SUBJECT: Crestview Parke Care Center,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Petitioner, Crestview Parke Care Center (Crestview), appealed a February 4, 2002 decision by Administrative Law Judge (ALJ) Carolyn Cozad Hughes. Crestview Parke Care Center, DAB CR867 (2002) (ALJ Decision). Crestview requested a hearing before an ALJ from a determination by the Centers for Medicare & Medicaid Services⁽¹⁾ (CMS) that Crestview was not in substantial compliance with program participation requirements for the period August 13 through October 21, 1999. Based on its finding of substantial noncompliance, CMS imposed a $27,600 civil monetary penalty (CMP) on Crestview ($400 per day for 69 days). The ALJ Decision granted CMS's motion for summary judgment.

As discussed more fully below, we find that there are no errors in the ALJ's conclusions of law and that her findings of fact are supported by substantial evidence on the record as a whole. Consequently, we affirm the ALJ Decision.

Background

A. The Surveys

Crestview is a nursing facility certified to participate in the Medicare and Medicaid programs as a provider of services. On August 12, 1999, the Ohio Department of Health (State Agency) completed a Life Safety Code (LSC) survey at Crestview and concluded that Crestview did not satisfy the LSC requirements for emergency lighting. ALJ Decision at 2, citing 42 C.F.R. � 483.70(a). On August 13^th, the State Agency completed a standard compliance survey at Crestview. This survey revealed that Crestview did not meet the program requirements for Environment, Quality of Care, Dietary Services and Administration. Id., citing 42 C.F.R. �� 483.15, 483.25, 483.35, 483.75; see also CMS Exs. 2 and 3.

On August 30, 1999 the State Agency advised Crestview that it was not in compliance with federal program requirements. Consequently, the State Agency proposed that CMS impose the remedies of termination, denial of payment for new admissions (DPNA) and a CMP of $400 per day beginning August 13, 1999. The State Agency noted that if Crestview alleged compliance by October 2, 1999, it would recommend that CMS not impose the suggested remedies unless a subsequent survey demonstrated that substantial noncompliance continued. CMS Ex. 1.

Crestview alleged that it was in compliance as of October 1, 1999. On October 5, 1999, the State Agency conducted a follow-up survey to verify Crestview's allegations. The follow-up concluded that Crestview was still not in substantial compliance with the program requirements. Consequently, on October 8^th the State Agency informed Crestview that it was recommending that CMS impose the DPNA, CMP and termination remedies. CMS Ex. 4.

By letter dated November 1, 1999, CMS notified Crestview that it concurred in the State Agency's finding of substantial noncompliance. CMS determined that, as of August 13, 1999, Crestview's deficiencies constituted actual harm that was not immediate jeopardy. CMS further determined that, as of the October follow-up, Crestview's deficiencies constituted no actual harm with the potential for more than minimal harm that was not immediate jeopardy. CMS concurred with the State Agency's recommendations that CMS impose a DPNA, effective November 16, 1999, and a $400 per day CMP, beginning August 13, 1999. CMS Ex. 7.

On October 21, 1999, the State Agency conducted a second follow-up survey. On November 2, 1999, the State Agency informed Crestview of its finding that Crestview had achieved substantial compliance as of October 21^st. On November 19, 1999, CMS notified Crestview that neither the DPNA nor the termination would be imposed and that the CMP had been discontinued on October 21, 1999. CMS Ex. 10.

B. Chronology of Crestview's Appeal

Crestview timely appealed imposition of the CMP. In June 2000, both parties filed readiness reports with the ALJ then assigned to hear Crestview's appeal.⁽²⁾ On or about December 2000, the parties told Judge Hughes that they would not be available for a hearing until September 2001. Judge Hughes scheduled the hearing for the week of September 18, 2001. The ALJ also scheduled a pre-hearing call for September 10, 2001. The ALJ told the parties that in the call, she expected them to stipulate to uncontested factual matters, set the issues in controversy, identify the evidence and witnesses to be presented and raise objections to the other side's evidence or witnesses. See ALJ Decision at 3, citing 42 C.F.R. � 498.47.

In the September 10^th pre-hearing call, the ALJ admitted evidence into the record. However, in spite of the ALJ's pointed efforts, the parties were unprepared to stipulate to uncontested facts, nor were they able to delineate, with any specificity, the issues in controversy. The ALJ continued the call to the next day, September 11^th. In anticipation of that call, the ALJ directed the parties generally to stipulate to the "obvious facts." Additionally, the ALJ directed Crestview, specifically, to examine the survey report from the October 1999 survey and to be prepared to challenge as untrue the specific facts asserted and to specify its rationale for its challenge to those facts. ALJ Decision at 3-4.

The events of September 11^th forced a postponement not only of the call scheduled for that day, but the hearing as well. The ALJ reconvened the pre-hearing conference call on September 19^th, at which time she learned that the parties had not complied with her September 10^th instructions. Crestview had not responded to proposed stipulations drafted by CMS. Additionally, Crestview had not identified the survey findings it wished to challenge, or, obviously, the bases for any challenges. Consequently, on September 21, 2001, the ALJ issued an order directing the parties to submit briefs which were to include (1) the facts the parties intended to prove at the hearing; (2) a discussion of the relevant law; (3) an explanation of how the evidence in the record proved the facts alleged; and (4) an explanation of how the testimony to be elicited at the hearing would prove the facts alleged. ALJ Decision at 4-5.

On December 12, 2001, the ALJ notified the parties "that certain material facts were not in dispute, that an in-person hearing was unnecessary, and that this matter could be decided on the written submissions, declarations and exhibits." On December 17, 2001, CMS filed a reply brief in which it moved for summary judgment. On December 19^th, Crestview submitted a letter in which it objected to cancellation of the hearing, alleging a denial of due process. Over the next several weeks, the parties briefed the issue of the propriety of summary judgment. ALJ Decision at 5-6.

On February 4, 2002, the ALJ issued her decision, granting summary judgment for CMS.

Standard of Review

Before an ALJ, a sanctioned facility must prove substantial compliance by the preponderance of the evidence, once CMS has established a prima facie case that the facility was not in substantial compliance with relevant statutory or regulatory provisions. See South Valley Health Care Center, DAB No. 1691 (1999), aff'd, South Valley Health Care Ctr. v. Health Care Financing Admin., 223 F.3d 1221 (10^th Cir. 2000), and Cross Creek Health Care Center, DAB No. 1665 (1998), applying Hillman Rehabilitation Center, DAB No. 1611 (1997) (Hillman), aff'd, Hillman Rehabilitation Center v. HHS, No. 98-3789(GEB), slip op. at 25 (D.N.J. May 13, 1999).

Initially, CMS must set forth the basis for its determination in support of the civil remedy its seeks to impose with sufficient specificity for the provider to respond. The provider must then identify which of the findings material to the CMS determination it disputes, and any additional facts that it is asserting. CMS then has the burden of coming forward with sufficient evidence which, when viewed together with any undisputed findings and the relevant legal authority, establishes a prima facie case that it had a legally sufficient basis for the civil remedy imposed. The petitioner has the burden of coming forward with evidence sufficient to establish the elements of its defense and any affirmative arguments. The petitioner bears the ultimate burden of persuasion.

In reviewing an ALJ Decision, our standard of review on a disputed conclusion of law is whether the ALJ erred. Our standard of review on a disputed finding of fact is whether the ALJ's finding is supported by substantial evidence on the record as a whole. See Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs; see also Hillman, at 6 (1997); Fairview Nursing Plaza, Inc., DAB No. 1715, at 2 (2000); South Valley.

We have repeatedly held that the role of appellate review is not to substitute our evaluation of the evidence for that of the ALJ, but only to determine whether the factual findings made by the ALJ are supported by substantial evidence in the record as a whole. See Lake Cook Terrace Center, DAB No. 1745, at 6 (2000); Beverly Health and Rehabilitation - Spring Hill, DAB No. 1696, at 40 (1999).

We first address Crestview's arguments concerning whether summary disposition was appropriate and then move to its arguments concerning the substantive issues raised by Crestview's hearing request.

I. The ALJ applied the correct standards in deciding this case by summary judgment.

Crestview contended that the ALJ erred when she denied Crestview's in-person hearing. Crestview argued that the regulations at 42 C.F.R. Part 498 generally require an in-person hearing unless a party waives its right to a hearing. Specifically, Crestview noted, 42 C.F.R. � 498.66 established the procedure for waiving a right to an in-person hearing. Crestview argued that it had not made such a waiver. Crestview cited the appellate panel decision in Glenburn Home, DAB No. 1806 (2002). Crestview asserted that Glenburn presented a factual pattern similar to this case and stood for the proposition that, absent a waiver, an oral hearing was required unless the affected party conceded all the material facts or proffered testimonial evidence only on facts which, if proven, clearly would not make any substantive difference in the results. Here, Crestview argued that it had presented genuine issues of material fact. Crestview Br. at 7-8.

Crestview took exception to the ALJ's reasoning that if, after resolving all factual disputes in Crestview's favor, CMS established substantial noncompliance justifying the penalties imposed, the disputed facts were not material and CMS was entitled to summary judgment. Crestview contended that this was the standard for a hearing on the merits, not summary judgment. Crestview noted that the ALJ had weighed the evidence and reversed several CMS findings. Crestview argued that the ALJ could not deny an affected party's right to a hearing and then proceed to weigh disputed facts. Crestview insisted that there were genuine issues of material fact upon which it would have prevailed.

Summary judgment is appropriate when it is demonstrated that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). Summary judgment should be entered, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to its case, and on which that party will bear the burden of proof at trial. A complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986). In attempting to defeat a motion for summary judgment, a party may not rely on the denials of its pleadings, but is required to tender evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support of its contention that a dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, n.11 (1986). The party must demonstrate that the fact in contention is material, that is, a fact that might affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is intended to pierce the pleadings, and assess the parties' proof in order to determine if there is a genuine need for trial. Matsushita, at 587. Finally, in order to demonstrate a genuine issue, the opposing party must do more than show that there is "some metaphysical doubt as to the material facts . . . . Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Id.

Contrary to Crestview's arguments on appeal, the ALJ did not deny Crestview due process or an opportunity to be heard. As noted above, the ALJ provided the parties with numerous and extended opportunities to develop their cases prior to deciding whether to provide an in-person hearing. To raise a dispute of fact, Crestview had only to explain the basis or rationale for its dispute and identify how the testimony to be elicited at the hearing would prove the alleged fact. The ALJ concluded that in spite of the extensive opportunity to develop its case, Crestview had not raised any disputes of material fact "with respect to several critical issues." For those limited instances where the ALJ concluded Crestview had raised a factual dispute, the ALJ concluded that the facts, even if established as Crestview asserted, would have no material effect on the remedy being imposed. CMS on the other hand had come forward with detailed affidavits in support of the deficiency findings and persuasive explanation of its rationale for determining the existence of substantial noncompliance. Crestview failed to establish on appeal that it was prejudiced by the pre-hearing process set by the ALJ when it had ample opportunity to establish a genuine issue of material fact. Even if Crestview were to establish such procedural prejudice (which it did not) it failed to establish before us that it could have raised before the ALJ (or even that it could now raise) a genuine dispute of material fact. In the second section of this decision, we consider each of the issues of material fact that Crestview alleged had been raised and conclude that the ALJ correctly determined in each instance that Crestview failed to demonstrate that there was any genuine factual dispute.

We further conclude that the ALJ was correct in determining that, for the limited instances where Crestview was found to have raised factual disputes, those disputes, even if resolved in Crestview's favor, would have had no material impact on the CMP under review in this case. Contrary to what Crestview seemed to be arguing, a factual dispute cannot be viewed as material to the remedy under review if that factual dispute, once resolved in the petitioner's favor, would still have no impact in reducing the remedy being imposed. This is fully consistent with the standard identified in Glenburn. Here, as in Glenburn, the ALJ concluded that an oral hearing was unnecessary because, although Crestview had raised limited disputes of fact for which testimonial evidence could be proffered, those facts, even if proven to be as Crestview asserted, would have no impact on the remedy in question. We discuss in the next section why the specific disputes of fact identified by Crestview would not establish that Crestview substantially complied with the applicable requirements and thus would have no impact on the remedy.

Crestview is also incorrect in arguing that in deciding this case by summary disposition, the ALJ actually weighed evidence under the preponderance of the evidence standard. The ALJ only evaluated Crestview's rationale for its alleged disputes of fact and its proffered evidence to see if genuine disputes of fact had been raised. Where the ALJ concluded that a dispute of fact had been raised, the ALJ then resolved the dispute in favor of Crestview, just as if it had been established by a preponderance of the evidence, for purposes of determining whether it was appropriate to grant summary disposition without an oral hearing. Where Crestview failed to raise a genuine dispute of fact, the ALJ found that the CMS finding of deficiency was uncontroverted and therefore established for purposes of summary disposition. Although in particular instances the ALJ may have stated that a deficiency finding had been established by a preponderance of the evidence, she in actuality was determining the finding to be uncontroverted. The ALJ further concluded that whether the undisputed facts amounted to substantial noncompliance constituted a conclusion of law, not allegations of fact. Thus, since Crestview had not raised a genuine issue of material fact, the ALJ moved to address the merits of the case based on the "uncontroverted" facts. ALJ Decision at 8-9. Ultimately, she concluded that the remedy in question was fully justified on the basis of the uncontroverted deficiency findings. Again, Crestview on appeal has had the opportunity to demonstrate that the remedy was not justified on the basis of the uncontroverted deficiency findings and has failed to demonstrate that the ALJ erred in concluding the remedy was justified on this basis.

Accordingly, the ALJ applied the correct standard in determining that this case could be decided by summary judgment.

II. The ALJ did not err in finding that Crestview failed to establish a genuine issue of material fact.

The ALJ Decision on the merits was based on two general findings of fact and conclusions of law (FFCLs) as well as supporting FFCLs quoted and discussed below.

A. From August 13, 1999, until October 21, 1999, the facility was not in substantial compliance with program participation requirements, specifically 42 C.F.R. � 483.15 (Environment), 42 C.F.R. � 483.25 (Quality of Care), 42 C.F.R. � 483.35 (Dietary Services), 42 C.F.R. � 483.75 (Administration), and 42 C.F.R. � 483.70(a) (Life Safety Code).

A.1. At the time of the Life Safety Code survey, August 12, 1999, the facility was unable to provide emergency power for lighting or other purposes.

In assessing this deficiency, CMS contended that Crestview's emergency generator failed to start during the August 12, 1999 LSC survey in spite of several attempts to start it.⁽³⁾ The surveyors also determined that Crestview's emergency generator log showed no indication that, since January 1999, required weekly tests had been performed on the generator, nor that the generator had been run under a monthly load as required by the LSC.

Before the ALJ, Crestview asserted that the generator's failure was a matter of happenstance. Crestview relied upon two declarations, dated November 27, 2001, and January 15, 2002, from an individual identified as the Regional Administrator for Regal Care, which operated Crestview (hereafter Hrybiniak Declarations) as well as a second declaration from the same individual. Ms. Hrybiniak stated that the generator had never been cited and worked both before and after the survey. She described its failure to operate during the survey as unknown and unexplained. Crestview Pre-Hearing Br. at 2; Crestview Br. in Opposition to Summary Judgment at 3; Hrybiniak Declarations. Crestview asserted that Ms. Hrybiniak spoke with the maintenance supervisor at the time of the failure and that the supervisor assured her that although the log may not have been up-to-date, the generator had been tested weekly and had never malfunctioned.

The ALJ considered thoroughly each of Crestview's arguments on this issue. The ALJ found that the generator had to comply with both the 1967 and 1981 editions of the LSC and had to work in order to meet program requirements. ALJ Decision at 12, n.11. The ALJ further found that CMS had presented uncontradicted evidence that on the day of the LSC survey, the generator did not function and had not been properly tested for a significant period of time. The ALJ noted that Crestview did not challenge "these specific factual findings." Id. at 13. Thus, the ALJ concluded that CMS had satisfied its prima facie case and Crestview had not demonstrated a material dispute with that deficiency finding and thus failed to establish by a preponderance of the evidence that it was in substantial compliance with the federal LSC requirements for emergency lighting. Id. at 15-16.

Crestview argued that the ALJ erred by applying the "preponderance of the evidence" standard for summary judgement. Rather, Crestview insisted, the question the ALJ should have addressed was whether there were genuine issues of material fact. Crestview contended that it had provided testimony and evidence sufficient to defeat summary judgment. Before this panel, as before the ALJ, Crestview relied on the Hrybiniak Declarations as evidence of the serendipitous nature of the generator's failure during the survey.

Nothing in Crestview's arguments on appeal persuades us that it raised a genuine dispute of fact concerning the performance of the emergency generator on the day in question. The ALJ correctly found that Crestview provided no evidence to overcome CMS's showing of substantial noncompliance with regard to the generator. In particular, the Hrybiniak Declarations offered no explanation for the generator's failure and, in fact, conceded that there was none. Further, Crestview offered nothing to overcome CMS's showing that the generator's required weekly testing had not been performed since January 1999. As the ALJ stated, Crestview failed to produce the generator log, nor any other documentation establishing when, how often, and under what conditions the generator was tested. ALJ Decision at 15. Nor did Crestview offer statements from individuals who were directly involved in the testing process and thus in the best position to respond to the survey findings.

Although Crestview also argued on appeal that it had an additional backup generator that would have operated on the day of the survey, nothing in the declarations submitted to the ALJ on this issue explicitly places this explanation before the ALJ. Thus, contrary to Crestview's arguments on appeal, the Hrybiniak Declarations do not demonstrate that there was an appropriate backup for the emergency generator.

Finally, while the ALJ may have made an passing reference to the preponderance of the evidence standard, in essence she meant that Crestview's failure to raise a genuine factual dispute caused this finding to be uncontroverted and thus established for purposes of summary judgment. The ALJ's overall analysis of this deficiency clarifies that she was not applying the preponderance of the evidence standard, but was rather determining whether a genuine factual dispute had been raised.

Thus, contrary to Crestview's assertions, Crestview failed to establish the existence of a genuine issue of material fact concerning this deficiency finding.

Accordingly, we affirm and adopt FFCL A.1.

A.2. The facility did not provide housekeeping and maintenance services necessary to maintain a sanitary, orderly and comfortable interior.

In reaching this FFCL, the ALJ relied on 15 specific citations from the August survey and an additional 12 citations from the October revisit. ALJ Decision at 16-20. The ALJ "accepted for purposes of summary judgment" Crestview's position on an additional alleged deficiency from the August survey. ALJ Decision at 20, n. 16.

Before the ALJ, Crestview had only argued that the one citation from the August survey that was ultimately accepted by the ALJ was not a deficiency. Crestview challenged only generally the remainder of the surveyors' specific factual findings. Crestview noted that the facility was in constant use and some of the citations were therefore circumstances over which it had little control. Crestview asserted that it would offer testimony that it "provided housekeeping and maintenance services necessary to maintain a sanitary, orderly and comfortable interior" and again cited the Hrybiniak Declarations. Crestview Pre-Hearing Br. at 3. Crestview asserted that these were deficiencies attributable to the previous owner, that the facility-generated infection rate among its residents was very low, and that none of these infections were related to the deficiencies at issue. Crestview also provided copies of the housekeeping staff's job descriptions, schedule, procedures and duties, and evidence of materials for safety and sanitation which it had ordered. Id. at 3-4. In its argument in opposition to summary judgment, Crestview asserted that its "pre-hearing brief was not intended to be a motion for summary judgment and therefore did not set out every fact to which its witnesses would testify." Pointing to the Hrybiniak Declarations, Crestview reiterated that there were no infections attributable to the deficiencies cited by the surveyors and that these deficiencies were attributable to the previous owner. Crestview Br. in Opposition to Summary Judgment at 4.

On appeal, Crestview again argued that its pre-hearing brief was not intended to be a motion for summary judgment and that it did not set out every fact to which its witnesses would testify. Crestview argued that in any event the Hrybiniak Declarations demonstrated the existence of genuine issues of material fact. Crestview restated arguments made before the ALJ that the survey occurred two days after it assumed operation of the facility; facility-generated infections were low in number and none were tied to the cited findings; it employs adequate staff to handle cleaning and maintenance and those services are performed routinely; and the constant use of the facility means that it can be "observed to be unclean" at any given time. Crestview reiterated that it was not required to establish substantial compliance by a preponderance of the evidence in order to defeat CMS's motion for summary judgment. Crestview Br. at 12-13.

As we discuss more fully in the next section, there is no merit to Crestview's argument that it cannot be held responsible for deficiencies identified in a survey shortly after a change in ownership. See CarePlex of Silver Spring, DAB No. 1683 (1999); CarePlex of Silver Spring, DAB No. 1627 (1997). Even if there were merit to that argument, however, unsanitary conditions were not merely identified in the August survey alone but were also identified in the October 5, 1999 follow-up survey. Thus, the new ownership had ample time to address this type of deficiency but did not succeed. Moreover, Crestview's assertions regarding its full-time housekeeping staff are unresponsive to the cited deficiencies. As the ALJ correctly pointed out, Crestview had not been cited for the "occasional spill, speck of dust or scrap of clutter." Rather, she noted, the extensive and wide-ranging list of deficiencies identified in two separate surveys demonstrated that Crestview was not well-maintained and was in ill repair over a significant period of time. ALJ Decision at 21. Thus, having a full-time housekeeping staff as well as policies and procedures for cleaning and maintaining the facility does not satisfy the requirement that the facility actually be kept clean and orderly. Moreover, although Crestview had argued that its pre-hearing brief was not intended to be a motion for summary judgment, Crestview failed to identify before us any additional facts it would have elicited at an in-person hearing in response to the multitude of deficiencies in this category that the ALJ ultimately found to be uncontroverted.

Crestview's other arguments, such as those pertaining to the facility's infection rate and the number of infections attributable to the deficiencies, are wholly irrelevant to this FFCL. The ALJ's findings address the requirement that a facility provide housekeeping and maintenance service to maintain a sanitary, orderly and comfortable interior. This requirement does not make any reference to infections that might (or might not) result from an unsanitary facility.

We therefore conclude that the ALJ did not err in finding that Crestview failed to establish the existence of a genuine issue of material fact relating to this deficiency.

Accordingly, we affirm and adopt FFCL A.2.

A.3. A change in ownership/management does not relieve the facility of its obligation to meet program participation requirements.

At several points in its case before the ALJ, Crestview asserted that it could not be held responsible for deficiencies identified in a survey occurring just 13 days after a change in ownership and thus in some degree inherited from the previous owners of the facility. Finding that Crestview was, in fact, responsible for the condition of the facility at the time of the survey, the ALJ concluded:

The regulations provide that, upon a change of ownership, the existing provider agreement is automatically assigned to the new owner, subject to all applicable statutes and regulations and to the terms and conditions under which it was originally issued, including, but not limited to (1) any existing plan of correction; and (2) compliance with applicable health and safety standards. 42 C.F.R. � 489.18(c) and (d). The regulation plainly holds new owners to compliance with all participation requirements from the time of the assignment of the agreement and therefore supports the conclusion that all providers are subject to normal enforcement authorities, regardless of how long they have owned or operated the facility.

ALJ Decision at 22.

On appeal, Crestview noted that a CMP is meant to be remedial, not punitive, and proceeded to discuss the purposes behind the statute and regulatory authority for imposing a CMP generally as well as those involved in assigning a dollar amount to a finding of noncompliance. Crestview cited the CarePlex decisions (DAB Nos. 1627 and 1683) for the proposition that CMS and the ALJ were required to take into consideration Crestview's prior compliance history as a provider when assessing Crestview's culpability for deficiencies inherited from a prior owner. Crestview argued that this FFCL was "an error of law and contrary" to those decisions. Crestview noted that it had no relationship of any kind with the prior owner of the facility. Crestview asserted that its actions since assuming ownership and general compliance history made it evident that it did not need a CMP or other remedy to spur it on to correct inherited deficiencies. Crestview Br. at 13-17.

The ALJ provided an in-depth review of the CarePlex decisions. Her summary of the decisions bears repeating here. She stated:

[T]he Appellate Panel, relying on statutory and regulatory construction, as well as sound policy reasoning, concluded that a new owner does not enjoy immunity from compliance with participation requirements simply because it acquired a deficient facility. In CarePlex, the facility was surveyed the day after it changed ownership, and many of its significant deficiencies were the result of long-standing conditions that required significant time and effort to correct.

As the Appellate Panel noted there, the statute provides no "grace period" during which a new owner may operate in violation of the participation requirements by showing good faith efforts to begin to improve the facility. If anything, the Act suggests Congressional concern that facilities undergoing changes in ownership might need additional scrutiny. Thus, by statute, if a standard survey has not already been conducted under normal time frames, a special survey may be conducted within two months of a change in ownership to determine if the change caused any decline in the quality of care. Act, section 1819(g)(2)(A)(iii)(II). The Board observed that a survey conducted within two months or less of a change in ownership "obviously" may pick up deficiencies caused by conditions that began under a prior regime. Yet Congress made no special provision to reduce the responsibility of new owners for deficiencies found during these surveys.

* * * *

The Appellate Panel also noted that CarePlex could have declined assignment of the existing provider agreement, and instead applied to participate in the program once it was able to meet the participation requirements.

* * * *

The Appellate Panel concluded that the legal basis for imposition of the CMP is not undercut by the uncontested evidence that the facility engaged in efforts to improve the operation and upgrade the facility during the period. The purpose of notifying a noncompliant provider that a CMP may be imposed until it achieves substantial compliance is to provide an incentive for prompt improvements and corrections.

ALJ Decision at 22-23.

Contrary to what Crestview argued, the Board's analysis in the CarePlex decisions is directly on point to the issues raised here and fully supports the result reached by the ALJ below. The ALJ thus correctly concluded that Crestview is responsible for the facility conditions, regardless of who may have initially created them. Otherwise, the residents of the facility would be placed in a vulnerable situation for an indefinite period of time if the facility were held to a lower level of scrutiny whenever it changed ownership.

It is also noteworthy here that in the case of the environmental deficiencies discussed in FFCL A.2., which Crestview disclaimed as inherited, the ALJ relied upon 15 deficiencies in her consideration of the August 1999 survey and then 12 deficiencies of the same type from the October 1999 follow-up, approximately two months after the change in ownership at Crestview. While the later deficiencies were not identical to the earlier ones, they were nevertheless similar in type and nature and Crestview failed to establish that they could not have been corrected by the new ownership before the October 1999 survey. See ALJ Decision at 16-20. Indeed, as CMS argued on appeal and as our discussion throughout this section of our decision indicates, almost all of the deficiencies cited from the August 1999 survey were the result of actions or inactions by Crestview's staff after the change of ownership, and thus, not "inherited" conditions as such.

Therefore, we find the ALJ correctly ruled that the change in ownership provides no basis for excusing Crestview from responsibility for the deficiencies found in August and October 1999, nor for reducing the amount of the CMP.

Accordingly, we affirm and adopt FFCL A.3.

A.4. The facility did not provide necessary care and services to ensure that each resident maintained the highest practicable physical, mental, and psychosocial well-being, in accordance with the comprehensive assessment and plan of care.

The ALJ based this FFCL on her findings that at least two Crestview residents did not have in place the appropriate combination of hand splints, heel protectors and elbow protectors prescribed for them by their physicians and called for as well in their plans of care. The orders for both patients required the protectors to be in place "at all times." The surveyors observed the absence of these protective devices numerous times over a three-day period during the August 1999 survey. These devices were ordered to alleviate post-stroke deterioration on one resident as well as pressure sores on both residents. The ALJ noted that although Crestview contended that it was routine for these devices to be removed from the residents during examinations, Crestview did not contest the surveyors' specific observations, which were inconsistent with a finding that the residents were being examined when they were observed by the surveyors. The ALJ also rejected as unsupported Crestview's assertions that there was no requirement for a physician's order for heel/elbow protectors; that removal of these devices was subject to the nurses' judgment; and that since one resident was on a pressure-relieving mattress, there was no need for heel/elbow protectors. The ALJ noted that the physician for each resident determined the protectors to be necessary, and that the interdisciplinary team agreed and incorporated these protective devices into each resident's plan of care. ALJ Decision at 23-26.

On appeal, Crestview repeated its assertions made with respect to other FFCLs that the ALJ had improperly weighed the evidence; that it was not required to establish substantial compliance by a preponderance of the evidence; and that it had clearly met its burden to require a hearing. Crestview argued that the Hrybiniak Declarations demonstrated that the individual plans of care for these two residents were designed to alleviate pressure sores and that their protective pads were removed for examination of the protected areas. Crestview then reiterated the arguments presented to the ALJ on this deficiency that were fully discussed in her decision. Crestview Br. at 17-19; Crestview Reply Br. at 9-11.

Crestview's arguments do not establish that it had raised a genuine dispute of material fact before the ALJ concerning this deficiency. Again, Crestview did not dispute the substance of the surveyors' findings that the patients were repeatedly observed without the protectors over the three-day survey. Rather, it attempted to discount the impact of these findings. The residents in question were required, by their physicians and their plans of care, to have these protective devices "at all times." The residents were observed without the devices on numerous occasions over a three-day survey. As the ALJ noted, the timing of the multiple observations of these residents in their unprotected conditions was inconsistent with Crestview's assertions that the protective devices had been removed in the course of the residents' treatment or examination.

Although Crestview suggested other rationales to justify the absence of these protective devices, these rationales were, on their face, unpersuasive and unsupported by any competent evidentiary proffer. Thus, Crestview asserted that nursing staff had determined that the protectors were unnecessary. Counsel's assertions alone would not establish what Crestview's nursing staff had concluded, nor would such assertions serve as competent evidence to counteract the effect of the physicians' orders or the plans of care. As the ALJ recognized, the regulations require that the facility provide care "in accordance with the comprehensive assessment and plan of care." 42 C.F.R. � 483.25. Crestview's failure here not only violates the regulations, it "creates a risk for more than minimal harm to individuals who were at high risk for developing pressure sores." ALJ Decision at 28. Finally, Crestview's explanation that the protectors had been removed by the patients concerned is not supported by the resident medical records. As the ALJ noted, these records suggest no problems with the patients themselves removing the protectors, much less consideration of any such problem by the interdisciplinary teams in the plans of care. Id. Moreover, Crestview's explanation is wholly unreasonable in view of the number and duration of the observations.

We therefore conclude that the ALJ did not err in finding that Crestview failed to establish the existence of a genuine issue of material fact relating to this deficiency.

Accordingly, we affirm and adopt FFCL A.4.

A.5. The facility failed to ensure that its residents not develop avoidable pressure sores, and did not ensure that a resident having pressure sores received the treatment and services necessary to promote healing, prevent infection, and prevent new sores from developing.

The ALJ based this FFCL on her finding of substandard treatment for two Crestview residents subject to pressure sores. Resident 68 was bed-ridden, unable to reposition herself and at high risk for pressure sores. There is no dispute that this resident had preexisting sores. On two occasions on August 10, 1999, the surveyor observed this resident positioned on her left side while wearing protective pressure relieving devices on her right side only. On August 11^th the surveyor, accompanied by a facility nurse, observed three sores on this resident's left side. Additionally, a surveyor noted that Resident 93 had dirty heel protectors which had been applied to open pressure sores following the resident's whirlpool treatment.⁽⁴⁾ Based on what she concluded were uncontroverted facts pertaining to this deficiency, the ALJ determined that Crestview had not taken "all necessary precautions" to promote healing, prevent infection and prevent new pressure sores from developing. Specifically, the ALJ found:

Allowing Resident #68, a high-risk individual to lie, unprotected, on vulnerable points, in contravention of physician orders, does not establish that the facility took "all necessary precautions." Similarly, applying soiled heel protectors directly on to Resident #93's open sores does not establish that the facility took "all necessary precautions" to prevent infection.

ALJ Decision at 28.

Before the ALJ, Crestview argued that the pressure sores afflicting Resident #68 were clinically unavoidable and that her treatment was appropriate at all times. Crestview offered the Hrybiniak Declarations and the Resident's Pressure Sore Progress report (Crestview Ex. 3, at 13) in support of its position. Regarding Resident #93, Crestview alleged that the nurse followed the correct procedures for good standards of practice techniques. In response to the CMS Motion for Summary Judgment, Crestview's arguments regarding these two residents were the same as those regarding the residents involved with the heel and elbow protectors. Crestview Br. in Opposition to Summary Judgment at 4-5.

On appeal, Crestview reiterated that the ALJ had inappropriately weighed the evidence. Crestview pointed to the ALJ's indication (ALJ Decision at 28) that, at a hearing, Crestview may have been able to undermine the surveyor's findings regarding dirty heel protectors being applied to bandaged pressure sores. Crestview reasoned that in a hearing it would have also been able to overcome the surveyor's findings of dirty heel protectors applied to open pressure sores. Crestview asserted that it had developed and followed a treatment and care plan for Resident #68. Crestview maintained that the sores on this resident were the result of the resident's "extremely compromised" medical condition rather than any deficient treatment by Crestview. Regarding Resident #93, Crestview contended that it had followed the correct procedures. Crestview asserted that the Statement of Deficiencies did not establish that this resident's condition had been compromised by deficient treatment.

The ALJ correctly found that Crestview had not raised a genuine material dispute that it was out of compliance with the regulatory requirements at 42 C.F.R. � 483.25. As the ALJ noted, we have held elsewhere that a facility must always furnish what is necessary to prevent new sores, unless clinically unavoidable, and to treat existing ones as needed. Koester Pavilion, DAB No. 1750, at 31-32 (2000).

Here Crestview did not dispute the ALJ's finding that Resident #68 in fact had three pressure sores on her left side and Resident #93 had open pressure sores on his ankles and heels. Nor did Crestview dispute the ALJ's finding that Resident #68 was observed without protectors on her left side that were required by her plan of care and that Resident #93 was observed with dirty protectors directly against the sores on his ankles and heels. Crestview moreover provided no reasonable explanation and no proffer of competent supporting testimony of how it could be complying with the requirement to provide all necessary treatment for the pressure sores in question when it was observed not even providing protectors for the sores required by the plan of care for Resident #68 and when it provided dirty heel protectors directly against Resident #93's open pressure sores. Crestview's arguments on appeal simply fail to address the merits of the deficiency as identified by the ALJ and fail as well to explain how Crestview had raised a genuine issue of material fact concerning this deficiency. Crestview's assertion that Resident #68 may have removed her own protectors was not supported by anything in that patient's records or by a testimonial proffer from a facility staff member actually treating that patient nor is that explanation reasonable on its face in view of the circumstances of this patient and the number of the pressure sores involved.

Accordingly, we affirm and adopt FFCL A.5.

A.6. The facility did not store, prepare, distribute and serve food under sanitary conditions.

Before the ALJ, Crestview asserted that its kitchen area was clean and sanitary. Crestview contended that many of the conditions cited by the surveyors were simply the natural and temporary conditions of the facility's operation during the survey and would have been common occurrences in any other facility. Crestview dismissed several of the surveyors' concerns as capable of being overcome by common-sense observations. Crestview offered the declaration of its food service manager regarding these deficiencies and noted that he would also testify at the hearing. Crestview Pre-Hearing Br. at 8-9. In opposition to summary judgment, Crestview characterized as disingenuous CMS's assertion that Crestview had not raised "factual questions regarding several samples." Crestview reiterated that its food service manager would testify regarding all the dietary and environmental concerns raised by the deficiencies. Crestview repeated its contention that many of the deficiencies cited were simply the circumstantial result of the condition of operating the facility at a particular time of day. Crestview Br. in Opposition to Summary Judgment at 5-6.

The ALJ noted that the surveyors cited "a long list of deficiencies" in dietary services. According to the ALJ, Crestview challenged some, but not all, of those deficiencies, raising factual disputes that "for these purposes" the ALJ resolved in Crestview's favor. The ALJ pointed to 10 dietary deficiencies covering a variety of issues. (The details of each are set out in the ALJ Decision and will not be repeated here.) The ALJ noted that Crestview did not challenge the facts underlying each deficiency, nor the opinions of the surveyors drawn from those deficiencies. The ALJ concluded that, even after resolving all disputed facts in Crestview's favor, the undisputed evidence established significant instances of unsanitary conditions that created the potential for more than minimal harm to the residents. Thus, the ALJ concluded that Crestview was not in substantial compliance with the program participation requirements. ALJ Decision at 29-32.

On appeal, Crestview maintained that the ALJ confused the standard of review for summary judgment. Crestview asserted that the ALJ found genuine issues of material fact when she resolved certain factual issues in Crestview's favor. Crestview argued that summary judgment is an all or nothing proposition in favor of the moving party. Crestview reiterated that it had submitted sufficient testimony and evidence to defeat summary judgment on "all findings." Crestview then referred to the testimony and evidence in a declaration from one of its witnesses (Mr. Bayalan) in an attempt to discredit some of the surveyors' observations. Crestview Br. at 21-22.

Crestview's arguments are not persuasive. The ALJ found in Crestview's (the nonmoving party's) favor on certain deficiencies. However, that does not mean that there exists a genuine dispute of material fact as to the remaining, unchallenged deficiencies. Crestview's position seems to be that if it was able to mount a sufficient challenge to some of the deficiencies, so that the ALJ gave it the benefit of the doubt in those instances, then it follows that it would have been able to succeed in challenges to the remaining deficiencies where no genuine dispute was raised. As CMS argued on appeal, the Declaration of Alejandro Bayalan as well as Crestview's briefs below and its other declarations and exhibits fail to raise any genuine factual questions regarding the remaining deficiencies. The ALJ therefore properly found these deficiencies to be uncontroverted. Moreover Crestview failed to establish before us that these remaining deficiencies did not constitute significant instances of unsanitary conditions that created potential for causing more than minimal harm to facility residents.

Accordingly, we affirm and adopt FFCL A.6.

A.7. The facility failed to ensure that its nurse aides received the required in-service education.

Before the ALJ, in both its pre-hearing brief and opposition to summary judgment, Crestview attributed this deficiency to the facility's prior owner. Citing the Hrybiniak Declarations, Crestview contended that it provided all necessary in-service training and education mandated by regulation. Crestview Pre-Hearing Br. at 9; Crestview Br. in Opposition to Summary Judgment at 6.

The ALJ noted that the applicable program regulation (42 C.F.R. � 483.75(e)(8)(i)) explicitly requires that a facility must provide regular in-service education, of at least 12 hours per year, to its nurse aides. Reviewing the facility's in-service training records, the surveyor determined that during the 1998 calendar year, 14 of the facility's 29 nurse aides, all of whom were hired prior to 1998, had received fewer than the required 12 hours in-service training. The ALJ found that Crestview had provided no evidence to counter the surveyor's findings on this deficiency. Rather, before the ALJ, Crestview asserted that it was not responsible for the policies, procedures or practices of the prior operator. The ALJ reiterated her earlier analysis that a new owner does not enjoy immunity from compliance with participation requirements simply because it acquires a deficient facility. ALJ Decision at 32-33.

Crestview reiterated that the August survey occurred within days of when it assumed ownership of the facility and that it therefore had no control over the circumstances underlying this deficiency. Crestview asserted that it began operations with all newly hired employees and that it was able to ensure that these nurse aides were receiving the requisite in-service requirements. Crestview added that, as a new owner, it had no control over a previous operator's employees and whether their in-service records established compliance with this requirement. Crestview Br. at 22-23.

CMS responded that it could find nothing in the record below that established that Crestview began its operations with all new employees. Nevertheless, CMS concluded that who was currently on staff as of the August 1999 survey was not relevant to this deficiency since the deficiency was established by a record review of the facility's 1998 in-service training records.

Crestview's position is effectively a repetition of its earlier arguments in regard to FFCLs A.2 and A.3. that it should not be held liable for this deficiency because it inherited the deficiency from the prior owner. As we did earlier, we reject this argument as contradictory to the requirements of 42 C.F.R.� 489.18. Crestview was responsible for the inherited conditions of the facility, including the in-service education level of its staff of nurse aides as represented by the 1998 in-service training records. A recent change of ownership does not make the residents of the facility any less vulnerable when the new management is unable to establish that the nurse aides at the facility have the requisite in-service training. Moreover, we agree with CMS that there is nothing in any declaration or exhibit submitted by Crestview below that establishes or even purports to establish that every nurse aide at the facility at the time of the survey had been newly hired and had not been among the nurse aides included in the 1998 in-service training records considered by the surveyors.⁽⁵⁾

Accordingly, we conclude that Crestview failed to raise a genuine factual dispute concerning this deficiency and we therefore affirm and adopt FFCL A.7.

B. The amount of the CMP . . . $400 per day, is reasonable.

Relying on the Appellate Panel's decision in CarePlex (DAB No. 1683), the ALJ focused her inquiry on whether the evidence supported a finding that the CMP was at a level reasonably related to an effort to produce corrective action by Crestview given the type of, and in light of the other, factors involved. The ALJ noted that Crestview's sole argument before her was that the CMP was unreasonable based on its financial condition. The ALJ determined that-

Petitioner limits its arguments to the facility's financial condition, one of the factors set forth in 42 C.F.R. � 488.438(f). However, evidence of the facility's financial condition are not appropriately before me because Petitioner neither timely raised the issue, nor timely presented its evidence relevant to the issue.

If a facility contends that its financial condition or some other factor makes a CMP unreasonable, the facility must raise that contention on a timely basis before any question would arise as to CMS's responsibility for producing evidence as to that factor. Community Nursing Home, DAB No. 1807 at 22, et seq.; Emerald Oaks, DAB No. 1800 (2001). Where either party fails to take advantage of its opportunity to submit evidence of a facility's financial condition, that opportunity is waived. Community Nursing Home, DAB No. 1807 at 15-16.

ALJ Decision at 34 (emphasis in original).

Relying on the program regulation setting out factors to be considered in assessing the reasonableness of a CMP, 42 C.F.R.� 488.438(f), the ALJ found that the facility had a history of failing to prevent the formation, or promote the healing, of pressure sores. In a 1998 review of this facility, CMS had found deficiencies in this area resulting in actual harm. The ALJ determined that the current deficiencies were significant, directly affecting resident comfort and safety. Given these factors and the facility's history, the ALJ determined that the CMP was reasonable. ALJ Decision at 34-36.

Crestview asserted that this FFCL "is not only in error, it is disingenuous, contemptuous and smacks of bias." Crestview noted that its Request for Hearing disagreed with the CMP. Crestview argued that CMS itself raised the question of the facility's financial condition in its pre-hearing brief as well as its motion for summary judgment. Thus, Crestview maintained, it was required (by Rule 56 of the Federal Rules of Civil Procedure) to respond to this argument. Crestview argued that the ALJ "had no problem" accepting CMS's declarations, offered for the first time in its pre-hearing brief and Motion for Summary Judgment. Crestview argued that the ALJ's refusal to accept its evidence illustrated her bias. Crestview concluded its argument with an analysis of the evidence it had proffered to the ALJ in an attempt to demonstrate that it was incapable of paying the CMP. Crestview Br. at 23-25.

As noted above, the ALJ concluded that Crestview had not timely raised specific issues affecting the reasonableness of the CMP, such as the facility's financial condition. Although Crestview stated in its notice of appeal that it disagreed with the CMP, the ALJ did not consider this general challenge sufficient to raise the financial condition issue. The ALJ concluded that Crestview was untimely in first raising the issue in its brief, which was submitted almost two years after filing its hearing request and five months after filing its readiness report. The ALJ further concluded that even if the issue had been timely raised, Crestview failed to timely proffer any evidence in support of the issue. The ALJ noted that on September 21, 2001, Crestview moved to amend and supplement its witness list. The ALJ denied that motion in a ruling dated October 3, 2001. In her ruling, the ALJ concluded that Crestview failed to show good cause for supplementing its witness list. The ALJ had stated in the September 21 Summary and Order that "No additional exhibits or witnesses will be accepted absent a showing of good cause." See September 21, 2001 Summary of Results of Pre-hearing Conference and Order to Submit Briefing. In her decision, the ALJ noted that even Crestview's motion to supplement did not list the sole witness Crestview ultimately proposed to have testify on this issue, nor include the sole financial condition document. The ALJ also relied on the Procedures for the Civil Remedies Division which set out the process for the exchange of witnesses and documents and which require a demonstration of extraordinary circumstances when a party fails to comply with pre-hearing procedures. The ALJ then concluded that Crestview's proffer of evidence and testimony on financial condition was untimely because Crestview had not even requested leave to make the proffer after the deadline had passed, much less made a showing of good cause. ALJ Decision at 34-36.

On appeal, Crestview did not demonstrate that the ALJ abused her discretion in concluding that it had not timely raised an issue concerning financial condition or that it had not timely proffered evidence in support of the issue. Crestview's general disagreement with the CMP in its request for hearing was not sufficient to raise this issue, nor was the issue raised in Crestview's readiness report filed over a year and a half after the notice of appeal. Moreover, Crestview failed to demonstrate that the procedures set by the ALJ for the parties to identify factual disputes and to proffer exhibits and witness testimony were in any way unclear or prejudicial to Crestview. Although the ALJ noted in her decision that Crestview had failed to make a showing of good cause or extraordinary circumstances for its failure to timely proffer evidence on this issue, Crestview did not argue before us that it had good cause or that extraordinary circumstances existed. Finally, the ALJ concluded that any argument or evidence submitted by CMS addressing Crestview's financial condition is irrelevant, as the issue was never "properly raised". The ALJ considered the record "silent" as to Crestview's financial condition and struck CMS's documents and declarations responding to Crestview's assertions regarding its financial condition. In Community Nursing Home, the appellate panel discussed at length the issues surrounding the consideration of a facility's financial condition and affirmed an ALJ's refusal to admit untimely evidence of a facility's financial condition under circumstances similar to those raised here.

Accordingly, we affirm and adopt FFCL B.

Conclusion

Based on the preceding analysis, we affirm the ALJ Decision in its entirety.

Cecilia Sparks Ford

M. Terry Johnson

Donald F. Garrett
Presiding Board Member

1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001). We use "CMS" in this decision unless we are quoting documents that refer to HCFA.

2. This case was assigned to Judge Hughes on December 6, 2000. Judge Hughes was the third ALJ assigned to this case.

3. A repair man arrived at Crestview later that day and the generator was eventually started. ALJ Decision at 13.

4. The surveyor made this observation about the dirty heel protectors having been applied directly against open pressure sores in the company of a nurse, who was "upset" at the situation. According to the surveyor, the nurse then cleaned and bandaged the sores, but reapplied the dirty protectors over the bandages. The ALJ noted that Crestview presented no credible argument to counter CMS's argument on the dangers of re-application of the dirty protectors to bandaged sores. However, the ALJ did not base her findings on this observation, conceding that had this issue been raised at a hearing Crestview might have been able to undermine the surveyor's observation on cross-examination. ALJ Decision at 27-28.

5. In its reply brief before us, Crestview also attempted to rely on one of CMS's exhibits below, "Exhibit B" to the CMS Motion for Summary Judgment. This exhibit, however, had been stricken from the record by the ALJ since it had been submitted in response to an issue which the ALJ concluded had not been properly raised by Crestview. Later in this decision, we conclude that the ALJ did not abuse her discretion in finding that Crestview had not properly raised this issue. Thus, the ALJ's ruling to strike the exhibit was correct. Even if that exhibit could be admitted into the record, however, we can find nothing in the document that substantiates Crestview's position that every one of its nurse aides had been newly hired.