$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Cases of:
Nazareno Medical Hospice Fajardo, Caguas, Cayey,
Petitioners,
- v. -
Health Care Financing Administration.
DATE: August 18, 1995
Docket Nos. C-94-383
C-94-384
C-94-386
Decision No. CR386
DECISION
These are my decisions in the above three captioned cases. I am
issuing the decisions as a single document. 1/ I do so for the
following reasons. The cases involve common issues of law. Each
Petitioner provides hospice care to Medicare beneficiaries. The
Petitioner in each of these cases is owned by the same corporation
and each Petitioner is represented by the same counsel. The cases
involve similar, but not identical, facts.
Although I have consolidated my decisions in a single document, I
have not consolidated the cases. My decision in each case is
separate. To the extent that a party wishes to appeal any of these
decisions, that party should specifically appeal that decision.
In each of these cases, the Health Care Financing Administration
(HCFA) terminated the Petitioner's participation in Medicare, based
on its determination that the Petitioner failed to comply with
conditions of participation in the Medicare program. In each case,
I conclude that HCFA failed to prove, by a preponderance of the
evidence, that the Petitioner did not comply with conditions of
participation. Therefore, in each case, I issue a decision that
HCFA did not prove a basis for terminating the Petitioner's
participation in Medicare.
Each Petitioner requested a hearing and the cases were assigned to
me for hearings and decisions. I conducted hearings in San Juan,
Puerto Rico, on March 21 - 23, 1995. 2/ After HCFA had rested in
each of the cases, the Petitioner requested leave to move for a
decision in its favor on the grounds that HCFA had failed to meet
its burden of persuasion. 3/ HCFA did not object to deferring the
Petitioners' presentation of evidence so that the Petitioners could
submit their proposed motions. I deferred the Petitioners'
presentation of evidence so that they could submit their motions.
It is not customary for me to issue a decision in a case without
first having heard all of the evidence offered by each party to
that case. Here, however, I conclude that the evidence adduced by
HCFA did not establish a basis for HCFA's determinations to
terminate the participation in Medicare of these Petitioners. No
legitimate purpose would be served here in requiring the
Petitioners to offer evidence, inasmuch as HCFA failed to meet its
burden of coming forward with evidence and establishing a prima
facie case against each Petitioner.
I have organized these decisions in the following manner. First,
I provide a consolidated background for the three cases. I then
identify issues of law which are present in all of the cases and I
decide those issues of law as common issues. Then, I identify the
issues which are unique to each case and I make findings of fact
and conclusions of law which pertain only to that specific case.
I. Background
The facts and law which I recite as background to these cases are
not in dispute. The Petitioners in these cases are the following
entities: Docket No. C-94-383, Nazareno Medical Hospice Fajardo
(Petitioner Fajardo); Docket No. C-94-384, Nazareno Medical Hospice
Caguas, (Petitioner Caguas); Docket No. C-94-386, Nazareno Medical
Hospice Cayey (Petitioner Cayey). Each of the Petitioners is owned
by Nazareno Medical Hospice Care, Inc., which is not a party to any
of these cases.
In each of these cases, the Petitioner is a hospice which did
business in a community in Puerto Rico. A hospice is described
under section 1861(dd)(1) of the Social Security Act (Act) as a
Medicare provider which offers care and services to a terminally
ill beneficiary pursuant to a written plan of care established and
periodically reviewed by the beneficiary's attending physician, the
hospice's medical director, and its interdisciplinary group. Under
the Medicare program, an individual is considered to be "terminally
ill" if that individual has a medical prognosis that he or she is
expected to live six months or less. Act, section 1861(dd)(3)(A).
The central purpose of a hospice is to provide dying beneficiaries
with palliative, rather than curative, care. Hospice care enables
the beneficiary to select an alternative to traditional care which,
hopefully, alleviates the beneficiary's symptoms and provides peace
of mind to the beneficiary and his or her family.
Under Medicare, a hospice provides its care and services in the
beneficiary's home, on an outpatient basis, and in some instances,
on a short-term inpatient basis. Act, section 1861(dd)(2)(A)(ii).
Hospice services include: nursing care, physical and other
therapy, medical social services, home health aide services,
medical supplies, physicians' services, short-term inpatient care,
and counseling. Id., section 1861(dd)(1)(A) - (H). In addition,
a hospice provides bereavement counseling for the immediate family
of a terminally ill beneficiary. Id., section 1861(dd)(2)(A)(i).
The Secretary of the United States Department of Health and Human
Services (Secretary) has published regulations which govern the
manner in which hospices participate in the Medicare program.
These are contained in 42 C.F.R. Part 418. These regulations
establish the basic conditions of participation for a hospice. 42
C.F.R. 418.50 - 418.100. They define the circumstances under
which a beneficiary may be eligible to receive hospice care. 42
C.F.R. 418.20. The regulations define the circumstances under
which a hospice may provide care to eligible beneficiaries. 42
C.F.R. 418.21 - 418.30. They identify the services that a
hospice must provide to beneficiaries under its care. 42 C.F.R.
418.200 - 418.204.
The Act and regulations governing the Medicare program establish
the procedure whereby HCFA, acting as the Secretary's delegate,
assures that providers comply with participation requirements.
Pursuant to section 1864(a) of the Act, the Secretary has entered
into agreements with State survey agencies to survey providers for
compliance with Medicare participation requirements and to report
their findings to HCFA. Act, section 1864(a); 42 C.F.R.
488.10 - 488.11.
Each of the Petitioners was surveyed in April 1994 by surveyors
from the Puerto Rico Department of Health, the State survey agency
for Puerto Rico. Petitioners Fajardo and Caguas were surveyed on
April 19, 1994, and Petitioner Cayey was surveyed on April 26,
1994. The surveyors concluded that each of the Petitioners was not
in compliance with conditions of participation in Medicare.
C-94-383, HCFA Ex. 15; C-94-384, HCFA Ex. 15; C-94-386, HCFA Ex.
15. 4/
Based on these survey results, HCFA advised each Petitioner that it
intended to terminate that Petitioner's participation in Medicare.
However, HCFA afforded each Petitioner the opportunity to submit to
HCFA a plan of correction to address the deficiencies that the
State agency had identified in April 1994. Each Petitioner
submitted a plan of correction to HCFA. On June 23, 1994, HCFA
accepted revised plans of correction from Petitioners Fajardo,
Caguas, and Cayey. C-94-383, HCFA Ex. 19; C-94-384, HCFA Ex. 18;
C-94-386, HCFA Ex. 20.
At HCFA's direction, State survey agency surveyors resurveyed each
of the Petitioners. The Petitioners were resurveyed on the
following dates: July 6, 1994, Petitioner Fajardo; July 8, 1994,
Petitioner Caguas; and July 20, 1994, Petitioner Cayey. The
surveyors found that each of the Petitioners continued to be
deficient in complying with conditions of participation in
Medicare. C-94-383, HCFA Ex. 21; C-94-384, HCFA Ex. 19; C-94-386,
HCFA Ex. 21. Based on these findings, HCFA terminated the
participation in Medicare of each of the Petitioners.
The Petitioners and HCFA simultaneously filed briefs and reply
briefs. I base my decisions in these cases on the law, the
evidence which was received at the hearings, and the parties'
arguments.
II. Common legal issues and conclusions of law
The parties have raised legal issues which are common to all of
these cases. These are:
1. Which party has the burdens of coming forwardwithevidence
and proof?
2. What effect does a plan of correction that has been
accepted by HCFA have on a provider's obligation to comply with
conditions of participation in Medicare?
I reach the following conclusions as to these issues of law. After
each conclusion, I cite to the page or pages of these decisions at
which I discuss my conclusions in detail.
1. HCFA has the burdens of coming forward with evidence and
proving, by a preponderance of the evidence, that its determination
to terminate a provider's participation in Medicare is justified (I
refer to these burdens collectively as the burden of persuasion).
Pages 6 - 17.
2. The terms of a plan of correction that has been accepted
by HCFA define the provider's obligation to comply with those
participation requirements that are addressed in the plan. Where
HCFA determines to terminate a provider's participation in Medicare
after it has accepted a plan of correction from that provider, HCFA
must prove, by a preponderance of the evidence, that the provider
is not complying with the terms of the plan of correction, to the
extent that those terms address conditions of participation with
which HCFA contends the provider is noncompliant. Pages 19 - 23.
A. Burden of persuasion
1. Allocation to HCFA of the burden of
persuasion
HCFA has the burdens of coming forward with evidence and proving,
by the preponderance of the evidence, that its determination to
terminate each Petitioner's participation in Medicare is justified.
This conclusion is identical to that which I made in Hospicio en el
Hogar de Utuado, DAB CR371, at 6 - 10 (1995); Hospicio en el Hogar
de Lajas, DAB CR366, at 6 - 8 (1995); and in Arecibo Medical
Hospice Care, DAB CR363, at 8 - 13 (1995). Administrative Law Judge
Leahy held the same in Guaynabo Hospice Care, Inc., DAB CR374, at
11 - 14 (1995).
Neither the Act nor regulations allocate the burden of persuasion
to a specific party in a case involving termination of a provider's
participation in Medicare. See Act, sections 205(b),
1866(b)(2)(A), (h)(1); 42 C.F.R. Part 498. However, the Secretary
has given administrative law judges broad authority to manage the
presentation and receipt of evidence in hearings concerning whether
terminations of participation are justified. 42 C.F.R.
498.60(b)(3). From this, I conclude, as I did in Utuado, Lajas,
and Arecibo, that administrative law judges who preside over
hearings concerning the propriety of terminations of participation
in Medicare have discretion to allocate the burden of persuasion
consistent with the requirements of due process.
The criteria which I use to allocate the burden of persuasion are
fairness and efficiency. In a case involving termination by HCFA
of a provider's participation in Medicare, it is both consistent
with the requirements of due process and efficient to allocate to
HCFA the burden of persuasion. 5/ As Judge Leahy observed in
Guaynabo, "the correctness of HCFA's findings and determination are
at the center of each case that is heard pursuant to section
1866(h)(1) of the Act." Guaynabo at 12. In such a case, HCFA will
have obtained facts -- usually as a result of a survey of the
provider -- which HCFA believes justify the determination that the
provider is not complying with conditions of participation. HCFA
is thus in the best position to identify the facts which support
its determination and to prove those facts.
It would be neither fair nor efficient to allocate to the provider
the burden of persuasion in a case involving HCFA's determination
to terminate that provider's participation in Medicare. The
provider would be placed in the position of having to prove a
negative proposition -- that it did not fail to comply with
conditions of participation -- without necessarily knowing what or
how much evidence might be needed to establish that proposition.
Allocating the burden of persuasion to the provider would invite a
massive and unfocused submission of evidence from the provider.
This would be an inappropriate allocation of the burden of
persuasion in light of the fact that HCFA ought to be in possession
of facts sufficient to justify its determination to terminate a
provider's participation in Medicare.
HCFA has not claimed in any of these cases that imposing the burden
of persuasion on it would be unfair or unreasonable.
Notwithstanding, HCFA asserts that its determination to terminate
a provider's participation in Medicare must be presumed to be
correct unless the provider proves otherwise. 6/
HCFA asserts that there is a presumption of correctness attached to
its determination that a provider is not complying with conditions
of participation. It asserts, in effect, that the administrative
hearing in a case involving termination of a provider's
participation in Medicare is essentially an appellate review of
HCFA's determination. In Utuado, HCFA argued that, in order to
prevail, a provider must prove HCFA's determination to be incorrect
with "clear and convincing evidence." Utuado at 7. HCFA argued
also in Utuado and Guaynabo that its findings must be sustained if
they are supported by "substantial evidence." Utuado at 7;
Guaynabo at 12. 7/
HCFA argues that it would not be unfair or inefficient to impose
the burden of persuasion on the Petitioners. HCFA asserts that the
Petitioners ought to know what evidence to produce on their behalf,
because they are on notice of HCFA's specific allegations of
failure to comply with conditions of participation. According to
HCFA, the specifics of its allegations are set out in the
statements of deficiencies which were produced by State survey
agency surveyors and provided to the Petitioners, recording the
results of surveys. See, e.g., in the case of Petitioner Fajardo,
C-94-383, HCFA Ex. 21.
I do not find that the statements of deficiencies describe HCFA's
findings with such precision that a Petitioner would know what
evidence to offer to rebut those findings. Indeed, even HCFA is
not confident that the statements of deficiencies describe
completely its cases against Petitioners, as is demonstrated by
HCFA's presentation of additional evidence in these cases.
The statements of deficiencies are not sufficiently precise to
allow a Petitioner to rebut HCFA's allegations of noncompliance
completely. They do not enunciate, except in sketchy terms, the
evidence on which HCFA relies to justify its determinations. For
example, in the case of Petitioner Fajardo, HCFA made a finding
based on the July 6, 1994 resurvey that the condition for
participation stated in 42 C.F.R. 418.54 (medical director) had
not been met. The rationale for this finding is that:
Based on record review of ten active and five inactive records
done on July 6, 1994 and review of minutes of discussion by the
Interdisciplinary Group, it was determined that the Medical
Director is not carrying out full responsibility for the
coordination of hospice care.
C-94-383, HCFA Ex. 21 at 3.
This rationale goes on to state that the findings "include but are
not limited to" certain specified examples. Id. The examples
listed thereafter include examples from some, but not all, of the
"ten active and five inactive records" that the surveyors reviewed.
The examples do refer to deficiencies in specified patient records.
However, they do not identify the documents in those records on
which the surveyors relied as evidence for their findings.
It is not possible to ascertain from the statement of deficiencies
resulting from the resurvey of Petitioner Fajardo which of
Petitioner Fajardo's records, aside from those few that are
specifically cited as examples, form the basis for the surveyors'
findings. The statement of deficiencies does not contain a list of
the "ten active and five inactive records" reviewed by the
surveyors, nor is there evidence in the case that HCFA provided
Petitioner Fajardo with that list. There is no evidence that HCFA
provided Petitioner Fajardo with a list of the specific documents
in any patient records which formed the basis for the surveyors'
findings. Nor do the findings specify which minutes of meetings of
Petitioner Fajardo's interdisciplinary group the surveyors relied
on for their findings.
In order for Petitioner Fajardo to rebut HCFA's findings, assuming
the findings are presumed to be valid, Petitioner Fajardo would
have to guess which of its active and inactive records, other than
those cited in the statement of deficiencies, were the "ten active
and five inactive records" to which the surveyors were alluding.
It would have to guess also which specific documents formed the
basis for the findings cited more specifically in the statement of
deficiencies. Petitioner Fajardo would have to guess which of its
interdisciplinary group's minutes were allegedly deficient.
Also, Petitioner Fajardo would find it difficult to gauge the
significance of the alleged deficiencies from the statement of
deficiencies sent to it by HCFA. As I discuss at Part II.A.2. of
this decision, in order to sustain a determination to terminate a
provider's participation in Medicare, HCFA must prove not only the
presence of deficiencies, but must prove also that the deficiencies
are substantial.
As HCFA concedes, there is nothing in either the Act or the
regulations which supports HCFA's assertions that its
determinations are presumptively correct and that administrative
hearings are only appellate reviews of HCFA's determinations. HCFA
bases its assertions on what it argues are the implications of the
regulations and on its interpretation of principles of
administrative law. There are three elements to HCFA's argument:
HCFA observes that, under 42 C.F.R. 498.25
and498.40, an administrative determination by HCFA becomes final
unless an affected provider requests a hearing from that
determination. From this, HCFA argues that logic dictates that the
burden of persuasion should fall on the provider who requests a
hearing, inasmuch as that provider is seeking to overturn a
decision by HCFA that would be final.
HCFA avers that an established principle
ofadministrative law is that an agency's action is presumptively
correct. It characterizes its determinations in these cases as
agency actions and argues, therefore, that they are presumptively
correct.
HCFA asserts that, ordinarily, in anadministrative
hearing, the burden of persuasion falls on the applicant for
relief, benefits, or a privilege. It characterizes Petitioners as
applicants, and argues, therefore, that the burden of persuasion
falls on them.
I am not persuaded by HCFA's analysis. HCFA mischaracterizes the
purpose of the administrative hearing guaranteed to providers by
Congress. Congress did not afford a provider whose participation
in Medicare has been terminated by HCFA only an appellate review of
HCFA's determination. Congress directed that such a provider be
afforded a de novo hearing at which the evidence is reviewed
independently by the Secretary or her delegate, an administrative
law judge. Furthermore, HCFA misconstrues the basic principles of
administrative law on which it has relied in support of its
argument.
A provider whose participation in Medicare has been terminated by
HCFA pursuant to section 1866(b) of the Act is afforded a right to
a hearing under section 205(b) of the Act. Act, section
1866(h)(1). Section 205(b) has been interpreted uniformly and
often as conferring a right to a de novo hearing. Robert M.
Matesic, R.Ph., DAB 1327 (1992); Bernardo G. Bilang, M.D., DAB 1295
(1992). In a de novo hearing, the administrative law judge makes
an independent decision, based on the weight of the evidence
admitted at the hearing. Neither party's actions are entitled to
a presumption of correctness. Section 205(b) provides specifically
that, in any case brought pursuant to it, the decision shall be
based "on evidence adduced at the hearing." This section neither
states nor suggests that, in such a hearing, an appellate standard
of review shall apply, nor that the Secretary's determination is
entitled to a presumption of correctness.
Regulations which provide that a determination by HCFA becomes
final unless a hearing is requested neither state nor suggest that
the determination is presumptively valid if challenged. There is
no general rule to that effect in administrative law. In fact, the
general rule is to the contrary. Both in civil money penalty cases
brought under section 1128A of the Act and 42 C.F.R. Part 1003, and
in exclusion cases brought under section 1128 of the Act and 42
C.F.R. Part 1001, the administrative determination is final if a
hearing is not requested by the affected individual or entity.
However, if a hearing is requested, the burden falls on the
Secretary or her delegate (in such cases, the Inspector General) to
prove by a preponderance of the evidence that the determination is
justified.
HCFA misinterprets the doctrine of presumptive validity which, in
law, attaches to the final actions of administrative agencies. See
Maryland-National Capital Park & Planning Comm'n v. Lynn, 514 F.2d
829, 834 (D.C. Cir. 1975); Mazaleski v. Treusdell, 562 F.2d 701,
717 n.38 (D.C. Cir. 1975). These decisions, cited by HCFA as
support for its argument that its determinations are presumptively
valid, do not hold that an agency determination must be presumed to
be valid when it is reviewed at an internal administrative hearing.
Rather, they hold that the final determination of an administrative
agency is presumed to be valid if challenged in a suit in a federal
court. These decisions confirm that, normally, federal courts
conduct an appellate review of agency determinations if those
determinations are challenged.
Consistent with this concept, section 205(g) of the Act adopts a
substantial evidence standard of review for any challenge brought
in federal district court to a hearing decision made under section
205(b) of the Act. Under section 205(g), the "final" decision
which is entitled to a presumption of validity is the
administrative law judge decision, or if that decision is reviewed
by the Departmental Appeals Board, the decision of the Departmental
Appeals Board.
HCFA asserts unrealistically that the Petitioners are merely
applicants for relief, benefits, or a privilege. Guaynabo at 11;
Utuado at 9; Lajas at 7 - 8; Arecibo at 11 - 13. In a case
involving a determination to terminate a provider's participation
in Medicare, the provider is not an applicant for a privilege, but,
in fact, has already received a privilege from HCFA, which HCFA has
determined to extinguish. That provider's ongoing business
activities -- and, in some cases, its very existence -- will be
ended as a consequence of HCFA's termination of the provider's
participation in Medicare.
Thus, it is incorrect to characterize the Petitioners as
applicants. Providers who are participants in Medicare, including
the Petitioners, have a contractual relationship with HCFA. The
terms of these contracts are stated in the Act, in applicable
regulations, and in the participation agreements executed by
providers. And, as I describe in Part II.B. of these decisions,
these terms are stated also in the plans of correction that HCFA
accepted. Judge Leahy found in Guaynabo that that case arose only
because HCFA determined that the petitioner "breached a condition
under the contract and HCFA initiated contract termination
proceedings." Guaynabo at 13. I reach the same conclusion in
these cases.
In Arecibo and Lajas, I discussed the authorities on which HCFA
relies to support its characterization of Petitioners as
"applicants." Arecibo at 10 - 13; Lajas at 8. It is unnecessary
for me to discuss these authorities again, except to say that HCFA
has offered no new arguments here which would support HCFA's
assertions that these authorities are precedent for deeming the
Petitioners to be "applicants." I note however, that my decision
in SRA, Inc., d/b/a St. Mary Parish Dialysis Center, DAB CR341
(1994), on which HCFA appears to rely as authority for its argument
that Petitioners have the burden of persuasion, and which HCFA did
not cite as authority in Arecibo and Lajas, does not support HCFA's
argument. The Petitioner in SRA was an applicant for certification
as a Medicare supplier. The case did not involve a determination
by HCFA to terminate a contract with a provider or a supplier.
HCFA argues also that the Petitioners in this case occupy the same
status in the administrative proceeding as do beneficiaries in
Social Security disability cases. HCFA contends that beneficiaries
in Social Security disability cases are regarded as applicants,
even after they are found to be entitled to benefits, and are under
a continuing burden to prove their entitlement. This argument
misstates the law. The decision cited by HCFA in its briefs,
Mathews v. Eldridge, 424 U.S. 319 (1976), no longer describes the
operative law governing a beneficiary's continuing entitlement to
disability benefits. Indeed, and as HCFA concedes, the current law
places the burden of proof on the Secretary to show that a
beneficiary's medical condition has improved, as a prerequisite to
terminating that beneficiary's entitlement to disability benefits.
20 C.F.R. 404.1594(b)(2) - (5).
In sum, I conclude that I have the discretion to allocate the
burden of persuasion in these cases. Considerations of fairness
and efficiency direct me to allocate that burden to HCFA. I am not
persuaded by HCFA's arguments that I am required to allocate this
burden to Petitioners.
2. The elements of HCFA's burden of persuasion
HCFA's burden of persuasion in these cases consists of three
elements. 8/ In order to establish a basis for terminating a
provider's participation in Medicare, HCFA must prove the
following:
The existence of the participation requirementswhich a
provider has allegedly not complied with. As I discuss below at
Part II.B. of these decisions, these requirements may necessarily
include the terms of a corrective action plan.
The facts which establish that the providerfailed to
comply with a Medicare participation requirement.
That a provider's failure to comply with aMedicare
participation requirement is so substantial as to justify
terminating that provider's participation in Medicare.
Participation requirements are stated both in the Act and in
implementing regulations and may be stated also in a corrective
action plan entered into between a provider and HCFA. Many of
these requirements are stated plainly and unambiguously. If HCFA
is relying on the plain language of the Act, a regulation, or an
agreement with a provider, as establishing a requirement for
participation, HCFA need only identify that requirement in order to
satisfy the first element of its burden of persuasion. For
example, in Arecibo and Lajas, HCFA asserted that the Petitioners
failed to comply with the plain language of 42 C.F.R. 481.58(b),
a section which governs the way in which hospices are required to
review patient plans of care and to document their reviews.
Arecibo at 19 - 22; Lajas at 17 - 18.
HCFA assumes additional burdens when it relies on an interpretation
of law that is not apparent from the plain meaning of that law. In
that event, HCFA must prove that its interpretation is reasonable
and that the provider had notice of the interpretation.
In both Arecibo and Lajas, I held that the Secretary delegated
authority to HCFA to interpret reasonably the criteria which
governed the participation of providers. Arecibo at 22; Lajas at
12 - 13. There may be ambiguities in some regulations which are
susceptible to reasonable interpretation by HCFA. 9/ HCFA does not
have the authority to use the vehicle of interpretation to create
participation requirements which exceed the specific requirements
of the Act or regulations. 10/ Nor does HCFA have the authority to
interpret ambiguous language unreasonably.
Furthermore, HCFA has the duty to communicate its interpretations
to providers as a prerequisite for holding providers accountable to
such interpretations. A provider is not required to divine HCFA's
intent from language that is unclear. In Utuado, Lajas, and
Arecibo, HCFA argued that providers were required to comply with
HCFA's interpretations of the Act or regulations even if HCFA did
not communicate its interpretations to providers. I found that
position to be unreasonable in those cases, and reaffirm my
conclusion here. Utuado at 11 - 12; Lajas at 13; Arecibo at 25.
HCFA meets the second element of its burden of persuasion, the
burden of proving that there exist facts which justify its
determination, by proving the existence of those facts by a simple
preponderance of the evidence. Evidence proving those facts may
consist of the testimony by State survey agency surveyors
concerning their fact findings. It may also consist of supporting
materials, such as patient records.
HCFA meets the third element of its burden of persuasion, the
burden of proving that a failure to comply with a participation
requirement is substantial, by proving that the noncompliance
substantially limits the provider's capacity to render adequate
care or that it adversely affects the health and safety of
patients. Utuado at 12; 42 C.F.R. 488.24(a).
Termination of a provider's participation in Medicare is a remedy
and not a punishment. Thus, the paramount question which must be
resolved in deciding whether termination is reasonable is whether
a provider's failure to comply with participation requirements
predicts a likelihood that the provider will not be able to deliver
care in the future consistent with the requirements of the Act and
regulations. However, as I held in Utuado, the Act and regulations
make it plain that an inference may be drawn from a provider's
substantial failure to comply with participation requirements that
the provider is likely to remain deficient in the future. Utuado
at 13.
Some of the criteria for participation are so fundamental to the
requirement that a provider render adequate care, or so necessary
to protect the health and safety of patients, that a failure to
comply with any of those criteria is on its face a substantial
deficiency justifying termination of participation. Utuado at 13.
That is evident where the deficiency is a failure to meet a broadly
stated condition of participation. It may be evident also where
the deficiency constitutes a systematic or wholesale failure to
comply with a participation requirement.
There may also be circumstances where a deficiency is not, on its
face, substantial. That is particularly true where the evidence of
the deficiency addresses a standard of participation, and not a
broad condition of participation.
The regulations establishing participation criteria for hospices
often state broad conditions of participation and state
additionally components of those conditions as standards. For
example, 42 C.F.R. 418.68 requires a hospice, as a condition of
participation, to designate an interdisciplinary group composed of
individuals who provide or supervise the services provided by the
hospice. It states also as standards specific requirements for the
performance of the interdisciplinary group. 42 C.F.R. 418.68(a)
- (d).
Failure by a hospice to establish an interdisciplinary group would,
on its face, be a failure to comply with the condition of
participation and would be a substantial deficiency. Failure by a
hospice to comply with one of the standards governing its
interdisciplinary group might be so egregious as to constitute a
failure of the overall condition of participation. However, that
would depend on the evidence. Isolated examples of failure to
comply with one of the standards might not be persuasive evidence
of failure to comply with the overall condition. Evidence of
systematic failure to comply with one of the standards might be
persuasive evidence of failure to comply with the overall
condition.
Therefore, in some cases, HCFA may have to prove not only the
presence of a deficiency, but may have to prove also that the
deficiency is substantial. In proving impact, expert opinion as to
the likely impact of the deficiency on the capacity of the provider
to provide care may be important.
3. Testimony offered by State survey agency
surveyors
In these three cases, as it has in previous cases, HCFA urges that
I accord a great deal of importance to the testimony offered by
State survey agency surveyors. For example, in the case of
Petitioner Caguas, HCFA argues that the opinions of State survey
agency surveyors are expert opinions which should be given "immense
weight." HCFA posthearing brief (Caguas) at 17. Indeed, HCFA
seems to be saying in the case of Petitioner Caguas that an
unrebuttable presumption of validity attaches to the opinions
expressed by State survey agency surveyors. Id. In Utuado, HCFA
argued also that the findings and opinions of State survey agency
surveyors should be sustained unless a provider could prove them to
be "clearly erroneous." Utuado at 7.
State survey agency surveyors may qualify as expert witnesses and
may offer expert opinion on issues of fact. However, I do not
accept HCFA's assertion that the opinions of State survey agency
surveyors qualify automatically as "expert" opinion which must be
presumed to be correct.
The regulations which govern surveys by State survey agency
surveyors state that surveyors are "professionals who use their
judgment, in concert with Federal forms and procedures, to
determine compliance . . . ." 42 C.F.R. 488.26(a)(3). The
regulations affirm that surveyors are supposed to possess expertise
in the activities of the providers which they survey, as well as
knowledge of applicable law and regulations.
But that is not to say that every individual who conducts a survey
qualifies automatically as an expert. Neither do the regulations
state or suggest, as HCFA has at times appeared to argue, that
surveyors are vested with authority to issue fact findings, or to
interpret law and regulations, definitively on behalf of the
Secretary. Nor do the regulations imply that even the qualified
expert opinions of surveyors are vested with a presumption of
correctness.
In order for a State survey agency surveyor to qualify as an expert
witness, that individual must demonstrate expertise in the area
about which he or she is testifying. The credibility of that
individual's opinion as to facts will depend in large measure on
the degree of expertise that the individual possesses concerning
the subject area of those facts, as well as on the extent to which
the facts are proven.
Furthermore, the fact that a State survey agency surveyor may
qualify as an expert in a particular subject does not suggest that
the surveyor is qualified to testify about all related subjects.
For example, as I shall discuss in my analysis of the individual
cases, the State agency surveyors whose testimony HCFA presented in
these cases are nurses who are qualified experts to testify in the
field of nursing. That expertise is limited, however. I do not
find that any of the nurses whose testimony HCFA presented are
qualified to opine as to the propriety of care ordered or provided
by physicians.
In Center Clinical Laboratory, the appellate panel concluded that,
in making a finding of immediate jeopardy in a case involving a
clinical laboratory's failure to comply with CLIA (Clinical
Laboratory Improvement Amendments of 1988) and implementing
regulations, HCFA "had relied on the judgment of state survey
officials, which it clearly had the right to do under the statute
and regulations." Center Clinical Laboratory at 22. The appellate
panel's decision addressed a situation where a State survey agency
had brought to the attention of HCFA exigent circumstances which
the State survey agency concluded would jeopardize the health and
safety of the public if not addressed immediately by HCFA. As
described by the appellate panel, the situation called for an
immediate response by HCFA.
That circumstance is distinguishable from an administrative hearing
held after the fact which addresses the propriety of a remedy
imposed by HCFA. There, the issue is not whether HCFA should react
immediately to the findings brought to its attention in order to
deal with exigent circumstances, but whether, in light of the
evidence, HCFA's action was appropriate. In the context of the
hearing and HCFA's overall burden of persuasion, it is reasonable
to require HCFA to prove that its action was justified.
Furthermore, it is reasonable at a hearing to require HCFA to prove
that the surveyors upon whom HCFA relied possess expertise
sufficient to make credible their findings. The judgment of the
surveyors will be found to be reliable where HCFA proves that the
surveyors have the requisite expertise to make judgments and where
the surveyors' findings are supported by the evidence.
The dichotomy between an agency's right to rely on information
brought to its attention by its agents and its burden of proving
that that information is reliable at a subsequent administrative
hearing is illustrated precisely in section 1128(b)(7) of the Act.
That section permits the Secretary, or her delegate, the Inspector
General (I.G.), to exclude individuals or entities, who are
engaging in fraud or unlawful kickbacks with respect to federally
funded health care programs. In the usual case, an exclusion under
this section becomes effective only after an administrative hearing
held pursuant to section 205(b) of the Act resulting in findings
favorable to the Secretary. Act, section 1128(f)(2). An exclusion
may go into effect prior to the administrative hearing where the
Secretary determines that the health or safety of individuals
receiving services warrants the exclusion taking effect earlier.
Id.
However, the fact that the Secretary or the I.G. may determine to
impose an exclusion under section 1128(b)(7) prior to an
administrative hearing does not mean that the I.G.'s burden of
persuasion at the hearing is less, or that the witnesses called by
the I.G. are vested automatically with greater credibility.
Whether the exclusion is imposed prior to or after the hearing, the
same standards of proof apply.
B. The significance of a corrective action plan
In each of these cases, HCFA and the Petitioner entered into a
corrective action plan to address the deficiencies that were
identified at the first survey of that Petitioner. 11/ In each of
these cases, the Petitioner was resurveyed after the date HCFA had
accepted that Petitioner's corrective action plan. Based on these
resurveys, HCFA concluded that each Petitioner continued to be
deficient in complying with conditions of participation that were
addressed in that Petitioner's corrective action plan.
These facts raise a question which is common to these cases. To
what extent does a corrective action plan agreed to by a provider
and HCFA define that provider's obligations and duties? I conclude
that a corrective action plan that has been accepted by HCFA
becomes an element of the contract between HCFA and the provider.
The corrective action plan defines the manner in which a provider
is expected to remedy deficiencies addressed in the plan. HCFA may
not ignore a corrective action plan once it has accepted it. In
determining whether a provider is complying with conditions of
participation, HCFA is obligated to consider the provider's
compliance with the terms of the corrective action plan, to the
extent that they address any condition for which compliance is
being evaluated.
My conclusions here are essentially the same as those which Judge
Leahy made in Guaynabo. Guaynabo at 14, 26. The Utuado, Lajas,
and Arecibo cases are distinguishable from these cases in that in
none of those cases did the petitioner argue that its relationship
with HCFA was governed by a corrective action plan.
HCFA appears to argue that the corrective action plan which it
entered into with each Petitioner in these cases is irrelevant to
the issue of whether that Petitioner failed to comply with
conditions of participation. First, HCFA seems to assert that it
may predicate its determination to terminate a Petitioner's
participation in Medicare on evidence predating the acceptance date
of a corrective action plan, even where the evidence pertains to
deficiencies that the plan proposes to address prospectively.
According to HCFA, a determination to terminate participation based
on preplan evidence must be sustained even if the plan of
correction promises that, prospectively, the Petitioner will
undertake steps to bring it into compliance.
Second, HCFA seems to argue that a corrective action plan cannot
supplant the specific compliance requirements set forth in
regulations. Thus, if there exists any difference between what is
required by the regulations and what might be promised in a
corrective action plan, the requirements of the regulations must
prevail.Alternatively, HCFA argues that a corrective action plan
should be construed to impose requirements on a provider in
addition to what is stated in regulations.
In sum, HCFA is arguing that it is free to disregard the terms of
a corrective action plan that it has accepted, except to the extent
that failure by the provider to comply with the plan gives HCFA an
additional ground upon which to premise its determination to
terminate that provider's participation. I find HCFA's position to
be untenable. HCFA's arguments ignore the purpose of a corrective
action plan. 12/
Where HCFA finds that a provider is not complying with a condition
of participation, it is not required to offer the provider the
opportunity to submit a corrective action plan or to accept such a
plan from the provider. In the case of a condition-level
deficiency, HCFA may simply terminate the deficient provider's
participation in Medicare. See 42 C.F.R. 488.28. In such a
case, HCFA has also the option, in lieu of immediate termination,
of offering the provider the opportunity to submit a corrective
action plan and of accepting that plan, assuming HCFA finds that it
proposes a satisfactory remedy for the provider's deficiencies.
That is the option HCFA chose with each of the Petitioners in these
cases.
Once HCFA accepts a corrective action plan, both HCFA and the
provider are bound by its terms. Where HCFA opts to accept a
corrective action plan which addresses condition-level
deficiencies, in effect HCFA tells the provider that, if the
provider does what it has promised to do in the plan, it will be
deemed to have corrected the deficiencies. Thus, compliance by a
provider with a corrective action plan becomes the measure of
whether the provider has corrected the deficiencies that are
addressed by the plan.
Furthermore, where a plan proposes to address deficiencies
prospectively, and HCFA accepts the plan, in effect it tells the
provider that HCFA will evaluate its compliance with the conditions
addressed in the plan beginning with the date of the plan, and
pursuant to the remedies identified in the plan. Under those
circumstances, evidence as to deficiencies predating the plan may
be irrelevant to the issue of compliance.
It would be punitive, and inimical to the remedial purpose of the
corrective action plan, for HCFA to agree to accept a plan from a
provider and then to terminate that provider's participation for
deficiencies which predate the plan, but which the plan proposes to
correct prospectively. It would be punitive also for HCFA to
disregard what it had agreed to accept from a provider as a method
of compliance with participation requirements.
HCFA argues that, in these cases, it advised each Petitioner that
HCFA would hold it accountable not only for compliance with the
terms of the corrective action plan, but also for compliance with
arguably different requirements. See, e.g., in the case of
Petitioner Fajardo, C-94-383, HCFA Ex. 19. The advisory language
relied on by HCFA to support this argument tells each Petitioner
that a resurvey of that Petitioner "will evaluate whether or not
you have successfully implemented your plan of correction and
achieved compliance with the Medicare Hospice Conditions of
Participation." Id.
I do not read this statement as telling the Petitioners, as HCFA
seems to be arguing, that HCFA would be evaluating their
performance both pursuant to the terms of the corrective action
plans and under separate (and arguably different) conditions of
participation. Rather, I believe that this statement must be taken
to mean what it says. It says, simply, that HCFA would be
evaluating each Petitioner's performance under that Petitioner's
corrective action plan and, from that evaluation, would determine
whether the Petitioner met conditions of participation.
Furthermore, I am troubled by the implications of HCFA's argument.
HCFA seems to be saying that the terms of a corrective action plan
may relate to remedies that address something in addition to what
is contained in the regulations governing Medicare participation.
That is not what a corrective action plan is intended to achieve.
The purpose of a corrective action plan is to bring a deficient
provider into compliance with Medicare participation requirements.
It would make no sense whatsoever for HCFA to enter into a
corrective action plan with a provider unless HCFA concluded that,
by complying with the elements of the plan, the provider would
remedy the deficiencies addressed by the plan and would thereby be
in compliance with Medicare participation requirements.
III. Analysis of the issues and evidence relating to Petitioner
Fajardo (Docket No. C-94-383)
A. Issues, findings of fact, and conclusions of law
At the July 6, 1994 resurvey of Petitioner Fajardo, the State
survey agency surveyors found that Petitioner Fajardo failed to
comply with conditions of participation stated in the following
regulations: 42 C.F.R. 418.50 (general provisions); 42 C.F.R.
418.54 (medical director); 42 C.F.R. 418.62 (informed consent);
and 42 C.F.R. 418.86 (physician services). The issue in this
case is whether Petitioner Fajardo failed to comply with any of
these conditions of participation.
I base my analysis of this issue on the evidence admitted at the
hearing, the parties' arguments, and the applicable law (which
includes my general conclusions of law stated at Part II of these
decisions). I make the following findings of fact and conclusions
of law. After each finding or conclusion, I state the page or
pages of this decision at which I discuss the finding or conclusion
in detail.
1. HCFA did not prove that Petitioner Fajardofailed to
comply with the condition of participation contained in 42 C.F.R.
418.50. Page 24.
2. HCFA did not prove that Petitioner Fajardofailed to
comply with the condition ofparticipation contained in 42 C.F.R.
418.54. Pages 24 - 28.
3. HCFA did not prove that Petitioner Fajardofailed to
comply with the condition of participation contained in 42 C.F.R.
418.62. Pages 28 - 30.
4. HCFA did not prove that Petitioner Fajardofailed to
comply with the condition of participation contained in 42 C.F.R.
418.86. Pages 30 - 41.
5. HCFA did not prove a basis for terminatingthe
participation in Medicare of Petitioner Fajardo. Page 41.
B. The alleged failure of Petitioner Fajardo to comply with
the general provisions condition of participation contained in 42
C.F.R. 418.50
According to HCFA, 42 C.F.R. 418.50 imposes on a hospice as a
condition of participation the requirement that the hospice comply
with all other conditions of participation stated in the
regulations. Thus, a failure by a hospice to comply with a
condition of participation stated elsewhere in the regulations is
automatically a failure by that hospice to comply with the
condition of participation contained in 42 C.F.R. 418.50. HCFA
contends that Petitioner Fajardo failed to comply with this
condition of participation because it failed to comply with
conditions of participation stated elsewhere.
I find this argument to be moot, because HCFA did not prove that
Petitioner Fajardo failed to comply with conditions of
participation stated in regulations other than 42 C.F.R. 418.50.
It is, therefore, not necessary for me to analyze in this case
HCFA's arguments concerning the meaning of 42 C.F.R. 418.50.
However, in Utuado and Lajas, I concluded that the Secretary did
not intend 42 C.F.R. 418.50 to inflate a hospice's failure to
comply with conditions of participation. Utuado at 16 - 17; Lajas
at 20 - 21. HCFA has not made any new arguments here that would
cause me to question the analysis I made in those decisions.
C. The alleged failure of Petitioner Fajardo to comply with
the medical director condition of participation contained in 42
C.F.R. 418.54
HCFA argues that, when it resurveyed Petitioner Fajardo on July 6,
1994, Petitioner Fajardo failed to comply in two respects with the
medical director condition of participation contained in 42 C.F.R.
418.54. First, the medical director was not assuring that patients
were being certified for hospice services in accordance with
Medicare certification requirements. C-94-383, HCFA Ex. 21 at 3;
HCFA posthearing brief (Fajardo) at 16 - 17. Second, the medical
director had failed to discharge his responsibilities by allowing
Petitioner Fajardo to treat patients who were not eligible for
hospice care. C-94-383, HCFA Ex. 21 at 5; HCFA posthearing brief
(Fajardo) at 18. 13/
HCFA failed to meet its burden of persuasion with respect to both
of these assertions. I find that HCFA's proof is deficient in the
following respects:
The performance of Petitioner Fajardo's medicaldirector
was made subject to the terms of a corrective action plan accepted
by HCFA on June 23, 1994. HCFA has the burden of proving that,
after June 23, 1994, Petitioner Fajardo failed to comply with the
corrective action plan. However, HCFA failed to offer the relevant
parts of the plan as evidence, and, therefore, the record is devoid
of the operative document by which the performance of the medical
director must be measured.
Even if the relevant part of the correctiveaction plan
had been offered by HCFA, HCFA failed to offer evidence which
relates to the performance of Petitioner Fajardo's medical director
after the critical date of June 23, 1994.
HCFA's assertion that the medical directorallowed
Petitioner Fajardo to treat patients who were not eligible for
hospice care is not supported by credible evidence.
The regulation governing the duties of a hospice medical director
states, as a condition of participation, that:
[t]he medical director must be a hospice employee who is a
doctor of medicine or osteopathy who assumes overall responsibility
for the medical component of the hospice's patient care program.
42 C.F.R. 418.54.
In Utuado, I analyzed the requirements of this regulation. Utuado
at 21 - 22. I held that the plain meaning of the regulation is
that a hospice medical director must assume supervisory and
management responsibility for the medical services that the hospice
provides to its patients. Id. In Utuado, I held further that the
duties of a hospice medical director included assuring that
patients of the hospice be certified as being eligible for hospice
care, pursuant to the requirements of applicable regulations. Id.
at 23 - 24. Finally, I held that the duties of a hospice medical
director included supervising the performance of the hospice's
interdisciplinary group. Id. at 22 - 23.
The medical director condition was a condition that HCFA had
concluded Petitioner Fajardo was not complying with as a
consequence of the initial survey of Petitioner Fajardo, conducted
in April 1994. C-94-383, HCFA Ex. 15. On May 16, 1994, Petitioner
Fajardo submitted its proposed corrective action plan to HCFA.
Among other things, this proposed plan addressed the deficiencies
which HCFA found in Petitioner Fajardo's compliance with the
medical director condition. C-94-383, HCFA Ex. 16 at 5 - 6.
On May 31, 1994, HCFA advised Petitioner Fajardo that it found the
proposed corrective action plan to be unacceptable insofar as it
addressed the role of the medical director. C-94-383, HCFA Ex. 17.
14/ Specifically, Petitioner Fajardo had proposed to prepare a
manual which outlined the duties of its medical director. HCFA
refused to accept the corrective action plan, insofar as it
addressed the duties of the medical director, without first
reviewing and approving the manual. C-94-383, HCFA Ex. 17 at 2.
On June 14, 1994, Petitioner Fajardo submitted a revised corrective
action plan to HCFA which included a medical director manual.
C-94-383, HCFA Ex. 18 at 2. HCFA accepted the revised corrective
action plan on June 23, 1994. C-94-383, HCFA Ex. 19.
The medical director manual, which is a part of the final
corrective action plan accepted by HCFA from Petitioner Fajardo, is
not in evidence in this case. HCFA did not offer the document as
an exhibit. HCFA did attach a purported English translation of the
document to its posthearing brief. Petitioner Fajardo objected to
my receiving this document into evidence.
I do not admit the medical director manual into evidence, and I do
not rely on it as part of my analysis. HCFA did not justify
offering the document untimely, nor did it prove an absence of
prejudice to Petitioner.
At the hearing, I commented that HCFA's case might be deficient
without the medical director manual being in evidence. Tr. at 498
- 500. HCFA did not offer the document. Also, HCFA did not elicit
testimony from the surveyors concerning whether any of them had
reviewed the performance of Petitioner Fajardo pursuant to the
medical director manual. HCFA rested its case without suggesting
that it wished to offer the manual at a later date.
Not only has HCFA not shown good cause for my considering the
medical director manual at this point, but it would be prejudicial
to Petitioner. HCFA has not proven the purported translation to be
accurate, and the parties have not stipulated to its accuracy.
Furthermore, Petitioner would be deprived of the opportunity to
cross-examine the surveyors concerning whether they reviewed
Petitioner's performance pursuant to the manual.
HCFA's failure to offer timely into evidence the remedial plan
which governed the performance of Petitioner Fajardo's medical
director after June 23, 1994, constitutes a fatal gap in HCFA's
proof. Having accepted a corrective action plan from Petitioner
Fajardo, HCFA has the burden of proving that Petitioner Fajardo
failed to comply with it. It is not possible for me to evaluate
Petitioner Fajardo's compliance with the medical director condition
of participation after June 23, 1994, given that the part of the
corrective action plan which addresses this condition of
participation is not in evidence.
Not only did HCFA not offer as evidence the part of the corrective
action plan that related to the medical director condition, but
also it is not apparent from the record that the State survey
agency surveyors even considered whether Petitioner Fajardo was
complying with it in conducting their July 6, 1994 resurvey of
Petitioner. None of the testimony of these individuals relates in
any respect to whether or not Petitioner Fajardo complied with the
corrective action plan. See Tr. at 184 - 218, 496 - 537.
Furthermore, it is unclear from the evidence offered by HCFA that
the evidence would prove that Petitioner Fajardo failed to comply
with the corrective action plan after June 23, 1994, assuming that
the part of the plan relating to the medical director was in
evidence. That is so because the evidence does not prove that it
relates to events after June 23, 1994.
HCFA bases its assertion that the medical director was not properly
supervising the certification of patients for hospice services on
its finding that, in seven of eight patient records reviewed on
July 6, 1994, the recertification documents lacked statements as to
the patient's present health status, prognosis, and life
expectancy. C-93-383, HCFA Ex. 21 at 3. The statement of
deficiencies prepared by the State agency surveyors after the July
6, 1994 resurvey does not note the dates of any of these records.
Id. Testimony offered by HCFA at the hearing relates to
recertifications of two patients, patient # 2 and # 9. Tr. at 214
- 215, 507 - 508. However, the patient records relied on by HCFA
show that the recertification of patient # 2 was made on May 9,
1994, and the recertification of patient # 9 was made on May 18,
1994. C-94-383, HCFA Ex. 36 at 20 - 21; C-94-383, HCFA Ex. 43 at
10 - 14. Both of these recertifications were made prior to June
23, 1994.
Finally, I am not persuaded that Petitioner Fajardo failed to
comply with the medical director condition of participation because
it discharged 66 patients between May 27 and July 6, 1994. HCFA
asserts that this is proof that Petitioner Fajardo was treating
patients who were not eligible to receive hospice care, and that
its medical director was deficient in allowing Petitioner Fajardo
to provide such treatment. The record is devoid of meaningful
evidence pertaining to the circumstances under which these patients
were discharged. Furthermore, assuming for the sake of argument
that HCFA correctly asserts that these patients were not eligible
to receive hospice care, then, by discharging these patients,
Petitioner Fajardo was attaining compliance with the criteria for
providing hospice care. That can hardly be a basis for finding
Petitioner Fajardo to be deficient as of the July 6, 1994 resurvey.
D. The alleged failure of Petitioner Fajardo to comply with
the informed consent condition of participation contained in 42
C.F.R. 418.62
HCFA asserts that, as of July 6, 1994, Petitioner Fajardo was not
complying with the condition of participation governing informed
consent of patients, contained in 42 C.F.R. 418.62. HCFA bases
this assertion on the findings of the State agency surveyors who
conducted the July 6, 1994 resurvey of Petitioner Fajardo. The
surveyors examined ten patient records and concluded that none of
them contained the informed consent form that Petitioner Fajardo
developed as part of its corrective action plan. C-94-383, HCFA
Ex. 21 at 6 - 7.
Petitioner Fajardo does not dispute this evidence. It argues,
however, that the evidence does not prove that it failed to comply
with the informed consent condition of participation. It asserts
that its obligations under the corrective action plan are
prospective only. According to Petitioner Fajardo, insofar as the
corrective action plan pertained to the issue of informed consent,
it required Petitioner Fajardo to obtain patient consent on the
newly developed form from any patient admitted after June 23, 1994.
Petitioner Fajardo argues that HCFA failed to prove that Petitioner
Fajardo did not live up to this obligation, inasmuch as the ten
patients whose records were examined by the surveyors had all been
admitted to hospice care prior to June 23, 1994.
HCFA responds to this argument by asserting that the obligation to
obtain informed consent from a patient is a continuing obligation.
It argues that the corrective action plan did not excuse Petitioner
Fajardo from obtaining executed consents from all of its patients
on the newly developed form, including those who were admitted
prior to June 23, 1994.
Petitioner Fajardo could have concluded reasonably from its
communications with HCFA that HCFA intended that it use the new
informed consent prospectively, to advise patients admitted after
June 23, 1994 of the services available to them. HCFA did not tell
Petitioner Fajardo that it was to have the new form executed by
both existing and future patients.
Petitioner Fajardo sent its first proposed corrective action plan
to HCFA on May 16, 1994. C-94-383, HCFA Ex. 16. In that document,
Petitioner Fajardo took issue with HCFA's assertion that an
informed consent form must recite all of the services that
Petitioner Fajardo would supply to its patients. Id. at 12 - 13.
Petitioner Fajardo asserted that, in fact, all of its patients had
been informed of the services to be provided to them in other forms
which Petitioner Fajardo had supplied to these patients. Id.
Notwithstanding, Petitioner Fajardo proposed to correct
deficiencies in the manner in which it obtained informed consent by
creating a manual to be provided to patients which detailed the
services that would be offered to them. Id.
HCFA found this proposal to be unacceptable. Id.; C-94-383, HCFA
Ex. 17 at 3. It advised Petitioner Fajardo that Petitioner Fajardo
was obligated to obtain informed consent on a single form which
addressed all services to be provided to patients under its care.
Id. On June 14, 1994, Petitioner Fajardo responded to HCFA by
providing HCFA with a proposed new informed consent form.
C-94-383, HCFA Ex. 18. 15/ On June 23, 1994, HCFA accepted the new
form. C-94-383, HCFA Ex. 19.
There is nothing in the correspondence between HCFA and Petitioner
Fajardo concerning the corrective action plan in which HCFA states
its intent concerning how Petitioner Fajardo was to use the new
informed consent form. HCFA never told Petitioner Fajardo that it
assumed that Petitioner Fajardo would have the new form executed by
patients who had been admitted previously to its care.
I do not find it unreasonable that Petitioner Fajardo would have
concluded that the form was to be utilized prospectively, with
patients admitted after the date the form was found to be
acceptable by HCFA. I find this to be so, particularly, because
Petitioner Fajardo was contending that it had complied with the
spirit, if not the letter, of the informed consent requirement.
Petitioner Fajardo told HCFA that it had advised its patients of
all of the services it would be providing to them, albeit in a
format that was different from the one insisted on by HCFA. HCFA
did not take issue with this statement.
Thus, the evidence presented by HCFA does not prove that Petitioner
Fajardo was failing to comply with the informed consent condition
after June 23, 1994. At most, it proves a misunderstanding between
HCFA and Petitioner Fajardo concerning Petitioner Fajardo's
obligations.
E. The alleged failure of Petitioner Fajardo to comply with
the physician services condition of participation contained in 42
C.F.R. 418.86
At the July 6, 1994 resurvey of Petitioner Fajardo, the State
survey agency surveyors identified seven deficiencies which they
concluded established that Petitioner Fajardo was not complying
with the physician services condition of participation contained in
42 C.F.R. 418.86. C-94-383, HCFA Ex. 21 at 12 - 14. I have
examined carefully the evidence that HCFA offered pertaining to
these alleged deficiencies. I conclude that this evidence does not
prove that, as of July 6, 1994, Petitioner Fajardo had failed to
comply with the physician services condition of participation.
The regulation which governs physician services provided by a
hospice states:
[i]n addition to palliation and management of terminal illness
and related conditions, physician employees of the hospice,
including the physician member(s) of the interdisciplinary group,
must also meet the general medical needs of the patients to the
extent that these needs are not met by the attending physician.
42 C.F.R. 418.86.
The meaning of this regulation is plain. It requires physicians
who are employed by a hospice to provide palliation and management
of patients' terminal illnesses and related conditions. It
requires also that physicians who are employed by a hospice provide
care to meet the general medical needs of hospice patients if those
needs are not met by the patients' attending physicians.
The term "attending physician" is defined elsewhere in the
regulations. Under 42 C.F.R. 418.3, an attending physician is
a doctor of medicine or osteopathy who is identified by the patient
at the time he or she seeks hospice care "as having the most
significant role in the determination and delivery of the . . .
[patient's] medical care."
At the hearing, I questioned whether HCFA had shown that the
physicians whose services HCFA had found to be deficient were
employed by Petitioner Fajardo. My preliminary assessment was that
HCFA's burden of persuasion under 42 C.F.R. 418.86 included the
duty to prove that any deficiency under the regulation was the
direct consequence of a failure by a physician employed by the
hospice to provide that service personally.
On further reflection, however, I conclude that, in expressing
these concerns I missed a broader and more fundamental point.
Under 42 C.F.R. 418.86, the hospice (and its physician
employees) assume the burden of providing physician services to a
patient only to the extent that the services are not being provided
by the patient's attending physician. The necessary predicate to
establishing deficient care by the hospice physician is to first
prove that the care is not being provided by the patient's
attending physician. Guaynabo at 30.
Therefore, in order to prove that a hospice is deficient under 42
C.F.R. 418.86, HCFA must prove that a patient's attending
physician has not provided a service required by the regulation and
that the hospice physician also has not provided that service.
Guaynabo at 30. HCFA does not meet its burden of persuasion under
42 C.F.R. 418.86 by proving only that a hospice physician failed
to provide necessary care to a patient. Such evidence is not
meaningful unless HCFA first proves that the service that was not
being provided by the hospice physician was also not provided by
the patient's attending physician.
HCFA appears to concede that it must prove that a patient's needs
are not being met, both by that patient's attending physician and
by the hospice physician, in order to prove a deficiency under 42
C.F.R. 418.86. HCFA reply brief at 11. However, HCFA seems to
argue, without explanation, that it has accomplished this task
simply by offering excerpts of hospice records which show that a
necessary service was not provided by an individual whom HCFA
asserts to be the hospice physician. Id. HCFA argues also that it
would be unreasonable to expect it to prove that a patient's
attending physician did not provide required services as a
prerequisite to proving that a hospice is deficient under the
physician services regulation. According to HCFA, it would be
faced with the unreasonable requirement of having the attending
physician admit against his or her self-interest that he or she had
not provided required services. Id. at 10 - 11.
I am not persuaded that it would be unreasonable to require HCFA to
prove that a patient's attending physician had not provided
required services as a prerequisite to proving that the hospice had
not complied with 42 C.F.R. 418.86. First, that is what is
required by the regulation. Second, the burden is not difficult
for HCFA to meet.
In any case where State agency surveyors find that necessary
physician services are not documented in a hospice record for a
patient, the surveyors could ask the hospice personnel or the
patient's family whether that patient had an attending physician
other than the hospice physician. If the surveyors established
that the patient had no physician other than the hospice physician,
a deficiency in providing physician services would be a deficiency
under 42 C.F.R. 418.86. If the surveyors established that the
patient did have an attending physician, they could then ask that
physician whether he or she had records to document that necessary
services which were not documented in the hospice record had been
provided to the patient. If that physician did not produce such
records, an inference could be drawn that the physician had not
provided the necessary services. HCFA has not offered any evidence
regarding whether the patient's attending physician failed to
provide necessary services. Therefore, HCFA has not established a
necessary element to proving a deficiency pursuant to 42 C.F.R.
418.86.
HCFA failed to meet its burden of proving that the hospice
physician failed to provide necessary medical services that had not
been provided by an attending physician. The patient records it
offered consist of fragments of the hospice records. It does not
appear that the State agency surveyors made any effort to determine
whether the patients had attending physicians, other than the
hospice physician, and whether records existed elsewhere for
services provided by the attending physicians. 16/
Furthermore, I am not persuaded by the evidence offered by HCFA
that in fact it proved that the services which it asserts to be
deficient are deficient. My analysis of the evidence relating to
the seven alleged deficiencies cited by the surveyors follows. 17/
1. Patient # 2
The surveyors found that, on May 10, 1994, the physician who
treated patient # 2 ordered that the patient be administered the
medication Prozac in the amount of 20 mg, but failed to indicate
the frequency of administration and the route of administration.
C-94-383, HCFA Ex. 21 at 12. HCFA asserts from these findings that
the physician's order was incomplete and, consequently, Petitioner
Fajardo was deficient under 42 C.F.R. 418.86. I am not
satisfied that HCFA proved that the service provided by the
physician to patient # 2 was substantially deficient.
The evidence HCFA offered at the hearing to support the surveyors'
findings concerning the order to administer Prozac to patient # 2
consisted of the testimony of Alba N. Mu¤oz, a surveyor who
participated in the July 6, 1994 resurvey of Petitioner Fajardo.
Tr. at 186 - 188. Ms. Mu¤oz is a nurse, and it is apparent, both
from her resume and from her testimony, that she has extensive
training and work experience in the nursing profession. C-94-383,
HCFA Ex. 61; Tr. at 179 - 183. HCFA offered the testimony of Ms.
Mu¤oz as expert testimony to prove that the services she reviewed
did not comport with the standards of care which governed the
physicians who provided services to the patients cared for by
Petitioner Fajardo.
I accept as credible Ms. Mu¤oz' testimony that the failure of the
physician to specify the route and frequency of administration of
Prozac to patient # 2 is a failure to comply with a generally
accepted requirement that a physician's order specify the route and
frequency of administration of medications that are prescribed in
that order. Tr. at 187. Ms Mu¤oz' experience as a nurse qualifies
her to attest to what is usually contained in a physician's order.
Furthermore, her testimony was supported on this point by the
testimony of Alma V. Rivera, M.D., a physician. Tr. at 655.
However, Ms. Mu¤oz did not testify as to the possible adverse
consequences that might have resulted to patient # 2 from the
failure of the physician to specify the route and frequency of
administration of Prozac to that patient. Neither did Dr. Rivera.
Indeed, Dr. Rivera did not review the treatment records of patient
# 2, or of any of the patients whose records are in evidence in
these cases. Tr. at 659.
HCFA offered no evidence, either through Ms. Mu¤oz or Dr. Rivera,
as to the medical purpose of Prozac, or of the usual route and
frequency of administration of that medication. HCFA did not offer
evidence to show that misinterpretation of a physician's order to
administer Prozac to a patient might produce harmful consequences
to that patient. Thus, there is no evidence of record to prove
that the incomplete order to administer Prozac to patient # 2 might
have adversely affected the health and safety of that patient.
Absent such evidence, I cannot fairly conclude that the failure to
specify the route and frequency of administration of Prozac to
patient # 2 is a substantial deficiency in the providing of
physician services to that patient.
HCFA did not argue that the failure to properly document the order
to administer Prozac to patient # 2 was a failure by Petitioner
Fajardo to comply with the clinical records condition of
participation contained in 42 C.F.R. 418.74. Nor did it argue
that other alleged failures by Petitioner Fajardo or of the other
Petitioners in these cases to maintain accurate records of medical
treatments ordered for and provided to patients were failures to
comply with that condition. I might have found that such alleged
failures constituted failures to comply with the clinical records
condition, had HCFA alleged that and provided the Petitioners with
notice of its allegations.
2. Patient # 3
The surveyors found that, as of June 13, 1994, the plan of care for
patient # 3 indicated that the patient's breathing problems had
been solved. However, nursing documentation recorded on June 19
and 29, 1994 showed that the patient was again experiencing
breathing problems and was receiving respiratory therapy for these
problems. C-94-383, HCFA Ex. 21 at 12. HCFA asserts that these
findings demonstrate that Petitioner Fajardo was not documenting
properly the services it was providing to the patient, nor was it
planning that patient's care. According to HCFA, this comprises a
failure to comply with 42 C.F.R. 418.86.
HCFA did not prove that Petitioner Fajardo was deficient in
providing physician services to patient # 3. There is nothing in
the surveyors' statement to suggest or show that inadequate or
improper services were supplied to this patient. There is no
suggestion that the patient's physician failed to diagnose or to
treat the patient's breathing problems. Ms. Mu¤oz offered nothing
in her testimony that would support the conclusion that the
physician who treated patient # 3 provided inadequate care to that
patient. See Tr. at 188 - 197.
At the hearing, HCFA asserted that the deficiency with respect to
patient # 3 was a failure by Petitioner Fajardo to amend its plan
of care for that patient to reflect breathing problems that
developed after June 13, 1994. If so, that is not a deficiency in
the services provided by a physician, so much as it is a deficiency
in recording the plan of care of the patient. There is a
regulation which governs the requirement for a hospice to plan a
patient's care and to document that care. 42 C.F.R. 418.58. I
do not find that regulation to be incorporated by reference into 42
C.F.R. 418.86. Thus, an alleged failure by a hospice to
properly plan the care it provides to a patient cannot
automatically be attributed to a deficiency in the services
provided by a hospice physician.
At the hearing, I observed that HCFA seemed to be arguing that most
of the regulations governing hospices are incorporated by reference
into most of the other regulations governing hospices. Thus, HCFA
asserts that: deficiencies under other regulations are
automatically deficiencies under 42 C.F.R. 418.50; virtually any
failure by a hospice to provide care to a patient consistent with
the requirement of some regulation is a deficiency in the
performance of the hospice medical director under 42 C.F.R.
418.54; and a deficiency in planning a patient's care may be
construed to be a deficiency in the performance of a hospice
physician employee under 42 C.F.R. 418.86. I observed then, and
I reiterate, that the Secretary did not intend the regulations
governing hospices to be interpreted so loosely. And, even if that
is the Secretary's intent, HCFA has not established that it has
communicated that intent to hospices in a manner which would put
them on notice of their obligation to comply. Tr. at 194 - 197.
3. Patient # 4
The surveyors found that patient # 4 was first admitted to the care
of Petitioner Fajardo on June 29, 1992. On May 23, 1994, this
patient was hospitalized with chest pain. The hospice records for
this patient document visits to the patient during the patient's
hospitalization by various professionals, but not by the hospice
physician. On June 2, 1994, the hospice physician noted that the
patient was not terminally ill and that the hospice planned to
transfer the patient to the services of home care. C-94-383, HCFA
Ex. 21 at 13; Tr. at 198. 18/ HCFA argues from these findings that
Petitioner Fajardo failed to comply with the requirements of 42
C.F.R. 418.86 in that a physician or physicians in its employ
should not have been providing services to a patient who was not
terminally ill. Tr. at 200 - 201.
I am not persuaded, either by the evidence or by HCFA's argument as
it relates to patient # 4, that HCFA proved that Petitioner Fajardo
did not comply with the physician services condition in its
treatment of this patient. First, 42 C.F.R. 418.86 does not
address the allegations raised by HCFA with respect to this
patient. The regulation was intended to insure that hospice
patients received physician services. It cannot be read to state
that hospice physicians who treat hospice patients who may not be
terminally ill are somehow deficient in providing services to these
patients.
That is not to say that a hospice may accept and treat patients
whom it knows not to be terminally ill. Both the Act and the
regulations limit coverage for hospice care to patients who are
terminally ill and impose requirements on hospices to certify that
their patients are terminally ill. But those requirements are not
incorporated implicitly into 42 C.F.R. 418.86.
Second, HCFA offered no qualified evidence to prove that Petitioner
Fajardo misjudged the medical condition of patient # 4. It offered
the testimony of Ms. Mu¤oz, who is a nurse and not a physician, to
demonstrate that the patient's treatment records did not establish
the patient to be terminally ill. Tr. at 205 - 210. I do not find
her opinion to be credible on this issue. Indeed, under
regulations governing hospices, the Secretary has determined that
only a physician is qualified to adjudge whether a patient is
terminally ill. 42 C.F.R. 418.20 - 418.22.
4. Whirlpool treatment for Patient # 2
The surveyors found that, on June 26, 1994, the physician who
treated patient # 2 ordered a consultation with a "physical
medicine physician" for whirlpool treatment. C-94-383, HCFA Ex. 21
at 13. 19/ As of the July 6, 1994 resurvey, the patient had not
yet been evaluated nor had the patient received whirlpool
treatment. HCFA argues from this that the patient had not received
services ordered by a physician and that, therefore, Petitioner
Fajardo was not complying with the physician services condition of
participation.
I am not persuaded that these findings document a failure by
Petitioner Fajardo or by a physician employed by it to provide a
service that is covered under 42 C.F.R. 418.86. There is proof
that the patient did not receive services that the physician had
ordered. However, the evidence offered by HCFA does not establish
that the physician had it within his or her ability to control
whether the services were delivered. The evidence establishes only
that the physician directed that there be a consultation with
another individual. The evidence does not establish whether that
individual is an employee of the hospice, or whether the physician
who ordered the consultation had it within his or her ability to
assure that the consultation took place.
Under the regulation, a physician who is employed by a hospice has
a duty to order that necessary services be provided to a patient,
to the extent that those services are not provided by the patient's
attending physician. The hospice physician has the additional
obligation to assure that services which are under his or her
control are delivered to the patient. But the regulation does not
impose on a hospice physician the duty to assure that third
parties, who may not be under the physician's control, deliver
services that have been ordered. Thus, a failure to supply a
service to a patient that has been ordered by a hospice physician
is not automatically a failure to deliver a physician service under
42 C.F.R. 418.86.
Arguably, Petitioner Fajardo may have had an obligation under some
regulation other than 42 C.F.R. 418.86 to assure that services
provided by a third party, but ordered by a hospice physician,
actually are provided to a patient. However, HCFA did not make
that assertion here. I find only that HCFA cannot attribute the
deficiency in providing a service to a hospice physician who
ordered that service, where it is unclear from the record that the
physician had the power to assure that the service was delivered to
the patient.
Furthermore, HCFA did not offer any credible evidence to show that
a 10-day delay in providing whirlpool treatments to patient # 2
constituted a substantial deficiency, if indeed it is a deficiency.
HCFA offered no evidence as to what adverse consequences this
patient might suffer from a failure to provide whirlpool treatments
to the patient.
5. Patient # 7
The surveyors found that patient # 7 was admitted to the care of
Petitioner Fajardo on June 23, 1993, with a diagnosis of "COPD."
C-94-383, HCFA Ex. 21 at 13. 20/ On June 21, 1994, a physician
issued a statement that patient # 7 was terminally ill. This
patient was discharged on July 5, 1994 with a finding that her
medical condition was stable. C-94-383, HCFA Ex. 45 at 10. The
surveyors found no evidence in that patient's record that the
patient had been reevaluated between June 23, 1994 and July 1,
1994. From this, HCFA asserts that the patient was deprived of
necessary physician services.
HCFA argues that "the absence of medical evidence showing that
. . . [the patient] was reevaluated prior to being discharged
suggests that her medical needs were not being met." HCFA
posthearing brief (Fajardo) at 22. In effect, HCFA is saying that
there must have been deficient services to this patient because the
reasons for her discharge were not explained fully in her treatment
records. I conclude that this argument is speculative, and not
supported by any credible evidence. HCFA has simply not identified
a deficiency in the care provided to this patient.
6. Patient # 10
The surveyors found that patient # 10, who was diagnosed to be
suffering from "COPD," was receiving the medication Theodur in a
dose of 200 mg, at 12-hour intervals, beginning March 24, 1994.
C-94-383, HCFA Ex. 21 at 14. They found that the patient's records
showed that, on June 3, 1994: "Theophyllin levels were o.2 mcg/ml
(normal range 10.0-20.0 mg)." Id. The surveyors concluded that:
"Eventhough [sic] the result was below normal range, no
intervention was indicated."
HCFA has not explained what it intends these findings to signify.
Ms. Mu¤oz offered no testimony concerning alleged deficiencies in
the treatment provided to patient # 10. HCFA made no argument in
its posthearing brief concerning alleged deficiencies in the
treatment provided to patient # 10. There is no evidence in the
record defining or explaining any of the technical language
contained in the surveyors' findings. I can find no deficiency in
the services provided to patient # 10 by Petitioner Fajardo in the
absence of a credible explanation from HCFA as to why the findings
by the State agency surveyors establish a deficiency.
7. Discharge of 66 patients
The surveyors found that Petitioner Fajardo had discharged 66
patients between May 27, 1994 and July 5, 1994, with findings that
these patients were medically stable. C-94-383, HCFA Ex. 21 at 14.
The surveyors concluded that these discharges showed that
Petitioner Fajardo was not complying with admission criteria for
terminally ill patients.
I do not conclude that these findings, assuming them to be true,
support a determination that Petitioner Fajardo was not complying
with the physician services condition of participation. First,
HCFA has not shown how admission criteria relate to the services
which Petitioner Fajardo must provide pursuant to 42 C.F.R.
418.86. The fact that Petitioner Fajardo discharged many of its
patients in a short period of time does not prove that its
physician employees were not providing the patients with required
medical services. Second, as I find above, the fact that
Petitioner Fajardo discharged many of its patients between the
first survey, conducted on April 19, 1994, and the resurvey of July
6, 1994 may show an attempt by Petitioner Fajardo to bring its
operations into compliance with HCFA conditions of participation.
At the hearing, I noted that a persistent theme in HCFA's cases
against all of the Petitioners appeared to be that these
Petitioners had treated many patients who were not, in fact,
eligible to receive hospice care. That may be so. But HCFA made
no specific allegation that these alleged practices by the
Petitioners constituted a failure by them to comply with
participation requirements. Nor am I convinced that HCFA may use
generalized allegations of improprieties by the Petitioners as a
technique to strengthen less-than-probative evidence relating to
allegations of failures by the Petitioners to comply with specific
conditions of participation.
F. Conclusion as to Petitioner Fajardo
HCFA did not establish a prima facie case that Petitioner Fajardo
failed to comply with conditions of participation. Therefore, HCFA
did not prove a basis for terminating the participation in Medicare
of Petitioner Fajardo.
IV. Analysis of the issues and evidence relating to Petitioner
Caguas (Docket No. C-94-384)
A. Issues, findings of fact, and conclusions of law
At the July 8, 1994 resurvey of Petitioner Caguas, the State survey
agency surveyors found that Petitioner Caguas failed to comply with
conditions of participation stated in the following regulations:
general provisions, 42 C.F.R. 418.50 and medical director, 42
C.F.R. 418.54. The issue in this case is whether Petitioner
Caguas failed to comply with either of these conditions of
participation.
I make the following findings of fact and conclusions of law with
respect to Petitioner Caguas:
1. HCFA did not prove that Petitioner Caguasfailed to
comply with the condition ofparticipation contained in 42 C.F.R.
418.50.Page 42.
2. HCFA did not prove that Petitioner Caguasfailed to
comply with the condition ofparticipation contained in 42 C.F.R.
418.54.Pages 42 - 44.
3. HCFA did not prove a basis for terminatingthe
participation in Medicare of PetitionerCaguas. Page 44.
B. The alleged failure of Petitioner Caguas to comply with
the general provisions condition of participation contained in 42
C.F.R. 418.50
HCFA makes the same argument concerning the alleged failure of
Petitioner Caguas to comply with the general provisions condition
of participation as it makes with respect to Petitioner Fajardo.
Here, as it did with respect to Petitioner Fajardo, HCFA asserts
that a failure by a hospice to comply with a condition of
participation stated elsewhere in the regulations also is a failure
to comply with the general provisions condition.
I do not find that HCFA proved that Petitioner Caguas failed to
comply with the requirements of 42 C.F.R. 418.50, for the same
reasons that I found that HCFA failed to meet its burden with
respect to Petitioner Fajardo. HCFA's argument is moot, because
HCFA failed to prove that Petitioner Caguas did not comply with
other conditions of participation. Furthermore, I do not agree
with HCFA's assertion that the Secretary intended that 42 C.F.R.
418.50 be read to mandate a finding that a hospice be found not to
have complied with the condition of participation stated in the
regulation if it is found not to have complied with a condition of
participation stated elsewhere.
C. The alleged failure of Petitioner Caguas to comply with
the medical director condition of participation contained in 42
C.F.R. 418.54
HCFA argues that the findings of the surveyors at the July 8, 1994
resurvey of Petitioner Caguas establish that the Petitioner was not
complying with the medical director condition of participation as
of that date. The gravamen of HCFA's argument was that the medical
director was failing to exercise his supervisory responsibility
over the medical component of Petitioner Caguas' operations to
assure that only patients who were terminally ill were being
treated by Petitioner Caguas.
I conclude that HCFA did not prove that Petitioner Caguas was not
complying with the medical director condition of participation. I
base this conclusion on the following:
As was the case with Petitioner Fajardo, theduties of
the medical director of Petitioner Caguas were the subject of a
corrective action plan that HCFA accepted on June 23, 1994.
C-94-383, HCFA Ex. 18. However, HCFA failed to offer as evidence
the portion of the corrective action plan that described the duties
of the medical director. 21/ The critical compliance issue related
to the medical director condition is whether Petitioner Caguas was
complying with the plan that HCFA accepted. I cannot find that
Petitioner Caguas was failing to comply with its obligations, given
HCFA's failure to offer as evidence the document which describes
those obligations.
As was also the case with Petitioner Fajardo,
thewitnesses whose testimony HCFA offered concerning the compliance
of Petitioner Caguas with conditions of participation made no
attempt in their testimony to explain whether Petitioner Caguas was
complying with the medical director portion of its corrective
action plan. Tr. at 218 - 235, 496 - 515. It is unclear whether
these witnesses even reviewed that part of the plan as an element
of their resurvey of Petitioner Caguas.
I do not find that HCFA proved that any of thepatients
whose records are at issue were not terminally ill. The two
witnesses whom HCFA called to testify about the alleged failure of
Petitioner Caguas to comply with the medical director condition
were Alba Mu¤oz and Mirta Fernandez. Both Ms. Mu¤oz and Ms.
Fernandez are nurses (I discussed Ms. Mu¤oz' qualifications in Part
III of this decision). HCFA offered both of these witnesses as
experts. These witnesses opined that the various patient records
they reviewed at the July 8, 1994 resurvey failed to establish that
the patients were terminally ill. C-94-384, HCFA Ex. 19 at 2 - 4;
Tr. at 221, 530. From this, HCFA asserts that the medical director
was failing to exercise his supervisory responsibility to assure
that Petitioner Caguas treated only terminally ill patients.
HCFA did not establish that either Ms. Mu¤oz or Ms. Fernandez
possesses the necessary qualifications to opine whether a patient's
treatment record establishes that patient to be terminally ill.
Nothing in these witnesses' backgrounds, including their education
and training as nurses, would suggest that they possess the medical
training and expertise to make such judgments. Neither witness
gave testimony at the hearing to suggest that she possessed the
experience to offer such a judgment.
HCFA argues that the testimony of Ms. Mu¤oz and Ms. Fernandez is
expert testimony that must be accorded "immense weight." HCFA
posthearing brief (Caguas) at 17. As I conclude at Part II.A.3. of
this decision, State survey agency surveyors may qualify as experts
and their testimony may constitute important expert opinion.
However, an expert witness' opinion as to an issue is probative
only insofar as it is supported by the credentials of that expert
to render an opinion. Here, I find that HCFA failed to prove that
Ms. Mu¤oz and Ms. Fernandez have the training, skills, or knowledge
to make medical judgments from patients' treatment records as to
whether the patients are terminally ill.
As I observed in the case of Petitioner Fajardo, the Secretary has
determined that only a physician is qualified to decide whether an
individual is terminally ill, and thus eligible for hospice care.
42 C.F.R. 418.20 - 418.22. HCFA had available at the hearing
a physician, Dr. Rivera, who might have offered persuasive evidence
as to whether the records of the patients in question showed these
patients to be terminally ill. However, HCFA did not ask Dr.
Rivera any questions about these records.
D. Conclusion as to Petitioner Caguas
HCFA did not establish a prima facie case that Petitioner Caguas
failed to comply with conditions of participation. Therefore, HCFA
did not prove a basis for terminating the participation in Medicare
of Petitioner Caguas.
V. Analysis of the issues and evidence relating to Petitioner
Cayey (C-94-386)
A. Issues, findings of fact, and conclusions of law
At the July 20, 1994 resurvey of Petitioner Cayey, the State survey
agency surveyors found that Petitioner Cayey failed to comply with
conditions of participation stated in the following regulations:
general provisions, 42 C.F.R. 418.50; medical director, 42
C.F.R. 418.54; and physician services, 42 C.F.R. 418.86. 22/
C-94-386, HCFA Ex. 21. The issue in this case is whether
Petitioner Cayey failed to comply with any of these conditions of
participation.
I make the following findings of fact and conclusions of law with
respect to Petitioner Cayey:
1. HCFA did not prove that Petitioner Cayeyfailed to
comply with the condition ofparticipation contained in 42 C.F.R.
418.50.Page 45.
2. HCFA did not prove that Petitioner Cayeyfailed to
comply with the condition ofparticipation contained in 42 C.F.R.
418.54.Page 46.
3. HCFA did not prove that Petitioner Cayeyfailed to
comply with the condition ofparticipation contained in 42 C.F.R.
418.86.Page 47 - 50.
4. HCFA did not prove a basis for terminatingthe
participation in Medicare of PetitionerCayey. Page 50.
B. The alleged failure of Petitioner Cayey to comply with
the general provisions condition of participation contained in 42
C.F.R. 418.50
HCFA makes the same argument concerning the alleged failure of
Petitioner Cayey to comply with 42 C.F.R. 418.50 as it did with
Petitioners Fajardo and Caguas. I do not find that HCFA proved
that Petitioner Cayey failed to comply with this regulation for the
same reasons that I concluded that HCFA did not prove that
Petitioners Fajardo and Caguas failed to comply with the
regulation.
C. The alleged failure of Petitioner Cayey to comply with
the medical director condition of participation contained in 42
C.F.R. 418.54
The medical director of a hospice is required to supervise the
delivery of the medical component of hospice care. This includes
assuring that physicians employed by the hospice provide care in
accord with the requirements of 42 C.F.R. 418.86. HCFA asserts
that Petitioner Cayey failed to comply with the medical director
condition of participation. HCFA bases this argument on its
assertion that, as of the July 20, 1994 resurvey, Petitioner Cayey
was not complying with the physician services condition.
Therefore, according to HCFA, the hospice medical director was
deficient in supervising the delivery of physician services.
The statement of deficiencies which the State survey agency
surveyors prepared after the July 20, 1994 resurvey of Petitioner
Cayey asserted several alleged specific failures by the medical
director to supervise the delivery of care. C-94-386, HCFA Ex. 21
at 2 - 3. However, in its posthearing brief, HCFA did not assert
that any of these alleged specific failures constituted proof that
Petitioner Cayey had failed to meet the medical director condition
of participation. HCFA posthearing brief (Cayey) at 15. Rather,
HCFA argues only that the alleged failure of Petitioner Cayey to
comply with the medical director condition derives from its alleged
failure to comply with the physician services condition.
I do not find that HCFA proved that Petitioner Cayey failed to
comply with the medical director condition of participation.
First, as I discuss below at Part V.D. of these decisions, HCFA did
not prove that Petitioner Cayey had failed to comply with the
physician services condition of participation. HCFA's argument
concerning Petitioner Cayey's alleged noncompliance with the
medical director condition thus fails.
Furthermore, I do not find that HCFA proved a condition-level
failure of Petitioner Cayey to comply with the medical director
condition of participation, even assuming that HCFA proved some
failures by Petitioner Cayey to meet the physician services
requirement of participation. I am not persuaded by the evidence,
of a few possible failures to deliver physician services in accord
with Medicare participation requirements, that there was an overall
failure by the medical director to supervise the delivery of
medical services.
D. The alleged failure of Petitioner Cayey to comply with
the physician services condition of participation contained in 42
C.F.R. 418.86
HCFA asserts that Petitioner Cayey was deficient in providing
physician services. The evidence on which HCFA relies to prove
this assertion is the findings of the State survey agency
surveyors. At the July 20, 1994 resurvey of Petitioner Cayey,
State agency surveyors found that, in two patient records that they
reviewed, there were missing orders for physician services.
C-94-386, HCFA Ex. 21 at 5 - 6. Additionally, they found that, in
one of the two records, there was evidence that services had been
provided for which no written justification by a physician existed.
Id. at 6.
I am not persuaded by this evidence that Petitioner Cayey failed to
comply with the physician services condition of participation.
I find this evidence not to be persuasive, for the following
reasons:
As with Petitioner Fajardo, HCFA did not offerproof
that there exists any deficiency in the services provided by the
attending physicians of the patients. HCFA's argument thus assumes
facts which it did not prove, that there exist underlying
deficiencies in the services provided by the patients' attending
physicians which the hospice physician became responsible for
providing.
HCFA did not prove that physicians failed toprovide
necessary services to patients of Petitioner Cayey. The fact that
written orders may not exist for all services that were provided to
a patient does not mean necessarily that the services that were
ordered by the physicians were not provided. For example, with
respect to patient # 1, the State agency surveyors found that there
were no orders in the patient's record for a nasogastric tube, a
"Foley" (apparently, a Foley catheter), and "Osmolite 60 cc/hr."
C-94-386, HCFA Ex. 21 at 5 - 6. However, the treatment record for
patient # 1 establishes that this patient was in fact receiving all
of these items or services. C-94-386, HCFA Ex. 25 at 4, 16, 18,
20, 26. The State agency surveyors did not find that these
services were unnecessary or that they were not being provided
correctly to the patient.
HCFA did not prove that failure to document theordering
of a service is necessarily a failure to provide a service, within
the meaning of 42 C.F.R. 418.86. The regulation does not
contain specific record-keeping requirements. It does not state or
suggest that a hospice is deficient in meeting patient needs if it
provides medical care for patients, but fails to document that care
with complete accuracy.
Arguably, the evidence which HCFA offered concerning the alleged
failure of Petitioner Cayey to record orders for physician services
or treatment delivered pursuant to those orders might prove a
failure by Petitioner Cayey to comply with the record-keeping
requirements of 42 C.F.R. 418.74. That regulation requires a
hospice to maintain complete and detailed records of all services
that are provided to a patient. However, HCFA has not argued that
the alleged failures by Petitioner Cayey to maintain records of
orders for treatment or of treatments provided constitute
deficiencies under 42 C.F.R. 418.74. Therefore, I make no
findings as to whether Petitioner Cayey was deficient under 42
C.F.R. 418.74.
It is certainly possible that, in a given circumstance, a failure
by a physician to document adequately the reason why he or she
orders or provides care to a patient, or to explain the treatments
that he or she provides, may constitute a deficiency in the
providing of care to that patient. But I am not satisfied that it
follows automatically that a failure to record accurately a
treatment order or the failure to explain a treatment constitutes
a failure to meet the medical needs of a patient. HCFA has the
burden of proving why that is so in a particular instance.
Here, HCFA did establish a prima facie case that failure to provide
a written order for the changing of a Foley catheter is a
deficiency in the underlying service (the administration of the
catheter to the patient). I am persuaded by Dr. Rivera's testimony
that, in the case of patient # 1, failure to provide written
instructions for the changing of the patient's catheter might
impair the appropriate use of the catheter. Tr. at 653 - 654. 23/
However, HCFA did not prove that failure to document other services
is a deficiency. HCFA did offer the testimony of one of the
surveyors, Delia Fortis, to show that a written physician's order
is a necessary prerequisite for obtaining laboratory tests. Tr. at
394. This testimony was offered to prove that failure to maintain
a written order by a physician for laboratory tests supplied to
patient # 2 constituted a deficiency in providing physician
services to that patient. C-94-386, HCFA Ex. 21 at 6. However,
the fact is that, in the case of patient # 2, tests were obtained
for that patient. Thus, even if a written order signed by a
physician usually is a prerequisite for obtaining test results, the
evidence in this case offered by HCFA proves that the results were
obtained without a written order. HCFA has offered nothing to show
how this would have adversely affected the health of patient # 2.
HCFA did not prove that a single deficiency inthe
providing of physician services by Petitioner Cayey, assuming that
these services had not been provided by the patient's attending
physician, is so substantial as to constitute a failure to comply
with the condition of participation contained in 42 C.F.R.
418.86. As I conclude at Part II.A.2. of these decisions, HCFA's
burden is to prove that a deficiency constitutes a substantial
failure to comply with participation requirements. The test for
substantial noncompliance is stated in 42 C.F.R. 488.24. In
order to be substantial, a deficiency or deficiencies must be "of
such character as to substantially limit the provider's . . .
capacity to render adequate care or which adversely affect the
health and safety of patients." 42 C.F.R. 488.24.
I am not satisfied that this test has been met here. In this case,
the only deficiency in the providing of physician services that
HCFA arguably proved was the failure of a physician to provide
written instructions for maintenance of one patient's Foley
catheter. I am not satisfied that this one possible deficiency
proves an overall inability by Petitioner Cayey to provide adequate
care to its patients.
Furthermore, I am not convinced that one deficiency in management
of a patient's Foley catheter proves that Petitioner Cayey engaged
in practices which adversely affected the health and safety of its
patients in a manner which is so substantial as to constitute a
failure under 42 C.F.R. 488.24. At most, the evidence proves a
potential to adversely affect the health and safety of one patient.
Dr. Rivera testified that, where a Foley catheter is not changed
regularly, there exists an increased risk that a patient may suffer
from an infection. Tr. at 654 - 655. However, Dr. Rivera did not
review the specific patient record at issue. She did not testify
that the patient was put at risk. There is no evidence of record
to show that the patient suffered from an infection as the result
of improper management of the Foley catheter.
VI. Conclusions
I conclude that HCFA did not prove, by a preponderance of the
evidence, that Petitioners Fajardo, Caguas, and Cayey were not
complying with conditions of participation in Medicare as of the
dates of the resurveys that were conducted of these Petitioners in
July 1994. HCFA has not proven a basis for terminating the
participation in Medicare of these Petitioners.
________________________
Steven T. Kessel
Administrative Law Judge
1. There is a fourth case which I heard along with the three
cases decided herein. That is the case of Nazareno Medical Hospice
Carolina, Docket No. C-94-385. I am issuing a separate ruling in
that case.
2. The parties agreed to present evidence in a consolidated
form, rather than in separate hearings for each Petitioner. In
part, this process was the consequence of the fact that State
agency surveyors who testified on behalf of HCFA often participated
in the survey of more than one of the Petitioners. It would not
have been efficient to recall these witnesses to testify separately
as to each Petitioner. However, I made it a point to have each
witness identify the Petitioner about which the witness was
testifying. See, e.g., Tr. at 104.
3. The consolidated hearings included a hearing as to
Petitioner Carolina in the case of Nazareno Medical Hospice
Carolina, Docket No. C-94-385. Petitioner Carolina moved also for
a decision based on the evidence adduced by HCFA. As I note above,
I am issuing a separate ruling as to Petitioner Carolina.
4. In each of these cases, I received into evidence exhibits
that are unique to that case. Also, I received into evidence a
number of exhibits that are common to all of the cases and one
exhibit that is common to two of the cases. An exhibit which is in
evidence only in a particular case is marked with the docket number
of that case and with the unique exhibit number for that exhibit.
Thus, C-94-383, HCFA Ex. 15 is an exhibit which is in evidence only
in Docket No. C-94-383 (Petitioner Fajardo) and is not in evidence
in any other case.
An exhibit which is in evidence in all of the cases is marked with
the docket numbers of all of the cases as well as the exhibit
number. The exhibits which are in evidence as common exhibits in
the three cases which I have decided here are in evidence also in
a fourth case, Nazareno Medical Hospice Carolina, Docket No.
C-94-385, which I have not decided here. In that fourth case, I
have issued a ruling separately in which I conclude that additional
proceedings may be necessary. The exhibits which I admitted as
common exhibits in all of the cases are C-94-383 - C-94-386, HCFA
Exs. 7 - 9, 12 - 14, and 62.
The exhibit which I received as a common exhibit in two of the
cases only is C-94-383 - C-94-386, HCFA Ex. 4. This exhibit was
admitted in the cases of Petitioners Fajardo and Caguas.
Finally, I rejected certain exhibits which HCFA offered as common
exhibits in all of the cases. These exhibits are C-94-383 -
C-94-386, HCFA Exs. 1 - 2 and 10 - 11.
5. I am not suggesting here that the burden of persuasion
should be allocated to HCFA in every case involving a dispute
between HCFA and a provider or an applicant for participation in
Medicare. There are circumstances where it may be appropriate to
allocate the burden of persuasion to a party other than HCFA. For
example, in a case where the issue involves the date when
deficiencies have been corrected by an applicant for participation
(for example, in a case where the correct date of certification is
at issue), it may be appropriate to allocate to the applicant the
burden of proving the date that it corrected the deficiencies.
6. HCFA does not object to coming forward first, in an
administrative hearing, with evidence supporting its determination.
There is an absence of logic to HCFA's position. If, in fact,
HCFA's determination is presumed to be correct, then HCFA would
have no burden of coming forward with evidence to support its
determination.
7. HCFA did not reiterate explicitly in these cases the
arguments it made in Utuado and Guaynabo, aside from asserting that
its determinations are presumptively correct. However, HCFA has
not retreated from these arguments.
8. My analysis here is substantially the same as in Utuado.
Utuado at 10 - 14.
9. As an appellate panel of the Departmental Appeals Board
noted in Center Clinical Laboratory, DAB 1526 at 11, n.4 (1995),
where a regulation is susceptible to more than one reasonable
interpretation, the interpretation advocated by the agency is
entitled to deference.
10. For example, in Utuado, I held that HCFA could not use its
authority to interpret regulations to read into the regulations a
requirement that was not specified in the regulations. In Utuado,
HCFA argued that the regulations subsumed a requirement that a
hospice provide laboratory services to its patients. I concluded
that there was no such requirement in the regulations and that HCFA
could not use the vehicle of "interpretation" to create such a
requirement, where the requirement did not exist. Utuado at 17 -
21.
11. The specific provisions of each corrective action plan
vary, depending on the deficiencies that were addressed by the
plan.
12. What HCFA did not argue in these cases, but which would not
be an unreasonable position for HCFA to advocate, is that a
corrective action plan becomes a basis for future performance
evaluation by HCFA for only those deficiencies addressed in the
plan. Thus, if HCFA were to resurvey a provider pursuant to a plan
and were to find that provider to be failing to comply with some
condition of participation other than that which is addressed by
the plan, HCFA would be within its rights to terminate that
provider's participation based on the provider's failure to comply
with that additional condition of participation.
13. The surveyors who conducted the July 6, 1994 resurvey of
Petitioner Fajardo identified a third alleged failure of this
Petitioner to comply with the medical director condition of
participation. This had to do with alleged failure of the medical
director to assure that patient plans of care were being reviewed
and revised as necessary. C-94-383, HCFA Ex. 21 at 3 - 5.
However, HCFA did not make any arguments concerning this alleged
deficiency in its posthearing brief. See HCFA posthearing brief
(Fajardo) at 15 - 18. Thus, I conclude that HCFA is no longer
asserting that this alleged deficiency establishes a violation of
the medical director condition of participation.
14. Also, HCFA found the corrective action plan to be
unacceptable because of the manner in which Petitioner Fajardo
proposed to advise its patients of their rights and obligations
under 42 C.F.R. 418.62. C-94-383, HCFA Ex. 17 at 3. I discuss
the issue of Petitioner Fajardo's alleged failure to comply with
the informed consent condition of participation below, at section
III.C. of these decisions.
15. As with the medical director manual, the new informed
consent form, part of the corrective action plan, was not made an
exhibit by HCFA and is not in evidence.
16. It is possible that a patient's attending physician could
be a physician employed by a hospice. The regulations plainly
contemplate that, in some cases, a patient could designate the
hospice physician as his or her attending physician. In that
event, HCFA would meet its burden of persuasion under 42 C.F.R.
418.86 by proving a deficiency in the treatment afforded by the
hospice physician. However, HCFA did not prove that the hospice
physician served as the attending physician for the patients of
Petitioner Fajardo.
17. Petitioner Fajardo's compliance with a plan of correction
is not at issue here. That is so because the alleged deficiencies
in physician services which the surveyors identified at the July 6,
1994 resurvey of Petitioner Fajardo were not addressed in the plan
of correction accepted by HCFA. See C-94-383, HCFA Ex. 15 at 22 -
26; C-94-383, HCFA Ex. 16 at 21 - 23; C-94-383, HCFA Ex. 17;
C-94-383, HCFA Ex. 18.
18. The statement of deficiencies contains an obvious error in
that it recites that "on June 2, 1994, the physician documented
that the patient was terminally."
19. The surveyors' findings and the testimony offered at the
hearing do not establish whether the physician ordered that the
patient be seen by a physician who specialized in physical medicine
or by a physical therapist.
20. There is an error in the statement of deficiencies prepared
by the surveyors. It states incorrectly that the patient was
admitted to hospice care on June 23, 1994. Id.
21. As was the case with Petitioner Fajardo, HCFA also
attempted to offer a purported English translation of the medical
director portion of the corrective action plan as an appendix to
its posthearing brief. HCFA posthearing brief (Caguas), Appendix.
Petitioner Caguas objected to my admitting this document into
evidence. I do not accept it for the same reasons that I refused
to accept HCFA's offer concerning Petitioner Fajardo.
22. The statement of deficiencies states incorrectly that
Petitioner Cayey was noncompliant with physician services, 42
C.F.R. 418.85.
23. Again, HCFA did not prove that the patient's attending
physician failed to issue written orders for the administration and
management of the Foley catheter. It proved only that a physician
whom HCFA asserts to be the hospice physician did not issue such
orders. However, a failure by the hospice physician to issue such
orders would be a deficiency only if HCFA proved that such orders
had not been made by the patient's attending physician.