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Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Appellate Division |
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DATE: December 16, 2005 |
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Centers for Medicare & Medicaid
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Docket No. A-05-37
Civil Remedies CR1263 Decision No. 2005 |
| DECISION | |
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FINAL DECISION ON REVIEW OF In March and June 2001, the State of Wisconsin conducted surveys of Park Manor Nursing Home (Park Manor) and found noncompliance with Medicare participation requirements. Based on the survey findings, the Centers for Medicare & Medicaid Services (CMS) imposed civil money penalties and other remedies on Park Manor. Park Manor requested a hearing before an Administrative Law Judge (ALJ) at the Departmental Appeals Board (Board). After the State withdrew some of the noncompliance findings, CMS chose to go forward based on six findings from the March survey and one finding from the June survey. The ALJ granted summary judgment in Park Manor's favor on two of these findings, overturning the remedies from the June survey as a result. He conducted a hearing on the remaining five findings and issued an initial decision in CMS's favor, based on one of the findings. On review, the Board reversed the ALJ, issuing a final decision in Park Manor's favor. CMS did not timely pursue before the Board the other four findings. Thus, during the proceedings, all of the noncompliance findings were withdrawn, not pursued, or reversed, and all of the enforcement remedies were overturned. Having obtained a favorable result on the merits, Park Manor applied for attorneys' fees and other expenses pursuant to the [Page 2] Equal Access to Justice Act (EAJA), 5 U.S.C. � 504. Among other things, the EAJA requires a federal agency to pay the reasonable fees and other expenses incurred by an eligible "prevailing party," unless the "position of the agency" in the underlying "adversary adjudication" was "substantially justified" or "special circumstances" make an award unjust. On December 28, 2004, the ALJ (Steven T. Kessel) issued a decision denying Park Manor's EAJA application. Park Manor Nursing Home, DAB No. CR1263 (2004) (ALJ EAJA Decision). The ALJ found (among other things) that CMS was substantially justified in pursuing enforcement remedies against Park Manor. Before us now is Park Manor's appeal of the ALJ EAJA Decision. As discussed below, the ALJ EAJA Decision does not properly apply EAJA standards, is incomplete, and does not accurately reflect our decision on the merits. Because of the lengthy history of this case and other factors, we are issuing a modified decision, rather than remanding to the ALJ. Our major conclusions are:
Our decision below sets further procedures to enable us to promptly determine the amount to which Park Manor is entitled under our decision (if the parties cannot agree on an amount within a specified time period, as we encourage them to do). If the parties agree on the amount, our decision will become final on the matters decided herein. Otherwise, we will issue a supplementary decision which, together with this decision, will constitute final agency action on the matters. Case Background This case has a long and convoluted history. We set out here only the background required to understand generally how the proceedings arose, how and why the issues narrowed over the course of the proceedings, and what steps were taken at key stages of the proceedings. (1) A skilled nursing facility (SNF) such as Park Manor must comply with the requirements in 42 C.F.R. Part 483, subpart B, if it wishes to participate in the Medicare program. Compliance is verified through surveys performed by state survey agencies under contract with CMS. 42 C.F.R. Part 488, subpart E. A survey agency reports any "deficiency" (failure to meet a participation [Page 4] requirement) it finds on a standard form called a "Statement of Deficiencies" (SOD). See, e.g., CMS Ex. 1. Each deficiency cited in the SOD is identified by an alpha-numeric "tag" relating to a requirement in Part 483. The survey agency also rates the seriousness of each reported deficiency by assessing scope and severity (whether it has placed residents in "immediate jeopardy," caused "actual harm," or created only the "potential for more than minimal harm"). Id.; see also 42 C.F.R. � 488.404. (2) A SNF is subject to enforcement remedies, including termination of its Medicare participation, if it is not in "substantial compliance." 42 C.F.R. � 488.402(b),(c). A SNF is not in substantial compliance if it has one or more deficiencies that create the potential for more than minimal harm. 42 C.F.R. � 488.301. "Noncompliance" means "any deficiency that causes a facility to not be in substantial compliance." Id. CMS determines whether to impose an enforcement remedy on a SNF, generally after approving a state survey agency certification of noncompliance. 42 C.F.R. �� 488.330(a); 488.330(e)(2). In lieu of termination, CMS may impose civil money penalties (CMPs) and other intermediate remedies to encourage the SNF to come back into substantial compliance promptly. (3) See 42 C.F.R. �� 488.406 and 488.408. This scheme is based on section 1819 of the Social Security Act (the Act), 42 U.S.C. 1395i-3. A SNF is entitled to an ALJ hearing to contest a federal enforcement action only if CMS issues an appealable "initial determination." 42 C.F.R. �� 498.3(b), 498.5, 488.330(e)(3). The definition of "initial determination" includes a finding of noncompliance that results in the imposition of a remedy specified in section 488.406, a finding of substandard quality of [Page 5] care that results in the loss of approval of a nurse aide training program, and the level of noncompliance found by CMS if a successful challenge on this issue would affect the range of CMP amounts that CMS may collect. 42 C.F.R. � 498.3(b)(13), (14), and (16). A hearing on a CMP typically requires an ALJ to make findings on two issues: first, whether the SNF was, as alleged by CMS, not in substantial compliance with participation requirements during the period for which CMS imposed the CMP; and second, whether the amount of the CMP is reasonable in view of the seriousness of the noncompliance, the SNF's compliance history, and other factors. See, e.g., 42 C.F.R. � 488.438. (4) On March 22, 2001, the Wisconsin Department of Health and Family Services (WDHFS) completed a standard survey and extended survey of Park Manor (the March survey). CMS Ex. 1, at 1; CMS Ex. 3, at 1. As initially issued, the SOD for the March survey contained noncompliance findings under 20 tags, two of which we identify at this point. CMS Ex. 1, at 1. First, surveyors found that Park Manor had failed to consult immediately with a resident's physician about a "significant change" in the resident's status (tag F157). Id. at 1-9. Second, surveyors found that Park Manor had not ensured that a resident received adequate supervision to prevent accidents (tag F324). Id. at 86. The surveyors also found that for two days, March 20 and 21, the deficiency under tag F324 placed residents in immediate jeopardy and therefore also constituted "substandard quality of care." (5) Id. at 1; see also CMS Ex. 8, at 2. In April 2001, before CMS made any determination based on the March survey, Park Manor filed two hearing requests. R. 1; R. 3. The first was dismissed as premature. R. 2; R. 37. The second [Page 6] responded to a WDHFS notice advising Park Manor that, due to the substandard quality of care finding, it would no longer be allowed to offer or conduct a nurse aide training and competency evaluation program (NATCEP). On May 4, 2001, CMS issued a "Notice of Imposition of Remedies." CMS Ex. 2. This notice informed Park Manor that CMS was imposing the following remedies based on the March survey: (1) a CMP of $6,200 per day for two days of immediate jeopardy; and (2) a CMP of $250 per day, which would accrue from March 22, 2001 until the facility achieved substantial compliance. Id. This notice also indicated that the alleged noncompliance with section 483.25 (tag F324) constituted "substandard quality of care," and that Park Manor was therefore prohibited from offering a NATCEP for two years. Id. at 1. Park Manor then filed its third hearing request. R. 12. In early May 2001, WDHFS held an informal dispute resolution (IDR) conference regarding the March survey findings. (6) CMS Ex. 5, at 2. Park Manor submitted extensive documentation to WDHFS in support of its presentation at this conference. On June 11, 2001, WDHFS completed a revisit survey (June revisit survey) of Park Manor and found continued noncompliance. CMS Ex. 6. The SOD for the June revisit survey cited the facility for deficiencies under six tags. Id. (This included a finding under tag F157 involving a different resident than the finding under that tag from the March survey.) Park Manor filed a fourth hearing request. R. 18. On June 15 and 19, 2001, CMS and Park Manor filed Reports of Readiness in the pending appeals. R. 15-R. 17. These reports, like similar reports submitted in September, contained general assertions, but no detailed arguments. Id.; R. 30, R. 31, R. 33. On June 21, 2001, WDHFS informed Park Manor that, as a result of IDR, WDHFS had amended the March survey findings under tag F324, [Page 7] placed the amended findings under tag F309, and reduced the noncompliance level from J (immediate jeopardy) to D (potential for more than minimal harm). CMS Ex. 7, at 1. WDHFS also agreed during IDR to withdraw or amend other March survey findings. Id.; see also R. 18, Att. 1. WDHFS then issued an amended SOD for the March survey, with 15 noncompliance findings (including one under tag F157). CMS Ex. 4; CMS Ex. 5, at 2. On July 3, 2001, CMS issued a Notice of Imposition of Remedies based on the June revisit survey. CMS Ex. 7. This notice advised Park Manor that CMS was continuing the $250 per day CMP previously imposed, and imposing a denial of payment for new admissions (DPNA) starting July 15, 2001. Id. at 2. The notice also said that CMS had accepted WDHFS's recommendation to rescind the $6,200 per day CMP previously imposed for two days of immediate jeopardy. Id. Park Manor then filed its fifth hearing request. R. 20 and R. 25. On August 2, 2001, WDHFS notified Park Manor that, as a result of IDR, it was rescinding two findings from the June revisit survey -- tags F157 and F281 - and amending one other finding from that survey. PM Exs. 34 and 66. On September 20, 2001, CMS notified Park Manor by letter that it was back in substantial compliance and that all remedies had been discontinued as of July 24, 2001 (the date WDHFS conducted a second revisit survey). CMS Ex. 8. CMS also said that the IDR decision to withdraw the immediate jeopardy finding (from the March survey) had effectively overturned the substandard quality of care finding. Id. at 2. (7) Meanwhile, the March survey had led WDHFS to levy fines against Park Manor for allegedly violating State nursing home requirements that are similar but not identical to the federal requirements. See PM Ex. 54. Park Manor contested these fines, and the resulting proceeding included a 13-day hearing before a State ALJ. Id. at 2. In March 2002, while the federal ALJ proceeding was pending, the State ALJ issued a decision [Page 8] overturning the fines. Id. Shortly afterward, CMS reviewed the State ALJ decision and the evidence developed in the State proceeding. CMS Answer at 16. Based in part on that review, CMS decided not to pursue some of the related federal findings. CMS Answer at 16-17. The federal ALJ did not issue orders setting deadlines for exchanging and submitting proposed exhibits, written testimony, and pre-hearing briefs until February and May 2002. R. 37; R. 43. CMS submitted proposed exhibits (including written direct testimony), a witness list, and a pre-hearing brief on July 15, 2002. The pre-hearing brief advised the ALJ and Park Manor that CMS had elected to go forward on only six of the March survey findings (tags F157, F279, F309, F332, F444, and F496) and on only one finding from the June revisit survey (tag F157). R. 44 (Brief at 3, n.3). Accordingly, CMS reduced the $250 CMP to $150 per day for the period March 22 through June 10, 2001, and $100 per day for the period June 11 through July 23, 2001. Id. On August 9, 2002, Park Manor moved for summary judgment on all of the findings and remedies at issue in the proceedings. R. 47. Among other things, Park Manor asserted that the sole remaining noncompliance finding from the June revisit survey -- the finding under tag F157 -- had been rescinded during IDR and thus could not be used to support the remedies imposed for the period June 11 through July 23, 2001. Id. at 11-13, 39-43. While the motion was pending, Park Manor filed its exhibits, written direct testimony, and list of proposed witnesses. R. 50. Some of the testimony addressed the findings under tag F157 in the original SOD from the June revisit survey. See, e.g., P. Ex. 61, at 23; P. Ex. 68, at 32. On October 8, 2002, the ALJ ruled that Park Manor was entitled to summary judgment concerning tag F157 because CMS had not taken the steps necessary to overrule the IDR decision. R. 60, at 3-6. The ALJ also ruled that no CMP or other remedy could be imposed for the period June 11 through July 23, 2001 because CMS had abandoned its reliance on all findings from the June revisit survey except for tag F157. Id. at 6. As a result, there was, as of October 8, 2002, no longer an issue about remedies for the period June 11 through July 23, 2001. The ALJ also granted summary judgment to Park Manor with respect to tag F444 from the March survey, but denied summary judgment with respect to the other five remaining tags from that survey (F157, F279, F309, F332, and F496). R. 60, at 8. The ALJ held a hearing in February 2003 to permit cross-examination regarding these five tags. The parties then filed post-hearing briefs [Page 9] setting out their arguments regarding each tag. R. 83, R. 86, R. 87-88. CMS argued that Park Manor was not in substantial compliance with the requirements associated with the five remaining tags, and that noncompliance with any one of these requirements was sufficient to support a $150 per day CMP. On September 30, 2003, the ALJ issued a decision upholding the $150 per day CMP for the period March 22 through June 10, 2001. Park Manor Nursing Home, DAB CR1090 (2003) (ALJ Merits Decision). In that decision, the ALJ made findings on only one of the five remaining tags -- tag F157. Regarding that tag, the ALJ found that Park Manor was not in substantial compliance with 42 C.F.R. � 483.10(b)(11) because it had failed to consult with a physician immediately about a change in Resident 20's condition. The ALJ also found that the amount of the CMP was reasonable based on his findings regarding tag F157, and therefore he did not need to address issues regarding the other four tags. Park Manor appealed the ALJ's decision to the Board. On June 17, 2004, the Board reversed the ALJ's finding of noncompliance with section 483.10(b)(11) and set aside the $150 per day CMP. Park Manor Nursing Home, DAB No. 1926 (2004). The Board did not remand the case to the ALJ to address the remaining noncompliance findings because CMS had not pursued those findings before the Board and because further proceedings would not serve the remedial purpose of the regulations. CMS asked the Board to reconsider its decision, and the Board denied the request. Then, on July 14, 2004, Park Manor filed an EAJA application seeking reimbursement of about $290,000 in attorneys fees and other expenses. Park Manor requested an award under an EAJA provision that requires a federal agency to pay the reasonable fees and other expenses of an eligible "prevailing party" in an "adversary adjudication" conducted by the agency unless the "position of the agency" in the adjudication was "substantially justified" or "special circumstances make an award unjust." Park Manor also contended that it was entitled to an award under an EAJA provision that authorizes an award when an agency makes an "excessive demand" in enforcing the party's compliance with a statutory or regulatory requirement. The ALJ denied the EAJA application in its entirety. He found that although Park Manor was a "prevailing party" and an eligible entity under the EAJA, Park Manor was not entitled to an award because CMS was substantially justified in determining to impose remedies, specifically, in: (1) alleging that Park Manor failed to comply with the requirements of section 483.10(b)(11) (tag F157); (2) alleging four additional deficiencies (tags F279, [Page 10] F309, F332, and F496) that might, in themselves, have served as a basis for imposing remedies; and (3) determining to impose a $150 per day CMP. The ALJ also rejected Park Manor's request for an award on the basis that CMS had made an excessive demand, finding that this basis does not apply when the party opposing the federal agency "prevails entirely" in the underlying proceeding, as Park Manor did. Id. at 16-19. The ALJ noted that, in any event, the $150 per day CMP was not excessive. Id. at 18. Park Manor now objects to most of the ALJ's key findings and conclusions, asserting that the ALJ failed to apply, or misapplied, relevant legal standards and that CMS's pursuit or defense of enforcement remedies was unjustified at every stage of the merits proceeding. In response to Park Manor's appeal, CMS also takes exception to several aspects of the ALJ's decision. Discussion We begin our discussion by briefly addressing, in section A, the parties' dispute about the appropriate standard for our review. Next, in section B, we address whether the ALJ correctly determined that Park Manor was not entitled to an award as a prevailing party, as follows:
In section C, we explain why we uphold the ALJ's conclusion that Park Manor is not entitled to an award on the basis that CMS made an "excessive demand." In section D, we explain why we uphold the ALJ's ruling denying Park Manor's request to withhold certain financial records from public disclosure. Finally, in section E, we establish a schedule for further submissions on the amount of the allowable award.
Park Manor argues that a substantial justification determination is a legal conclusion that the Board should review de novo. PM Reply at 10-12. CMS, on the other hand, asserts that the issues of whether an agency position is substantially justified, or whether "special circumstances" make an EAJA award unjust, are questions of fact whose resolution by the ALJ should be reviewed under a "substantial evidence" standard. CMS Reply at 3-8. The Department of Health and Human Services (HHS) has issued regulations to implement the EAJA. 45 C.F.R. Part 13. These regulations were last amended in January 2004. 69 Fed. Reg. 2843 (Jan. 21, 2004). The January 2004 amendments became effective on February 20, 2004, before Park Manor filed its EAJA application, and both parties cited them as applicable here. The regulations provide that the "adjudicative officer" who presided in the proceeding, such as an ALJ, shall issue an "initial decision" containing written "findings" on, among other things, whether the agency's position was substantially justified and whether special circumstances make the award unjust. 45 C.F.R. � 13.26. The regulations designate the Board (the HHS "component that would have jurisdiction over an appeal of the merits") as the "appellate authority" responsible for "review of the adjudicative officer's decision on the fee application[.]" 45 C.F.R. � 13.27(a), (b). [Page 12] It is clear, then, that the Board is in an appellate posture with respect to the ALJ's findings about whether to make an EAJA award. Accordingly, our guidelines on review of ALJ EAJA decisions provide that the standard of review on a disputed factual issue is whether the ALJ's decision is supported by substantial evidence in the whole record, and that the standard of review on a disputed issue of law is whether the ALJ's decision is erroneous. (8) As CMS argues, there are sound reasons for us to defer to an ALJ on EAJA issues that involve evaluating the parties' behavior during the proceedings before the ALJ (such as whether that behavior is a special circumstance making an EAJA award unjust), or on other matters with respect to which the ALJ is best situated to make a judgment. Park Manor argues, however, that the "substantial justification" test (which we discuss below) is a purely legal standard and not a factual matter to evaluate under the substantial evidence test, as CMS argues that we should. As explained below, the "substantial justification" test requires an analysis of whether CMS's position had a reasonable basis in law and fact. Whether CMS had a reasonable basis in law is a matter that we review for legal error under our guidelines - a de novo review. Whether CMS had a reasonable basis in fact does not generally require either the ALJ or us to determine what the facts were; instead, the analysis focuses on whether CMS had a reasonable factual basis, given the undisputed facts and the evidence regarding disputed facts, for the position CMS took. This is not a purely factual question. Since, however, the substantial evidence standard calls for us to defer to an ALJ's inferences drawn from the evidence so long as those inferences were reasonable, even if we may not have drawn those inferences ourselves, we similarly in an EAJA case defer to an ALJ's reasonable judgment on whether there was a reasonable basis in fact for the agency position (so long as the ALJ did a correct analysis under the EAJA). Also, if the ALJ makes findings of fact regarding disputed factual issues such as what evidence an agency had available at a particular stage of the proceedings, we apply the substantial evidence standard to review those findings. We note, however, that where, as here, a party raises threshold issues about whether an ALJ applied the correct legal standards [Page 13] under the EAJA in determining whether the agency position was substantially justified, those issues are purely legal ones that we review de novo. Hanover Potato Products, Inc., v. Shalala, 989 F.2d 123, 127 (3rd Cir. 1993). If we agree that the ALJ made a prejudicial legal error, then we must determine whether to remand the case or to resolve it ourselves, applying the correct test and addressing any material issue the ALJ did not address. If applying that test requires us to address factual disputes on which the ALJ made findings, however, we then apply the substantial evidence standard.
Under the EAJA, a federal agency that conducts an "adversary adjudication" must award to an eligible "prevailing party" the "fees and other expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust." 5 U.S.C. � 504(a)(1) (emphasis added). In this case, CMS does not deny that there was an "adversary adjudication" and that Park Manor met the requirements for award eligibility. Also, although Park Manor asserts that the ALJ failed to consider all of the issues on which Park Manor prevailed, CMS does not challenge the ALJ's finding that Park Manor was a "prevailing party." Park Manor is therefore entitled to fees and expenses in connection with the proceedings unless CMS's "position" was "substantially justified" or "special circumstances" make an award unjust. According to the EAJA statute (as amended in 1996), the "position of the agency" refers not only to the "position taken by the agency in the adversary adjudication," but to "the action or failure to act by the agency upon which the adversary adjudication is based." 5 U.S.C. � 504(b)(1)(E). Similarly, HHS's EAJA regulations state that the agency's position "includes, in addition to the position taken by the agency in the proceeding, the agency action or failure to act that was the basis for the proceeding." 45 C.F.R. � 13.5(b)(1). The EAJA does not define the term "substantially justified." The regulations, however, provide that an agency's position is substantially justified if it "was reasonable in law and fact." [Page 14] 45 C.F.R. � 13.5(b)(1). The regulations further provide that a substantial justification finding must be based on the administrative record as a whole, and that a party's status as a prevailing party does not create a presumption that the agency's position in the proceeding was not substantially justified. Id. However, the agency's litigating party (here CMS) has the burden of proving that its position was substantially justified. Id. These regulatory criteria reflect court decisions on the EAJA. The Supreme Court has said that the government's position "can be justified even though it is not correct, and . . . it can be substantially (i.e., for the most part) justified if a reasonable person could think it correct, that is, if it has a reasonable basis in law and fact." Pierce v. Underwood, 487 U.S. 552, 566, n.2 (1988). The courts emphasize that, in performing a substantial justification analysis, a tribunal applies a different standard than the standard used to adjudicate the prevailing party's rights in the underlying merits proceeding. United States v. Hallmark Const. Co., 200 F.3d 1076, 1080 (7th Cir. 2000). Consequently, the findings or conclusions that support the decision on the prevailing party's merits claim, and other circumstances relevant to that decision (such as the stage of the proceeding when it was made), are rarely conclusive factors in a substantial justification analysis. (9) Id. at 1079-80; F.J. Vollmer Co. v. Magaw, 102 F.2d 591, 595-96 (D.C. Cir. 1996). According to one court, a proper substantial justification analysis focuses on "'the actual merits of the Government's litigating position'" and is global or comprehensive in scope, examining "not simply whether the government was substantially justified at the beginning or end of the proceedings, but whether the government was substantially justified in continuing to push forward at each stage." Hallmark, 200 F.3d at 1080 (quoting Pierce, 487 U.S. at 569). Because a substantial justification inquiry focuses on the agency's litigation position in the merits proceeding, the context in which that proceeding arose and was conducted may be relevant in evaluating the agency's position. We found no court opinion applying the EAJA to a case arising from the nursing facility enforcement process. Based on our experience with this process, we consider the following factors to be important to an EAJA analysis in this context:
These factors inform our analysis below.
The ALJ denied an award to Park Manor as a prevailing party because he concluded that CMS's position was substantially justified. Park Manor contends that this conclusion is invalid because the ALJ failed to evaluate CMS's position in its totality. In particular, Park Manor contends that the ALJ failed to consider the agency actions that were the bases for the merits proceeding (actions that Park Manor claims were unreasonable) and erroneously confined his discussion to the issues addressed at the in-person hearing. Park Manor also contends that the ALJ inadequately analyzed whether CMS had reasonable bases for seeking affirmance of four findings of noncompliance (under tags F279, F309, F332, and F496) from the March survey that were not addressed in the ALJ Merits Decision. According to Park Manor, the ALJ EAJA Decision "merely recites the allegations in the SOD" regarding these four findings and provides "[n]o analysis of the supporting and contrary evidence" and little or no "explanation of the ALJ's reasoning[.]" PM Brief at 20. Park Manor also contends that the ALJ erred in failing to consider whether CMS was justified in seeking remedies based on tag F157 from the June revisit survey, and in failing to determine whether CMS had a [Page 17] reasonable basis for pursuing tag F444 from the March survey. (CMS also takes exception to the ALJ's failure to address tag F444.) We find that the ALJ did not do a substantial justification analysis that comports with the statute and regulations. As noted, the EAJA and HHS's January 2004 regulations define the phrase "position of the agency" to include the agency actions (or failures to act) that were the bases for the proceeding. The ALJ did not consider or evaluate these predicate agency actions. The ALJ EAJA Decision quotes a superseded provision that describes the substantial justification inquiry as an evaluation of whether the agency's "position in the proceeding was substantially justified at the time the proceeding was initiated." ALJ EAJA Decision at 6-7, quoting unamended 42 C.F.R. � 13.5(a). Yet, the ALJ's discussion of CMS's position in fact focused entirely on the issues addressed at the in-person hearing. In addition, the ALJ did not adequately support his findings that CMS's position on tags F279, F309, F332, and F469 had a reasonable basis in law and fact. Regarding each of these tags, the ALJ EAJA Decision contains a single, short paragraph that briefly states the basis for CMS's allegation of noncompliance. ALJ Merits Decision at 14-16. Although the ALJ indicated in each paragraph that his finding was based on evidence in the record, the ALJ did not describe or evaluate that evidence in any detail. Given the difficulty of applying the EAJA reasonableness standard, the significant amount of evidence introduced by the parties, and the fact that there was no previous ruling on the merits of these four tags, the ALJ should have thoroughly explained the reasons for his finding on each tag. Hallmark Const. Co., 200 F.3d at 1080 (decision should contain an "evaluation of the factual and legal support for the government's position"). Another problem is that the ALJ focused only on the evidence tending to support CMS's position, indicating in each instance that this evidence was sufficient to prove Park Manor's noncompliance. Such a cursory, one-sided evaluation does not satisfy EAJA requirements and gives no assurance that the ALJ in fact considered the opposing evidence. The statute and regulations require an adjudicative officer to evaluate the agency position in light of the entire administrative record, including rebuttal evidence known to the agency. 45 C.F.R. � 13.5(b)(1); Alphin v. National Transp. Safety Board, 839 F.2d 817, 822 (D.C. Cir. 1988). [Page 18] Most significantly, the ALJ did not determine whether CMS was substantially justified in pursuing remedies based on findings from the June revisit survey. The ALJ acknowledged that his summary judgment ruling had "affected the remedies that remained at issue." ALJ EAJA Decision at 19. He did not recognize, however, that Park Manor's successful effort to overturn the remedies based on findings from the June revisit survey was a potential basis for award. HHS's EAJA regulations provide:
45 C.F.R. � 13.5(b)(2) (italics and emphasis added). In this context, a "matter," for purposes of section 13.5(b)(2), could be a request for hearing on a CMS "initial determination." While arguably CMS made four "initial determinations" (set out below), the parties litigated only two "matters" on which Park Manor was a "prevailing party." The first matter was the appeal from the finding of noncompliance resulting in the CMP for the period March 22 to June 10, 2001. This matter stemmed from CMS's May 4, 2001 determination, which Park Manor appealed on May 5, 2001. R. 12. Resolving that matter required the ALJ to assess the merits of findings from the March survey. The second matter was the appeal from the noncompliance finding resulting in a CMP and DPNA for the period June 11 to July 23, 2001. This matter stemmed from CMS's July 3, 2001 determination, which Park Manor appealed on July 12, 2001. R. 20. Resolving that matter required the ALJ to assess the merits of findings from the June revisit survey. It is apparent, then, that these two matters -- having arisen from separate appeals of noncompliance findings based on different surveys and resulting in different remedies -- "could have been heard separately" by the ALJ. Consequently, the fact that Park [Page 19] Manor succeeded in overturning the remedies for the period June 11 to July 23, 2001 was a potential ground for an EAJA award. (10) CMS's position on that matter was, of course, that the remedies were proper. As of July 2002, this position was based entirely on the June revisit survey's finding under tag F157. Park Manor opposed this position in its motion for summary judgment, contending that because the IDR decision had rescinded tag F157, CMS could not rely on that tag to support the remedies. The ALJ concluded that CMS had not followed proper procedures to overrule the IDR result on tag F157, and therefore set aside the remedies that CMS had imposed based on the June revisit survey. Having obtained this favorable ruling by the ALJ, Park Manor was the prevailing party on this matter. (11) In the EAJA proceeding before the ALJ, Park Manor argued that CMS was not justified in seeking remedies based on tag F157. The ALJ should have addressed that argument and determined whether Park Manor was entitled to an award for the reasonable fees and expenses it incurred to overturn those remedies. Citing Commissioner, INS v. Jean, 496 U.S. 154 (1990) and other cases, CMS asserts that an award should not be based on a piecemeal examination of the litigation, and that we must make a single substantial justification finding encompassing the entire merits proceeding. CMS Response at 21, 27. In Jean, the Supreme Court stated that "[w]hile the parties' postures on individual matters may be more or less justified, the EAJA -- like other fee-[Page 20] shifting statutes -- favors treating a case as an inclusive whole, rather than as atomized line items." 496 U.S. at 161-62. The relevance of that statement to this situation is unclear because the issue in Jean was fairly narrow -- namely, whether an EAJA award could include fees and expenses incurred by the prevailing party in the fee litigation. Jean did not indicate the scope of a substantial justification inquiry with respect to a proceeding in which the prevailing party sought relief from multiple government actions, any one of which was sufficient to support remedies that the party sought to avoid by participating in the proceeding. Some courts that have confronted these or similar circumstances have required the government to justify each such action and, when appropriate, have approved a partial award relating to the unjustified actions. See, e.g., Alphin, 839 F.2d at 822-823; American Wrecking Corp. v. Secretary of Labor, 362 F.3d 321, 325-26 (D.C. Cir. 2004). This approach, which HHS adopted in section 13.5(b)(2), is consistent not only with how courts define the term "prevailing party" in fee-shifting cases, but also with the purpose of the EAJA, which is "to eliminate for the average person the financial disincentive to challenge unreasonable government actions." Jean, 496 U.S. at 164. We do not imply here that a substantial justification analysis must address the reasonableness of every single argument an agency makes during a proceeding. Roanoke River Basin Ass'n v. Hudson, 991 F.2d 132, 138-139 (4th Cir.), cert. denied, 510 U.S. 864 (1993); Hanover Potato Products, 989 F.2d at 131 (noting that not every argument made by an agency must be substantially justified, but that a district court must evaluate every "significant argument" in order to determine whether the government's position "as a whole" was substantially justified). The analysis must, however, be consistent with the EAJA statute and regulations and must provide more than a cursory or one-sided review of the evidence. Our finding that the ALJ did not perform a legally adequate substantial justification analysis means that we must either remand the case to the ALJ or modify the analysis. Given the history of this case, we determined that remand would take additional time and money, without contributing substantially to the result, and therefore be inconsistent with EAJA goals. Thus, we instead modify or supplement the ALJ's analysis as necessary to apply the appropriate standards. We also modify the decision to include analyses of issues raised before the ALJ that he did not address. Finally, we find it necessary to modify the ALJ's analysis regarding tag F157 from the March survey to correctly reflect our decision on the merits regarding that tag.
Having found that the ALJ did not consider the "agency actions" that were the bases for the proceeding in evaluating the "position of the agency," we consider those actions here. CMS contends that it reasonably relied on the survey findings in the SODs in taking these actions, and that the reasonableness of its reliance can be discerned from the face of those findings. We find merit in this contention. Park Manor's right to a hearing arose when it timely appealed the following four "initial determinations" by CMS:
As discussed below, Park Manor was not a prevailing party in its appeal of the latter two determinations and for that and other reasons is not entitled to an award based on them. Thus, we examine CMS's pre-adjudication actions only with respect to the first two determinations. Given the goal and structure of the enforcement process we outlined above, CMS's pre-adjudication actions are properly judged reasonable as long as (1) the SOD issued by the state survey agency contains factual allegations that provide a reasonable basis for a finding of noncompliance under the relevant requirements, (2) there are one or more findings of [Page 22] noncompliance that are legally sufficient to support the remedy imposed, and (3) CMS does not know or have reason to know of credible evidence that would undermine the legality of its remedy determination. Applying these criteria, we find that each of CMS's pre-adjudication actions was justified:
Park Manor points out that after it appealed, the State survey agency modified or withdrew a number of the deficiency findings during IDR; that CMS rescinded the immediate jeopardy finding and associated CMP; and that CMS elected not to rely on other findings. Park Manor contends that this abandonment, rescission, or modification of findings and remedies shows that the actions leading to the proceeding were not reasonable on the whole. Park Manor further contends that in order to avoid liability for an EAJA award, CMS was obliged to establish, with evidence and argument, that each and every citation and remedy emanating from the two surveys, not just the ones it pursued before the ALJ, had a reasonable basis. In addition, Park Manor suggests that independent investigation by CMS would have revealed the weakness of the abandoned or modified deficiency citations, and that CMS was unreasonable in not performing one before deciding to impose the remedies it did. In short, Park Manor contends that CMS's failure to justify its approval of these other survey findings warrants an EAJA award regardless of whether CMS had a reasonable basis for the findings it defended in the merits proceeding. We reject this argument because we do not accept its two key premises. The first premise is that CMS may not reasonably rely on state survey findings in making its remedy decisions but must investigate - or look behind - those findings to verify their correctness before deciding to impose remedies. However, this premise is inconsistent with the enforcement process described above. Reliance by CMS on state survey findings is precisely what this process permits and encourages. Requiring CMS to [Page 24] investigate every facility before imposing remedies would frustrate the goals of protecting residents and encouraging facilities to correct quickly any deficiencies that jeopardize resident health and safety. (As our criteria indicate, however, we reject CMS's suggestion that it could never have a duty to look behind survey findings before acting. Accepting that suggestion would undercut the EAJA goals.) Park Manor's second premise is that CMS's remedy decisions constitute acceptance or approval of each of the many survey findings in the relevant SODs. This premise is a mistaken one because CMS may impose a CMP or other remedy based on any single finding of noncompliance. Regarding the remedies that CMS imposed for alleged deficiencies that were not at the immediate jeopardy level, Park Manor would have us conclude that those remedies were inappropriate or unreasonable even if CMS showed that some deficiency findings had a reasonable basis in law and fact and were otherwise legally sufficient to warrant the remedies. Park Manor points out that CMS might have chosen a different remedy (or permitted corrective action first) but for the survey findings that were later abandoned. Such speculation is irrelevant for EAJA purposes, however. CMS's pre-adjudication actions can be considered reasonable for EAJA purposes if there are some legally sufficient grounds for the actions, regardless of whether other allegations were made that might have affected how CMS exercised its discretion. As discussed, there were legally sufficient grounds for CMS's pre-adjudication actions regarding the two matters on which Park Manor was a prevailing party. (13) We do not wish to imply that the immediate jeopardy and substandard quality of care determinations were entirely irrelevant to the EAJA analysis. These determinations arguably constitute two additional "matters" under section 13.5(b)(2). These matters were pending before the ALJ as of May 5, 2001. They ended on July 3, 2001 when CMS withdrew the $6,200 per day CMP and the substandard quality of care finding. Because the matters were concluded in Park Manor's favor, an issue exists about whether an award can be made regarding them. [Page 25] To resolve that issue, we need go no further than to inquire whether Park Manor was a prevailing party on the matters. A party is a prevailing party for purposes of the EAJA if the proceeding was a "catalytic, necessary, or substantial factor" in obtaining the favorable result. Maduka v. Meissner, 114 F.3d 1240, 1241 (D.C. Cir. 1997). Park Manor did, of course, obtain CMS's rescission of the immediate jeopardy finding, the $6,200 per day CMP, and the substandard quality of care finding. However, CMS took that action in direct response to the IDR results. No ruling by the ALJ prompted CMS to take these actions, and Park Manor was not required to submit evidence relevant to these matters in the merits proceeding. There is, in short, no basis to conclude that the proceeding before the ALJ was a catalytic, necessary, or substantial factor in resolving these matters. Consequently, Park Manor is not a prevailing party regarding these matters, and CMS was not required to show that its positions on them were substantially justified. Even if we considered Park Manor a prevailing party on these matters, however, we would find that CMS showed it had a reasonable basis for determining that Park Manor was in a state of noncompliance at the immediate jeopardy level on March 20-21, 2001, and therefore that Park Manor had provided substandard quality of care. The survey findings were legally sufficient on their face as a basis for these actions. (14) There is no evidence [Page 26] that when CMS took the actions, CMS possessed credible evidence calling these survey findings into question. For the reasons above, CMS had a reasonable basis for taking the actions that were the bases for the adversary adjudication.
As discussed, whether Park Manor was properly subject to a CMP effective on March 22, 2001 is one of two matters actually litigated in the merits proceedings. For the following reasons, we find that CMS's position on this matter was substantially justified. First, we have just discussed why the actions that were the basis for the proceeding on this matter were reasonable. Second, for reasons set out in sections 4a.-4e. below, we conclude that CMS had reasonable bases for contending that, as of March 22, 2001, Park Manor was not in substantial compliance with the Medicare participation requirements associated with tags F157, F279, F309, F332, and F496. CMS also had reasonable grounds for defending the survey agency's finding of noncompliance under tag F444, which the ALJ overturned in his summary judgment ruling (see section 4f., below). Third, Park Manor did not show in the proceeding that it had corrected these six alleged instances of noncompliance prior to the June revisit survey. Once identified, any noncompliance is presumed to continue until the state survey agency verifies correction during a revisit survey or by other acceptable means. Spring Meadows Health Care Center, DAB No. 1966 (2004). Finally, the regulations authorized CMS to impose the remedy it ultimately sought -- namely, a $150 per day CMP - for the alleged noncompliance. 42 C.F.R. �� 488.434, 488.438(a)(1)(ii). Park Manor did not contend in the proceedings that the amount of this CMP was unreasonable, see R. 83, and a finding in favor of CMS on any one of the six contested findings was legally sufficient to support the CMP. [Page 27] Park Manor argues that CMS's position on this matter was not substantially justified because CMS abandoned its reliance on multiple deficiencies that supported its determination to impose the CMP. It is true, of course, that CMS scaled back its case-in-chief during the proceeding. On July 2002, before the parties had exchanged evidence and witness lists, CMS reduced the CMP and informed the ALJ and Park Manor that it would seek $150 per day based on only six of the 17 findings from the March survey. CMS argues that its decision to pursue only some of the findings before the ALJ did not render its overall position unreasonable because a $150-$250 per day CMP did not warrant litigation over every single finding of noncompliance. CMS Response at 27-28. We agree with CMS. In the merits proceedings, CMS could have reasonably relied on any number of the deficiencies alleged in the SOD, provided that they were supportable and justified the amount of the CMP imposed. The six findings that CMS ultimately chose to pursue were, in fact, sufficient to support the CMP, either as modified or as originally imposed ($250 per day being only 8.3 percent of the maximum amount authorized). CMS's decision to streamline its case would have given us more concern had CMS actually presented a case on the abandoned findings before July 2002, forcing Park Manor to mount opposition. But that it is not what happened. After September 2001, the federal proceedings were held in abeyance while the State fines were being litigated. When the State proceedings ended, CMS reviewed the evidence developed in the State proceeding and, based on its review, decided to narrow its case-in-chief before Park Manor was required to submit its exhibits, written direct testimony, and initial pre-hearing brief. See CMS Answer at 16. Given these circumstances, we find that CMS took adequate and timely measures to assess the merits of its position on this matter and to narrow the scope of its case-in-chief accordingly. We next discuss why we find that CMS had reasonable bases for defending the six contested findings from the March survey, beginning with tag F157. Although our discussion about these findings refers to undisputed facts reflected in the documentary record, we are not making findings on disputed issues of fact or reaching conclusions of law on disputed issues of law. In other words, we are not deciding whether CMS's position was the correct one, but only whether a reasonable mind could think it correct.
[Page 28] The ALJ's substantial justification determination was based largely on an analysis of CMS's position regarding tag F157, a position that we rejected in our previous decision. Since the ALJ's analysis does not correctly reflect the bases for our decision regarding that tag and contains other errors, we provide our own analysis of whether CMS's position on this tag had a reasonable basis and conclude that it did. Under tag 157 in the March survey, the SOD found:
CMS Ex. 4, at 2. During proceedings before the ALJ, CMS dropped the allegation concerning notice to the niece, presumably based on evidence presented by the facility that the niece had been contacted several times on the evening of Friday, March 2, and had visited the resident on Sunday, March 4. Relying on the opinion of a CMS surveyor who oversaw the state survey, CMS continued to assert that the resident showed signs and symptoms on March 3 and 4 that required immediate physician notification, beyond the notification given at 5:26 p.m. on March 2, in response to which the physician had ordered an antibiotic and urinalysis for symptoms of a urinary tract infection (UTI). CMS Ex. 54, at �� 13-15. The surveyor's opinion, submitted as written direct testimony pursuant to the pre-hearing procedures set by the ALJ, stated that it was based on certain CMS exhibits. Those exhibits included the nurses notes for the weekend in question and a resident assessment from January, but did not include nurses notes for January and February (submitted by Park Manor) and do not indicate any awareness that the contemporaneous nurses notes evidence a conversation a Park Manor nurse had with the resident's physician at 9:46 p.m. on Friday, March 2, after the contact referred to in the SOD. The ALJ Merits Decision found that one of the symptoms on which the surveyor relied (oxygen saturation level) was not a significant change, but found in [Page 29] CMS's favor on the basis that the resident's lack of ability to ambulate, non-responsiveness (lethargy), and mottling were significant changes. His decision did not mention the 9:46 p.m. contact with the physician. Park Manor appealed, and the Board reversed, based on the wording of the regulation and its context and history. Section 483.10(b)(11) gives a right to a resident to have a facility notify a physician of a "significant change in the resident's status (i.e., a deterioration in health, mental, or psychosocial status in either life-threatening conditions or clinical complications)." The regulatory history acknowledges that nursing judgment may be involved in evaluating what is significant for a particular resident, gives examples of "life-threatening conditions" (heart attack and stroke), and supports a conclusion that the potential need for physician intervention is a factor in whether notice is required. The CMS surveyor had in effect applied the regulation to mean that each individual sign or symptom required physician notification if it "could affect the physical or mental well-being" of the resident, even if that sign or symptom was consistent with what had already been reported to the physician regarding a deterioration in the resident's status, and did not indicate a potential need for additional physician intervention consistent with exercise of the resident's right to refuse treatment. (15) The Board concluded that it was not clear that CMS, or the ALJ, had applied a standard consistent with the wording of the regulation and its history. (16) [Page 30] Applying the correct legal standard, the Board then found that at the time Park Manor had last reported to the physician on the resident's status (at 9:46 p.m. on Friday) its staff was already aware of some of the signs and symptoms that CMS later treated as evidencing changes and had viewed those signs and symptoms as indicating not merely a UTI, but as consistent with an overall continuing decline that had begun several months earlier, of a type to be expected given his age and his pre-existing diagnoses. The Board's determination was limited to the facts of the case, which included corroboration of the facility's nursing judgment regarding the resident's status by the resident's niece, who had authority to exercise the right to physician notification of a significant change in status, had personal knowledge of the status, and had nursing expertise. The Board concluded that Park Manor had reasonably thought it was complying with the requirement, under the particular circumstances of the case. DAB No. 1926, at 10-11. While Park Manor acknowledged that mottling on the resident's extremities that appeared on Sunday, March 4 (at some time between 4:00 and 10:00 p.m.) would have been a significant change for a "full code" resident, Park Manor relied on nursing standards for its assertion that the mottling did not require notification for this resident, who was "no code" and "comfort measures only." Thus, the Board did not take this acknowledgment to mean that Park Manor had conceded the mottling was a significant change requiring notice to the resident's physician beyond what Park Manor had already given. The Board concluded, however, that, even if the mottling were considered a significant change in physical status for this resident (despite the "no code" and "comfort measures only" directives), CMS had not made a prima facie case that the failure to notify the physician immediately of the mottling had the potential for more than minimal harm. Thus, the Board's decision was fully consistent with past Board decisions that, when there is a change that a facility reasonably should have known was a significant change in status, a deficiency may be found if there is no immediate physician notification. The issue for EAJA purposes, however, is not whether CMS could anticipate that the Board would reach a different result, but whether CMS's position had a reasonable basis in law and fact. [Page 31] Although we agree with Park Manor that the ALJ misread our decision, we conclude that CMS's position on this tag did have a reasonable basis in law. First, the regulation requires a fact-based determination of whether there has been a change in a resident's physical, mental, or psychosocial status since the last physician notification and whether that change is significant for that resident. The parenthetical explanation that this means "a deterioration in status in either a life-threatening condition or clinical complication" and the examples of heart attack or stroke as life-threatening conditions provide some guidance in evaluating what is a significant change, but are not unambiguous, particularly when applied to a fact situation as complicated as the one at issue here. (17) Second, while the Board's decision was not, as the ALJ found, based on a "novel interpretation" inconsistent with the plain language of the regulation (ALJ EAJA Decision at 12), there were no Board decisions previously addressing the need for physician notification in equivalent circumstances. Nor had the Board previously analyzed the wording and context of the requirement and its regulatory history in as great a detail. Ultimately, our decision that Park Manor made a reasonable nursing judgment that none of the signs and symptoms on which CMS relied constituted a significant change in the resident's status rested primarily on our different analysis of what the record showed regarding the [Page 32] resident's status prior to and at the time of the last consultation with the physician late Friday evening. With respect to the facts, we conclude that CMS had a reasonable basis for its position, both at the time of its initial determination and later. (18) The SOD for the March survey included a finding that the only notification to the physician was the initial notification of the UTI and a finding that the facility had not notified the legal guardian, as required. As discussed above, CMS does not have a duty to investigate the facts asserted in an SOD prior to taking an enforcement action, contrary to what Park Manor asserts. Thus, we find that CMS had a reasonable basis in fact for its initial determination, relying in part on these findings in the SOD as a basis for imposing remedies. In arguing that CMS's position was not substantially justified, Park Manor focuses mainly on our conclusion that CMS had not made a prima facie showing of a potential for more than minimal harm from the lack of immediate notification after the mottling appeared. This conclusion does not necessarily mean that CMS was not substantially justified in pressing forward with its case on this tag, however. CMS was relying on the CMS surveyor's opinion on symptoms other than the mottling as evidencing significant changes, including what the surveyor saw as a failure to respond to the antibiotic prescribed for the UTI. The CMS surveyor also relied on the resident's need for assistance with ambulation and his lethargy, which the ALJ also found to be significant changes in light of the fact that the resident had been assessed as "ambulatory" at the time of his last comprehensive assessment. (19) [Page 33]While we concluded that Park Manor could have made a different reasonable judgment, given other evidence in the record regarding pre-existing declines in the resident's abilities and energy level and in light of the resident's status at the last time the physician was updated on Friday evening, that evidence was not so conclusive, nor the flaws in the surveyor's opinion so apparent, that CMS was unreasonable in going forward to hearing. (20) Moreover, the problem with the lack of evidence regarding the alleged potential for more than minimal harm to the resident from failure to notify the physician of the mottling was not readily apparent without considering the resident's wishes for comfort measures only and evaluating whether the record contained any evidence the resident was in pain or discomfort. At the hearing, CMS elicited testimony (on which it then relied in its post-hearing brief) that it read as showing that a resident would suffer pain and discomfort from a UTI, a "high" fever, and difficulty breathing and, therefore, as showing that the resident had suffered actual harm (although the testimony, carefully read, merely indicates that these could be associated with pain or discomfort). The Board noted the lack of evidence from the resident's medical record that in fact he was suffering, and the contrary evidence from his legal guardian, but again, the weakness in CMS's evidence was not so apparent that CMS was [Page 34] unreasonable in going forward, especially given that CMS was not relying on this tag alone to support the CMP. (21) In its post-hearing submission, CMS also relied on what it viewed as concessions it had elicited from some of Park Manor's witnesses on cross-examination, including their part ownership interest in the facility, which it could have reasonably thought undercut their credibility. In addition, CMS sought to introduce evidence from the transcript of the state hearing that CMS thought undercut the testimony of Park Manor's witnesses who appeared before the ALJ in the federal proceeding. Park Manor had opposed admission of this evidence, but the ALJ deferred ruling on the objection until after receiving the post-hearing briefs. Although the ALJ ultimately did not admit this evidence into the record (see ALJ Merits Decision at 3-4), CMS was not unreasonable in thinking that the ALJ might admit it. While Park Manor pointed out in reply to CMS's post-hearing brief that CMS had taken part of the state hearing testimony out of context, CMS's reliance on this evidence became a moot issue after the ALJ declined to admit it. We next turn to the other tags on which the ALJ held a hearing. For those tags, we have, as indicated above, determined that the ALJ's analysis was insufficient under the EAJA. Because those tags (unlike tag F157 from the March survey) were not addressed in any merits decision, we necessarily provide more detail in our analysis than would otherwise be required. Our conclusions are not, however, merits conclusions based on the weight of the evidence.
[Page 35] Tag F279 relates to 42 C.F.R. � 483.20(k)(1), which requires a facility "to develop a comprehensive care plan for each resident that includes measurable objectives and timetables to meet a resident's medical, nursing, and mental and psychosocial needs that are identified in the comprehensive assessment." The plan "must describe . . . [t]he services that are to be furnished to attain or maintain the resident's highest practicable physical, mental, and psychosocial well-being as required under � 483.25." 42 C.F.R. � 483.20(k)(1)(i). The purpose of the care planning requirement is to ensure that a resident receives the services essential to meet his assessed needs and to help the resident achieve or maintain his "highest practicable" level of well-being. See section 1819(b)(2) of the Act. The SOD made findings under tag F279 regarding the care of five residents. CMS Ex. 4, at 26-34. CMS presented evidence regarding one of those five residents, Resident 12. In addition, CMS introduced evidence regarding a sixth resident, Resident 19. Although we reviewed CMS's position on Resident 19 and find it reasonable, we discuss only CMS's position on Resident 12. (22) CMS contended that Park Manor had violated section 483.20(k)(1) because Resident 12's plan of care contained no measures to address his problem of inadequate fluid intake. Resident 12 was 88 years old at the time of the survey and suffered from Alzheimer's type dementia. CMS Ex. 20, at 1. He was 5'2" tall, and his ideal body weight was 115 pounds. CMS Ex. 21, at 3. In November 2000, he experienced an acute episode of dehydration. CMS Ex. 17, at 4. In response, his physician ordered intravenous fluids. Id.; see also CMS Ex. 23, at 1 (entries for December 1). In early December 2000, a Park Manor dietician, Jennifer Timm, wrote that Resident 12 was "nutritionally at risk" due to "potential for dehydration," inadequate food intake, and low body weight. CMS Ex. 23, at 1. According to Timm, Resident 12 did not like to be bothered by staff to eat at or between meals, and although she had talked with him about "drinking more fluids to avoid dehydration and weak/confused feelings," he "did not appear to care much." Id. [Page 36] Treatment notes indicate that the nursing staff regularly encouraged Resident 12 to drink fluids. CMS Ex. 23, at 1. The notes also indicate that he had a strong personality and sometimes became upset or agitated when he was encouraged to do things he did not want to do. Id. Timm cited his dementia and depression as factors that impaired his willingness to consume adequate food and liquids. CMS Ex. 21, at 3-4. At some point between January 6 and 10, 2001, Park Manor completed a comprehensive assessment of Resident 12. See CMS Exs. 18-19. The apparent reason for the assessment was that Resident 12 had experienced a "significant change in status." CMS Ex. 18, at 1 (item 8). As part of the assessment, Timm reviewed Resident 12's nutritional status, noting that he had suffered a 9.2% weight loss over the past month "despite all staff efforts to encourage increased intake." (23) CMS Ex. 21, at 3. She estimated his fluid needs at 1500 cc. per day and wrote that "[f]luid intake is often poor, causing potential for dehydration." Id. at 3-4. The regulations require that a comprehensive assessment be completed using the "resident assessment instrument" (RAI) specified by the state. 42 C.F.R. � 483.20(b)(1). The RAI used here was the "CMS-designated" RAI, consisting of three basic components: the Minimum Data Set Version 2.0 (MDS), the Resident Assessment Protocols (RAPs), and the RAI Version 2.0 Manual (RAI Manual). 42 C.F.R. � 483.15. In states using this RAI, a facility must complete an MDS form (CMS Ex. 18) to collect and report information about the resident's functional capacity and then use RAP guidelines to identify and assess problems that might require care planning (CMS Ex. 19). Id. The RAPs address a minimum of 18 "domains," each covering a broad subject related to patient health, well-being, or treatment; one of these domains is "dehydration/fluid maintenance". 42 C.F.R. � 483.315(f). A problem is targeted for evaluation or assessment under a particular RAP based on certain "trigger" conditions identified in the MDS or elsewhere. In section J of the MDS form, the facility is instructed to note any "indicators of fluid status" that manifested themselves during the previous seven days (unless a different time frame is indicated). CMS Ex. 18, at 3. One of these indicators is [Page 37] "Dehydrated; output exceeds input." Id. Another "fluid status" indicator is "Insufficient fluid; did NOT consume all/almost all liquids provided during LAST 3 DAYS." CMS Ex. 18, at 3. In January 2001, Park Manor completed a MDS form as part of Resident 12's comprehensive assessment. CMS Ex. 18, at 5. In that form Park Manor did not check the "Dehydrated; output exceeds input" indicator in section J. Id. at 3. Nor did it check the "Insufficient fluid" indicator. Id. In addition to completing the MDS form, Park Manor prepared a "Resident Assessment Protocol [RAP] Summary" for Resident 12. CMS Ex. 19. This RAP summary lists the 18 RAP "problem areas" (including "dehydration/fluid maintenance" and "nutritional status") and indicates which areas were "triggered" as requiring further assessment. CMS Ex. 19. According to this RAP summary, nutritional status was a triggered problem area, but dehydration/fluid maintenance was not. Id., at 2. In February 2001, Park Manor began to record Resident 12's fluid intake each shift. (24) PM Ex. 8, at 1-2. On February 1, 2001, Nurse Wendy Barbeln wrote in the nurses notes that Resident 12 was showing signs of dehydration and noted that his fluid intake was 1140 cc. CMS Ex. 23, at 9; see also PM Ex. 8, at 1 (showing intake of 1140 cc. on the 7:00 a.m. to 3:00 p.m. shift, and 1500 cc. overall for February 1). On February 3, 2001, another nurse wrote that Resident 12 had consumed only 120 cc. of water at supper and that he "continue[d] to need encouragement to drink fluids[.]" CMS Ex. 23, at 9; but see PM Ex. 8, at 1 (showing intake of 360 cc. on the 7:00 a.m. to 3:00 p.m. shift, 240 cc. on the 3:00 p.m. to 11:00 p.m. shift, and a total intake of 1000 cc. on February 3). On February 6, 2001, at Nurse Barbeln's request, Dr. Funk, the attending physician, assessed Resident 12 and "agreed that [he] was dehydrated." CMS Ex. 23, at 9; Tr. at 172. The treatment notes indicate that Dr. Funk instructed the nursing staff to "continue pushing fluids" but decided not to restart IV therapy because Resident 12 was "anxious and frustrated" during the previous infusion and kept pulling the IV out of his arm. CMS Ex. 23, at 9. [Page 38] On March 7-9, 2001, Resident 12 had bouts of diarrhea. CMS Ex. 23, at 10. On March 20, 2001, a "potential for dehydration" was noted in his chart. Id. at 12. Resident 12's daily fluid intake in February and March 2001 ranged from a high of 1500 cc. to a low of 180 cc., and in March his daily fluid intake was consistently below 1000 cc., exceeding 600 cc. only three times. PM Ex. 8, at 1-2. Under the heading "alteration in nutrition," the plan of care in effect for Resident 12 during March 2001 addressed the problem of inadequate food intake and consequent weight loss with specific instructions. CMS Ex. 20, at 2. The plan of care said nothing about Resident 12's potential for dehydration, however. Nor did it set any fluid intake goals. Jan Suzuki, a licensed dietician with a bachelor's degree in nutrition and medical dietetics, testified on behalf of CMS. CMS Ex. 55. She testified that the nursing records (CMS Exhibits 17-24) "tell me that Park Manor assessed [Resident 12] to be at risk for dehydration." Id., � 12. She further stated that, given Resident 12's "recent history as documented in Park Manor's records," her opinion was that "dehydration should have been triggered as a concern for care planning." Id., � 13. In addition, Suzuki testified that Park Manor did not devise a care plan designed to address Resident 12's need for hydration:
Id., � 15. Suzuki noted that "dehydration" is categorized as a health concern in the MDS, distinct from questions of nutritional status. Id., � 15. She stated that Park Manor's failure to address Resident 12's need for fluids in the plan of care "had the potential for more than minimal harm because without a care plan to prevent dehydration the resident is at greater risk for recurrence of dehydration." Id., � 16. In their affidavits, Park Manor's witnesses testified that it was difficult at times to get Resident 12 to take fluids. See, e.g., PM Ex. 56, � 8 (Barbeln); PM Ex. 74, �� 8-10 (Timm). Most described him as someone who ate or drank only what he wanted and when he wanted to. See, e.g., PM Ex. 63, � 18. They also [Page 39] testified that he was offered food and fluids "on contact" but that he would sometimes refuse the offer if approached in the wrong way or at the wrong time. PM Ex. 56, � 11; PM Ex. 68, � 31; PM Ex. 71, at 7; PM Ex. 74, � 10. Jennifer Timm (Park Manor's dietician) and others testified that it "was not necessary to care plan for a problem of dehydration . . . because dehydration had not been triggered as a problem in the comprehensive MDS assessment and RAP summary." PM Ex. 74, � 16 (Timm); PM Ex. 63, � 16 (Haegerl). These witnesses also asserted that as used in a plan of care, the terms "meals" and "nutrition" refer to "food and fluids," and that Resident 12's hydration needs were addressed in the care plan under the problem heading of "alteration in nutrition." PM Ex. 74, �� 14, 16; PM Ex. 63, � 17. In addition, Park Manor's witnesses noted that the nursing staff was aware of Resident 12's hydration needs, that his food and fluid intake were monitored at each meal, and that fluid intake was recorded on his medication administration record. PM Ex. 63, � 17; PM Ex. 74, �� 16-17. At the hearing, Mary Jane Merkely-Zimmerman, a Park Manor certified dietary services manager, admitted that Resident 12 was at high risk of dehydration. Tr. at 218. In addition, Karen Haegerl, a facility nurse, admitted that in early 2001 Resident 12 had signs of, and risk factors for, dehydration, including lethargy and diarrhea. Tr. at 171. Each of these witnesses also admitted that Resident 12's plan of care did not articulate any specific or particular approach for getting Resident 12 to increase his fluid intake or to prevent dehydration. Tr. at 173-175, 218. Nurse Haegerl conceded that "pushing fluids" did not constitute an "individualized" plan of care. Tr. at 175-76. Considering the whole record, we find that CMS had a reasonable basis for alleging noncompliance with section 483.20(k)(1) in the care of Resident 12. There was evidence -- specifically, Jennifer Timm's January 4, 2001 nutrition status report -- that inadequate fluid intake had been identified as a problem during Resident 12's comprehensive assessment. CMS Ex. 21, at 3-4. However, in March 2001, Resident 12's plan of care did not expressly mention this problem, and some of Park Manor's witnesses conceded that the plan did not set forth a specific approach to mitigate the risk of dehydration. That risk was not insignificant or speculative. Resident 12 had been treated for dehydration only four months before the survey. Facility records indicate that in early 2001, Resident 12's fluid intake was often below his estimated daily need, and nursing notes from this period reflect concerns that he was dehydrated or at risk for dehydration. [Page 40] Park Manor's witnesses stressed that the nursing staff was aware of Resident 12's need to consume more fluids and encouraged him to drink fluids at every opportunity. Nurse Haegerl admitted, however, that Resident 12 enjoyed certain liquids only at certain times and that there was no plan about when it was a good time to offer particular liquids. Given this testimony, and the evidence that Resident 12 often did not accept the nursing staff's entreaties to increase his consumption, CMS could reasonably argue (as it did) that the general approach of "pushing fluids" -- or providing fluids "on contact" -- was no substitute for careful care planning designed to meet Resident 12's individual needs. In this appeal, Park Manor contends that it did not violate section 483.20(k)(1) because dehydration was not identified in the documents from the comprehensive assessment. PM Reply at 27-28. Park Manor also asserts that there were too few RAP "risk factors" present to trigger dehydration as a "problem" for care planning, and that the MDS and the RAP summary did not identify dehydration as a care planning problem. PM Reply at 27-28. (25) Even if the risk factors for "dehydration" triggering a RAP were not present, however, CMS could reasonably take the position that there were indicators of inadequate fluid intake and therefore a risk of dehydration, for which Park Manor should have planned. Section 483.20(k)(1) requires a facility to formulate a care plan for needs identified by a "comprehensive assessment." CMS could reasonably read that regulation as not limiting a facility's care planning obligations only to problems or needs a facility in fact notes on the MDS form and uses a RAP to assess. See 42 C.F.R. � 483.20(b)(1) (requiring a facility to perform a comprehensive assessment "using the resident assessment instrument" (emphasis added) and requiring the assessment to cover "at least" 18 [Page 41] domains). (26) Otherwise, a facility could avoid its obligation to provide services simply by failing to report an assessment accurately on the RAI. Our conclusion that CMS's reading is reasonable is supported by the Board's recent decision in Maine Veterans' Home-Scarborough, DAB No. 1975 (2005), in which the Board concluded that the MDS and RAPs are merely tools to assist a facility and not the exclusive means of identifying resident needs or problems during a comprehensive assessment. We also note here that Resident 12's problem with fluid intake continued to manifest itself in the weeks after the assessment. Park Manor argues that CMS produced insufficient evidence that the alleged deficiency created the potential for more than minimal harm, asserting that Jan Suzuki was unqualified to give an opinion on the issue. PM Reply at 30. CMS reasonably considered Suzuki to be qualified. See CMS Ex. 55, �� 1-3. Even disregarding Suzuki's opinion, however, the record contains more than adequate evidence from which one could reasonably infer the potential for "more than minimal" harm. In sum, CMS had a reasonable basis for contending that Park Manor was not in substantial compliance with section 483.20(k)(1) based on the evidence regarding Resident 12.
Tag F309 relates to 42 C.F.R. � 483.25, which requires a facility to ensure that each resident receives "the necessary care and services to attain or maintain [the resident's] highest practicable physical, mental, and psychosocial well-being, in accordance with the comprehensive assessment and plan of care." CMS contended that Park Manor violated section 483.25 by failing to supervise Resident 19 adequately to ensure that he did not choke or aspirate his food or liquids. R. 86, at 22-25. Aspiration occurs when food or liquid enters the airway, and aspiration of foreign matter into the lungs can lead to aspiration pneumonia. CMS Ex. 30, at 3. The record reveals the following undisputed facts. Resident 19 was admitted to Park Manor on August 25, 2000. PM Ex. 15, at 1. His diagnoses included aspiration syndrome, dysphagia (difficulty swallowing), and Alzheimer's disease and dementia. Id.; CMS Ex. 25, at 3, 6; CMS Ex. 27, at 1, 4; CMS Ex. 28, at 2; CMS Ex. 30, [Page 42] at 3. Just prior to admission, he had been treated in the hospital for aspiration syndrome and pneumonia. CMS Ex. 27, at 1. An August 30 nursing note states that Resident 19 coughed "at times" when eating. PM Ex. 15, at 3. During his comprehensive assessment, a facility staff member noted that Resident 19 "may forget to swallow." CMS Ex. 28, at 2; see also CMS Ex. 65, at 11 (nursing notes to same effect); Tr. at 33, 41. His diet in the facility called for "mechanically altered" or "general house ground texture" food as well as thickened liquids, except for water and coffee. CMS Ex. 29, at 3; PM Ex. 15, at 2-3 (entries for August 30); PM Ex. 74, � 21; PM Ex. 71, � 7. When admitted to the facility, Resident 19 could not feed himself without substantial assistance. See, e.g., PM Ex. 15, at 1, 3. His ability to feed himself apparently improved during the course of his stay. Id. at 22; PM Ex. 74, �� 21-23. On March 7, 2001, the nursing staff noted that he needed only "setup help," "standby assistance," and "verbal cues" from the staff during his meals. PM Ex. 15, at 22. Because of his dementia, dysphagia, and need for assistance during meals, Resident 19 ate his meals in a supervised eating group in the dining room of the facility's Alzheimer's wing. PM Ex. 15, at 3; PM Ex. 71, � 4; PM Ex. 74, � 21, 23. According to certified nursing assistants who supervised residents in this group --
PM Ex. 58, � 8; see also PM Ex. 64, � 13. Jennifer Timm, Park Manor's dietician, testified that "verbal cueing was sometimes necessary to remind [Resident 19] to take smaller bites and sips, chew more thoroughly and to eat or drink more slowly." PM Ex. 74, � 24. On January 13, 2001, Resident 19 was admitted to the hospital for aspiration pneumonia. PM Ex. 15, at 15. When he returned to Park Manor, he was assessed by a nurse who observed him eating a meal and who determined that he had "no problems with chewing, swallowing, no coughing during meal." Id. The nurse who made [Page 43] the assessment indicated that "aspiration precautions" had been taken during the meal. Id. Jennifer Timm testified that Park Manor's nurses and dietary staff were trained to use aspiration precautions. PM Ex. 74, � 19. She further testified:
Id., � 20. Mary Jane Merkely-Zimmerman testified that Resident 19's need for aspiration precautions was noted on his dietary card and recalled that the card contained instructions for aspiration precautions. PM Ex. 71, � 9. CMS's allegation of noncompliance was based largely on the testimony of Jan Suzuki regarding her observations of Resident 19 in the dining room between 7:35 and 8:10 a.m. on March 20, 2001. Her self-described "minute-by-minute" observations that morning are recorded in her handwritten notes. CMS Ex. 10, at 44-45. In her declaration, Suzuki noted what she considered to be two problems with Resident 19's care on the morning of March 20. CMS Ex. 55, �� 24-26, 28-29. The first was that Resident 19 had been given a food item that was, in Suzuki's opinion, not consistent with his prescription for a "ground texture" diet. Id., � 26. The second (and the one on which CMS focused its presentation) was that staff in the dining room did not adequately safeguard Resident 19 from choking on or aspirating his food. Suzuki testified that Resident 19 was coughing during his breakfast, and that "[w]hen he spoke he made gurgly sounds in his throat that in my professional judgment are associated with aspiration." CMS Ex. 55, � 25. Suzuki's notes state that she observed Resident 19 "gurgling" and coughing at 7:44 a.m. CMS Ex. 10, at 44. Suzuki explained that "verbal cuing" is a "method of instructing a cognitively impaired resident while eating, to remind him to chew, swallow, or take small bites, as indicated." CMS Ex. 55, � 28. She asserted that the first time she saw Resident 19 being verbally cued on March 20 was at 7:53 a.m., when a certified [Page 44] nursing assistant gave him water and instructed him to "drink it slow" and to "slow down." Id. Suzuki further stated that she observed staff encouraging Resident 19 to continue eating even though he was coughing. She described this as dangerous, opining that "given the severity and duration of [Resident 19's] coughing that I observed . . . , as well as the gurgling sounds I heard, at that time it would have been advisable to cease offering him food and fluids to prevent choking." CMS Ex. 55, � 29. In addition, Suzuki noted that for about two minutes, beginning at 7:58 a.m., there was no nursing staff in the dining room where Resident 19 was eating breakfast. Id., � 30. In Suzuki's opinion, "staff should have been present at all times to ensure that [Resident 19] did not choke on any of the foods and fluids on his tray[.]" Id. Finally, Suzuki asserted that Park Manor had "failed to do a comprehensive assessment of [Resident 19's] swallowing ability and those foods and fluids he could swallow safely or to develop a comprehensive care plan for his aspiration syndrome with methods to reduce his risk of aspiration." CMS Ex. 55, � 31. At the hearing, Suzuki testified that she saw Resident 19 continue to eat while coughing and take a bite of food while chewed food was still in his mouth. Tr. at 44. She also testified that Resident 19's cough was not strong enough to clear food that might get stuck in his airway, and that he could not consistently "cough and clear his throat independently." Tr. at 33, 57. In view of these factors, it was, in Suzuki's opinion, important that the nursing staff be present to verbally cue Resident 19 (remind him to chew, swallow, or take small bites) during meals to prevent choking or aspiration. Tr. at 57; see also CMS Ex. 55, � 28. Park Manor's witness, Jenean Erickson, admitted that it was "possible" that Resident 19 would choke if left to his own devices while eating. (27) Tr. at 210. [Page 45] A speech pathologist named Tom Olson evaluated Resident 19's swallowing ability in June 1999, after Resident 19 reportedly choked on various foods at home. (28) PM Ex. 17, at 1. At the State hearing, Olson explained his findings and described the "bedside evaluation" on which the findings were based. CMS Ex. 53, at 5, 7-10, 12-13. Olson found that Resident 19's swallowing problem was "severe." Id. at 32-33. Olson reported that Resident 19 pooled thin liquids, which was manifested by "a small, a slight gurgling in the throat upon breathing." Id. at 55. Olson also found that Resident 19 "had a very weak cough" when he coughed voluntarily in an effort to clear away or expel aspirated liquids or food particles. Id. at 56-57. Olson stated that Resident 19's swallowing ability could be expected to worsen. Id. at 32-33, 77. In its post-hearing brief, CMS argued that because of Resident 19's swallowing disorder, dementia, risk for aspiration, and partial ability to feed himself, adequate supervision and verbal cuing were services needed to maintain his well-being. R. 86, at 22-24. CMS further contended that Resident 19 did not receive these services on March 20, noting that the nursing staff had encouraged Resident 19 to continue eating while he coughed, provided virtually no verbal cuing, and left him alone with food outside the presence of staff, increasing the risk that he might choke on or aspirate the food. (29) Id. CMS asserted that it was unsafe for Resident 19 to ingest any food or fluids unless staff was available to remind him to chew and swallow, to cough when [Page 46] necessary to clear his throat, and to stop eating while coughing. R. 88, at 15. Considering the whole record, we find that CMS had a reasonable basis for alleging noncompliance with section 483.25. Based on the evidence, CMS could reasonably argue that Resident 19 was at risk of aspirating his food and needed staff to remind him to swallow, to eat slowly, and to clear his throat when necessary, and that the supervision in the dining room on March 20 was inadequate. Surveyor Susuki's testimony, if credited, shows that staff provided virtually no verbal cuing despite Resident 19's coughing and "gurgling," improperly told him to continue eating while he was coughing, and left him in the dining room alone. Park Manor's witnesses testified that it "would not have been necessary for a nursing assistant to sit at a table with Resident No. 19 on a one-on-one basis if he was in a supervised feeding group," and that it "was adequate if the staff kept Resident No. 19 within visual and hearing contact during the course of the meal." See, e.g., PM Ex. 74, �� 23, 27. Yet, none of the witnesses asserted that the verbal cuing observed by Suzuki was adequate under the circumstances, that it was safe to leave Resident 19 alone in the dining room, or that staff outside the dining room could actually maintain "visual and hearing contact" with residents inside. In this appeal, Park Manor contends that CMS failed to make a prima facie showing of noncompliance because its evidence failed to establish that Resident 19's care was inconsistent with physician orders, the plan of care, or "professionally accepted standards." PM Reply at 32. However, Park Manor points to nothing in section 483.25 limiting a facility's obligation to provide "necessary services" to services required by a plan of care, physician's order, or "professionally accepted" standard. Board decisions have, in fact, rejected such a narrow application of section 483.25. See, e.g., Harmony Court, DAB No. 1968, at 8 (2005) ("the mere fact that [the facility] did not specify in the resident's plan of care that the monitoring would be done is not sufficient to show" compliance with section 483.25); The Windsor House, DAB No. 1942, at 19-20 (2004)(noting that section 483.25's overarching purpose is to ensure that residents receive services that ensure favorable health outcomes). Section 483.25 requires a facility to ensure that a resident receives services "necessary" to "attain or maintain the highest practicable [Page 47] physical, mental, and psychosocial well-being" of the resident. (30) In this case, CMS presented evidence that verbal cuing and close supervision during meals were necessary to prevent choking and aspiration and thereby ensure Resident 19's well-being. CMS also presented evidence that Resident 19 did not receive these services in adequate measure on March 20. Emphasizing that Jan Suzuki had not worked in a long-term nursing facility, Park Manor asserts that she was not qualified to determine if its nursing care met professional standards, to state that Resident 19's "gurgling sounds" were associated with aspiration, to assert that encouraging Resident 19 to eat while coughing could lead to choking, or to assert that the presence of staff was necessary to ensure that Resident 19 did not choke. PM Reply at 35-36. Although Suzuki had not worked in a nursing facility, she did work as a clinical dietician in the cardiac, surgical, rehabilitation, and oncology units of a hospital. CMS Ex. 55, � 2. She testified that during her tenure at the hospital, she spent five years working closely with a speech language pathologist managing residents with swallowing difficulties. Tr. at 55. She also testified that her degree in nutrition and medical dietetics included "the study of the physiology, anatomy, different kinds of health conditions, disease states, different age groups, different living conditions, whether it is in a health institutionalized setting versus out patient versus living at home, counseling, performing assessments, making recommendations to other health care professionals including physicians." Id. In addition, Suzuki testified that her continuing education included attending seminars on dysphagia. Id. None of Park Manor's witnesses testified that Suzuki was unqualified to render the opinions she did, and none questioned her interpretation or assessment of what she observed on the morning of March 20 (e.g., her opinion that Resident 19's gurgling was a sign of aspiration). Under the circumstances, CMS reasonably relied on Suzuki's testimony. Finally, Park Manor contends that there was insufficient evidence of the potential for more than minimal harm. PM Reply at 36-37. CMS had a reasonable basis to contend that Park Manor's noncompliance created a potential for more than minimal harm, [Page 48] however. Jan Suzuki gave uncontradicted testimony that the practices she observed on March 20 created a risk that Resident 19 might choke on or aspirate his food. Resident 19 had, moreover, recently been hospitalized with aspiration pneumonia. Accordingly, we find that CMS had a reasonable basis for alleging noncompliance with section 483.25.
Tag F332 relates to 42 C.F.R. � 483.25(m)(1), which provides that a facility "must ensure that . . . [i]t is free of medication error rates of five percent or greater[.]" A companion provision requires the facility to ensure that residents are free from "significant" medication errors. 45 C.F.R. � 483.25(m)(2). In the rulemaking that adopted section 483.25(m), CMS stated:
56 Fed. Reg. 48,826, 48,853 (Sept. 26, 1991) (emphasis added). CMS's Guidance to Surveyors -- Long-Term Care Facilities (CMS Guidance), an appendix to the State Operations Manual (SOM), defines a "medication error" as --
SOM, App. PP, at PP-129. (31) According to the CMS Guidance, "[a]ccepted professional standards and principles include the various practice regulations in each State, and current commonly accepted health standards established by national organizations, boards, and councils." Id. The CMS Guidance provides that the error rate is calculated by dividing the total number of errors observed by the survey team by the total number of "opportunities for error." SOM, App. PP, at PP-130. An "opportunity for error" is a medication dose that is administered to the resident or an ordered dose that is not administered. Id. CMS's Survey Procedures for Long Term Care Facilities (Survey Procedures), another SOM appendix, instruct the survey team to "[i]nitially observe a minimum of 20-25 opportunities for errors" and "[s]trive to observe as many individuals administering medications as possible." SOM, App. P, at P-61. The Survey Procedures instruct the team to observe another 20-25 opportunities for error if one or more errors is found in the initial round of observations. Id. Wanda Hardges, R.N., a CMS nurse consultant who accompanied State surveyors on the March survey, testified that during "medication passes" on March 15 and 16, Park Manor was found to have 11 medication errors out of 59 opportunities for error, an error rate of 18.6 percent. (32) CMS Ex. 54, �� 21-31. (CMS later [Page 50] conceded that the number of opportunities for error was 60. R. 86, at 27.) Hardges described what she considered to be Park Manor's 11 medication errors on March 15 and 16. CMS Ex. 54, �� 22-29. Three of the errors she described involved administering insulin; the remaining eight involved inhaled medication. Regarding the three alleged insulin errors, Hardges testified that "accepted nursing standards" call for administering "short-acting" insulin 15 to 30 minutes before a meal, and "intermediate-acting" insulin 30-60 minutes before a meal. CMS Ex. 54, �� 24, 27. Hardges testified that on March 15, three instances were observed in which Park Manor made a "medication timing error" by failing to administer insulin in accordance with the accepted nursing standards. Id., �� 23-27. She also testified that these errors created a risk that the residents might suffer a hypoglycemic reaction. Id., �� 25-27. The other eight alleged errors were instances in which a nurse failed to wait 60 seconds between puffs when administering multiple puffs of inhaled medication. CMS Ex. 54, �� 28-29. Nurse Hardges testified that she personally observed one of these errors on March 15, that the other seven errors were observed and reported to her by State surveyors, and that in none of the instances did the nurse wait longer than 15 seconds between puffs. Id. Hardges testified that failing to wait at least one minute between puffs was contrary to the "accepted nursing standard," citing an American Society of Consultant Pharmacists (ASCP) publication entitled Medication Guide for the Long Term Care Nurse (ASCP Guide). CMS Ex. 54, � 28. The ASCP Guide contains a section on inhaled medications such as corticosteroids and bronchodilators, instructing caregivers to "[w]ait one minute between 'puffs' for multiple inhalations of the same drug" and noting that "spacing and proper sequence of different inhalers is important for maximal drug effectiveness." CMS Ex. 42, at 3. Hardges testified that if inhaled medication is not allowed sufficient time to penetrate the lungs between puffs, the medication is dissipated, and the resident does not receive the full benefit of the medication. CMS Ex. 54, � 28. [Page 51] Three of the alleged inhaled medication errors involved the drug Azmacort, a corticosteroid. (33) CMS Ex. 54, �� 28-29. CMS relied on the manufacturer's instructions (for periods starting in 1995) for Azmacort, which advised the user to wait one minute between puffs. CMS Exs. 62-64. CMS also pointed out that the CMS Guidance lists as a medication error the failure to wait approximately one minute between multiple puffs of medication administered via "metered dose inhalers." SOM, App. PP, at PP-135.3. Paula Kock, Park Manor's nursing administrator, testified that she was unaware of any one-minute standard or requirement. PM Ex. 68, � 66. She stated: "Other than what occurred in this survey, I have never before or since read or heard of any independent nursing practice which indicates that a nurse is required to wait a full minute between administering successive 'puffs' of the same inhaled medication." Id. She asserted that a 15-second waiting time was consistent with accepted nursing practice. Id., � 68. She also asserted that Azmacort instructions specifying a pause of 60 seconds between puffs did not arrive at Park Manor until many months after the survey. Id.,�� 67-68 (citing PM Exs. 24 and 25). Park Manor's consultant Jenean Erickson testified that there was no consistent standard, as evidenced by the fact the SOD cited a 30-second standard. PM Ex. 61, � 70. She also said that manufacturers' recommendations are different from "manufacturers' specifications." Id. Considering the whole record, we find that CMS had a reasonable basis for alleging noncompliance with section 483.25(m)(1), based solely on its evidence concerning the administration of inhaled medication. (34) The ASCP Guide, issued by a national organization, instructs a nurse to wait one minute between puffs of commonly prescribed inhaled medication; no exceptions or qualifications are noted. The package insert for Azmacort contains the same clear instruction. According to the CMS Guidance, the ASCP guidelines and the manufacturer's specifications are the type of evidence that should be considered authoritative by surveyors in deciding whether a medication "error" has occurred. Moreover, [Page 52] even if Park Manor was not aware of these instructions or considered them merely recommendations, the CMS Guidance itself indicates that failure to wait about one minute between puffs is a medication error. CMS could reasonably rely on this evidence about the standard, especially since Park Manor presented no documentary evidence that 15 seconds was the commonly accepted professional standard. CMS presented evidence -- including "Medication Pass Worksheets" (CMS Exhibits 32-33) and the declaration of Wanda Hardges -- that, on eight occasions, Park Manor nurses failed to wait at least one minute when administering multiple puffs of an inhaled medication to a resident. In other words, CMS presented evidence of eight medication errors involving inhaled medication. Eight errors in 60 opportunities for error yields an error rate of 13.3%, well above the five percent threshold. Given Hardges' unrebutted testimony that a resident would not get the full benefit of the medication if the wait time were less than one minute and that the surveyors said they observed three different nurses waiting only 15 seconds or less, for a total of eight such observations, CMS reasonably argued that there was a systemic flaw in Park Manor's medication administration procedures that created the potential for more than minimal harm. In the EAJA appeal, Park Manor makes a number of assertions about CMS's case-in-chief, none of which causes us to question its reasonableness. First, Park Manor asserts that CMS's position was fatally compromised by reliance on hearsay evidence - namely, the reports of surveyors who did not testify. PM Reply at 37. We do not agree. Hearsay is admissible in these cases and may constitute substantial evidence of the facts asserted if it has sufficient indicia of reliability. Florence Park Care Center, DAB No. 1931 (2004), citing Richardson v. Perales, 402 U.S. 389 (1971). With respect to the inhaled medication errors, the surveyor's observations were reported to (and described by) Nurse Hardges in her direct testimony. CMS Ex. 54, �� 28-29. These reports had some indicia of reliability. Park Manor did not attempt to secure, by subpoena or otherwise, the testimony of the surveyors or of the facility employees involved in these incidents. The staff who were observed were presumably in the best position to challenge the accuracy or veracity of the surveyors' reports. Well before the hearing, Park Manor was aware that CMS intended to rely on the surveyors' observations but never sought to exclude the evidence of those observations on the ground that surveyors were unavailable. In addition, the observations described by Hardges are corroborated by the written reports of the surveyors in official survey documents -- e.g., Medication Pass Worksheets (CMS Exhibits 32-33) and the SOD (CMS [Page 53] Exhibit 4, at 67-70) -- all of which would arguably qualify for admission under the Federal Rules of Evidence hearsay exception for records or reports of public agencies, absent circumstances indicating their untrustworthiness. Guardian Health Care Center, DAB No. 1943, at 16, n.13 (2004). Park Manor asserts that the hearsay was unreliable because the surveyors were "biased." PM Brief at 38, citing PM Exs. 79A-83B. We have examined the exhibits cited by Park Manor to support this allegation but find no evidence that surveyor bias tainted the reported observations. Under the circumstances, CMS reasonably relied on the observations reported by Nurse Hardges. Next, Park Manor contends that CMS "failed to introduce any evidence tending to show that the standards, against which it sought to measure Park Manor's practices, was either a doctor's order, a manufacturer's specification, or a commonly accepted health standard established by a national professional organization, board, or council." PM Reply at 37. As we have just explained, however, CMS did introduce such evidence for the inhaled medication incidents. Park Manor also contends that CMS failed to authenticate or validate the "sample" of observations upon which CMS based its allegations. PM Reply at 37-38. It also asserts that CMS failed to introduce any "credible evidence of how many observations constituted the sample on which the calculation was based." Id. CMS could reasonably rely on the evidence it did as establishing the medication error rate, however. As the Board pointed out in Pacific Regency Arvin, DAB No. 1823, at 11 (2002), the SOM uses CMS's longstanding definition of the term "medication error rate" (the number of errors observed divided by the opportunities for error times 100), and nothing in the regulation requires CMS to address the statistical significance of its findings as part of its prima facie case of noncompliance. Moreover, Nurse Hardges did explain how the surveyors arrived at the number of observations (by counting doses administered and doses ordered but not administered). CMS Ex. 54, � 30. This testimony is corroborated by the medication pass worksheets completed by the surveyors. CMS Exs. 32-33. These worksheets document the 59 observations that Hardges refers to in her testimony, and cross-examination of Hardges did not show that the number of observations was any larger than 60. Tr. at 78-91. Whether the total number of observations is 59, 60, or 100, CMS could reasonably claim that the error rate was greater than five percent based on the number of inhaled medication errors alone. [Page 54] Finally, Park Manor asserts that the Azmacort administration errors were "the result of differences between what may have been the instructions in the packages," which Park Manor claims it had not yet received, "and the directions in the PDR [Physicians' Desk Reference], which was used at Park Manor as a medication reference." PM Reply at 40. Park Manor had failed to produce the relevant portions of the PDR on which it claimed to rely, however. Thus, we see no reason why CMS needed to account for this assertion.
Tag F496 relates to 42 C.F.R. � 483.75(e)(5), which states in pertinent part:
Section 483.75 implements section 1819(b)(5) of the Act, which prohibits a facility from employing as a nurse aide any person who has not completed a state-approved training and competency evaluation program (NATCEP). The purpose is to ensure that nurse aides have the education, practical knowledge, and skills needed to care for facility residents. 56 Fed. Reg. 48,880 (Sept. 26, 1991). A state-approved training program must include "supervised practical training," in which a trainee "demonstrates knowledge while performing tasks on an individual under the direct supervision of a registered nurse or a licensed practical nurse." 42 C.F.R. � 483.152(a)(3). States must maintain a registry of nurse aides who satisfactorily complete the required education and training. Section 1819(e)(2) of the Act. [Page 55] The record contains evidence of the following facts. (35) On February 27, 2001, Park Manor hired Ron Reeder to work as a nurse aide. At Park Manor, a nurse aide's duties include assisting residents with bathing, dressing, oral hygiene, feeding, toileting, turning and repositioning, and restorative care. Reeder began working at Park Manor on March 2, 2001. He received some training during his first two weeks of employment. The training consisted of four hours of video instruction and 10 days working beside -- and under the direct supervision of -- a certified nursing assistant named Jeanette Ryback. Ryback provided Reeder with on-the-job skills training and, at the end of the training period, certified that he had achieved the necessary degree of proficiency in performing certain nurse aide duties. The training Reeder received was not part of an approved NATCEP. According to Karen Haegerl, whose duties at the facility included serving as an instructor in its approved nurse aide training program, a NATCEP must be run by registered nurses who themselves receive training on how to train others. Park Manor's approved NATCEP required 40 hours of classroom instruction and 40 hours of clinical practice as a prerequisite for certification. Jeanette Ryback, Reeder's trainer, was not a registered nurse and had no training as an instructor in the State-approved NATCEP. On or about March 15, 2001, Reeder began to perform his duties independently of his trainer, providing the full range of nurse aide services to eight residents. On March 22, 2001, Park Manor's nursing home administrator informed surveyors that Reeder had no nurse aide certification and was not then enrolled or participating in an approved training program. Reeder did not start the approved training program until after the survey. These facts, none of which Park Manor disputed, show that beginning in early March 2001, Park Manor allowed a person who was not then on Wisconsin's nurse aide registry, had not recently completed an approved NATCEP, and was not then enrolled in or actively participating in an approved NATCEP to work in the facility as a nurse aide. The plain language of section 483.75(e)(5) expressly prohibits a facility from using a person as a nurse aide under these circumstances. [Page 56] Park Manor does not allege that it was complying with section 483.75(e)(5), but contends that CMS was not justified in alleging noncompliance because CMS failed to introduce any evidence of a potential for more than minimal harm. PM Reply at 41. We do not agree that such evidence was lacking. During the proceeding, CMS presented written direct testimony from state surveyor Barbara Brock Arndt. CMS Ex. 56. She did not directly state an opinion that this deficiency had a potential for more than minimal harm. She did, however, refer to the competency requirements under the statutory scheme and state law, describe her findings on aspects of Reeder's training and supervision (which on their face are inconsistent with these requirements or otherwise questionable), and describe her findings regarding the activities in which he was engaged shortly after being employed, without even a CNA to supervise him. She also stated her opinion that Reeder was "employed by the facility to provide direct nursing services to residents without being properly trained to provide such services." Id. at � 12. One could reasonably infer from this evidence that there was a potential for more than minimal harm. At the hearing, moreover, CMS elicited testimony from Karen Haegerl, a supervising nurse at Park Manor, that the approved training program would have been better able than Reeder's trainer to instruct a trainee about spotting problems with a resident's condition. Tr. at 160-161. In addition, Haegerl admitted that a nurse aide trainee would not learn everything he needed to know about proper body positioning without taking the approved training course. Tr. at 164-65. Haegerl also testified that Reeder would be less able to detect a significant change in a resident's condition than a person who participated in state-approved training. Tr. at 186, 192-193. Park Manor submitted a checklist completed by Jeanette Ryback that indicates that Reeder had demonstrated proficiency in a number of nurse aide skills between March 2 and March 14, 2001. PM Ex. 85. However, Park Manor made no attempt to show that Reeder's training was comparable to an approved NATCEP. Ryback's checklist does not confirm that Reeder received all the required training. For example, the required curriculum includes training in meeting residents' mental health and social services needs and in communicating and understanding the needs of cognitively impaired residents. 42 C.F.R. 483.152(b)(4) and (5). The checklist does not indicate that Reeder received any training in these areas, yet Park Manor provided no evidence that the eight residents Reeder cared for did not have any such needs. Given the undisputed facts, a fact-finder could reasonably infer that Park Manor's failure to comply with section 483.75(e) [Page 57] created the potential for more than minimal harm to residents, especially to the eight residents under Reeder's care. Park Manor asserts that CMS goes too far in arguing here that the fact that Congress required NATCEP training in order to protect and promote resident health and safety means that any failure to comply with the requirement automatically poses a potential for more than minimal harm. PM Reply at 41. In fact, however, CMS was not relying solely on the failure to meet the requirements, but also on the extent and nature of the failure. Accordingly, we conclude that CMS had a reasonable basis for alleging noncompliance with section 483.75(e).
Tag F444 relates to 42 C.F.R. � 483.65(b)(3), which states: "The facility must require staff to wash their hands after each direct resident contact for which handwashing is indicated by accepted professional practice." In the rulemaking that promulgated this section, CMS explained:
54 Fed. Reg. 5316, 5345 (Feb. 2, 1989). CMS's evidence regarding tag F444 consisted largely of statements by Wanda Hardges, the CMS nurse consultant who accompanied WDHFS [Page 58] surveyors during the March survey. (36) CMS Ex. 54. In written direct testimony, Nurse Hardges stated that, on March 15, 2001, she watched Park Manor nurse Pat Witt administer insulin to four residents. Id. � 32. According to Hardges, Witt "did not wash her hands either with water or a hand sanitizer before and after administering the insulin injections to each" of the four residents. Id. Hardges stated that this omission was "contrary to accepted professional practice, which requires that a nurse wash his or her hands before and after administering an injection to each patient, using either soap and water or a liquid sanitizer." Id. Nurse Hardges further stated that on March 20, 2001, she observed a physical therapist administer ultrasound treatment to Resident 17. CMS Ex. 54, � 33. According to Hardges, the therapist entered the room with ultrasound equipment in a carrying case, removed a leg wrap from the case, and put on gloves without first washing his hands. Id. The therapist then applied gel to the resident's legs and wrapped them in preparation for administering the ultrasound treatment. Id. Hardges stated that the therapist's failure to wash his hands before putting on gloves to administer treatment was "contrary to accepted professional practice which requires staff to wash their hands before putting on gloves to give direct care." Id. � 34. In support, she pointed to a guideline adopted by the Association for Professionals in Infection Control and Epidemiology, Inc. (APIC), a national organization. Id. The APIC guideline, entitled Guideline for Hand Washing and Hand Antisepsis in Health-Care Settings, states that gloves should be used in addition to, not as a substitute for, handwashing. Id. (citing CMS Ex. 44, at 12). Hardges stated that the "APIC recommends this guideline because of the problem with leakage of microbial contamination from latex and vinyl gloves and possible transmission of infection even when gloves are worn." Id. CMS also submitted a copy of a handwashing guideline published by the Centers for [Page 59] Disease Control, entitled Guideline for Handwashing and Hospital Environmental Control, 1985. CMS Ex. 43. Finally, Nurse Hardges stated that she observed what she considered to be a failure to adhere to accepted professional practices during a wound dressing change:
CMS Ex. 54, � 35. (37) In its summary judgment motion, Park Manor made no attempt to rebut Nurse Hardges' opinion that she had witnessed failures to follow accepted nursing standards regarding handwashing. Nor did Park Manor attempt to dispute any of the factual assertions supporting that opinion. Instead, Park Manor argued that section 483.65(b)(3) does not make the facility responsible for discrete or specific instances in which an employee fails to follow accepted professional handwashing practices. R. 47, at 23. According to Park Manor, the regulation merely calls on the facility to require its staff to follow such practices. Id. at 23-24. Consequently, Park Manor said, the incidents described by Hardges did not constitute a violation of section 483.65(b). Id. In granting partial summary judgment to Park Manor, the ALJ found that section 483.65(b)(3) does not make a facility responsible for incidences of substandard care but merely directs a facility [Page 60] to "enforce" a handwashing policy. R. 59, at 13. The ALJ acknowledged that a "pattern of violations of handwashing policy might be proof from which I could infer that the facility was not enforcing a policy or that it had no policy." Id. But here, he said, "the evidence consists of a few observations which CMS has not linked to a pattern of noncompliance." Id. He concluded that Hardges' "few observations" were insufficient proof that Park Manor was not enforcing its handwashing policy. Id. CMS's position, of course, was that the incidents described by Nurse Hardges were sufficient evidence of noncompliance with section 483.65(b)(3). R. 52, at 19-20. In support of that position, CMS argues that the regulation can reasonably be read to hold the facility responsible for instances in which employees fail to live up to professional standards regarding handwashing. CMS Response at 47. We agree that this is a reasonable interpretation. Section 483.65(b)(3) states that a facility must "require staff to wash their hands after each direct resident contact" when accepted nursing standards require this practice. The word "require" can reasonably be read as meaning that the facility must do something more than merely adopt a handwashing policy. Unless a facility takes steps to ensure that its handwashing policy is actually and consistently followed by facility staff, the goal of controlling infection cannot be met. The introductory language in section 483.65 further supports CMS's argument. This language, which describes the general standard that the facility must meet in controlling infection, states that a facility must not only "establish" but "maintain" an infection control program, and that this program must be "designed" to achieve certain outcomes -- namely, a "safe, sanitary, and comfortable environment" and the prevention of disease and infection. Given its focus on health outcomes, the regulation can reasonably be read as requiring the facility to implement an effective infection control program in their daily interaction with residents. CMS's argument is also consistent with statements made in the preambles to the proposed and final rules enacting section 483.65. The final rule indicates that section 483.65(b)(3) was adopted to "state in more specific terms the basic intent of a requirement that [CMS] originally proposed" in section 483.65(a)(5). 54 Fed. Reg. 5316 (Feb. 2, 1989). The preamble to the proposed rule explained section 483.65(a)(5) as follows:
52 Fed. Reg. 38582 (Oct. 16, 1997) (emphasis added). In addition, we find that CMS had a reasonable basis in fact for asserting noncompliance at the summary judgment stage. CMS proffered direct testimony from Nurse Hardges that three employees failed to wash their hands when professional standards required them to do so. It also produced documentary evidence of those standards. Park Manor's summary judgment motion offered no contradictory evidence or opinion or, for that matter, any explanation for the alleged lapses. (38) Park Manor suggests that because CMS did not rely on the introductory language in section 483.65(b)(3) in opposing the motion for summary judgment, CMS is now defending a position that it did not take before. PM Reply at 23. We find no merit to this argument. The position that CMS took before is the one that it is defending now -- namely, that section 483.65(b)(3) requires facility staff to perform handwashing in accordance with accepted professional practices, and that its evidence was sufficient to support a finding of noncompliance under that section. Park Manor also contends that CMS's evidence does not establish a breach of professional standards because CMS did not expressly allege that employees did not wash their hands between patient contacts or after contact with blood, body fluids, or contaminated articles. PM Reply at 24. However, with respect to the incidents involving the injections and wound dressing change, [Page 62] such allegations can reasonably be inferred from Nurse Hardges' statements. In the first, Nurse Hardges reported that a nurse had failed to wash her hands between injections given to different patients. CMS Ex. 54, � 32. In the second, Hardges asserted that handwashing should have been done while changing dressings on leg wounds, implying that this was necessary because of contact with dressings contaminated by open wounds. Id. � 35. Finally, Park, Manor contends that because it had a written handwashing policy, quoted in the SOD, CMS could not reasonably argue that it was not in substantial compliance with section 483.65(b)(3). PM Reply at 23-25. As we have said, however, the regulation can reasonably be read to require more than adopting a policy. Moreover, Park Manor did not produce a copy of the policy or introduce evidence suggesting that it had taken reasonable and adequate steps to enforce the policy. We note that we are addressing only whether CMS had a reasonable basis for its position at the summary judgment stage of the proceeding. We also note that the incidents described by Hardges were not trivial or insignificant. Two of the incidents involved nurses who were directly administering treatment. One involved a nurse who allegedly failed to wash her hands in the course of administering injections to four different residents. Another allegedly occurred in the presence of Park Manor's nursing director. Given these circumstances and the ALJ's obligation at the summary judgment stage to view the evidence in the light most favorable to CMS, we conclude that CMS reasonably opposed the summary judgment motion with respect to Tag F144.
As discussed in section B.2 above, we must determine whether CMS's position that Park Manor was subject to remedies based on the June revisit survey was substantially justified and, if not, whether special circumstances make an award with respect to that matter unjust. Below, after reviewing some relevant background information, we explain why we conclude that CMS did not show that (1) its position on that matter was substantially justified or (2) special circumstances make an award for costs associated with that matter unjust. The June revisit survey yielded findings under six tags. In July 2001, CMS issued a notice advising Park Manor that two [Page 63] remedies were being imposed based on the revisit findings: a continuation of the $250 per day CMP previously imposed as a result of the March survey and a DPNA. In August 2001, WDHFS issued a revised SOD for the June revisit survey, as a result of IDR, and removed the findings under tag F157. (CMS acknowledges that it received a copy of the revised SOD, but points to a typographical error in an identification number on the revised SOD. The first page of the revised SOD clearly states, however, that the original SOD - cited by number - was withdrawn due to IDR, and clearly relates to the June 11, 2001 survey of Park Manor. CMS Ex. 60.) Because of the events occurring at the State level, the parties in the federal proceedings were not required to submit their briefs, exhibits, and written direct testimony until almost a year later. In mid-July 2002, CMS made its submission, stating that it was relying on only one deficiency (tag F157) to support a $100 per day CMP for the period after the June revisit survey. (While CMS did not so state, this also meant that this alleged deficiency was the only remaining basis for the DPNA imposed as a result of the June revisit survey.) Park Manor's submission was due and was submitted in mid-August, 2002, but Park Manor first moved for summary judgment. In its motion, Park Manor contended, among other things, that the remedies associated with the June revisit survey should be set aside because tag F157 had been rescinded by WDHFS in August 2001 as a result of IDR. In response to the motion, CMS did not withdraw the remedies imposed as a result of the June revisit survey. Rather, CMS contended that it was not bound by state IDR determinations, and that it had "never adopted" the survey agency's decision to rescind tag F157. R. 52, at 2, 6-7. CMS also claimed that CMS officials were unaware of the rescission prior to the filing of Park Manor's motion. Id. at 7. In addition, CMS declared that it was rejecting the IDR determination regarding tag F157 and reaffirming its finding that Park Manor was not in substantial compliance during the June revisit survey. Id. at 8. In his October 2002 summary judgment ruling, the ALJ found that CMS had the authority to overrule the IDR determination, but that CMS had failed to show that an employee with proper authority had done so. For this reason, the ALJ granted summary judgment to Park Manor with respect to tag F157 and set aside the CMP and DPNA for the period June 11 through July 23, 2001. [Page 64] In its EAJA application, Park Manor relied on the summary judgment ruling in its favor to support its entitlement to an award. CMS's Answer, however, did not address why CMS defended the remedies based on the June revisit survey findings under tag F157, even after those findings had been withdrawn. CMS has the burden of showing substantial justification. Yet, CMS does not even contend that it had a reasonable basis for relying on tag F157 from the June revisit survey, despite the IDR result. Because Park Manor was the prevailing party on this matter, CMS was obliged to defend that assertion in this proceeding or risk having to pay an EAJA award for expenses associated with that matter. This was not an inconsequential issue in the proceedings, but had become the determinative issue on the remedies resulting from the June revisit survey. As a result of CMS's assertion, Park Manor was obliged to take significant steps to defend against it, including submitting its arguments, written direct testimony, and exhibits, before it prevailed on the matter through the ALJ's summary judgment ruling. Moreover, Park Manor specifically argued in the EAJA proceeding, both before the ALJ and before us, that CMS had not made even a prima facie showing of noncompliance under tag F157. See, e.g., Park Manor's Reply to CMS Answer at 23-24. Yet, CMS did not and does not respond directly to this argument, much less provide the type of analysis of the legal and factual basis for its substantive position that EAJA requires. In its brief to the ALJ in the EAJA proceeding, CMS referred to the summary judgment ruling as a "procedural ruling." See CMS Answer at 27, n.11. But CMS did not then (and does not now) explain why that would make a difference in an EAJA analysis. Under the regulations, "an applicant has prevailed when the agency has made a final disposition favorable to the applicant with respect to any matter which could have been heard as a separate proceeding, regardless of whether it was joined with other matters for hearing." 45 C.F.R. � 13.22(c). The regulations do not distinguish between favorable dispositions on procedural and substantive grounds. (39) [Page 65] CMS further asserts in a footnote before us that the ALJ had previously upheld CMS's authority to overrule a state IDR determination. CMS Brief at 26, n. 14. Even if CMS has the authority to overrule a state IDR determination, however, that does not automatically mean that CMS properly exercised that authority or that it had a reasonable basis for doing so. At the time CMS filed its July 2002 submission stating that it was relying on tag F157, CMS had taken no action to review the evidence or argument that led to the IDR result, much less to overrule that result based on its own findings. In describing the case background to us, CMS reiterates its assertion (first made in response to the summary judgment motion) that it was not "aware" of the IDR results prior to that motion. Even if such unawareness might be understandable in some circumstances, it is hardly an excuse under the particular circumstances here. (40) First, WDHFS had informed CMS of the results almost a year before CMS's key evidentiary submission (to which Park Manor was obliged to respond). Second, CMS does not deny that it was aware that Park Manor had requested IDR on the June revisit survey, aware that many of the findings from the March survey had been rescinded through IDR, and aware that the State ALJ had overruled some other findings from the March survey. Third, the whole purpose of IDR is to avoid less formal proceedings for disputes that can be resolved informally. In any event, CMS fails to make any case that it reasonably defended against the summary judgment motion, after learning of the IDR result. As noted above, CMS responded to the motion by asserting that it had "never adopted" the IDR results and by offering noncompliance findings in a declaration made by a CMS employee, who identified herself as the person who makes recommendations on initial determinations. R. 52, at 2, 6-7; CMS Ex. 58, � 2. But CMS did not then and does not now point to anything in the regulations supporting a view that IDR results are contingent on CMS "adopting" them. The regulations provide instead that the result of successful IDR is removal of the deficiencies from the SOD and that, if any enforcement actions are based solely on those deficiencies, the actions are rescinded. 42 C.F.R. � 488.331(c). Here, once WDHFS did issue a [Page 66] revised SOD, removing the findings under tag F157, CMS could no longer reasonably rely on the findings in the initial SOD. The regulations do provide that, if CMS and a state disagree over findings of noncompliance, CMS's findings regarding a facility that participates in both Medicare and Medicaid take precedence when CMS "finds that [the] facility has not achieved substantial compliance." 42 C.F.R. � 488.452(a)(2). The ALJ therefore held that CMS could make a finding to overrule IDR results, but concluded that the CMS employee on whose declaration CMS relied had no authority to overrule the IDR results. Her own declaration suggests as much, and CMS offered no evidence in the EAJA proceeding that she had such authority. More important, even if CMS had followed the proper procedure to overrule the IDR result, that alone would not be sufficient for CMS to meet its burden to show it had a reasonable basis for its substantive position in the proceeding. The key reason why we grant an EAJA award is that CMS fails to contend that it had a reasonable basis in law and fact for asserting noncompliance under tag F157 as support for the DPNA and the $100 per day CMP. Accordingly, we conclude that CMS did not meet its burden to show that its position on this matter was substantially justified. Having reached this conclusion, we must next determine whether "special circumstances" make an award for Park Manor's work on that matter unjust. CMS contends generally that special circumstances exist precluding any EAJA award to Park Manor, but asserts that this issue is a factual question that should be resolved initially by the ALJ. (41) CMS Reply at 3-8; CMS Response at 57-58. Neither the regulations nor the EAJA mandates a remand in these circumstances, nor does Board precedent. (42) Although we would [Page 67] prefer to have an ALJ address a special circumstances issue in the first instance, we find that a remand is not necessary here. The potential award pertains to a narrow part of the merits proceeding, the record is sufficient to permit us to evaluate CMS's contentions in a meaningful way, and the narrow issues we need to resolve do not require us to evaluate the credibility of witnesses or counsel. Moreover, the history of the case and the need to bring it to closure weigh against a remand. CMS contends that Park Manor's litigation behavior and rejection of good faith settlement offers are special circumstances that justify denial of an EAJA award. Regarding settlement, CMS asserts that it offered to settle the case early in the proceeding (in late June 2002), then later (after the ALJ's October 2002 summary judgment ruling) proposed to settle the case for $6,100. According to CMS, Park Manor rejected the settlement offers "out of hand" and made no reasonable counter offer. CMS asserts that Park Manor's settlement proposals in November 2002 included a stipulation that it be denominated the "prevailing party." CMS asserts that it "could not reasonably have been expected to agree to enter into a compromise that would require ongoing litigation over an EAJA application." CMS Answer at 44. Regarding Park Manor's litigation behavior, CMS asserts that while CMS "tried repeatedly to maintain a sense of proportion in the litigation" (by moving for summary judgment and unilaterally reducing the number of findings at issue), Park Manor "consistently expanded the scope of the litigation" by (1) filing an excessive number of affidavits and state hearing transcripts containing "duplicative," redundant, or "irrelevant" testimony, and (2) unjustifiably withholding transcripts from the State proceeding, requiring CMS to file two motions to compel. CMS Answer at 43-51; CMS Reply at 9-17. CMS also asserts that Park Manor, in defending its failure to produce the contested transcripts, made inaccurate or untrue statements about their nature and content. CMS Answer at 49-51; CMS Reply at 9-15. In [Page 68] addition, CMS contends that Park Manor filed two affidavits by its nursing administrator that contained "inconsistent statements made under oath." CMS Answer at 51-53; CMS Reply at 18-20. The term "special circumstances" is not defined in the statute or regulations, and there appears to be scant evidence of its meaning in EAJA's legislative history. Air Transport Assoc. of Canada v. Fed. Aviation Admin., 156 F.3d 1329, 1333 (D.C. Cir. 1998). What evidence there is indicates that the special circumstances provision was intended as a "safety valve" that gives the decision-maker the discretion to deny an award when "'equitable considerations dictate an award should not be made.'" Id. (quoting from H.R. Rep. No. 1418, 96th Cong., 2d Sess. at 11) (emphasis added); see also Scarborough v. Principi, 541 U.S. 401, 423 (2004) (citing and quoting from the same House Report). (43) One court has observed that the "theme of 'unclean hands' pervades the jurisprudence of 'special circumstances' under EAJA." Air Transport, 156 F.3d, at 1333. Traditionally, the doctrine of unclean hands is invoked to bar equitable relief to a party that has engaged in unlawful or inequitable conduct concerning the matter for which it seeks the relief. When applying the doctrine, courts have required a close or actual connection between the alleged misconduct and the claim at issue. In re New Valley Corp., 181 F.3d 517, 525 (3rd Cir. 1999), cert. denied 528 U.S. 1138 (2000); see also Keystone Driller Co. v. General Excavating Co., 290 U.S. 240, 245 (1933) (noting that courts of equity "apply the maxim requiring clean hands only where some unconscionable act of one coming for relief has immediate and necessary relation to the equity that [the party] seeks in respect to the matter in litigation"). Unclean hands appears to be the basis for CMS's special circumstances argument. The argument, in essence, is that Park Manor should not be awarded fees and expenses for litigation that it pursued in bad faith or proceedings that it "unnecessarily multiplied" (CMS Answer at 45). However, the potential award covers only a small segment of the proceeding -- namely, the part connected with Park Manor's challenge to tag F157 from the June revisit survey. As discussed, the ALJ resolved that matter on October 8, 2002 by granting summary judgment to Park Manor on tag F157 and setting aside the related remedies. CMS did not appeal the summary judgment ruling. Consequently, the award will, for the most part, be limited to fees and expenses for work performed [Page 69] prior to October 8, 2002 -- more specifically, to the fees and expenses incurred in connection with the proceedings to overturn tag F157 and set aside the related remedies. We find no special circumstances that would justify denying this limited award. The alleged misconduct that CMS describes -- including Park Manor's failure to produce the contested State hearing transcripts -- has no apparent direct relationship to the June revisit survey. For example, CMS's contention that one of Park Manor's witnesses made "inconsistent statements under oath" relates to a finding from the March survey. As for CMS's contention that Park Manor unjustifiably failed to turn over transcripts, that issue first surfaced in early September 2002 when CMS filed a motion to compel production of the transcripts. R. 53. The motion to compel was filed after the parties had exchanged briefs supporting or opposing the summary judgment motion that sought to set aside the remedies associated with the June revisit survey. See R. 47 and R. 52. There is no indication that Park Manor's refusal to turn over the transcripts at this point resulted in unnecessary or protracted litigation concerning those remedies. Moreover, CMS's assertion that Park Manor filed duplicative, redundant, and irrelevant testimony is at most minimally related to the potential award, given that the summary judgment ruling obviated the need for a hearing on the matter arising from the June revisit survey. In any event, some of CMS's claims regarding irrelevant evidence and obstructive behavior were rejected by the ALJ in the merits proceeding, including CMS's claim that Park Manor willfully ignored an ALJ order by declining to turn over its own transcriptions of testimony from the State hearing. R. 68, at 2; R. 69; Tr. at 126-27. Finally, we do not find that Park Manor's filing of duplicative and redundant testimony is so egregious as to establish unclean hands. We reject any suggestion that Park Manor's refusal to settle the case is a special circumstance. (44) The settlement negotiations that took place in late June 2002 occurred before CMS submitted its evidence and witness list. Whatever Park Manor's actual reasons for rejecting settlement, Park Manor could reasonably insist on seeing CMS's proof before deciding whether to accept or propose settlement at this stage of the proceedings. To the [Page 70] extent that CMS believes that it was unreasonable not to settle the case because the amount of the penalty was small, we note that Park Manor had the statutory right to contest a CMP of any amount. In addition, it might have had other reasons for going forward. The hearing process may have favorable results for a facility other than overturning a CMP, including avoiding adverse publicity and removing deficiencies from the facility's compliance record, which CMS might consider in selecting remedies in future surveys. For the foregoing reasons, we find that there are no special circumstances that render the limited EAJA award unjust and that Park Manor is therefore entitled to an award for the reasonable fees and expenses it incurred in connection with the proceeding to overturn the remedies from the June revisit survey.
Park Manor contends that the ALJ erred in finding that it could not recover an award under 5 U.S.C. � 504(a)(4) because it was a "prevailing party." PM Brief at 30-37. According to Park Manor, sections 504(a)(1) and 504(a)(4) of the EAJA provide remedies for different "administrative abuses": section 504(a)(1) authorizes an EAJA award when an agency's position is not substantially justified, and section 504(a)(4) authorizes an award when the penalty demanded by an agency in an enforcement action is excessive. Id. at 32. Park Manor argues that these provisions do not provide mutually exclusive avenues of relief for private litigants because it is conceivable that an agency may, in the same case, take a position that is not substantially justified and seek a penalty that is excessive or unreasonable. Id. at 33. Park Manor also contends that the ALJ erred in concluding that CMS's demand was not excessive or unreasonable. PM Brief at 37-41. We find it unnecessary to address the ALJ's finding concerning the reasonableness of CMS's demand because we agree with the ALJ that Park Manor was not entitled to an award under section 504(a)(4) as a matter of law. Section 504(a)(4) states:
(Emphasis added). "Demand" means the express demand of the agency which led to the proceeding. 5 U.S.C. � 504(b)(1)(F). HHS's EAJA regulations provide that an award may be made "either on the basis that the Department's position in the proceeding was not substantially justified or on the basis that, in a proceeding to enforce compliance with a statutory or regulatory requirement, the Department's demand substantially exceeded the ultimate decision and was unreasonable when compared with that decision." 45 C.F.R. � 13.5(a). Section 13.5(c) provides that an award may be made on the latter basis "only if the Department's demand that led to the proceeding was substantially in excess of the ultimate decision in the proceeding, and that demand is unreasonable when compared with that decision, given all the facts and circumstances of the case." 45 C.F.R. � 13.5(c)(1). That section also states that an award under the excessive demand provision "shall be limited to the fees and expenses that are primarily related to defending against the excessive nature of the demand," and "shall not include fees and expenses that are primarily related to defending against the merits of charges, or fees and expenses that are primarily related to defending against the portion of the demand that was not excessive, to the extent that these fees and expenses are distinguishable from the fees and expenses primarily related to defending against the excessive nature of the demand." 45 C.F.R. � 13.5(c)(2). Viewed in their totality, these provisions envision a situation in which the agency has obtained some measure of the relief it sought by initiating the enforcement action. This is most clearly evident from the requirement that the award be fashioned to exclude (to the extent practicable) fees and expenses associated with the reasonable or justified part of the agency's demand, including costs incurred in defending against the "merits of charges." We therefore find that section 504(a)(4) applies when an enforcement action like this one results in a proceeding that establishes a private party's noncompliance but gives the agency substantially less than what it "demanded" in remedies for that noncompliance. See American Wrecking Corp., 364 F.3d at 327 (noting that the function of the analogous excessive demand provision in 28 U.S.C. � 2412(d)(1)(D) is "merely to permit non-prevailing parties to recover fees and expenses where the United [Page 72] States obtained a judgment that was substantially - and unreasonably -- exceeded by its initial demand"). In this case, section 504(a)(4) does not apply because CMS did not obtain any part of its initial demand. The provision's inapplicability is apparent from the scope of Park Manor's fee request: Park Manor seeks not merely the limited award permitted by section 13.5(c) - that is, costs associated with the "excessive" portion of a partially justified demand -- but all of the fees and expenses it would be entitled to receive under section 504(a)(1) as a "prevailing party," including costs associated with its challenge to findings that had a reasonable basis in law and fact. Park Manor insists that it may recover an award for all of its fees and expenses in the merits proceeding based on the absolute disparity between CMS's initial demand and the outcome of the proceeding. (45) But section 504(a)(4) requires not only that a disparity exist but that the initial demand be "unreasonable." Here, CMS's remedy demands can be considered unreasonable only if CMS's position on which those demands were based was not substantially justified. See 142 Cong. Reg. S3242-02, 104th Cong., 2d sess. 1996, WL 142887, at 8 (March 29, 1996) (noting that the "test" for applying the provision is "not a simple mathematical comparison" but an assessment of whether the agency's demand "is so far in excess of the true value of the case, as demonstrated by the final outcome, that it appears the agency's assessment or enforcement action did not represent a reasonable effort to match the penalty to the actual facts and circumstances of the case)" (italics added). (46) To permit recovery under section 504(a)(4) based solely on the absolute disparity between the initial demand and the outcome would allow [Page 73] Park Manor to circumvent the substantial justification requirement in section 504(a)(1) and to obtain an award merely because CMS's position did not succeed. American Wrecking Corp., 364 F.3d at 327 (noting that the excessive demand provision "surely does not permit [a litigant] to recover a greater amount than it could otherwise recover" under section 504(a)(1)).
Park Manor contends that the ALJ erred in denying its request to exclude from the public record certain information about the net worth of Park Manor and its controlling shareholder. We find that the ALJ did not err in denying this request. An EAJA applicant is eligible for an award only if its net worth falls below certain limits. 5 U.S.C. � 504(b)(1)(B). To ensure compliance with this eligibility requirement, an EAJA applicant must submit "a detailed exhibit" showing its net worth and the net worth of any "affiliates." 45 C.F.R. � 13.11. This "net worth exhibit" will "ordinarily" be included in the public record of the proceeding unless the applicant shows that the exhibit is exempt from public disclosure under the Freedom of Information Act (FOIA). Id. Section 13.11(c) describes how the applicant should make this showing:
45 C.F.R. � 13.11(c) (emphasis added). Park Manor's net worth exhibit includes the affidavit of a person who stated that he was the accountant for Park Manor and Park Manor's majority or controlling shareholder. Attached to his affidavit are Park Manor's balance sheets for 2000 and 2001, as well as a one-page document detailing the shareholder's personal [Page 74] assets. With the net worth exhibit, Park Manor filed a motion under FOIA to withhold from public disclosure the accountant's affidavit and attached material. PM EAJA Ex. 10. The motion contained only the following rationale:
Id. The FOIA exemption claimed by Park Manor, known as "exemption 4," covers "trade secrets and commercial or financial information obtained from a person and privileged or confidential." 5 U.S.C. � 554(b)(4) (emphasis added). In denying the motion, the ALJ found that it contained only "conclusions" that parroted statutory and regulatory language and failed to explain how or why the shareholder would be injured by disclosure of the information in the net worth exhibit. ALJ EAJA Decision at 5. Park Manor now insists that its motion was adequate -- that to prevent public disclosure, it was sufficient for the motion to demonstrate that financial information was obtained from "a person" who regarded that information as "confidential." PM Brief at 63-64. Park Manor contends that its motion satisfied these criteria by stating that the documents contained "detailed financial information" about its controlling shareholder, information that "'had been maintained by the [shareholder] and her accountants in the strictest of confidence.'" Id. at 64 (quoting the motion). Park Manor also contends that the harm or potential harm from disclosure was obvious and "inherent in the situation," and that although its motion did not allege a lack of public interest in disclosure, the public interest would not in fact be served by keeping the documents in the public record because CMS did not challenge its financial eligibility for an EAJA award. Id. at 64-65. We uphold the ALJ's ruling. As the ALJ found, Park Manor's motion failed to provide the detailed explanation required. The motion made no attempt to show that the financial information was [Page 75] exempt from disclosure under FOIA exemption 4 and the case law construing that exemption. In addition, the motion did not explain how Park Manor or its shareholder would be adversely affected by disclosure, or why disclosure was "not required in the public interest." Finally, the accountant's affidavit does not support the motion. Indeed, the affidavit does not state that the shareholder's financial information was in fact confidential.
Having found Park Manor entitled to an award, we must determine the amount to be awarded. The allowable award covers the litigation-related work that Park Manor performed to overturn the June revisit survey's finding of noncompliance and the related remedies. Park Manor's fee and expense documentation is not detailed enough for us to determine exactly how many attorney and paralegal hours were actually and reasonably spent on that work (or the amount of associated expenses). For example, time summaries from July 2002 use the phrases "work on motion" or "edit and revise motion," or some variation on these words, to describe the work on the summary judgment motion that prompted the ALJ to overturn the remedies based on the June revisit survey. However, that motion also addressed several issues concerning the March survey. Thus, while we could estimate how much of Park Manor's work on the motion concerned issues related to the June revisit survey (and may therefore be allowable), we prefer to have the parties' input before doing so. The regulations provide that when the proceeding involves "two or more matters, each of which could have been heard separately . . . the fees and expenses shall be shown separately for each proceeding or matter, and the basis for allocating expenses among the proceedings or matters shall be indicated." 45 C.F.R. � 13.12(b). However, given the novelty of applying the EAJA in these cases, we do not think Park Manor can fairly be faulted for not maintaining its documentation to reflect the different matters involved. Since the award should be based on the firmest footing possible, we will give Park Manor an opportunity to provide some reasonable basis for allocating the already documented hours and expenses between the matter arising from June revisit survey and the rest of the proceedings, and give CMS an opportunity to comment and to offer an alternative allocation. Accordingly, within 30 days of receiving this decision, Park Manor may submit its proposed methodology, with a supporting rationale, and documentation applying that methodology to determine the amount that may be reimbursed under this decision. [Page 76] CMS shall have 30 days from receiving Park Manor's submission to file a response. The Board will then promptly issue a final decision that incorporates all its findings and conclusions regarding this appeal. We encourage the parties to consult with one another during the briefing period to narrow the remaining issues and, if possible, to agree on the amount of the fees or expenses to be awarded. Should the amount of the allowable award remain disputed after the briefing period, we will apply the following guidelines in resolving the dispute. As HHS's regulations make clear, fees or expenses may be awarded only if they have a direct and necessary connection with the applicant's representation in the proceeding. Section 13.5(b)(3), for example, states that "[a]wards for fees and expenses incurred before the date on which a proceeding was initiated will be made only if the applicant can demonstrate that they were reasonably incurred in preparation for the proceeding." Section 13.7 states that the reasonable cost for any report, study, exhibit, or similar matter may be awarded only if it "was necessary to the preparation for the administrative proceeding." The burden is on Park Manor to establish the reasonableness of its fee and expense request. Role Models America, Inc. v. Brownlee, 353 F.3d 962, 969-70 (D.C. Cir. 2004). Hours that are not adequately documented or that are "excessive, redundant, or otherwise unnecessary" are not reimbursable. Precision Concrete v. N.L.R.B., 362 F.3d 847, 853 (D.C. Cir. 2004) (quoting Hensley v. Eckerhart, 461 U.S. 434, 443 (1983)). Time records must be detailed enough to permit an assessment of the reasonableness of the claimed fees and expenses. Role Models America, 353 F.3d at 970-73 (discussing various shortcomings with applicant's fee documentation, including inadequate or "generic" descriptions of work performed). The parties' briefs contain arguments about the allowability of particular claimed fees or expenses (which should not be repeated in the new submissions). If necessary, we will address those arguments after receiving the parties' new submissions. Conclusion Pursuant to 5 U.S.C. � 504(a)(1), Park Manor is entitled to an award for the reasonable fees and expenses incurred in the proceeding to challenge the remedies imposed by CMS based on the June revisit survey. In accordance with the schedule outlined in section E of the Discussion section, the parties may make additional submissions to assist the Board in determining the amount of the award. If necessary, the Board will then issue a [Page 77] final decision that fixes the amount of the award. No other award is appropriate. |
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| JUDGE | |
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Cecilia Sparks Ford Donald F. Garrett Judith A. Ballard |
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1. The record before the ALJ in the EAJA proceeding included: (1) briefs submitted in support of or opposition to Park Manor's EAJA application, including an opening brief by Park Manor, a CMS "Answer" to the application (CMS Answer), and a reply to the CMS Answer; (2) various exhibits in support of or opposition to the EAJA application (PM EAJA Ex. ___ and CMS EAJA Ex. ___); and (3) the record of the merits proceeding initiated by Park Manor to challenge CMS's determinations. The record of the merits proceeding includes: the parties' exhibits (PM Ex.__ and CMS Ex. ___); the hearing transcript (Tr. ___); and the pleadings, briefs, and other related pre- and post-hearing material listed (by number) in chronological sequence on a December 30, 2003 document prepared by the Civil Remedies Division (R. 1 to R. 92). Our record on appeal of the ALJ EAJA Decision also includes Park Manor's opening brief (PM Brief), a CMS response brief (CMS Response), and reply briefs filed by both parties (PM Reply and CMS Reply). 2. Noncompliance levels are denoted by letters: D, E, and F refer to deficiencies with the potential for more than minimal harm"; G, H, and I refer to deficiencies that have caused "actual harm" to residents; and J, K, and L identify deficiencies that place residents in immediate jeopardy. CMS State Operations Manual (SOM), Pub. 7, App. P, sec. V. 3. If CMS finds immediate jeopardy, CMS may impose a CMP in the range of $3,050-$10,000 per day; for other noncompliance, CMS may impose a CMP in the range of $50-$3,000 per day. 42 C.F.R. � 488.438(a)(1). A CMP accrues until the SNF has achieved substantial compliance or its provider agreement is terminated. 42 C.F.R. � 488.454(a). 4. Contrary to what Park Manor suggests, however, it did not have a right to review of CMS's exercise of discretion to impose remedies, rather than giving Park Manor an opportunity to correct them, nor did Park Manor's right to appeal arise before CMS issued its initial determinations. 42 C.F.R. �� 488.438, 498.3. 5. "Substandard quality of care" means one or more deficiencies (under 42 C.F.R. �� 483.13, 483.15, or 483.25) that constitute either: immediate jeopardy to resident health or safety; a pattern of or widespread actual harm that is not immediate jeopardy; or a widespread potential for more than minimal harm (but less than immediate jeopardy, with no actual harm). 42 C.F.R. � 488.301. 6. States must offer facilities an opportunity to informally dispute adverse findings in a SOD. 42 C.F.R. � 488.331(a)(1). The pendency of IDR does not toll or delay the effective date of enforcement action by CMS. 42 C.F.R. � 488.331(b)(2). However, "[i]f a provider is subsequently successful, during the [IDR] process, at demonstrating that deficiencies should not have been cited, the deficiencies are removed from the [SOD] and any enforcement actions imposed solely as a result of those cited deficiencies are rescinded." 42 C.F.R. � 488.331(c). 7. At this point, the following were at issue: (1) 15 noncompliance findings from the March survey, resulting in the $250 per day CMP effective March 22, 2001; and (2) six noncompliance findings from the June revisit survey, resulting in continuing the $250 per day CMP through July 23, 2001 and a DPNA for the period July 15 through July 23, 2001. The total CMP was $31,000 ($250 per day for the 124 days from March 22 to July 23, 2001). 8. Guidelines -- Review of Initial Decisions on Fee Applications Under the Equal Access to Justice Act, http://www.hhs.gov/dab/guidelines/eaja.html. 9. "Conceivably, the Government could take a position that is not substantially justified, yet win; even more likely, it could take a position that is substantially justified, yet lose." Pierce, 487 U.S. at 569. 10. Indeed, had Park Manor appealed only the July 3, 2001 initial determination and obtained a summary judgment ruling disposing of the matter in Park Manor's favor (or had the appeals not been consolidated), Park Manor could have sought an EAJA award as prevailing party, regardless what happened with respect to CMS's May 4, 2001 determination. 11. The Supreme Court has said that a party is a prevailing party if it "'succeed[s] on any significant issue in [the] litigation which achieves some of the benefit [it] sought in bringing suit.'" Hensley v. Eckerhart, 461 U.S. 424, 433 (1983) (quoting Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir. 1978)). In another formulation, the Court has said that a party prevails when the litigation has resulted in a "material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute." Texas State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989). 12. For example, the SOD found noncompliance with 42 C.F.R. � 483.15(g) (tag F250). This section requires a facility to provide "medically-related social services to attain or maintain the highest practicable physical, mental, and psychosocial well-being of each resident." The survey agency found that Park Manor had failed to provide Resident 12 with services to help him in the dying process. Among other things, the survey agency found that Park Manor had not followed up on a physician-recommended hospice referral. The surveyors determined that this deficiency had the potential for more than minimal harm. CMS Ex. 6, at 3-4. The SOD also found noncompliance with 42 C.F.R. � 483.75(i) (tag F501). This section requires the facility to designate a physician to serve as a "medical director," responsible for "implementation of resident care policies" and "coordination of medical care in the facility." The survey agency reported that it was informed on June 11, 2001 that the facility's "current" medical director was "unable to meet the duties of Medical Director" and that the facility was "attempting to contract with another physician for the position of Medical Director." CMS Ex. 6, at 18. According to the survey agency, this prospective medical director had been following his patients at the facility and was involved in "some infection control issues," but had not, as of June 11, 2001, been designated as the facility's medical director. The surveyors determined that this deficiency had the potential for more than minimal harm. Id. at 18-19. 13. Moreover, the survey findings that were withdrawn at an early stage of the proceedings are inconsequential for purposes of a substantial justification analysis, which ultimately must evaluate the agency's overall position, considering the administrative record as a whole. 14. The SOD found noncompliance with section 483.25(h)(2), which requires a facility to ensure that a resident receives "adequate supervision and assistance devices to prevent accidents." CMS Ex. 1, at 86. The SOD describes a resident whose difficulty swallowing had been documented, who had recently been hospitalized for aspiration pneumonia, and whose care plan called for extensive one-person assistance with meals. Surveyors found that Park Manor had failed to supervise and assist this resident to ensure safe intake of nourishment to prevent coughing, choking, and potential aspiration. Id. The SOD describes an incident on March 14 on which the resident was observed to be coughing while having breakfast but received no assistance with eating. Id. at 88. The SOD also describes other occasions - on March 19 or 20, 2001 - in which the resident was observed choking on liquids or showing signs of aspiration ("tracheal gurgling") in circumstances in which the assistance provided could reasonably be considered inadequate. Id. at 88-91. Based on the SOD, CMS could reasonably find that Park Manor failed to provide adequate supervision to guard against accidental harm from choking or aspiration and that there was "immediate jeopardy." See 42 C.F.R. � 488.301. The survey finding of immediate jeopardy was, in turn, sufficient to support the $6,200 per day CMP, as well as the substandard quality of care finding. 42 C.F.R. � 488.408(e); 42 C.F.R. � 488.301. 15. Contrary to what the ALJ suggests, the regulation specifically authorizes a legal guardian to exercise a resident's rights, as our decision pointed out. Also, although the ALJ questions how the requirement to notify a physician relates to the possible need for physician intervention, CMS's witness acknowledged that the purpose of notifying the physician is to obtain or alter treatment, that "no code" and "comfort measures only" mean that a resident is to be kept comfortable and pain-free at the end of life and that aggressive steps are not to be taken to extend the resident's life, and that there was no evidence in the resident's record that he was not comfortable and pain-free. Tr. at 72-76. She indicated, however, that she was unaware that the resident's plan was for "comfort measures only" and she questioned whether the resident was in fact dying. Id. 16. For example, the ALJ stated that deterioration in life-threatening conditions and clinical complications were "examples" of significant changes. ALJ Merits Decision at 4. But the regulation uses "i.e.," not e.g. Even CMS did not in the merits proceeding articulate the interpretation the ALJ now attributes to CMS, nor did CMS's witness. 17. Indeed, the ALJ EAJA Decision reads the reference to "deterioration" to mean that every "sign" of deterioration that might signify a resident is dying should be reported. Park Manor, on the other hand, reasonably interpreted the regulation to mean that, where it had already consulted with a physician about a clinical complication and other signs of deterioration that indicated that the resident was dying, it was not required to consult again if the signs and symptoms were the same or were consistent with the change in status already reported to the physician and if the facility made a reasonable judgment that the sign or symptom did not signify a potential need for any further medical intervention that would be consistent with the resident's wishes. The ALJ also refers to the resident's signs as "life-threatening," but the regulation defines a significant change as a "deterioration of the resident's status in a life-threatening condition" (such as a heart attack or stroke). While the need for assistance in ambulating, lethargy, and mottling may be signs of or result from "life-threatening conditions," one cannot determine whether they evidence a significant change in the resident's physical status without examining the circumstances. 18. We recognize that the statement of "facts" in the ALJ EAJA Decision contains some errors. For example, the ALJ EAJA Decision refers to a failure to consult over a four-day period, which is inaccurate. Also, contrary to what the ALJ stated, the record does contain evidence about the resident's wishes. (See evidence cited in DAB No. 1926, at 5.) 19. The resident assessment instrument (RAI) for January 2001 indicates that he could walk independently in his room, but also that he needed supervision for transfers and when off the unit, that he had fallen within the prior 30 days, and that, for some functions, he was either totally dependent on staff or required extensive assistance. CMS Ex. 12, at 2-3. CMS was not unreasonable in relying on the RAI for some indication of the resident's status, even though we ultimately credited Park Manor's evidence showing that his status had declined between the January RAI and the March events at issue here. 20. As we noted in our merits decision, the ALJ found Park Manor's witnesses to be credible, but not persuasive. Our evaluation took into account that these witnesses had greater experience in long-term care than the CMS surveyor, several of them were personally familiar with the resident, and their statements were corroborated by the written record and the legal guardian. While their written direct testimony contained information key to our decision, their statements were sufficiently general that CMS could reasonably seek to test them through cross-examination. Some flaws in the CMS surveyor's opinion, moreover, were not readily apparent until cross-examination. For example, on cross she admitted that antibiotics do not work immediately and that the resident's need for help with ambulating was consistent with having a UTI (Tr. at 68-69), which undercut her view that Park Manor should have consulted on alternative treatments for his UTI when he continued to run a fever and that his need for assistance was a significant change. 21. We also noted that the physician, after being contacted on Monday, March 5, did not order any new treatment (which undercut CMS's position that, if called sooner, he may have adjusted the medication for the UTI or otherwise found ways of alleviating any discomfort the resident was experiencing). In the EAJA proceeding, both CMS and the ALJ questioned the basis for this finding. Page 4 of Appendix I to CMS's post-hearing brief, however, lists as an undisputed fact that the physician had "issued no additional orders" after being contacted on March 5. CMS did seek at and after the hearing to introduce evidence that might have raised questions about whether to draw any inference in Park Manor's favor from this lack of new orders, but the ALJ rejected this evidence on procedural grounds. 22. Park Manor's care of Resident 19 is also at issue under tag F309, discussed below. In its summary judgment motion, Park Manor argued that the allegations regarding Resident 19 could not serve as a basis for noncompliance with section 483.20(k)(1) because they were not set out under tag F279 in the SOD. The ALJ rejected this argument. R. 59, at 10-11. 23. According to a CMS exhibit, Timm's review of Resident 12's status was recorded on January 4, 2001. CMS Ex. 21, at 3. The heading that precedes her review states: "DIETICIAN NOTE: SIGNIFICANT CHANGE IN CONDITION ASSESSMENT." Id.\ 24. Nurse Wendy Barbeln testified that the recording of Resident 12's fluid intake began in January 2001, see PM Ex. 56, �� 17, 20, but there is no documentary evidence that the nursing staff gathered this information prior to February 2001. 25. Park Manor had submitted MDS instructions telling a facility to check the box for the dehydration indicator if two or more of the following conditions exist:
PM Ex. 7, at 1. 26. Nurse Haegerl admitted that the nursing staff must formulate a care plan for problems that are not covered by the MDS or RAPs if doing so is clinically warranted. Tr. at 173. 27. CMS also relied on a nursing note describing how Resident 19 ate his breakfast on the morning after surveyor Suzuki's observations. CMS Ex. 65, at 11. The note indicates that Resident 19 needed "cueing not to eat or drink quickly as he did want to take another drink or eat another bite either before he had swallowed what was in his mouth or before he had completely swallowed." When reminded to swallow, Resident 19 stated, "Oh you know that's just my Alzheimers kicking in and I forgot." The note also indicates that Resident 19 was at times trying not to cough, but was told he should cough to ensure he cleared his throat. 28. Park Manor submitted Mr. Olson's report as an exhibit, but none of its witnesses testified that he was familiar with the report, or that it was used to care plan for Resident 19. 29. Although Jan Suzuki faulted Park Manor for providing Resident 19 with food that was, in her opinion, inconsistent with his diet and for failing to perform a "comprehensive" assessment of Resident 19's swallowing ability or to develop a care plan for the aspiration risk, CMS did not rely on these opinions for its post-hearing argument on tag F309. Instead, CMS argued that Park Manor was not in substantial compliance with section 483.25 because it failed to supervise Resident 19 adequately during his meal and provide verbal cuing. R. 86, at 22-24. Because we find that this argument had a reasonable basis, we need not address the other EAJA arguments made by Park Manor related to tag F309. 30. Although section 483.25 states that the services must be "in accordance with the comprehensive assessment and plan of care," the Board has concluded that this phrase cannot reasonably be interpreted to limit the facility's obligation to provide needed services, given the history and context of the regulation. Spring Meadows Health Care Center, DAB No. 1966 (2005). 31. We cite to the paper-based version of the SOM that was in use during 2001 (CMS Pub. 7). In 2004, CMS issued an electronic version of the SOM (Pub. No. 100-07) that supplants the paper-based version. We note that CMS cited the SOM in its arguments to the ALJ during the merits proceeding, and that Park Manor did not challenge the accuracy or relevance of the citations or claim that it lacked pre-survey notice of the SOM provisions. 32. Nurse Hardges stated in her declaration that the "opportunities for error" included the "total number [of] all doses observed by the survey team to be administered plus all doses which were ordered but not administered." CMS Ex. 54, � 30. According to Hardges, 25 opportunities for error were observed on March 15, and 34 on March 16. Id. 33. The other alleged errors involved Serevent (a bronchodilator), Flovent (a corticosteroid), and Atrovent (a bronchodilator). CMS Ex. 54, � 29. 34. Given this conclusion, we find it unnecessary to discuss the alleged insulin errors, although our review of the record persuades us that CMS could reasonably contend that Park Manor committed at least one timing error in administering insulin. 35. This recitation of background facts is drawn from the following sources: CMS Ex. 4, at 79-80; CMS Exs. 46-51; CMS Ex. 56, �� 4-11; Tr. at 147-157, 179, 185, 194; PM Exs. 33, 84-88. 36. Surveyors reported that Park Manor had a written policy entitled "Infection Control -- Prevention Policy and Procedure." CMS Ex. 4, at 74. According to the SOD, this policy stated: "The MOST important factor in infection control is handwashing. . . . Handwashing will be done as promptly and thoroughly as possible between resident contacts and after contact with blood, body fluids, secretions, excretions, and equipment or articles contaminated by them." Id. Neither party submitted a copy of the policy, or any evidence about whether its contents adequately reflected "accepted professional practice" for handwashing. 37. Nurse Hardges described other incidents, related to administering eye drops and assisting with food trays, but did not specify that they were departures from accepted nursing practice. The issues Park Manor raised about these incidents were an inconsequential part of the proceedings. 38. Shortly after moving for summary judgment, Park Manor filed an affidavit by Paula Kock, who stated that she was present during the dressing changes Hardges observed. Kock asserted that she and the other nurse who was present changed gloves and washed their hands "at all appropriate stages of the dressing changes" and suggested that Hardges was not present during the entire procedure and therefore did not witness their handwashing. PM Ex. 68, �� 70-72. At best, these statements reveal that Hardges and Kock had differing recollections of the relevant events and that a hearing was necessary to resolve the dispute. At that stage of the proceeding, there was no other evidence corroborating Kock's account. Thus, CMS was reasonable in pressing forward based on Hardges' testimony. 39. CMS does assert that its failure to challenge the summary judgment ruling is "irrelevant to the issue of substantial justification." CMS Response at 26, n.14. We do not rely on CMS's failure to challenge the ruling as a basis for our substantial justification analysis (although we do not consider it wholly irrelevant). That failure, however, made the summary judgment ruling the final disposition on the matter. 40. CMS also seems to fault Park Manor for not informing CMS of the IDR results sooner. However, Park Manor could have reasonably thought that WDHFS would do so, as it did. While Park Manor could have informed CMS through a less formal means than a motion for summary judgment, moreover, CMS's response indicates that this would have made no difference. 41. On May 9, 2005, Park Manor filed a "motion to strike" the arguments on special circumstances CMS made in its reply brief. Because we rule in Park Manor's favor on that issue, we deny this motion as moot. 42. The EAJA provides that "the adjudicative officer" will determine whether special circumstances make an award unjust, but it does not preclude an agency's appellate authority from making that determination in appropriate circumstances. Federal agencies must establish "uniform procedures for the submission and consideration" of EAJA applications. 5 U.S.C. � 504(c)(1). The HHS regulations do not require the Board to remand a case to the ALJ when he or she has failed to make required findings. They provide only that the Board "shall issue a final decision on the application . . . or remand to the adjudicative officer for further proceedings." 45 C.F.R. � 13.27. The authority to issue a "final decision" generally includes the authority to modify or supplement an ALJ's findings, and, therefore, our EAJA Guidelines interpret the regulation to permit us to do so. 43. The cited legislative history relates to the analogous "special circumstances" provision in 28 U.S.C. � 2412(d)(1)(A). 44. It is difficult to imagine that refusal to settle a case and accept a CMP would ever constitute a special circumstance, given that facilities have a statutory right to a hearing to challenge the imposition of any CMP. See 42 U.S.C. �� 1395i-3 (h)(2)(B)(ii) and 1320a-7(a). 45. Park Manor asserts that the statute and regulations required the ALJ to compare CMS's "initial demand" -- that is, the remedies initially imposed by CMS following the March and June revisit surveys -- with the "final outcome" of the proceeding to determine whether the demand was excessive or unreasonable. Instead of making that comparison, says Park Manor, the ALJ "established a 'rolling standard' of reasonableness in which the demands that the agency made at various stages of the litigation were compared to the remedies which could have been imposed based on the allegations which had survived the litigation process to that point." PM Brief at 38. 46. The excessive demand provision was added to the EAJA in 1996 by section 231 of Public Law 104-121 (110 Stat. 862-863). | |