SUBJECT: Regency Gardens Nursing Center,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

On August 23, 2002, the Centers for Medicare & Medicaid Services (CMS) filed a request for review of the June 20, 2002 decision of Administrative Law Judge (ALJ) Keith W. Sickendick granting summary judgment to Regency Gardens Nursing Center (Regency) on the grounds that CMS failed to establish a basis to impose a proposed civil monetary penalty (CMP) of $97,000. Regency Gardens Nursing Center, DAB CR921 (2002) (ALJ Decision). A complaint survey conducted April 7, 1999 at Regency, in the wake of the March 27, 1999, death of a patient from complications following improper replacement of a feeding tube, resulted in a finding of immediate jeopardy. A revisit on April 20, 1999 found that Regency had achieved substantial compliance as of that date. CMS imposed a CMP of $7,500 per day from April 7, 1999 through April 19, 1999. The ALJ found that CMS failed to show that Regency was in violation of any participation requirement during the days for which the CMP was imposed, whatever deficiencies may have existed on dates prior to April 7, 1999. Two fundamentally flawed premises underlay the ALJ's analysis -

1) that CMS is required to prove new evidence of noncompliance afresh for each day on which a remedy is applied rather than the facility being required to allege and show that it has returned to substantial compliance before CMS is obliged to lift a remedy once properly imposed; and

2) that the CMS notice imposing a remedy, or the Statement of Deficiencies (SOD) incorporated into that notice, must not only provide notice of what deficiencies were found, but also of why the survey found the facility's corrective actions to be inadequate, even if no allegation of compliance was even made until after the survey was completed.

We conclude that these premises are legally erroneous, that CMS did proffer evidence sufficient to make a prima facie case, and that there are genuine disputes of material fact. Accordingly, we reverse and remand for further proceedings consistent with this decision.

Background

The parties submitted a joint stipulation of undisputed facts, on which the ALJ based his findings of fact, which read as follows:

1. Petitioner, a long-term care facility, is authorized to participate in Medicare, Medicaid, and other federal health care programs pursuant to a participation agreement with the Secretary under the Act.

2. On March 27, 1999, at approximately 10:45 PM, a facility charge nurse found that Resident 1 had pulled out a recently placed percutaneous endoscopic gastronomy (PEG) tube (a feeding tube surgically passed through the abdominal wall and abdominal cavity to the stomach to permit feeding).

3. The charge nurse, having found the PEG tube removed, inserted a different tube and continued feeding Resident 1 despite some complaint of pain by the resident.

4. Early the next morning, March 28, 1999, leakage was noted around the feeding tube and Resident 1's condition was noted to have deteriorated so she was transported to a hospital.

5. Resident 1 died on March 28, 1999, at the hospital due to complications related to the feeding tube.

6. The charge nurse who inserted the feeding tube on March 27 violated Petitioner's policies and procedures by failing to obtain a physician's approval before inserting the tube.

7. Petitioner's policies regarding PEG tubes and other feeding tubes are consistent with standards of practice. Declaration of Ellen Bennet, at 7, � 20.

8. The charge nurse who inserted the tube was counseled on March 29, 1999 and she continued to work at the facility until April 4, 1999, but resigned at Petitioner's request on April 6, 1999.

9. Petitioner provided in-service training for all nursing staff on March 29, 1999, related to "G tube placement and residual." Joint Stip., para. 17; Declaration of Ellen Bennet, at 14, � 47.

10. Petitioner reported the incident to the New Jersey Board of Nursing (Joint Stip., para. 19) and the NJSDHSS on April 6, 1999 (Declaration of Ellen Bennet, at 2, � 7).

11. On April 7, 1999, the NJSDHSS conducted a complaint survey of Petitioner as a result of Petitioner's April 6, 1999 report.

12. The NJSDHSS cited Petitioner for four regulatory violations in its official report of the April 7, 1999 complaint survey. Statement of Deficiencies (SOD), HCFA Form 2567, dated April 7, 1999, attached to P. Brief.

13. The SOD cited the following violations related to the treatment and death of Resident 1:

a. Violation of 42 C.F.R. � 483.13(c)(1)(ii) (F Tag 225) at Scope and Severity (SS) Level J or immediate jeopardy, because Petitioner did not immediately fully investigate the incident of March 27, 1999; the nurse who inserted the tube continued to work until April 4, 1999, and she had been warned in 1997 for failure to report and investigate; and Petitioner did not report to NJSDHSS until April 6, 1999, which is not within the five-day period specified by the regulations.
b. Violation of 42 C.F.R. � 483.20(d)(3)(i) (F Tag 281) at SS Level J, because the charge nurse who inserted the tube on March 27, 1999, failed to notify the physician, a violation of facility policy.
c. Violation of 42 C.F.R. � 483.25 (F Tag 309) at SS Level J, because the nursing staff failed to address the needs of Resident 1 on March 27, 1999 and March 28, 1999, as indicated by an absence of written nursing assessments for Resident 1 for the events of March 27, 1999 and March 28, 1999.
d. Violation of 42 C.F.R. � 483.25(g)(2) (F Tag 322) at SS Level J, because the nurse who inserted the tube in Resident 1 on March 27, 1999, failed to provide the care and service necessary to prevent complications associated with tube-fed residents and the facility did not arrange emergency transport of Resident 1 on March 28, 1999.

14. The NJSDHSS conducted a revisit of Petitioner on April 20, 1999 and found the facility in substantial compliance as of that date.

15. CMS notified Petitioner in a letter dated June 24, 1999 that it was imposing a CMP in the amount of $7,500 per day for the 13-day period beginning April 7, 1999 and ending April 19, 1999, a total of $97,500.

ALJ Decision at 3-5 (footnote omitted). The core conclusion which the ALJ drew was as follows: "Considering the undisputed facts, the facts alleged in the SOD [Statement of Deficiencies], and the facts alleged by CMS in its briefs and supporting declaration, in a light most favorable to CMS, there is no basis for the imposition of a CMP for the period April 7, 1999 through April 19, 1999 and, therefore, I do not sustain the CMP." Id. at 6.

Applicable Law

The regulatory requirements for long-term care facilities are set forth at 42 C.F.R. Part 483. ⁽¹⁾ As relevant here, section 483.13(c) requires that the facility "develop and implement written policies and procedures that prohibit mistreatment, neglect, and abuse of residents and misappropriation of resident property." All alleged violations of this standard must be "reported immediately to the administrator of the facility and to other officials in accordance with State law" and must be "thoroughly investigated" with the results reported within 5 working days of the incident and "appropriate corrective action" taken. Id.

The services provided by the facility must meet "professional standards of quality" in assessing the condition of its residents. 42 C.F.R. � 483.20(d)(3)(i).

Generally, section 483.25 requires that -

Each resident must receive and the facility must provide the necessary care and services to attain or maintain the highest practicable physical, mental, and psychosocial well-being, in accordance with the comprehensive assessment and plan of care.

Specifically, subsection 483.25(g)(2) requires the facility to ensure that any resident fed by tube receive appropriate treatment and services.

Compliance with these requirements is determined through the survey and certification process, set out at 42 C.F.R. Part 488, Subpart E. Surveys are generally conducted by a state survey agency under an agreement with CMS. Subpart F of Part 488 specifies the remedies that may be imposed by CMS based on a determination that a facility is not in substantial compliance with the requirements. The regulations define "substantial compliance" as "a level of compliance with the requirements of participation such that any identified deficiencies pose no greater risk to resident health or safety than the potential for causing minimal harm." 42 C.F.R. � 488.301.

Section 488.430(a) provides that CMS "may impose a civil money penalty for either the number of days a facility is not in substantial compliance with one or more participation requirements or for each instance that a facility is not in substantial compliance." For deficiencies that constitute immediate jeopardy, a CMP in the range of $3,050 - $10,000 per day of noncompliance may be imposed. 42 C.F.R. � 488.438(a)(1)(i). For deficiencies that do not constitute immediate jeopardy, but either caused actual harm or caused no actual harm but have the potential for more than minimal harm, a CMP in the range of $50 - $3,000 per day may be imposed. 42 C.F.R. � 488.438(a)(1)(ii). CMS may also impose a CMP ranging from $1,000 to $10,000 per instance. 42 C.F.R. � 488.438(a)(2).

"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, harm, impairment, or death to a resident.

42 C.F.R. � 488.301.

Standard of Review

The standard of review on a disputed issue of law is whether the ALJ decision is erroneous. The standard of review on a disputed factual issue is whether the ALJ decision is supported by substantial evidence in the record as a whole. Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs; see also South Valley Health Care Center, DAB No. 1691 (1999), aff'd South Valley Health Care Center v. HCFA, 223 F.3d 1221 (10th Cir. 2000); Lake Cook Terrace Center, DAB No. 1745, at 6 (2000).

Issues

The central issue before us on appeal is whether the ALJ correctly found that CMS failed to proffer evidence sufficient to establish a prima facie case that it had authority to impose the CMP on the dates in question. See CMS Reply Br. at 4-8. CMS argued that the ALJ ignored much of the evidence that it did proffer regarding the scope of the deficiency findings and the inadequacy of corrective measures taken. CMS Br. at 13-24. Finally, CMS argued that summary judgment should lie against Regency on the grounds that Regency failed to present evidence rebutting CMS's prima facie case.

1. The ALJ misconstrued the elements of the prima facie case that CMS was required to proffer to avoid summary disposition.

This case was decided on cross-motions for summary judgment so no hearing has been held. For purposes of summary judgment, Regency treated the factual findings on the SOD as undisputed, arguing that, even assuming they were true, CMS had failed to make a prima facie case of noncompliance from April 7 through April 20, 1999. The parties also stipulated as to some facts. The undisputed facts on which the ALJ relied in his decision include that on March 27, 1999, one of Regency's staff nurses inserted a different tube after Resident 1's feeding tube became dislodged without seeking guidance from a physician as required under Regency's own policy. ALJ Decision at 9. The resident died the next day due to complications with the feeding tube. Id. It is not disputed that the offending nurse continued to be employed at the facility until April 6, 1999, nor that Regency failed to provide notice of the events to the state survey agency until that date. Finally, it is not disputed that CMS found after a resurvey that Regency came back into compliance on April 20, 1999.

The difficulty for the ALJ in this matter arose from the fact that CMS did not impose a CMP during the period from March 27, 1999, through April 6, 1999, ⁽²⁾ but rather imposed a per-day CMP from April 7, 1999, through April 20, 1999. The ALJ Decision rested on the premise that whatever deficiencies might have existed prior to April 7, 1999, were essentially irrelevant to what CMS had to demonstrate to establish a prima facie case that it had authority to impose a CMP for the period April 7 to April 20, 1999. See ALJ Decision at 11-12. This concept is inconsistent with the regulatory scheme for nursing home enforcement and with longstanding Board precedent.

CMS pointed to a series of decisions by the Board, followed in numerous ALJ decisions, rejecting the idea that CMS must provide affirmative evidence of continuing noncompliance for each day that a remedy is in place. CMS Reply Br. at 6-7. For example, in a recent case, the Board quoted with approval from the ALJ Decision the following language:

[U]nder the regulatory scheme, any deficiency that has a potential for more than minimal harm is necessarily indicative of problems in the facility that need to be corrected. Lake City Extended Care Center, DAB No. 1658, at 14 (1998). Since I found that the incidents in question have the potential for more than minimal harm, I must also find that the facility was out of compliance "from the date of the completion of the survey in which this incident was cited until the date of the resurvey in which substantial compliance was established." Emphasis added; id. at 14 - 15. Substantial compliance means not only that the surveyors found no other incidents, but also that the facility has implemented a plan of correction designed to assure that no such incidents occur in the future. No findings that the facility violated the standard of care between these dates are required in order to find the facility out of substantial compliance, nor can evidence of other incidents in which the facility met the standard of care change the fact that it was out of substantial compliance.

Barn Hill Care Center, DAB No. 1848, at 12-13 (2002), quoting DAB CR902, at 21-22 (2002). This discussion correctly focuses on substantiation of the initial finding that the facility was not in substantial compliance and assessment of whether its correction efforts had resulted in reestablishing substantial compliance. On appeal, Barn Hill argued, as did Regency in this case, that "CMS must assert and prove that Barn Hill was noncompliant on the days for which it actually imposed the CMP." Barn Hill at 13. The Board rejected that argument relying on the regulatory scheme and citing the following analysis from a prior case:

That scheme does not require that CMS provide affirmative evidence of continuing noncompliance, nor does it require that the surveyors identify the underlying problems giving rise to a deficiency finding as well as its factual basis. Instead, under the regulatory scheme, where there is a deficiency involving a potential for more than minimal harm -

the facility must submit a plan of correction which describes "1. How corrective action will be accomplished for those residents found to have been affected by the deficient practice; 2. How the facility will identify other residents having the potential to be affected by the same deficient practice; 3. What measures will be put into place or systemic changes made to ensure that the deficient practice is being corrected and will not recur, i.e., what program will be put into place to monitor the continued effectiveness of the systemic changes."

State Operations Manual, section 7304; see also [42 C.F.R.] sections 488.401 (definition of "Plan of correction"), 488.402(d) and 488.408(f)(1). Even if the plan of correction is accepted, the facility is not regarded as in substantial compliance until HCFA determines, usually through a revisit survey, that the deficiency no longer exists. Section 488.440(b) and (h). [footnote omitted]

Barn Hill at 14, quoting Lake City at 12-13.

The Board in Lake City summarized the correct standard to evaluate when remedies must end, as follows: "No findings that Lake City violated the standard of care between these dates were required in order to find Lake City out of substantial compliance, nor can evidence of other incidents in which Lake City met the standard of care change the fact that it was out of substantial compliance." Lake City at 14-15. The Board rejected Lake City's argument that it was out of substantial compliance only on the date of the incident on which the finding of noncompliance was based, finding that this was-

contrary to the regulatory scheme, which assumes that any deficiency that has a potential for more than minimal harm is necessarily indicative of problems in the facility which need to be corrected. If this were not the assumption, there would be no basis for requiring a plan of correction in the case of such a deficiency. Moreover, a plan of correction is required regardless of the scope of the deficiency, as long as the deficiency has a potential for more than minimal harm or involves actual harm. Section 488.402(d)(2). Since the ALJ found that the incident in question had a potential for more than minimal harm, he was required to find that Lake City was out of substantial compliance from the date of completion of the survey in which this incident was cited until the date of the resurvey in which substantial compliance was established. (Substantial compliance here meant not only that surveyors found no other incidents like the one at issue after the November survey but also that Lake City had implemented a plan of correction designed to assure that no such incidents would occur in the future.)

Lake City at 14-15. Similarly, in Careplex of Silver Spring, DAB No. 1683 (1999), the Board concluded that nothing "in the regulations suggests that . . . [CMS] is obligated to independently assess the status of a facility's compliance for each intervening date," pointing out that it would be "impracticable to expect surveyors to return daily to monitor corrections before the facility even offers a credible allegation that it has achieved substantial compliance." Careplex at 6.

The ALJ expressed concern that, unless CMS were required to prove specific violations independently on each day a remedy was imposed, CMS might face challenges for arbitrarily applying CMPs for days with no "nexus between the dates for which it imposes remedies and the alleged deficiencies." ALJ Decision at 11, n.9. This concern is misplaced. CMS is not empowered to impose remedies for any arbitrary set of dates. Regulations constrain the imposition of remedies, however, in a manner different than that posited by the ALJ. Under the regulations, a per day CMP may start to accrue "as early as the date the facility was first out of compliance" but may continue in effect only until the facility alleges and establishes that it has achieved substantial compliance once more (or the facility is terminated). 42 C.F.R. � 488.440(a)-(h); see also � 488.454. Thus, a plain nexus exists between the discovery of deficiencies constituting a failure to comply substantially with participation requirements, the dates for which remedies are imposed, and the core remedial purpose of motivating prompt and effective corrective measures.

The ALJ also professed himself "at a complete loss" for any explanation of why "CMS did not impose remedies for dates supported by the evidence." ALJ Decision at 12, n.10. The regulations, as noted, provide that once a facility is found to be out of substantial compliance, CMS is authorized to impose remedies beginning as early as the first day of noncompliance and lasting until the facility achieves substantial compliance. CMS is not under any compulsion to explain why it decides not to impose remedies on days for which it might do so. From the provision that remedies may be imposed as early as the first day of noncompliance, it follows that CMS may choose to begin any remedy at a later date. In either case, the remedy ends no sooner than the point at which the facility achieves substantial compliance or is terminated from the program. We see nothing impermissible in beginning the CMP accrual period from the day on which a survey determined that the facility was not in substantial compliance, even if events evidencing that noncompliance occurred prior to the survey. It is also noteworthy that the scope of the problem was affected by the alleged failure to make required reports and investigation within the time which had expired just before the survey.

The logic of this arrangement for duration of CMPs is plain when the context for the statutory addition of such remedies is considered. Prior to the creation of a wider choice of remedies by the Omnibus Budget Reconciliation Act of 1987, Public Law No. 100-203, section 1866(b)(2)(A) of the Act empowered the Secretary to terminate a provider agreement after determining that "the provider fails to comply substantially" with the agreement or the applicable law and regulations. CMS essentially could only choose between terminating a facility or allowing it to continue operating despite deficiencies. The congressional purpose in providing for remedies short of termination was to allow CMS to apply pressure to motivate facilities to solve problems quickly and so protect residents without disrupting placements unnecessarily. See, e.g., H.R. Rep. No. 391, 100th Cong., 1st Sess. 942 (1987); see discussion of purpose at 59 Fed. Reg. 56,116-17, 56,177-78; see also CarePlex of Silver Spring, DAB No. 1683 (1999), Golden State Manor and Rehabilitation Center, DAB No. 1597 (1996).

Consistent with that purpose, a non-compliant facility is required to promptly file for CMS's approval a plan stating when and how the facility will correct the conditions violating participation requirements and is not entitled to have the remedies lifted unless and until the facility demonstrates that substantial compliance has been achieved. 42 C.F.R. �� 488.401, 488.402(d). CMS retains the discretion to impose termination on any facility found not to be in substantial compliance, but now has the flexibility to give a facility time to demonstrate its capacity to improve. That flexibility is limited to no more than six months from the date that the facility was first found out of substantial compliance, at which point termination is mandatory. 42 C.F.R. � 488.412(d). Throughout, the governing goal is not to punish individual violations but to pursue attainment and maintenance of a state of substantial compliance with federal requirements. Since CMS has sufficient discretion to terminate after finding a facility out of substantial compliance, ⁽³⁾ it is reasonable that CMS also has the authority to continue lesser remedies in effect until it is assured that substantial compliance has been regained where it forbears to terminate the facility and provides an opportunity for correction. See section 1866(b)(2) of the Act; 42 C.F.R. � 488.456(b)(1)(i); Beechwood Sanitarium, DAB No. 1824, at 14-15 (2002).

2. Evidence in the record and proffered before the ALJ sufficed to show a prima facie case that CMS was authorized to impose remedies here until April 20, 1999.

The ALJ stated that neither "CMS nor its declarant cite[d any] other corrective action Petitioner could have or should have taken in regard to this incident." ALJ Decision at 10. This formula improperly shifts to CMS or state surveyors the responsibility for prescribing the measures a facility may or must adopt to correct its deficiencies and to attain substantial compliance. The statutory and regulatory scheme presently in place is founded, however, on the concept of defining outcomes necessary to provide quality care to residents and resting flexibility in the facilities to determine how to achieve those outcomes. See, e.g., Beverly Health and Rehabilitation Services, Inc., v. Thompson,__ F. Supp.2d ___, 2002 WL 31109618 (D.D.C. 2002)(and discussion of legislative and regulatory history therein), aff'g DAB No. 1696 (1999).

The ALJ held that CMS presented no "evidence that other corrective action was taken or required before Petitioner was declared to be in substantial compliance effective April 20, 1999." ALJ Decision at 10 (emphasis added). This finding ignores evidence in the record before the ALJ, including exhibits of both CMS and Regency. Thus, Regency's own exhibits tend to undermine the ALJ's finding that all of the corrective actions based on which the facility was found to be in substantial compliance had been taken by April 6, 1999. Instead, the exhibits establish that Regency continued to take corrective actions set out in the approved plan of corrections until April 20, 1999. ⁽⁴⁾

Only on April 15, 1999 did Regency write to the State survey agency with its express "allegation of compliance." P. Ex. 34. ⁽⁵⁾ Regency provided statements of how it sought to correct each deficiency found, ⁽⁶⁾ and included asserted completion dates for each action. The asserted completion dates included April 13, 1999 for such steps as:

• development of a protocol, transport response sheet, and log to assess nursing staff and ambulance service actions in emergency transports (taken in "response to the particular, recent breach of nursing practice of March 27, 1999");
  
  
• in-servicing, speakers, and group discussions for nurses on assessments and interventions and a focus on recognizing changes in residents' health status;
  
  
• a mandatory clinical in-service on April 13, 1999, by an enteral supplier nurse on nine aspects of feeding tubes including checking proper placement, reporting and documentation, and preventing self extubation such as occurred with Resident 1;



• reviewing the personnel records of all nurses to determine that they were acceptable for continued employment as of that date and institution of probationary periods for new nurses; and



• requiring all nurses sign a statement that they knew and would conform to standards of practice and all facility policies.

P. Exs. 35, 36, 37, 46.

Furthermore, despite its allegation of compliance on April 13, 1999, Regency did not complete other steps until later dates. For example, arrangements were made for a nurse representative of the enteral supplier to monitor monthly the charts of all residents with feeding tubes, beginning on April 16, 1999. P. Ex. 46. Signed evidence of attendance at the planned in-service training sessions trickled in for dates as late as April 15 through 20, 1999. See, e.g., P. Exs. 62 at 1; CMS Ex. 23, at 5-8, 14, 19, 42.

Obviously, Regency well understood that the surveyors had determined that the events of March 27 and 28, 1999, disclosed systemic problems and that the risk of recurrence could be eliminated only by similarly systemic solutions. Further, Regency was clearly aware that CMS had not and would not consider the discharge of a single nurse and a narrow in-service review of feeding tube placement to suffice to demonstrate that substantial compliance was achieved and the risk of future harm adequately addressed. The follow-up survey concluded that substantial compliance was not evident until April 20, 1999, which is consistent with the latest date at which planned steps were completed. The surveyor's records from that revisit report some of the verification efforts made as to each outstanding deficiency finding, including obtaining copies of policies, interviewing staff about their awareness of their responsibilities and their implementation of facility policies, documenting participation in in-service training, and evaluating the conditions of residents with feeding tubes. P. Ex. 73. These notes are consistent with the CMS position that the surveyors' opinion was that the initial corrective measures were not adequate to protect residents. CMS Br. at 13-15.

While a factual dispute may exist as to whether substantial compliance could be demonstrated for any date earlier than the completion of the revisit, the documentation now in the record, taken in the light most favorable to CMS for purposes of summary disposition, plainly establishes a prima facie case that substantial compliance was not regained until April 20, 1999. Hence, it was error to find that CMS proffered no evidence to support a prima facie case that it was authorized to extend the CMP to that date.

3. Material facts remain in dispute.

We find that the ALJ also erred in his assessment that no material facts were disputed, "except as to their legal impact." ALJ Decision at 9. The error rested in part on the misunderstanding discussed above as to what facts were necessary to establish a prima facie case for CMS's authority to impose a CMP on the dates in question. Based on the misunderstanding, the ALJ found the facts set out in the joint stipulation sufficient in themselves to dispose of the matter.

However, an additional source of error appeared to arise from over-reliance on the contents of the SOD as the only permissible source of relevant factual allegations about which CMS could proffer evidence. See, e.g., ALJ Decision at 11, n.8. For this and other reasons, the ALJ gave scant weight to the declaration of surveyor Ellen Bennet, proffered with CMS's motion for summary judgment. ⁽⁷⁾ Thus, the ALJ emphasized that "the SOD has never been amended or revised and CMS's declarant does not address what deficiencies were considered to exist after April 6, 1999." ALJ Decision at 11, n.8.

Regency argued before the ALJ and again in response to CMS's appeal that the Bennet declaration was inadmissible as an "improper attempt to amend and expand the facts and theories alleged" in the SOD. Regency Br. at 9. This contention highlights a misunderstanding about the role of the SOD in relation to evidence admissible on appeal of a remedy arising from deficiencies first found in a survey and documented in an SOD. The Board has previously addressed this question in a case where CMS also offered a surveyor declaration which expanded upon the allegations in the SOD (also known as a form 2567), as follows:

The ALJ appeared to treat the statement of deficiencies as rigidly framing the scope of evidence to be admitted concerning any allegation relating to a cited deficiency, and requiring formal amendment of the 2567 to allow any additional supporting evidence. We find this treatment of the 2567 erroneous. The 2567 is a notice document, and is not designed to lay out every single detail in support of a finding that a violation has been committed. If the opposite were the case, there would not be much of a need for an exchange of documents or, for that matter, a hearing. This approach is consistent with the intention of the regulations governing surveys as embodied in this exchange from the preamble to the regulations -

Some commenters further suggested that the facility should be provided with full information that supports each citation and the survey agency's decisions including the underlying reason, basis or rationale for the findings of noncompliance with a regulatory requirement.
Response: We are not accepting this suggestion because we believe that the Statement of Deficiencies and Plan of Correction Form (HCFA-2567) provide facilities with the specific information necessary to formulate an acceptable plan of correction. To include such detailed information regarding deficiencies in the notice of noncompliance would be duplicative and administratively burdensome.

59 Fed. Reg. 56,116, at 56,155. This is not to say that an ALJ may not require adequate notice before the hearing of testimony and evidence to be presented, but rather to say that such disclosure is a matter of pre-hearing development of the record and clarification of the issues rather than a matter of amending the 2567. . . .

Just as we do not require a petitioner to fully establish its defense in great detail in the Request for Hearing, anticipating that the issues will be more fully joined in subsequent development of the case, so we hold here that the 2567 is not expected to elucidate in detail every aspect of proof of the violation alleged. It is not intended to serve as the sole basis for CMS's prima facie case. To treat it as such would put an untenable burden on surveyors who are professionals trained to assess compliance with participation requirements but not to necessarily display the drafting skills of attorneys. It would also be inconsistent with the notion that the 2567 be issued promptly after the survey concludes to allow the facility to achieve compliance as quickly as possible.

Pacific Regency Arvin, DAB No. 1823, at 9-10 (2002).

We conclude that the Bennet declaration was properly considered as a proffer of proof and was not improper in scope. It clarified the relationship between the facts alleged in the SOD and the conclusions that the requirements were not met, and explained the basis of the determination that Regency did not come into substantial compliance until April 20, 1999. The declaration did not add any new deficiency findings unrelated to the facts alleged in the SOD, but merely referred to further evidence supporting the conclusions in the SOD. We therefore reject Regency's motion to strike the declaration.

The reasoning of Pacific Regency is even more apropos of the situation here, in which the focus of the ALJ Decision is not the noncompliance documented in the SOD, but rather when the facility came into compliance. That issue was at least implicitly addressed in the SOD and subsequent notice to the facility since a determination that the deficiencies had already been corrected would have led to a certification of compliance rather than a certification of noncompliance and imposition of an ongoing CMP. The question of whether substantial compliance was attained by corrective measures taken after the end of the survey could hardly be expected to be addressed presciently in the SOD since the deciding facts would be those occurring subsequently. ⁽⁸⁾ The regulations provide that when a facility has been found not to be in substantial compliance with the requirements for its participation in the program, the facility must submit a plan of correction and make a credible allegation when it asserts that substantial compliance has been regained. As mentioned above, compliance is usually verified by a follow-up survey, unless it can be determined from documentation alone.

Further, a review of the SOD and the proffered declaration of the surveyor belie the constrained version of the allegations described by the ALJ. For example, the ALJ characterized the events surrounding the death of Resident 1 as involving a single nurse who re-inserted a feeding tube without consulting a physician, in violation of facility policy which had "no defect . . . in that regard." ALJ Decision at 10. The incident was alleged under F Tag 225 to have been reported late (on April 6, 1999) to the State survey agency, but, according to the ALJ, the adequacy of the report and investigation that followed were not questioned. Id. The ALJ characterized the remaining deficiency findings as limited "by their terms" to actions taken on March 27 or 28, 1999. He concluded that he would have construed any allegations of deficiencies existing on or after April 7, 1999, in the light most favorable to CMS but "CMS is mute as to any deficiencies existing after April 6, 1999, and there is nothing to construe in CMS's favor." Id. at 11.

The SOD, read most favorably to CMS, does allege more than the occurrence of isolated events on discrete dates. Further, the circumstances alleged in the SOD (particularly when read together with the requirements found to have been violated) give rise to reasonable inferences that could be drawn in CMS's favor which further support CMS's claims to have presented evidence that Regency had larger problems than a single nursing error. See CMS Br. 2-5, 13-24. Thus, in regard to the requirement that facilities report, thoroughly investigate and take corrective action regarding any incidents of resident abuse, neglect, or mistreatment, the SOD asserts, inter alia, that -

The facility did not immediately fully investigate the incident of 3/27/99 and Resident 1's subsequent death nor take any corrective action to prevent further incident. The nurse who reinserted the peg tube without an order continued to work on the units until 4/4/99. This nurse had been given a warning in 1997 for failure to report and investigate an injury of unknown origin and notify the attending physician.

CMS Ex. 1, at 8 (emphasis added). Reasonable inferences which the ALJ could draw from these allegations include that no actions taken by the facility as of April 7, 1999, constituted corrections calculated to prevent recurrence and that allowing a nurse to remain on staff despite two such professional failures indicated a potentially wider breakdown in the facility's assurance that unfit employees are not on staff.

Under requirements addressing resident assessments, the surveyor reported that no vital signs for Resident 1 were recorded in the nursing notes by nursing staff for almost four hours on the morning of March 28, 1999, even though she was observed to be in pain, moaning, with clammy skin and other signs of shock, and that two hours elapsed from the time emergency transport was ordered before she was actually taken to the hospital. Hospital records show that by the time Resident 1 arrived in intensive care she was in septic shock, suffering from peritonitis, with the tube discharging outside the stomach, poorly oxygenated and with very low blood pressure, and critically ill. CMS Ex. 12, at 15-21. The SOD mentions the peritonitis and septic shock. CMS Ex. 1, at 8. Reasonable inferences which the ALJ might draw from these records include that at least some of the nurses at Regency were not able to assess and respond to a clear life-threatening emergency adequately. It is not obvious that firing one nurse and providing training on tube insertion to the others would correct the problems giving rise to this alleged failure to address a resident's pressing need and to arrange prompt emergency transport in a manner precluding their repetition should another resident require emergency assessment and transfer. Moreover, Ms. Bennet's declaration explained differences between a PEG tube sutured into a patient and other types of feeding tubes in support of her conclusion that the in-service training provided before April 7, 1999, was inadequate.

Ms. Bennet also provided her explanation of the implications which CMS derived concerning wider, underlying problems in the facility extending beyond the events of a single weekend (March 27-28). The following paragraphs of her declaration exemplify the proffer made by CMS on this point:

45. As a necessary part of its obligation to protect and adequately care for its residents, a facility must have in place an effective process for immediately addressing its failings. However, in this case, there was systemic breakdown because the Administrator and Corporate Clinical Director were on vacation. Their absence led to a delay in reporting the events to the Administrator, completing the investigation, and reporting the incident to NJDHHS [the State survey agency]. The Corporate Director of Nursing, Lucia Hill, did not report the incident until April 6, 1999. At the time of the survey, the facility had still not reported the incident to the Office of the Ombudsman.

54. Nurse #1's resignation still did not remove the risk to other residents. The facts amply demonstrate that Nurse #1 was not the only staff member involved in the failure to provide [Resident 1] with services that met professional standards. . . .

56. The facility's training was also insufficient to address the facility's staff's repeated failures to provide [Resident 1] with appropriate care and services. According to facility documents, the training provided shortly after [Resident 1's] death only addressed G tubes. There is no evidence that any training was provided concerning resident assessment, documentation, physician notification or emergency transport. In fact, it was not until the surveyor informed the facility of her finding of immediate jeopardy and requested a plan of correction that the facility developed definitive policies and procedures to address these deficient areas.

We conclude that evidence proffered to the ALJ was sufficient, if construed most favorably to CMS and with reasonable inferences drawn in favor of CMS, to preclude summary judgment against CMS. We therefore determine that the case must be remanded to the ALJ for further proceedings. On remand, the ALJ shall develop the record fully and determine what weight to give the evidence and what reasonable inferences to draw therefrom. We discuss next the key issues as to which genuine disputes appear to exist.

4. Issues remain to be decided on remand.

While we conclude that CMS proffered evidence sufficient, if supported after hearing and not rebutted, to demonstrate its authority to impose a CMP on Regency on the given dates, we do not accept CMS's position that summary judgment should be granted in its favor because Regency "failed to present evidence to refute CMS's prima facie case." CMS Br. at 30. Regency submitted argument and proffered evidence sufficient to raise genuine issues of material fact precluding summary disposition. ⁽⁹⁾

The factual disputes remaining in this matter beyond the stipulated facts largely concern three issues necessary to the resolution of the case. First, the parties dispute whether the events that occurred surrounding the death of Resident 1 constituted an isolated episode or evidenced systemic failures. The ALJ held erroneously that Regency had no right to review of those allegations on the grounds that the CMP was not imposed "for the incidents that occurred on March 27 and 28, 1999, or for the period March 27, 1999 though April 6, 1999." ALJ Decision at 13. In so doing, he relied on Board decisions which have established that a facility has no right under the regulations to review of deficiency findings that do not form the basis of any remedy. ALJ Decision at 8, 13, citing Arcadia Acres, Inc., DAB No. 1767 (2001) and Lakewood Plaza Nursing Center, DAB No. 1767 (2001). This rule is accurate but inapplicable to the current case. The events that occurred on the dates cited by the ALJ were found by the surveyors to evidence noncompliance with a number of participation requirements. The noncompliance - the failure to meet the participation requirement - is what constitutes the deficiency, not any particular event that was used as evidence of the deficiency. See 42 C.F.R. � 488.301. The findings of noncompliance here did result in the imposition of remedies. There is no requirement that the duration of a remedy coincide with particular events that form the evidence of lack of substantial compliance. Moreover, the Board has repeatedly held that CMS imposes remedies geared to motivate facilities to reach compliance, not to punish facilities for individual adverse events, explaining as follows:

The basis for imposition of remedies set out in the regulations is "noncompliance found during surveys" and one or more remedies (including termination) may be applied for each deficiency or "for all deficiencies constituting noncompliance." 42 C.F.R. � 488.402(b) and (c). The reasoning behind this approach was explained in the preamble to the regulations which stated that "setting forth specific sanctions to be applied for each deficiency . . . or group of deficiencies would defeat the whole purpose of providing maximum flexibility to both the Secretary and to the states" and, furthermore, that "remedies are imposed for noncompliance in a facility, rather than for deficiency 'a' or 'b' or 'c,' etc." 59 Fed. Reg. 56,169 (Nov. 10, 1994).

Beverly, DAB No. 1696, at 12; see also Desert Hospital, DAB No. 1623 (1997) (even though deficiencies found at the initial survey were corrected, remedies remained in effect based on other deficiencies at resurvey showing continuing noncompliance).

Second, the parties dispute when the facility regained substantial compliance, with Regency contending that it was achieved at least once the offending nurse was terminated and the other nursing staff in-serviced on feeding tubes and CMS arguing that it was achieved only after the plan of correction was implemented and a survey verified the allegation of compliance. If the facility can demonstrate that it achieved substantial compliance with all participation requirements at a date earlier than that found by CMS, that is relevant to the date on which remedies must end.

Third, the parties dispute whether the amount of the CMP was reasonable in light of the disputed scope and duration of the noncompliance and the application of other regulatory factors. ⁽¹⁰⁾ Because the ALJ disposed of this case on the theory that no legal basis existed for imposing a remedy, he did not reach the question of whether the remedy imposed, if authorized, was unreasonable. ALJ Decision at 6, 12.

On remand, the ALJ should permit the parties to develop the factual underpinnings of these issues, including providing an opportunity for a hearing if they remain disputed. ⁽¹¹⁾

Conclusion

For the reasons explained above, we reverse the ALJ Decision and remand the case for further proceedings consistent with this decision.

Cecilia Sparks Ford

Donald F. Garrett

Judith A. Ballard
Presiding Board Member

1. The regulatory references are for the versions in effect at the time of the survey at issue.

2. That is to say, no CMP was imposed from the date the nurse reinserted the tube without physician approval through the date when the nurse had been terminated, a training session had been held on insertion of one type of feeding tubes and the circumstances of the fatality reported to the State survey agency.

3. Thus, the Board noted that "[o]nce a facility has been found not to be in substantial compliance with the requirements, that is to say, having any deficiencies which present a risk greater than the potential for minimal harm, CMS has discretion to select an appropriate remedy, whether termination and/or alternative remedies, and the exercise of this discretion is not subject to ALJ review." Emerald Oaks, DAB No. 1800, at 39 (2001); Carmel Convalescent Hospital, DAB No. 1584, at 25 (1996)(a single deficiency can be sufficient to justify termination).

4. These documents may answer the ALJ's expressed puzzlement about "what CMS intended to do in this case" and why remedies were imposed on the selected dates. See ALJ Decision at 12, n.10.

5. The State survey agency's notice letter to Regency instructed the facility that it should send its "written credible allegation of compliance" at such time as it believed that the deficiencies had been corrected, and could do so by indicating that its plan of correction constituted such an allegation. CMS Ex. 2, at 5. Regency's administrator signed a notice dated April 13, 1999, stamped on the plan of corrections which it completed on the SOD form, indicating that the plan of correction constituted its allegation of compliance. CMS Ex. 1, at 1. Thereafter, Regency sent a letter dated April 15, 1999, making the allegation of compliance. For purposes of this decision, the significant point is not whether Regency intended to allege substantial compliance as of April 13 or 15 but that Regency was fully aware that it had an affirmative responsibility to make such an allegation when it believed that it had taken the necessary corrective actions.

6. Regency's plan of correction proposed dates for completion of various steps ranging from April 9 though 13, 1999. CMS Ex. 1. The actual completion dates which Regency was claiming were less than entirely clear, however. For example, the proposal for in-service education on "nurses' responsibility in resident assessment, professional judgment in determining appropriate courses of action and proper responses to resident condition changes" had a handwritten note reading that this "has begun to be completed by 4-14-99." CMS Ex. 1, at 15.

7. Some dispute and confusion surrounded the admission and use of this declaration. The ALJ seemed troubled that the signed copy did not contain an attestation required by 28 U.S.C. � 1746 for use of a statement in lieu of an affidavit in court. Hence, the ALJ said he would consider it "for purposes of this motion only as I perceive no prejudice to Petitioner and Petitioner raised no objections." ALJ Decision at 2-3, n. 3. The cited requirement is not applicable for CMS's use of the declaration for the present purposes. Ellen Bennet's declaration is best characterized as a proffer of the testimony she might be called to offer at a hearing. The purpose of such a proffer is to establish what facts the party asserts it would show in evidence at a hearing in order to show what facts are in dispute. In resolving a summary judgment motion, as the ALJ correctly stated, the proffered evidence of asserted facts should be construed in the light most favorable to the non-movant party. ALJ Decision at 9, 11. Moreover, no summary judgment procedures apply that specifically require an attestation for a declaration simply intended as a proffer to show material facts in dispute.

8. This paradox is particularly evident in the Conclusion of Law # 6 in the ALJ Decision which recounts that the SOD "for the survey ended on April 7, 1999, does not identify any deficiency existing at Petitioner's facility on April 7, 1999 or for the period April 7, 1999 through April 19, 1999." ALJ Decision at 6.

9. While, as CMS pointed out, Regency did not substantiate its allegations with a proffer of testimonial evidence comparable to the Bennet declaration, Regency did identify witnesses it would present and the general nature of their testimony. No procedures were set for the summary judgment motion requiring declarations or written proffers of testimony. Further, the documentary evidence is not wholly unambiguous, and Regency has raised alternative inferences that might be drawn other than those favoring CMS as are proper to draw for purposes of summary judgment. In addition, Regency is entitled to cross-examine Ms. Bennet, on whose professional opinion CMS is relying. Finally, there are factual issues that were raised but not fully fleshed out below in the context of the cross-motions for summary judgment.

10. The factors to be taken into account in setting the amount of a CMP are:

(1) The facility's history of noncompliance, including repeated deficiencies.
(2) The facility's financial condition.
(3) The factors specified in � 488.404 [relating to the seriousness of the deficiencies].
(4) The facility's degree of culpability. . . .

42 C.F.R. � 488.438(f) (italics omitted).

11. In light of our disposition of the case, we do not address further CMS's arguments relating to procedural error. See CMS Br. at 33-36.