SUBJECT: Odd Fellow and Rebekah Health Care Facility,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Odd Fellow and Rebekah Health Care Facility (Petitioner) appealed the February 19, 2002 decision of Administrative Law Judge (ALJ) Richard J. Smith. Odd Fellow and Rebekah Health Care Facility, DAB CR873 (2002) (ALJ Decision). The ALJ Decision sustained the determination by the Centers for Medicare & Medicaid Services (CMS)⁽¹⁾, based on a survey conducted on May 20 and 21, 1999, that Petitioner was not in substantial compliance with federal participation requirements for Medicare and Medicaid and that Petitioner's lack of compliance constituted immediate jeopardy and substandard care.

Petitioner appealed the ALJ Decision. Petitioner argued that the ALJ had made findings of facts which were not supported by substantial evidence in the record and conclusions of law which were erroneous.

As explained in detail below, we uphold the ALJ's determination that Petitioner was not in substantial compliance with federal participation requirements as to two of the four requirements at issue. We also uphold the ALJ's determination that this noncompliance constituted immediate jeopardy and substandard care. We reverse the ALJ's determination as to two of the participation requirements. Consequently, we uphold the remedies imposed by CMS for this noncompliance: a Directed Plan of Correction and the loss of approval for Petitioner's Nurse Aide Training and Certification Evaluation Program (NATCEP).

Factual and procedural background

The ALJ Decision contains a full discussion of the undisputed background facts, which we summarize here. ALJ Decision at 2-5. Petitioner is a long-term care facility in New York. In May of 1999, Petitioner was engaged in an extensive renovation of its physical plant. On May 18, in the course of that renovation, a subcontractor cut a hole in the rear corner of Room 67, an unoccupied room on the first floor of the facility. The hole measured approximately 2 � by 5 feet. The door to Room 67 had been fitted with a lock and the keys to the lock were held by Petitioner's maintenance staff and the primary contractor (Construction Manager.) In front of the door to Room 67, there was a plastic particle barrier which hung from the ceiling and was duct taped to the walls. The door had a sign which read "DANGER! BIG HOLE IN FLOOR." There was yellow construction warning tape across the door and three strips of yellow construction warning tape in front of the hole.

At 10:00 a.m. on May 19, the Construction Manager unlocked the door to Room 67 for a plumber who worked there until approximately 3:05 p.m. When he left for the day, the plumber closed the door. At approximately 3:12 p.m. an elderly resident (Resident 1) wheeled himself and his wheelchair past the particle barrier and caution tape and into the hole. Resident 1 fell to the basement below. Later that day, Resident 1 died from the injuries sustained in that fall.

On May 20 - 21, 1999, the New York Department of Health (NYDOH) conducted a survey at Petitioner's facility. By letter dated May 25, 1999, Petitioner was advised that it had been cited for immediate jeopardy deficiencies and that NYDOH was imposing a Directed Plan of Correction, effective immediately. CMS Ex. 21. The letter further indicated that state monitoring had been imposed on May 21, 1999 and that NYDOH had recommended termination of Petitioner's participation in Medicare and Medicaid unless all deficiencies related to immediate jeopardy had been corrected before June 11, 1999. By letter date June 7, 1999, NYDOH notified Petitioner that the approval of its Nurse Aide Training Program was being rescinded. CMS Ex. 25. Petitioner filed a request for a hearing before an ALJ to challenge CMS's deficiency and immediate jeopardy findings.⁽²⁾

Before the ALJ, the parties agreed that this case would be decided on written submissions in lieu of an in-person hearing and accordingly filed briefs. Both parties submitted exhibits. Petitioner's exhibits consist of Petitioner Exhibits 1 - 68 and Petitioner Supplemental Exhibit 60. CMS's exhibits consist of CMS Exhibits 1 - 41. Additionally, the parties submitted a Stipulation of Facts (SOF). No objections were made to any of the exhibits and all submissions were received into evidence.

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 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), at 25 (D.N.J. May 13, 1999).

A party dissatisfied with an ALJ decision or dismissal may file a written request for review by the Departmental Appeals Board. 42 C.F.R. � 498.82(a). The request must "specify the issues, the findings of fact or conclusions of law with which the party disagrees, and the basis for contending that the findings and conclusions are incorrect." 42 C.F.R. � 498.82(b). On review, the Board may remand to the ALJ, or may modify, affirm, or reverse the ALJ's decision. 42 C.F.R. � 498.88. The role of appellate review is not to substitute our evaluation of the evidence for that of the ALJ, but 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. 1785 (2000); Beverly Health and Rehabilitation - Spring Hill, DAB No. 1696, at 40 (1999).

The standard of review on a disputed factual issue is whether the ALJ decision is supported by substantial evidence in the record. Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs; see also Hillman, DAB No. 1611, at 6; Fairview Nursing Plaza, Inc., DAB No. 1715, at 2 (2000); South Valley Health Care Center, DAB No. 1691 (1999), aff'd South Valley Health Care Center v. HCFA, 223 F.3d 1221 (10^th Cir. 2000). The standard of review on a disputed issue of law is whether the ALJ decision is erroneous. Id. The bases for modifying, reversing or remanding an ALJ decision include the following: a finding of material fact necessary to the outcome of the decision is not supported by substantial evidence; a legal conclusion necessary to the outcome of the decision is erroneous; the decision is contrary to law or applicable regulations; or a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations) was committed.

Issues on appeal

Petitioner challenged six of the ALJ's findings of fact and conclusions of law (FFCLs). The challenged FFCLs are the following:

1. Petitioner failed to ensure that the resident environment remained as free as possible of accident hazards. 42 C.F.R. � 483.25(h)(1).

2. Petitioner failed to ensure adequate supervision to prevent accidents. 42 C.F.R. � 483.25(h)(2).

3. I find it unnecessary to take further evidence on whether Petitioner failed to provide assistance devices to prevent accidents under 42 C.F.R. � 483.25(h)(2).

4. The deficiencies under 42 C.F.R. � 483.25(h)(1) and (2) constitute immediate jeopardy and substandard quality of care.

7. Petitioner failed to administer its facility in a manner enabling it to use its resources effectively and efficiently to attain or maintain the highest practicable physical, mental and pyschosocial well-being of each resident. 42 C.F.R. � 483.75.

8. Petitioner's governing body did not implement policies regarding the effective management and operation of the facility. 42 C.F.R. � 483.75(d)(1).

The unchallenged FFCLs are hereby affirmed. They provided as follows:

5. Petitioner failed to provide adequate outside ventilation. 42 C.F.R. � 483.70(h)(2).

6. Petitioner was not in compliance with the Life Safety Code of the National Fire Protection Association. 42 C.F.R. � 483.70(a).

Both of these deficiencies had to do with conditions created by the renovation project.

1. Whether Petitioner failed to ensure that the resident environment remained as free as possible of accident hazards. 42 C.F.R. � 483.25(h)(1).

Petitioner challenged the ALJ's conclusion that Petitioner violated 42 C.F.R. � 483.25(h)(1). That regulation provides that a "facility must ensure that . . . [t]he resident environment remains as free of accident hazards as is possible." Petitioner argued that the ALJ's conclusion is erroneous because (1) the ALJ reached this conclusion by applying a standard of strict liability rather than considering whether the facility had done everything it could to avoid foreseeable accidents, and (2) at the time of the accident, Petitioner was in compliance with an accepted Plan of Care (POC) concerning its construction activities. Below we explain why we reject both these arguments.

First, Petitioner asserted that the "[d]ecision incorrectly applies a standard of strict liability for all accidents which may arise during renovation projects in active patient care areas of a health care facility." P. Br. at 2-3. Petitioner argued that "the proper standard of review is to focus on whether the provider developed and implemented adequate procedures to ensure that foreseeable hazards would be properly addressed." Id. at 3.

The Board has repeatedly recognized that section 483.25(h) does not impose a standard of strict liability on facilities for all accidents. Asbury Care Center at Johnson City, DAB No. 1815 (2002); Price Hill Nursing Home, DAB No. 1781 (2001); Koester Pavilion, DAB No. 1750 (2000); and Woodstock Care Center, DAB No. 1726 (2000). While section 483.25(h) "does place a high expectation on the facility to achieve results, . . . it does not "amount to strict liability or require absolute success in an obviously difficult task." Woodstock at 27. In order to evaluate a facility's compliance with this requirement, the ALJ must engage in "an examination of whether the facility had done all it could to prevent foreseeable accidents" (Asbury, DAB No. 1815, at 12) or whether the facility did "everything in its power to prevent accidents." Id.; Koester, DAB No. 1750, at 25-26.

Contrary to Petitioner's allegation, the ALJ did not apply a standard of strict liability. The ALJ looked at the undisputed fact that at 3:05 p.m. on May 19, 1999, there was a large hole in the floor of a room which fronted a corridor housing mobile judgment-impaired nursing home residents. While the door to the room was shut and shielded by a plastic dust barrier, a warning sign was on the door, and caution tape was across the door and the hole, the door was not locked and the hole was not covered by plywood. The ALJ reasonably concluded that the presence of an accessible large hole in a floor of a facility housing mobile judgment-impaired residents constituted a foreseeable accident hazard. The ALJ also looked at the facts concerning whether Petitioner had done everything it could to prevent such a hazard and found it had not.

Petitioner argued that the ALJ erred in this conclusion and asserted that it had done all it could to ensure a safe environment generally and to prevent access to this hole specifically. In support of this assertion, Petitioner represented that (1) it "hired an experienced reputable construction manager with prior experience in 'active renovation projects'"; (2) "safety meetings were regularly held and attended"; (3) "floor openings and holes were specifically addressed in the contracts and safety meetings and OSHA regulations"; (4) "access to Room 67 [the room with the hole] was physically restricted"; (5) "the plan of correction accepted just weeks prior to the accident did not recommend any further barriers to access the room than those in place on the date of the incident"; and (6) "inspection and safety rounds were made daily." P. Br. at 9-11.

The ALJ reasonably concluded that these preventive strategies were either inadequate or ultimately not followed and thereby failed to prevent the presence of a large accessible hole which constituted an obvious accident hazard.

Clearly, the first failures in the system Petitioner adopted to prevent access to any hole involved the actions of the contractor and subcontractors. It is undisputed that they failed to abide by both contractual provisions and Occupational Safety and Health Agency (OSHA) standards regarding this hole. Petitioner's contract clearly called for any holes to be covered. SOF at � 47. OSHA regulations required personal restraints for affected workers, or covers or guard rail barriers to be installed over or around such holes. SOF at � 46. In this case, none of these protective measures were in place while the plumber worked in the room or when the plumber vacated the room on May 19, 1999.

Petitioner argued that, given the care it had taken in choosing the contractor, in structuring of contract safety provisions, in having regular meetings concerning safety, and in monitoring the progress of the construction, it should not be responsible for the contractors' failure to follow their contractual obligations. The ALJ rejected this position, writing that --

these [contractual] provisions cannot insulate Petitioner from complying with the Medicare and Medicaid regulations. The regulation cited requires that the facility "ensure" that the resident environment remain as free as possible of accidental hazards. This places an affirmative duty on the facility to ensure such an environment for its residents that cannot be contracted away to someone else.

ALJ Decision at 6.

We agree with the ALJ's conclusion. While section 438.25(h) does not impose strict liability for all accidents, it does impose a high burden on a facility to "ensure" the safety of its environment. In the context of construction hazards which are obvious and require no special expertise to recognize, such as large holes in the floor, Petitioner cannot rely on the presence of a contractual provision to shift the responsibility for ensuring restricted access to such holes to the contractors. This conclusion furthers the purpose of section 483.25(h)(1) of ensuring that residents of such facilities, who are often judgment-impaired, live in a safe environment. In contrast, allowing facilities to contractually shift the responsibility to prevent accident hazards which should also be obvious to the facility would subvert the regulation's purpose.

In the context of the renovation of a long-term care facility, such contractual provisions operate not to shift the responsibility for the safety of the environment to the contractors but to enable facilities to require contractors to perform pursuant to certain safety standards. Further, while Petitioner had a set of procedures to monitor the contractor's performance of the safety provisions of the contract, these procedures also broke down or were inadequate. Therefore, as the ALJ noted, the record shows that the accident resulted not just from the contractors' failure to abide by the contract but also from Petitioner's failure to follow its own procedures to ensure that the contractors abided by the contract.

For example, it was the practice of Petitioner to have two-week look ahead meetings "to keep the facility apprized of the progress of the construction." SOF at � 15. Additionally, Petitioner's Plan of Care (POC) accepted by the state survey agency provided that "THE FACILITY CONSTRUCTION WILL BE DONE ON A SCHEDULE AND REVIEWED WITH THE DIR. OR MAINT. & NURSING STAFF ON A DAILY BASIS BY THE SITE PROJECT SUPRV." Further, the POC provided that "THE DIR. OF MAINT. AND THE SITE SUPERVISOR SHALL MAKE ROUNDS ON A REGULAR BASIS TO ENSURE AREAS ARE SAFE AND SECURE." Petitioner's Administrator represented that "On a daily basis, [the Director of Maintenance] made rounds to ensure that there was no construction debris that would endanger residents." P. Ex. 66, at � 13. Therefore, the ALJ was correct in determining that under the procedures set up by Petitioner, the Director of Maintenance should have known a hole was to be cut and had been cut through the floor. Since he had the responsibility of determining that all areas were safe and secure, one would reasonably assume this would include looking at the hole. If he had, he would have known that the hole was uncovered and in violation of the contract.⁽³⁾

Additionally, as the ALJ pointed out, the contractual provision authorizing contractors to charge for covering any holes left by prior contractors shows that Petitioner must have been aware of the possibility of such a hazard. Therefore, determining whether the hole was covered was necessary to prevent accident hazards since the evidence also established that Petitioner's procedures did not provide for constant supervision or locking the door of Room 67. ALJ Decision at 10. The construction manager was to "lock the door at the end of the work day and to unlock the door at the start of the work day to allow access by tradesmen." Affidavit of Administrator at � 13, P. Ex. 6., SOF at � 14. The Director of Maintenance was to "check doors to ensure that they were locked on a daily basis after construction crew[s] would leave." Id. What is missing in Petitioner's procedures is any indication that the locking of doors or checking on the locking of doors was specifically related to a given worker's departure. In fact, the plumber who worked in Room 67 on May 19 stated that he did not have a key to the door and had no instructions to contact anyone to lock the door when he left. SOF at � 13. Petitioner offered no evidence contradicting this representation.⁽⁴⁾ Therefore, the ALJ reasonably concluded that, under Petitioner's established practices, the hole was unsupervised while the room was unlocked during certain times of the day. On May 19, the plumber left at 3:00 p.m., but as Petitioner pointed out, there was nothing in the record to establish the hour of "the end of the workday" and therefore when the construction manager would lock the door. Further, it was reasonable for the ALJ to assume that, since the plumber did not know he was not supposed to leave the room unlocked, he would not have sought help to lock it if he went to lunch or needed supplies from some other place on the site.

Therefore, in addition to finding that the actions of the contractors created an accident hazard, the ALJ reasonably concluded that Petitioner had not done everything in its power to prevent the accident hazard.

Petitioner also asserted that it was in compliance with a POC submitted in response to an April 1, 1999 survey which addressed construction hazards and which was accepted by state surveyors on May 7, 1999, two weeks prior to the accident. Petitioner argued that the ALJ erred in rejecting its position that its compliance with this POC established that it was in compliance with section 483.25(h).

The ALJ properly rejected this argument for three reasons. First, the ALJ found that the POC standards concerned a different hazard than that posed by large holes and therefore Petitioner could not rely on the POC to establish compliance with section 483.25(h)(1) as to the hole. ALJ Decision at 8.

Petitioner argued that ALJ erred in concluding that the POC addressed a different hazard. We reject Petitioner's argument for the following reasons. In the April 1, 1999 survey, the state survey agency cited the following conditions as not meeting section 483.25(h)(1):

Based on observation, the facility did not ensure that the residents' environment remained as free of accident hazards as possible. One (north unit) of three nursing units under construction had construction material laying in two resident rooms which house three residents. The area was not contained or monitored to prevent resident access. . . . At 9:25 a.m. on March 29, 1999, resident rooms 68 and 69 in the north wing were observed by two surveyors to have the doors open while on going construction was occurring. During this time, no staff or workers were present when a resident from room 68 walked to the door and stated, "can't I get into my room yet?" This room had two two foot by two foot ceiling tiles removed and was cluttered with construction material . . . . In room 69, there was also a heating unit and cover on the floor. These rooms contained four beds and were not available until after 3:00 p.m. This active construction area was neither contained nor monitored.

P. Ex. 48, at 23-24.

These passages support the ALJ's determination that, while the state surveyors were concerned about construction accident hazards, the hazards evident during the on-site visit concerned construction dust and construction material which was not contained or monitored. ALJ Decision at 8. As to this type of hazard, draping plastic and closing doors to work areas was regarded by the surveyors as sufficient. As the ALJ reasonably concluded, a large hole in the floor was the type of hazard which required additional measures and could not reasonably be regarded as encompassed by the provisions of the POC addressing unmonitored construction material or construction dust. Further, the POC was not static -- rather it provided that work was to be reviewed on a daily basis, that the Director of Maintenance would make rounds on a regular basis to ensure that areas were "safe and secure," and that the POC procedures would be continually reviewed to maintain a safe environment. Therefore, the POC clearly contemplated that Petitioner would make adjustments to address future or different hazards.

Second, the ALJ correctly determined that the POC was not completely followed. For example, the POC required that facility construction "be reviewed with the Director of Maintenance and nursing staff on a daily basis by the site Project Supervisor . . . the Director of Maintenance and the Site Supervisor shall make rounds on a regular basis to ensure areas are safe and secure." P. Exs. 39, 48. The hole in question was cut over a period of two days, May 17 and 18.⁽⁵⁾ SOF at � 8. By May 18, there was an open 10 foot drop to the basement through the floor. It is reasonable to conclude that the POC requirement for the Director of Maintenance and Project Supervisor to make regular rounds to ensure that a construction area was safe should have resulted in discovery and correction of this uncovered hole prior to May 19, the day of the accident.

Third, the ALJ properly concluded that even if the hazard had been covered by the POC and Petitioner had complied with the POC, compliance with a POC does not necessarily constitute compliance with the federal regulations. William N. Barr Pavilion of Illinois Masonic Medical Center, DAB No. 1705, at 6 (1999).

For the preceding reasons, we uphold the ALJ's determination that Petitioner failed to substantially comply with section 483.25.(h)(1), and we accordingly affirm FFCL 1.

2. Whether Petitioner failed to ensure adequate supervision to prevent accidents. 42 C.F.R. � 483.25(h)(2).

Section 483.25(h)(2) provides that a "facility must ensure that . . . [e]ach resident receives adequate supervision and assistance devices to prevent accidents."

CMS found that Petitioner had been deficient under section 483.25(h)(2) as to Resident 1, as discussed above, and as to Resident 11. The ALJ upheld the deficiency finding as to Resident 1 but concluded that he did not need to determine whether Petitioner had been deficient in relation to Resident 11 since he had found it deficient as to Resident 1. FFCLs 2 and 3.

As explained below, we reverse the ALJ's deficiency finding as to Resident 1. As to Resident 11, we affirm the ALJ's determination that this issue does not need to be resolved.

In upholding the section 483.25(h)(2) deficiency as to Resident 1, the ALJ reasoned as follows.

Although Resident 1's care plan did not require one on one supervision, in light of the hazardous conditions, closer supervision of all residents, including the resident in question, was required. Clearly, in light of the hazardous conditions, Resident 1 and the other mobile residents on that unit were not provided sufficient supervision adequate to prevent an accident.

ALJ Decision at 12.

We reverse this finding for the following reason. We agree that a facility should provide closer supervision for residents when the facility is experiencing a hazardous condition. However, here, the hazardous condition was the result of Petitioner's failure under section 483.25(h)(1) to prevent the development of the hazardous condition in the first place. In other words, it is because Petitioner was in substantial noncompliance with section 438.25(h)(1) that the nursing staff was charged with responsibility for preventing residents from falling in a construction hole that should never have been accessible to residents and about which the nursing staff was unaware. Additionally, Resident 1's plan of care did not call for one on one supervision nor is there any indication that the nursing staff was inattentive to Resident 1.

As to Resident 11, the surveyors set forth the following basis for a deficiency finding under section 483.25(h)(2):

Review of the medical record and care plan of Resident # 11 revealed the resident has a diagnosis of senile dementia, osteoarthritis, glaucoma and near syncope. The resident has a history of falls, two of which resulted in fractures to the left ankle and right clavicle. The resident presently is nonambulatory related to these injuries. Review of medical records revealed that the resident was independent in ambulation and transfer prior to these injuries. Review of the resident's care plan revealed the resident was identified to be at risk for falls and injuries. However, approaches to prevent an injury/fall in the care plan were not changed after the resident sustained the first fracture. Direct observation on May 20, 1999 between 12:00 p.m. and 4:00 p.m. also showed dycem⁽⁶⁾ was not on the floor near resident's bed as directed by her care plan.

In the decision, the ALJ ruled that, since he had determined Petitioner was not in substantial compliance with section 438.25(h)(2) in regards to Resident 1, it was unnecessary to take further evidence on whether Petitioner failed to comply with that standard in its care of Resident 11. On appeal Petitioner asserted that CMS had failed to establish a prima facie case as to Resident 11, citing the ALJ's statement that "neither party provided me with evidence as to Resident 11's condition on the day of the survey." ALJ Decision 12.

We uphold the ALJ's decision not to address this deficiency because this deficiency allegation is not material to any outcome of this case. Rather, our finding below that the deficiency as to Resident 1 constituted immediate jeopardy is a sufficient basis to uphold CMS's imposition of a Directed Plan of Correction and loss of NATCEP.

For the preceding reasons we reverse FFCL 2 and affirm FFCL 3.

3. Whether the deficiencies under 42 C.F.R. � 483.25(h)(1) and (2) constitute immediate jeopardy and substandard quality of care.

The ALJ found that the deficiencies under 42 C.F.R. � 483.25(h)(1) and (2) constituted immediate jeopardy and substandard quality of care. We uphold the ALJ's finding of immediate jeopardy as to section 483.25(h)(1).

The regulations define "immediate jeopardy" as "a situation in which the provider's noncompliance with one or more requirements of participation has caused or is likely to cause serious injury, harm, impairment, or death to a resident." 42 C.F.R. � 488.301. The noncompliance at issue involves the presence of an accident hazard consisting of a large accessible hole with a drop to the floor below. As the ALJ found, such a hazard was plainly likely to cause serious injury or worse and therefore constituted immediate jeopardy. Because the ALJ found there was immediate jeopardy, he necessarily concluded that there was also substandard quality of care which is defined as "one or more deficiencies under . . . � 483.25 . . . which constitute . . . immediate jeopardy to resident health or safety." 42 C.F.R. � 488.301.

On appeal, Petitioner argued that the circumstances presented by this case did not meet the definition of immediate jeopardy. Petitioner argued:

Immediate jeopardy is defined "as a situation in which the provider's noncompliance with one or more requirements of participation has caused, or is likely to cause, serious injury . . . ." While the latter clause of the definition is met - (actual harm to resident), the former is not: namely harm which is caused by the provider.

P. Br. at 20 (emphasis in original.) Petitioner took the position that the harm was the result of the contractors' actions, not its policies or actions. Therefore, Petitioner reasoned that it did not cause the harm and the ALJ should not have upheld CMS's finding of immediate jeopardy.

We reject this argument. As explained in section 1, Petitioner failed to comply with 45 C.F.R. � 483.25(h)(1), and this noncompliance caused and was likely to cause serious injury, harm, impairment, or death to a resident. A finding of noncompliance under section 483.25 necessarily includes a finding that the noncompliance is the responsibility of or "caused" by the provider. Even if the condition constituting the noncompliance (such as an accident hazard) is also caused by a third party, it remains the noncompliance of the provider for purposes of Part 483. Therefore, we uphold the ALJ's finding in FFCL 4 that Petitioner's noncompliance with section 483.25(h)(1) constituted immediate jeopardy. We modify FFCL 4 to delete any reference to a deficiency under section 483.25(h)(2) in view of our conclusion that the ALJ erred in finding that Petitioner violated section 483.25(h)(2).

4. Whether Petitioner failed to administer its facility in a manner enabling it to use its resources effectively and efficiently to attain or maintain the highest practicable physical, mental and pyschosocial well-being of each resident in violation of 42 C.F.R. � 483.75. (FFCL 7).

The ALJ upheld CMS's determination that Petitioner was not in substantial compliance with 42 C.F.R. � 483.75. The introductory paragraph of section 483.75 provides:

� 483.75 Administration. A facility must be administered in a manner that enables it to use resources effectively and efficiently to attain or maintain the highest practicable physical, mental and psychosocial well-being of each resident.

The ALJ sustained this deficiency on the grounds that the May 1999 survey identified a series of deficiencies associated with the renovation and that two of these deficiencies resulted in the death of one resident and put other residents in immediate jeopardy, thereby affecting Petitioner's ability to provide the highest level of well-being for each resident. ALJ Decision at 7.

We conclude that the ALJ's finding here was supported by substantial evidence that Petitioner was not in substantial compliance with section 475.75. This deficiency finding was derivative, i.e., was based on the surveyors' identification of other deficient practices related to Petitioner's management of its construction project. We have previously ruled that the existence of independent deficiencies may constitute a prima facie case that a facility has not been administered efficiently or effectively as required by section 483.75. Asbury Center at Johnson City, DAB No. 1815 (2002). We wrote:

As the ALJ noted, the administrative deficiency is a derivative deficiency based on findings of other deficiencies. We agree with the ALJ that, where a facility has been shown to be so out of compliance with program requirements that its residents have been placed in immediate jeopardy, the facility was not administered in a manner that used its resources effectively to attain the highest practicable physical, mental, and psychosocial well-being of each resident.

Id. at 11.

In determining that Petitioner was out of compliance with the administration requirement, the ALJ relied on his findings that Petitioner had failed to ensure that the resident environment remained as free of accident hazards as is possible by allowing the presence of a large accessible hole in the floor. He also relied on the fact that Petitioner did not contest its citation for failing to provide adequate outside ventilation (42 C.F.R. � 483.70(h)(2)) and failing to comply with the Life Safety Code of (LSC) the National Fire Protection Association. (42 C.F.R. � 483.70(a)). We have found above that there is substantial evidence in the record supporting the ALJ's findings, and it therefore follows that the ALJ's conclusion that Petitioner was out of compliance with the administration requirement is also supported by substantial evidence. While the ALJ clearly considered the evidence concerning Petitioner's efforts to prevent accident hazards and other violations of participation requirements (ALJ Decision at 6-7), these efforts "do not overcome the fact that the facility's administration failed to prevent a deficiency of this scope." Id. Thus, we conclude this finding was supported by substantial evidence.

5. Whether Petitioner's governing body did not implement policies regarding the effective management and operation of the facility in violation of 42 C.F.R. � 483.75(d)(1). (FFCL 8).

The ALJ upheld CMS's determination that Petitioner was not in substantial compliance with 42 C.F.R. � 483.75(d)(1). Subsection 483.75(d)(1) provides:

(d) Governing Body. (1) The facility must have a governing body, or designated persons functioning as a governing body, that is legally responsible for establishing and implementing policies regarding the management and operation of the facility.

The ALJ sustained these deficiencies on the grounds that governing body did not implement its own POC, did not ensure that its residents were in an environment as free of accidents as possible, and did not ensure that the requirements of the LSC were implemented. ALJ Decision at 15.

We conclude that the ALJ erred in finding that Petitioner was not in substantial compliance with section 483.75(d). The ALJ found that "Petitioner's governing body did not implement its policies regarding effective management and operation of the facility." Id. (emphasis added). However, section 483.75(d), on its face, is directed at the existence of a governing body, not the body's performance. Therefore, absent any evidence indicating that Petitioner did not have such a governing body, it was error for the ALJ to sustain this deficiency.

Conclusion

For the reasons explained above, we affirm FFCL 1, (deficiency under section 483.25(h)(1)); we affirm FFCL 3 (additional evidence at to Resident 11); we affirm FFCLs 5 and 6 to which Petitioner did not except; and we affirm FFCL 7 (deficiency under section 483.75). We reverse FFCL 2 (deficiency under section 483.25(h)(2)); and we reverse FFCL 8 (deficiency under section 483.75(d)(1)). We modify FFCL 4 as follows:

4. The deficiency under 42 C.F.R. � 483.25(h)(1) constituted immediate jeopardy and substandard quality of care.

M. Terry Johnson

Donald F. Garrett

Marc R. Hillson
Presiding Board Member

1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001).

2. Section 498.3(b)(13) provides that a Skilled Nursing Facility or a Nursing Facility may seek review of findings of noncompliance which result in the imposition of a remedy specified in section 488.406, except the remedy of State monitoring. Section 488.406(a)(7) identifies a directed plan of correction as a remedy subject to review. On May 25, 1999, the date of the determination of substandard care, the loss of NATCEP was not an appealable remedy. 42 C.F.R. � 498.3(d)(10)(iii) (1998). As the ALJ noted, effective July 23, 1999, the regulations were revised and the loss of NATCEP became an appealable sanction, but the new regulations had no retroactive effect. Lakewood Plaza Nursing Home, DAB No. 1767 (2001); 64 Fed. Reg. 39934, 39936 (1999). However, in this case, CMS took the position that the finding of substandard care and resulting loss of NATCEP could be reviewed because Petitioner was also challenging the imposition of an appealable remedy, i.e., the directed plan of correction. CMS letter date January 30, 2002. CMS relied on the preamble to the rule amendment authorizing appeal of the loss of NATCEP which stated that "[f]acilities have had the ability to challenge the loss of their nurse aide training programs only if they were challenging the imposition of a remedy that was appealable." Id. at 39935.

By letter dated July 2, 1999, CMS notified Petitioner that a denial of payment for new admissions would be imposed effective July 2, 1999. However, this remedy was never actually imposed, although it was never officially rescinded. ALJ Decision at n. 1.

3. Petitioner asserted there was no evidence to support the ALJ's statement that the Director of Maintenance had been informed that a hole was to be cut in the floor of Room 67. P. Br. at 6. However, whether or not he was told is not dispositive of this issue. As we discuss above, the evidence is clear that Petitioner's procedures called for the Director of Maintenance to be told and called for the Director of Maintenance to inspect what had been done. Therefore, if he did not know about the hole, it reflects a failure upon the part of the Construction Manager and the Director of Maintenance.

4. On appeal, Petitioner pointed to its agenda for in-service training which instructed workers to "secure and clean your work area each day of anything that would possibly be unsafe to any resident." P. Br. at 5. However, the attendance sheets for that training do not reflect that this particular plumber attended. P. Ex. 41, at 5. Further, "secure" and "lock" can be construed differently. The plumber might have regarded closing the door and the use of the plastic barriers and caution tape as securing his area.

5. Petitioner took issue with the statement in the ALJ Decision that the hole was left uncovered for two days. The ALJ relied on the finding OSHA made to that effect. CMS Ex. 39, at 9. Moreover, the Stipulation of Facts states that a subcontractor removed the concrete from the floor on May 17 and then removed the "metal deck from the floor penetrating Room 67" on May 18. SOF at � 8. Therefore, the hole was left uncovered for some part of two days. However, the number of days is not a determinative factor. The point is that the hole was left uncovered and accessible and that created a foreseeable accident hazard.

6. A dycem is a rubber mat which grips the floor and helps to prevent falls.