SUBJECT:

Emerald Shores Health & Rehabilitation Center,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

I find that the evidence in this case does not support the determination of the Centers for Medicare & Medicaid Services (CMS) to impose remedies, including civil money penalties and denial of payment for new admissions, against Petitioner, Emerald Shores Health & Rehabilitation Center.

I. Background

Petitioner is a skilled nursing center in Calloway, Florida. It participates in the Medicare program. Its participation in Medicare is governed by sections 1819 and 1866 of the Social Security Act (Act) and by regulations at 42 C.F.R. Parts 483 and 488.

CMS's remedy determination arises from a compliance survey that the Florida Agency for Health Care Administration conducted on CMS's behalf on July 16, 2004 (July 16 survey). The surveyors found that Petitioner was not complying substantially with three Medicare participation requirements. The surveyors found that two of the alleged deficiencies were so egregious as to comprise immediate jeopardy for residents of Petitioner's facility. "Immediate jeopardy" is defined to be:

a situation in which . . . [a facility's] noncompliance with one or more requirements of participation has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident.

42 C.F.R. � 488.301. CMS accepted the surveyors' findings. The remedies that CMS determined to impose consist of a denial of payment for new Medicare admissions beginning on July 22, 2004, and a civil money penalty of $10,000 per day for each day of Petitioner's alleged noncompliance beginning on July 16, 2004. ⁽¹⁾

CMS subsequently determined that Petitioner corrected its alleged deficiencies on July 28, 2004. The total period for denial of payment of new admissions that CMS determined to impose runs from July 22 through July 27, 2004. The period during which CMS determined to impose the $10,000 per day civil money penalty runs from July 16 through July 27, 2004. The total civil money penalties at issue is $120,000.

Petitioner requested a hearing and the case was assigned to me for a hearing and a decision. I held a hearing in Tallahassee, Florida, on September 7, 2005. At the hearing, I received exhibits from CMS consisting of CMS Exhibits (Exs.) 1-29. I received exhibits from Petitioner consisting of P. Exs. 1-26 and P. Exs. 28-29. I heard the cross-examination and re-direct testimony of several witnesses.

II. Issues, findings of fact and conclusions of law

A. Issue

The issue in this case is whether Petitioner failed to comply substantially with one or more Medicare participation requirements, thereby authorizing CMS to impose remedies.

There are other potential issues that I do not address in this decision. Had I found Petitioner to be deficient, I would have addressed the issue of whether CMS's determination of immediate jeopardy is clearly erroneous. Also, I would have addressed the issue of whether CMS's remedy determinations - specifically, CMS's determinations as to duration of remedies and as to civil money penalty amounts - is reasonable.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below, as a separate heading. I discuss each Finding in detail.

1. The preponderance of the evidence establishes that Petitioner was complying substantially with the requirements of 42 C.F.R. � 483.70(h)(4) on and after July 16, 2004.

The regulation that is at issue here states that a nursing facility must:

Maintain an effective pest control program so that . . . [it] is free of pests and rodents.

42 C.F.R. � 483.70(h)(4). CMS alleges that Petitioner failed to comply substantially with this regulation because it allegedly allowed its facility to be invaded by imported fire ants. CMS Ex. 2, at 12-18. Imported fire ants are endemic throughout the southern United States. They are nuisance insects whose stings can cause serious medical problems. CMS Ex. 8, at 4.

CMS's noncompliance allegations center to a large extent around an event that occurred at Petitioner's facility on July 7, 2004. On that date, a resident, who is identified in the report of the July 16 survey as Resident # 1, was observed by Petitioner's staff to have been stung by fire ants approximately 40 times. CMS Ex. 23, at 5.

The surveyors who conducted the July 16 survey found that this episode, while it is certainly the most serious episode of ant invasion at Petitioner's facility, was not isolated. They found noncompliance by Petitioner based on the July 7, 2004 episode and what they characterized as a series of similar incidents. There had been a previous episode in July 2003 in which another resident was stung by fire ants. CMS Ex. 2, at 14. During the July 16 survey other residents or residents' relatives alleged that, in the past, they had seen ants in the facility or had been stung by them. Id. at 15-18.

CMS asserts that the episodes documented by the surveyors are in and of themselves proof that Petitioner failed to maintain an effective pest control system. Moreover, according to CMS, whatever efforts Petitioner undertook to control fire ants were ineffective. According to CMS, Petitioner relied mainly on a spot treatment system pursuant to which an extermination service would periodically spray insecticide on sites where ants were found. But, according to CMS, Petitioner failed to implement an integrated pest management system which might have been effective in preventing ant infestations.

Petitioner disputes these contentions. Petitioner does not deny that there were two episodes, in 2003 and 2004, in which residents of its facility were stung by fire ants. It contends that the other complaints of ant infestation cited by the surveyors are not credible because they are based on uncorroborated hearsay. It asserts that the two documented episodes of ant stings on its premises were isolated and unavoidable, occurring despite Petitioner's efforts at ant eradication. It argues that its efforts prior to the July 16 survey were reasonable. Moreover, it asserts that by July 16, 2004 it had implemented all that any facility could do to eradicate ants and prevent re-infestation. It contends that by that date it was employing precisely the integrated pest control system that CMS asserts it should have been using.

July 16, 2004 is the critical date in deciding the issue of Petitioner's noncompliance. CMS determined that the remedies it imposed would not begin to run earlier than that date. The $10,000 per day civil money penalty begins with July 16, 2004. The denial of payment for new admissions begins with July 22, 2004. Consequently, the issue that I must decide is whether Petitioner was not complying with participation requirements as of July 16, 2004. Petitioner's alleged noncompliance prior to that date is irrelevant to deciding whether CMS is authorized to impose remedies. Specifically, I do not make findings as to whether Petitioner was not in compliance on July 7, 2004 or on dates between July 7 and July 16, 2004. It is unnecessary that I make findings concerning Petitioner's compliance status with the pest control regulation during the July 7-16 period because CMS made no determination to impose remedies for dates that are within the period.

CMS argues that it has discretion to impose a civil money penalty on a given date, asserting that it is not required to explain why it opts to choose a particular date for the inception of the penalty. CMS's Post-hearing Brief at 19-21. It argues also that it should benefit from a presumption that a facility, once it is established not to be complying with participation requirements, remains out of compliance until it proves that it has regained compliance. Id. Neither of these arguments is incorrect. However, neither of them are inconsistent with the rule that I rely on here: CMS may not impose remedies prospectively if a facility is in compliance as of the date of the remedies' inception and thereafter. If the preponderance of the evidence establishes Petitioner to have been in compliance with the pest control regulation by July 16 - irrespective of its prior compliance history - then CMS is not authorized to impose remedies beginning July 16 for Petitioner's failure to comply with that regulation. ⁽²⁾

Even if Petitioner were out of compliance at some point prior to July 16, it could overcome the presumption of continuing noncompliance as of July 16 by proving by the preponderance of the evidence that it was in compliance by that date. So, the question that I address here is: what does the preponderance of the evidence show about Petitioner's compliance status on and after July 16, 2004?

In measuring Petitioner's compliance with the pest control regulation as of July 16 and thereafter the question is not whether it was able to guarantee that its facility would remain completely free of ants. Rather, the question is whether Petitioner did all that it reasonably could be expected to do to prevent ant infestation and to protect its residents against ant stings. Fire ants are ubiquitous in the southern United States. No pest control program - no matter how intensive - will ensure that an environment is ant free. Tr. at 25; CMS Ex. 19, at 5. The ubiquitous nature of imported fire ants means that even a thoroughly protected and treated facility may have occasional ant mounds on its premises. Tr. at 34. An average ant colony contains between 100,000 and 500,000 individual fire ants. CMS Ex. 8, at 14. Consequently, no nursing facility can guarantee to its residents that they will never be stung by fire ants. Id.

I decide that Petitioner was in compliance with the pest control regulation as of July 16, 2004 because, as of that date, it was doing all that a facility reasonably could be expected to do to protect its residents against fire ants. In reaching that conclusion I have examined the evidence of Petitioner's pest control efforts in the context of what CMS's expert asserts that Petitioner should have done. I find that by July 16 Petitioner provided its residents with what CMS's expert characterizes as integrated pest control management.

CMS called as its expert Michael E. Merchant, Ph.D., a professor of entomology for the Texas A & M University Research and Extension Center in Dallas, Texas. CMS Ex. 19, at 1. Dr. Merchant is expert in the study of fire ants and their eradication and control. Id. at 1-2. Dr. Merchant testified that one of the best methods of fire ant eradication and control is an integrated pest management policy. The elements of that policy, as attested to by Dr. Merchant, include: requiring regular pest management inspection reports from a pest control service; aggressive caulking and sealing actions after ant sightings as well as documented correction of all conditions conducive to ant entry; broadcast application of facility premises with ant bait; regular inspections and regular mound treatment of visible mounds within 50 feet of the facility; additional use of a barrier treatment around the facility's perimeter; and a verifiable staff training program to ensure that new staff are aware of their role in a facility's pest management program. Id. at 5.

Dr. Merchant's testimony identifies three critical elements of an integrated fire ant control program. First, there must be extensive surveillance of facility premises and grounds in order to identify the presence of ants. Second, there must be effective documentation of problems accompanied by coordination of ant control efforts. Third, there must be an effective eradication program which consists of more than sporadic spraying of visible infestation. Such eradication should include a barrier insecticide application in order to deny ants access to a facility.

I make no finding that a facility which fails to implement the system described by Dr. Merchant to control fire ant infestation is necessarily out of compliance with 42 C.F.R. � 483.70(h)(4). The regulation does not specify what techniques a facility must use to control pests, including ants. Nor has CMS published any guidance to facilities in which it states what, minimally, it expects from them by way of fire ant control. It is, therefore, conceivable that in another case a facility might be able to prove that it did something other than what Dr. Merchant recommends that was, nevertheless, effective. However, in this case it is appropriate to look at what Petitioner did up to and including July 16, 2004 in the context of Dr. Merchant's opinion inasmuch as CMS avers that Dr. Merchant's opinion sets forth state of the art fire ant control techniques for a nursing facility such as Petitioner's facility. It is CMS's contention that if a facility does what Dr. Merchant recommends, it would be doing all that a facility reasonably could do to prevent fire ant infestation. So, if a facility does what Dr. Merchant recommends that would answer CMS's concerns about that facility's ant control efforts.

CMS characterizes Petitioner's ant eradication and control program as merely a "spot and treat regimen" and it asserts that Petitioner failed to take ant prevention and control seriously, even after the July 7, 2004 incident. CMS's Post-hearing Brief at 17-18. The preponderance of the evidence shows these assertions to be incorrect. Contrary to CMS's assertions, the weight of the evidence in this case establishes that by July 16, 2004 Petitioner had implemented all three critical elements of an integrated ant control system. Indeed, the preponderance of the evidence is that Petitioner always was concerned with, and diligent about, preventing ant infestations of its premises. As comprehensive as Petitioner's efforts may have been, they were greatly augmented after July 7, 2004.

The evidence offered by Petitioner concerning its fire ant control and eradication efforts establishes that Petitioner contracted beginning in 2000, the year that it opened its facility, for regular inspections and treatment of its facility for fire ants. Tr. at 63-76; CMS Ex. 22, at 1. The services originally contracted for included a monthly inspection and treatment of both the exterior and interior of Petitioner's facility as well as spot treatment for each instance in which ants were observed on Petitioner's premises. Tr. at 70; P. Ex. 28, at 91-92. These services were characterized by the pest control service as being integrated services. Tr. at 26; P. Ex. 11.

Petitioner took additional actions after the July 7, 2004 incident to intensify its fire ant eradication and control activities. On July 7, it drafted and implemented an action plan in order to reduce the risk of residents sustaining ant stings and to eliminate pests in and around Petitioner's facility. P. Ex. 7. The plan included the following elements: inspection of the outside perimeter of Petitioner's facility for evidence of ants; inspection of the rooms adjacent to Resident # 1's room for evidence of ant infestation; calling the extermination service to come to the facility as soon as possible; daily exterior rounds and spreading of bait; daily "guardian angel" rounds of residents' rooms to assure that there were no additional ant infestations; assisting residents to assure that food is kept in sealed containers; and education of staff in pest control protocol. Id. at 1-2. These actions were completed by Petitioner's staff on July 12, 2004.

The action plan and additional efforts at ant control not stated in the plan embodied the central elements of the pest control system that Dr. Merchant described as state of the art. Petitioner achieved the first element of an integrated ant control system before July 16, 2004 via enhanced surveillance and communications activities. It achieved the second element through the creation of a written insect reporting system and a treatment log. It attained the final element through repeated spraying of the facility and grounds and implementation of a barrier treatment.

Petitioner achieved the first element of the system described by Dr. Merchant by implementing frequent inspection of the exterior and interior of its facility in order to detect and prevent ant infestation. It provided for communication among Petitioner's staff concerning possible ant infestation. And, it provided for education of both residents and staff in steps necessary to prevent ant infestation. Tr. at 31-33; P. Ex. 28, at 56, 57, 6, 89; P. Ex. 7.

Second, Petitioner began comprehensive documentation of its insect control efforts, thereby addressing the second element of the system described by Dr. Merchant. These efforts included creation of a written insect reporting system and a written insect treatment log. Tr. at 89. Petitioner also greatly increased its surveillance for insect infestation, inspecting rooms three times per shift. P. Ex. 28, at 78. Petitioner's staff received in-service training concerning Petitioner's insect prevention plans. Tr. at 68; P. Ex. 8; P. Ex. 28, at 61.

Finally, Petitioner's ant eradication efforts included aggressive treatment activities, the third element of the integrated pest management system described by Dr. Merchant in his testimony. The entire grounds of Petitioner's facility were treated twice between July 7 and 16, 2004 in order to eradicate fire ants. Tr. at 31. Petitioner obtained a barrier treatment of its entire facility on July 16, 2004. P. Ex. 28, at 64, 73, 76.

The surveyors' findings at the July 16 survey include findings of continued presence of ants at Petitioner's facility. These include sightings of two areas of ant activity on the grounds of Petitioner's facility and some dead ants in Resident # 1's room. At times during this case, CMS has appeared to argue that the effectiveness of Petitioner's ant control system may be gauged by the surveyor's finding of continued ant activity. I am not persuaded that such evidence shows that Petitioner was doing less than it should have been doing as of the 16^th of July.

As Dr. Merchant noted in his testimony, no ant control system can guarantee that a facility will be free from fire ant infestation. Fire ants are ubiquitous in the southern United States. A single ant colony contains an enormous number of individual ants. Thus, the presence of two areas of ant activity on Petitioner's grounds on July 16, 2004 is not a meaningful gauge of the extent of Petitioner's ant control efforts, especially given that Petitioner's facility is situated on approximately five acres of land. See Tr. at 34. Moreover, the surveyors were not experts in ant control and eradication. The finding of dead ants in Resident # 1's room may have, in fact, been evidence of the success of Petitioner's ant eradication program.

2. The preponderance of the evidence establishes that Petitioner was complying substantially with the requirements of 42 C.F.R. � 483.13(c) on and after July 16, 2004.

The regulation that is at issue in this Finding states that a facility:

must develop and implement written policies and procedures that prohibit mistreatment, neglect, and abuse of residents and misappropriation of resident property.

42 C.F.R. � 483.13(c). ⁽³⁾ The July 16 survey report alleges that Petitioner failed to ensure that 41 of its residents, consisting of residents who were either cognitively impaired, non-verbal, bedfast, or who received their nutrition through tube feedings, were free from neglect. CMS Ex. 2, at 5.

CMS's allegations that Petitioner neglected its residents rest on two assertions. First, CMS contends that the alleged failure by Petitioner to have in place an effective fire ant detection and eradication system constituted neglect. Second, CMS asserts that CMS deprived Resident # 1 of needed medication that had been prescribed by the resident's physician in the wake of that resident's encounter with fire ants. CMS's Post-hearing Brief at 10-13.

I addressed CMS's allegations about Petitioner's fire ant detection and eradication system above, at Finding 1. It is unnecessary that I repeat my analysis here.

As for the allegations about depriving Resident # 1 of necessary medication, I note that in some respects CMS's assertions in its post-hearing brief depart from the allegations of the survey report. In addition to contending that medication was not provided to Resident # 1, the survey report alleges a failure by Petitioner's staff to document its administration of medication to the resident. CMS Ex. 2, at 6-7. Additionally, the survey report asserts that there was a failure by Petitioner's staff to communicate with the resident's family and to report an alleged change in the resident's medical condition to the family. Id. These additional allegations appear to have dropped out of CMS's case. Given that, I will not address them here except to the extent that allegations concerning documentation of medication administration relate to the allegation that Petitioner actually deprived the resident of necessary medication.

Close review of Resident # 1's medical records does not support an allegation that the resident was deprived of medication. The resident's physician issued three orders for medication immediately after the resident was stung by fire ants. The resident's records establish that Petitioner's staff followed all three of those orders and gave the resident what had been prescribed for her.

On July 7, 2004, the physician ordered that the resident receive an intramuscular injection of Benadryl, an antihistamine. CMS. Ex. 23, at 14. The physician also ordered that the resident receive Benadryl by mouth, and be administered Hydrocortisone cream, a topical antihistamine. Id. Petitioner's nursing notes establish that all of these medications were provided to Resident # 1 at 4:00 p.m. on July 7. Id. at 10.

On July 8, 2004, Resident # 1's physician issued two orders for administration of medications. The first order was recorded as being issued at 6:00 a.m. In that order, the physician ordered that the resident receive an intramuscular injection of Decadron, an antihistamine. CMS Ex. 23, at 14. Petitioner's nursing notes contain no reference to administration of Decadron to the resident on the morning of July 8, 2004. The note for 6:00 a.m. reports that the nurse spoke with the resident's daughter about the incident and relayed the resident's condition to the daughter. CMS Ex. 23, at 10. It is silent on the subject of medication administration. Id. However, the resident's medication administration record (MAR) recites that Decadron was administered to the resident at 5:30 a.m. on July 8. Id. at 19. The physician's order of 6:00 a.m (which was received by telephone), the 6:00 a.m. nursing note, and the MAR are all signed by the same nurse, D. Elliott R.N.

I find no basis to infer from the 30-minute discrepancy between the 5:30 a.m. MAR entry and the physician's 6:00 a.m. medication order that the medication prescribed by the physician was not administered to the resident. A more reasonable inference is that Ms. Elliott administered Decadron to the resident as per the physician's order but made a mistake in recording either the time of the physician's medication order or of the entry on the MAR.

The second July 8 physician's order was issued at 4:00 p.m. That order directs that Resident # 1 receive an additional injection of Decadron. CMS Ex. 23, at 14. A nursing note that was recorded at 4:30 p.m. on the 8^th of July recites that the resident received an intramuscular injection of Decadron pursuant to the physician's order. Id. at 11.

3. CMS failed to establish a prima facie case that Petitioner did not comply with the requirements of 42 C.F.R. 483.10(b)(7)(iii) - (iv).

The regulation that is at issue here provides that a facility must make a posting of names, addresses, and telephone numbers of all pertinent State client advocacy groups such as a State survey agency and other agencies that protect residents' interests. 42 C.F.R. � 483.10(b)(7)(iii). Additionally, a facility must provide each resident with a statement telling the resident that he or she may file a complaint with the State survey agency concerning resident abuse, neglect, mis-appropriation of resident property, and non-compliance with advance directive requirements. 42 C.F.R. � 483.10(b)(7)(iv). ⁽⁴⁾

CMS asserts that Petitioner failed to comply with these requirements by denying a member of a resident's family the opportunity to speak with a surveyor. ⁽⁵⁾ CMS asserts that the following facts support this allegation. On July 8, 2004, a family member of a resident called the facility and asked to speak with a surveyor. ⁽⁶⁾ Allegedly, the facility receptionist told the family member that the survey team was in a meeting but that it would be given a message. Petitioner's director of nursing is alleged to have called the family member a few minutes later. The family member allegedly stated that he or she informed the director of nursing that he or she wanted to speak with the surveyors. The family member allegedly averred that the director of nursing stated that the survey team was aware of the issue, but was exiting the facility. CMS Ex. 2, at 1-4.

There are several reasons why I conclude that these allegations do not establish a prima facie case of noncompliance. First, the allegations do not, on their face, establish that Petitioner failed to provide residents with any of the information required at 42 C.F.R. � 483.10(b)(7)(iii) - (iv). There is simply nothing in the record to show that Petitioner failed to post the information required at 42 C.F.R. � 483.10(b)(7)(iii). And, assuming that the allegations reported by the surveyors are true, they do not add up to a prima facie case that Petitioner failed to give any resident the requisite statement informing that resident of his or her right to file a complaint with appropriate authorities as is required by 42 C.F.R. � 483.10(b)(7)(iv).

Indeed, it is entirely unclear from the allegations that the family member wanted to make a complaint to the surveyors. The facts as alleged by the surveyors do not describe what the family member wanted to discuss with them. It is possible, of course, that the family member wanted to make a complaint. But, it is equally possible from the allegations of the survey report that the family member wanted to tell the surveyors that Petitioner's conduct was not deficient. Consequently, there is no way to discern from the allegations - assuming their truth - that a family member wanted to communicate a complaint to surveyors, but was prevented from doing so.

Moreover, the facts alleged by the surveyors appear - assuming their truth - to be innocuous. Nothing in these allegations suggests that Petitioner's director of nursing told a resident's family member that he or she could not speak with a surveyor. The allegation only is that the director of nursing told the family member that the surveyors were aware of the family member's call, but were exiting the facility. A reasonable interpretation of that statement is that Petitioner's staff relayed the family member's request to the surveyors and that it was the surveyors who decided not to return the family member's call.

Finally, all of the reported allegations are hearsay. It is simply impossible to verify their truth. In the absence of direct testimony, I have no way of determining exactly what the family member wanted to speak to the surveyors about or whether Petitioner actually denied the family member the opportunity to do so.

Steven T. Kessel

Administrative Law Judge

1. Apparently, the determination to impose the remedy of denial of payment for new admissions was based on findings of noncompliance that were made at the July 16 survey and at a previous survey completed on July 8, 2004 (July 8 survey). Petitioner did not challenge the noncompliance findings made at the July 8 survey and I do not address them in this decision. Petitioner's Post-hearing Brief at 1. All that I hold here is that CMS may not impose remedies based on the July 16 survey findings.

2. Had CMS determined to impose remedies beginning with July 7, 2004, I would have decided whether Petitioner was in compliance on that date and on dates between July 7 and July 16, 2004.

3. The July 16 survey report actually asserts that Petitioner failed to comply with a different subsection of the regulation, 42 C.F.R. � 483.13(c)(1)(i). However, the text of the report makes it evident that the noncompliance allegation relates to 42 C.F.R. � 483.13(c). I do not find that either notice or due process questions were raised by the report.

4. The survey report alleges more broadly that Petitioner failed to comply with the requirements of 42 C.F.R. � 483.10(b)(5) - (10). However, there is nothing in the other regulatory sections that even remotely relates to the allegations of noncompliance.

5. CMS failed to discuss these allegations in its pre-hearing brief. At the hearing, I questioned whether CMS had abandoned them. It has raised them again in its post-hearing brief.

6. The call was made at the time of the July 8 survey. As I discuss above, the findings of the July 8 survey are not at issue here.