SUBJECT:

Walker Methodist Health Care,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

Petitioner, Walker Methodist Health Center, is a Minnesota long term care facility that participates in the Medicare and Medicaid programs as a provider of services. Following a standard survey, completed February 1, 2002, the Centers for Medicare & Medicaid Services (CMS) notified Petitioner that it was out of compliance with program participation requirements, citing fourteen deficiencies. Petitioner requested a hearing on only two of those deficiencies. CMS now asks for summary affirmance on the twelve deficiencies that Petitioner has not appealed. CMS also asks that I affirm the penalty imposed, a $350 per day civil money penalty (CMP).

As discussed below, based on the twelve deficiencies that Petitioner has not appealed, I affirm CMS's determination that Petitioner was not in substantial compliance with program participation requirements. I also conclude that these uncontested deficiencies provide a sufficient basis for imposing a CMP, and affirm the imposition of a $350 per day CMP.

I. Background

To participate in the Medicare and Medicaid programs, facilities periodically undergo surveys to determine whether they comply with applicable statutory and regulatory requirements for Medicare (skilled nursing facilities or SNFs) and/or Medicaid (nursing facilities or NFs). The Secretary of Health and Human Services contracts with state survey agencies to conduct those surveys. Social Security Act (Act), section 1864(a); 42 C.F.R. � 488.20. The regulations require that each facility be surveyed at least once every 12 months, and more often if necessary, to ensure that identified deficiencies are corrected. 42 C.F.R. � 488.20(a). Where deficiencies are found in a survey, the state survey agency and CMS assess the seriousness of the deficiencies on a scale that considers the scope (how isolated or widespread the deficiency is) and severity (how much harm or potential harm the deficiency causes or may cause). 42 C.F.R. � 488.404. The findings are reported on a standard form (Form CMS-2567L, also called a 2567) that identifies specific deficiencies and assigns an "F-tag" number to each deficiency.

In this case, on February 1, 2002, the Minnesota Department of Health (State Agency) completed a standard survey of Petitioner's facility, finding Petitioner not in substantial compliance with federal requirements for nursing home participation in the Medicare and Medicaid programs. Specifically, the State Agency listed, under separate tag numbers, fourteen deficiencies:

�Tag F159. 42 C.F.R. � 483.10(c)(2) and (3) (protection of resident funds) at scope and severity level E (pattern of noncompliance, causing no actual harm but with potential for more than minimal harm);

�Tag F176. 42 C.F.R. � 483.10(n) (self administration of drugs) at scope and severity level D (isolated instances causing no actual harm but with potential for more than minimal harm);

�Tag F204. 42 C.F.R. � 483.12(a)(7) (transfer and discharge requirements) at scope and severity level D;

�Tag F246. 42 C.F.R. � 483.15(e)(1) (quality of life) at scope and severity level D;

�Tag F250. 42 C.F.R. � 483.15(g) (social services) at scope and severity level E;

�Tag F272. 42 C.F.R. � 483.20(b) (resident assessment) at scope and severity level D;

�Tag F275. 42 C.F.R. � 483.20(b)(2)(iii) (resident assessment) at scope and severity level D;

�Tag F276. 42 C.F.R. � 483.20(c) (resident assessment) at scope and severity level G (isolated instance of actual harm that is not immediate jeopardy);

�Tag F279. 42 C.F.R. � 483.20(k) (resident assessment) at scope and severity level E;

�Tag F309. 42 C.F.R. � 483.25 (quality of care) at scope and severity level D;

�Tag F324. 42 C.F.R. �  483.25(h)(2) (quality of care) at scope and severity level G;

�Tag F332. 42 C.F.R. � 483.25(m)(1) (quality of care) at scope and severity level E;

�Tag F371. 42 C.F.R. � 483.35(h)(2) (dietary services) at scope and severity level E; and

�Tag F426. 42 C.F.R. � 483.60(a) (pharmacy services) at scope and severity level D.

CMS Exhibit (Ex.) 1.

CMS agreed with the State Agency assessment, and, in a letter dated March 27, 2002, advised the facility that it was not in substantial compliance with program requirements, and that, based on its noncompliance, CMS: 1) had already approved the institution of state monitoring, effective February 19, 2002; 2) would deny payment for new Medicare and Medicaid admissions (DPNA) effective April 18, 2002; 3) was imposing a $350 per day CMP effective February 1, 2002, continuing until the facility achieved substantial compliance or until its provider agreement was terminated; and 4) if the facility did not achieve substantial compliance, would terminate the facility's provider agreement effective August 1, 2002. The letter also said that the facility was prohibited from offering or conducting a nurse aide training and competency evaluation program for two years from April 18, 2002. CMS Ex. 3.

The letter set forth the facility's appeal rights:

If you disagree with the finding of noncompliance which resulted in the imposition of denial of payment for new admissions and a civil money penalty, you or your legal representative may request a hearing before an administrative law judge of the Department of Health and Human Services, Departmental Appeals Board. Procedures governing this process are set out in 42 C.F.R. � 498.40 et seq. A written request for a hearing must be filed no later than 60 days from the date of receipt of this letter.

* * * *

A request for a hearing should identify the specific issues and the findings of fact and conclusions of law with which you disagree. It should also specify the basis for contending that the findings and conclusions are incorrect.

CMS Ex. 3.

CMS subsequently determined that the facility brought itself back into substantial compliance on February 22, 2002. It rescinded the DPNA and the termination action. The $350 per day CMP was discontinued effective February 22, 2002, resulting in a total CMP of $7,350 ($350 x 21 days), and, because the CMP was greater than $5,000, the two year prohibition on nurse aide training and competency evaluation remained in effect. CMS Ex. 4.

In a letter dated May 22, 2002, Petitioner requested a hearing to challenge just two of the fourteen citations, including their alleged scope and severity: Tag F276 and Tag F324. Petitioner also challenged the constitutionality of CMS's actions. Petitioner's Hearing Request. ⁽¹⁾

CMS has moved for summary affirmance on the twelve unchallenged deficiencies, and the $350 per day CMP. Petitioner opposes summary affirmance. It "does not challenge the factual basis" for the undisputed citations (P. Br. at 8), but points out that the unchallenged deficiencies were cited at a scope and severity level of "E" or lower, and argues that deficiencies of such scope and severity do not support the imposition of a CMP. Petitioner also raises some technical procedural arguments as to the form of CMS's request for summary affirmance. ⁽²⁾

CMS attached five exhibits to its brief, CMS Exs. 1-5. Petitioner's opposition brief is accompanied by seven exhibits, P. Exs. 1-7, including three affidavits. There being no objection, for purposes of this ruling, I admit into evidence CMS Exs. 1-5, and P. Exs. 1-7.

II. Discussion

I make findings of fact and conclusions of law to support my decision. I set forth each finding below, in italics, as a separate heading.

A. CMS's determination on the twelve unchallenged deficiencies is final and binding.

CMS's findings of noncompliance that result in the imposition of a remedy are considered initial determinations that the affected party may appeal. The regulations governing such actions dictate that CMS mail notice of an initial determination to the affected party, setting forth the basis for and effect of the determination, and the party's right to hearing. 42 C.F.R. �� 498.20(a)(1); 498.3; 498.5. The affected party may then challenge the determination by filing a hearing request within sixty days of its receiving the notice. 42 C.F.R. � 498.40. An initial determination is final and binding unless reversed or modified by a hearing decision, or under other circumstances not applicable here. 42 C.F.R. � 498.20(b).

Here, the facility filed a valid appeal, but did not contest CMS's determination of deficiencies under twelve of the cited tags: Tags F159 (protection of resident funds), F176 (self administration of drugs), F204 (transfer and discharge requirements), F246 (quality of life), F250 (social services), F272 (resident assessment), F275 (resident assessment), F279 (resident assessment), F309 (quality of care), F332 (quality of care), F371 (dietary services), and F426 (pharmacy services). In its brief, Petitioner reiterates that "the factual bases of the remaining twelve citations are not challenged. . . ." P. Br. at 6, 8, 9.

CMS's determination on these deficiencies is therefore final and binding. 42 C.F.R. � 498.20(b).

B. The twelve uncontested deficiencies provide a sufficient basis for imposing a CMP.

Petitioner bases its opposition to summary affirmance on a purely legal issue: whether deficiencies cited at a scope and severity level of "D" or "E" can support the imposition of CMPs.

A long-term care facility participating in the Medicare and Medicaid programs must be in substantial compliance with relevant Medicare requirements. Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Center v. United States Department of Health and Human Services, No. 98-3789 (GEB), slip. op. at 25 (D.N.J. May 13, 1999). "Substantial compliance" means a level of compliance with participation requirements such that any identified deficiencies pose no greater risk to resident health or safety that the potential for causing minimal harm. 42 C.F.R. � 488.301. If a facility is not in substantial compliance with program requirements, CMS has the discretion to impose one or more of the enforcement remedies listed in 42 C.F.R. � 488.406, which include the imposition of a CMP. Act, section 1819(h); 42 C.F.R. � 488.402.

Petitioner mischaracterizes CMS's argument: "CMS claims it has discretion to levy civil money in any range for any citation regardless of scope and severity." P. Br. at 9. In fact, CMS may impose a penalty only if the deficiency is considered "substantial noncompliance," which means that it poses the potential for more than minimal harm. CMS may not impose a penalty for deficiencies that have caused no actual harm, with the potential for no more than minimal harm.

Here, we have a final and binding determination that the facility was out of compliance with twelve program requirements that were serious enough to pose the potential for more than minimal harm. CMS therefore has a sufficient basis for imposing a CMP. ⁽³⁾

C. I have no authority to review CMS's determination to impose a remedy.

Having determined that a basis exists for the imposition of remedies, the regulations limit my authority to review CMS's selection of remedies. I may not review CMS's exercise of its discretion to impose the CMP. 42 C.F.R. �� 488.408(g)(2) ("A facility may not appeal the choice of remedy, including the factors considered by CMS or the State in selecting the remedy. . . ."); 488.438(e) (If an ALJ finds a basis for imposing a CMP, he/she may not review CMS's exercise of its discretion to do so.)

Petitioner reasons that no penalty would have been imposed but for the findings of "G" level deficiencies during this 2002 survey, and the findings of "G" level deficiencies during the preceding 2001 survey. According to Petitioner, the State Agency does not recommend imposing a CMP in the absence of at least one "G" level deficiency. For summary judgment purposes, I accept that this is a usual State Agency practice. I also accept, for summary judgment purposes, that the facility had no "G" level deficiencies during either the 2001 or the 2002 survey. However, the fact that a state agency has deviated from its usual practice does not negate the unambiguous regulatory directive that I have no authority to review CMS's exercise of its discretion to impose a remedy when the facility's deficiencies pose the potential for more than minimal harm.

D. I find reasonable the $350 per day CMP, which is at the low end of the CMP range for non-immediate jeopardy situations.

As noted above, if CMS determines that a facility is not in substantial compliance with program requirements, it may impose a CMP for each day of substantial noncompliance. Act, section 1819(h); 42 C.F.R. �� 488.402; 488.408. Where the deficiencies do not pose immediate jeopardy to resident health and safety, but have either caused actual harm or have the potential for more than minimal harm, the penalty will be in the range of $50 to $3,000 per day. 42 C.F.R. �� 488.408(d); 488.438(a). At $350 per day, the penalty here is at the low end of the range.

I determine whether the amount of a CMP is reasonable by applying the factors listed in 42 C.F.R. � 488.438(f): 1) the facility's history of noncompliance; 2) the facility's financial condition; 3) factors specified in 42 C.F.R. � 488.404; and 4) the facility's degree of culpability, which includes neglect, indifference, or disregard for resident care, comfort or safety. The absence of culpability is not a mitigating factor. 42 C.F.R. � 488.438(f). The factors in 42 C.F.R. � 488.404 include: 1) the scope and severity of the deficiency; 2) the relationship of the deficiency to other deficiencies resulting in noncompliance; 3) the facility's prior history of noncompliance in general and specifically with reference to the cited deficiencies.

With respect to facility history, I will assume that Petitioner would have prevailed had it been able to appeal its 2001 survey. ⁽⁴⁾ However, without considering that survey, other factors justify this relatively minimal CMP. First, as CMS points out, and Petitioner does not dispute, the facility has ample operating income to pay the $7,350 CMP. CMS Ex. 5, at 35-37. Second, while, by itself, the gross number of deficiencies does not dictate the reasonableness of a CMP, neither is it irrelevant (see Pacific Regency Arvin, DAB No. 1823, at 17-18 (2002)), and the presence of twelve deficiencies is significant enough to justify a CMP that is greater than the minimum.

Moreover, although they did not result in actual harm, the uncontested deficiencies here are not insignificant, and they suggest systemic problems for which the facility must be considered culpable. For example, the facility allowed three residents to self-administer drugs, in contravention of its own policies. One of these residents was diagnosed with chronic depression and mixed personality disorder. According to his assessment, he could not name his medication, state what it was for, nor the time it was to be taken. His care plan did not indicate that he was able to self-administer his medication, and he had not been reassessed before he started to do so. CMS Ex. 1, at 3-5. A second resident had four inhalers at bedside, and was allowed to self-administer his pulmonary medications even though his assessment for self-administration of medication directed that the nurses administer the drugs. He was observed inappropriately administering the drugs, and he told the surveyors that nursing staff had not given him necessary instructions. He also had a nasal spray, which he self-administered, without a physician order. CMS Ex. 1, at 5. A third resident daily self-administered Tums and Maalox without a physician order. She had an order to self-administer Tylenol, but for three months staff had not documented her use of that medication. CMS Ex. 1, at 6-7.

In one instance, medication that should have been maintained in a locked compartment was observed lying on a bedside stand (Tag F426, 42 C.F.R. � 483.60(a)). The facility's medication error rate exceeded 5 percent (Tag F332, 42 C.F.R. � 483.25(m)(1)). CMS Ex. 1, at 33-35.

With respect to the discharge planning deficiency, Tag F204, 42 C.F.R. � 483.12(a)(7), the facility simply failed to follow up on a physician order that the resident could be discharged with home care services and medications "when he is ready." CMS Ex. 1, at 7-8. Six residents had not received the social services that they plainly needed (Tag F250, 42 C.F.R. � 483.15(g)). CMS Ex. 1, at 9-16. Required resident assessments had not been completed for four residents (Tags F272, F275, 42 C.F.R. � 483.20(b)). CMS Ex. 1, at 16-20.

Deficiencies in dietary services included leaving frozen raw meat to thaw on trays over cooked meat and vegetables, and food left on the steam table was not maintained at safe temperatures (Tag F371, 42 C.F.R. � 483.35(h)(2)). CMS Ex. 1, at 36-37.

IV. Conclusion

For all of the reasons discussed above, I uphold CMS's determination that Petitioner was not in substantial compliance with program participation requirements from February 1, 2002, through February 21, 2002, and find reasonable the amount of the CMP imposed, $350 per day for 21 days (total $7,350).

Carolyn Cozad Hughes

Administrative Law Judge

1. At the time it filed a hearing request in this case, Petitioner apparently also asked leave to reopen its appeal of deficiencies cited during a 2001 survey. Petitioner's Memorandum in Opposition (P. Br.) at 1. Judge Kessel denied that request in a ruling dated May 18, 2002, issued in Docket No. C-01-842. P. Ex. 4.

2. Petitioner makes much of CMS's having filed a Brief in Support of Summary Affirmance, unaccompanied by a separate motion, arguing that "procedural decorum and rules dictate that CMS follow the rules for bringing dispositive motions." P. Br. at 7. But Petitioner does not cite any particular rule dictating the form of a party's request in these circumstances, and, as far as I know, there is no such rule. Although parties often request relief by separate motion, accompanied by a memorandum in support (and I understand that some judges may order them to do so), I am not aware of any specific rule governing these proceedings that precludes a party from submitting one document containing both a request for relief and arguments in support of the request. In any event, CMS appears to have remedied any "error" by subsequently filing the motion. Cf. Crestview Parke Care Center v. Thompson, 373 F.3d 743, 747 (6^th Cir. 2004). (Nothing prevents CMS from filing a motion for summary judgment with its reply brief or at any other time.)

3. In its response brief, Petitioner states that "[i]f the court permits summary affirmance, [Petitioner] requests to amend its request for hearing as required to meet the merits of its case for good cause." P. Br. at 10. As I have pointed out above, however, Petitioner has specifically declined to challenge the bases for the unappealed deficiency citations, and I find that Petitioner has not shown good cause to amend its hearing request to include them. The desire to avoid summary affirmance does not constitute good cause.

4. It is well-settled that facilities may not appeal deficiency findings where CMS has imposed no remedy. Schowalter Villa, DAB No. 1688 (1999). In declining to vacate his dismissal of Petitioner's 2001 survey appeal, Judge Kessel nevertheless recognized

that a facility is disadvantaged, perhaps unfairly, where, following a subsequent survey, those unappealable deficiencies are later relied upon to justify a higher CMP. Judge Kessel's ruling suggests that, in this case, the facility might appropriately challenge the 2001 findings of noncompliance if CMS relies on them to justify the $350 per day CMP. See P. Ex. 4. But CMS has not relied on those 2001 survey findings. Moreover, because my review is de novo (Windsor Health Care Center, DAB No. 1902 (2003); Barn Hill Care Center, DAB No. 1848 (2002); Emerald Oaks, DAB No. 1800 (2001)), and I find the CMP justified without regard to the 2001 survey results, I need not reach this thorny issue.