Palace Rehabilitation and Care Center, LLC, DAB CR6912 (2026)

DECISION

Petitioner, Palace Rehabilitation and Care Center, LLC, challenges the determination by Respondent, the Centers for Medicare & Medicaid Services (CMS), that the facility was not in substantial compliance with a participation requirement.  Palace also challenges CMS’s imposition of a $11,300 civil money penalty (CMP) and two-year ban on operating a nurse aide training program.  As explained herein, I grant summary judgment in favor of CMS and find the penalties imposed reasonable.

I.  Background

Petitioner is a skilled nursing facility (SNF) located in New Jersey participating in the Medicare and Medicaid programs.  The New Jersey State Department of Health (NJDOH or state agency) initiated a complaint investigation and survey at Petitioner’s facility completed on February 4, 2021.  CMS Ex. 1.  The state agency found Petitioner did not substantially comply with 42 C.F.R. § 483.25(d), Tag F689 (Free of Accident/Hazards/ Supervision/Devices) at the “G” scope and severity level (indicating isolated actual harm

Page 2

that did not rise to the level of immediate jeopardy) because it did not adequately supervise a resident with a history of violence who attacked his roommate.1  Id. at 1-3.

On June 1, 2021, CMS notified Petitioner that based on the state agency’s findings of noncompliance with Medicare participation requirements, it would deny approval of the facility’s nurse aide training program (NATCEP) for two years, effective February 4, 2021, and impose a per-instance CMP of $11,300.  CMS Ex. 29 at 2, 5.

Petitioner timely sought hearing before an administrative law judge (ALJ) in the Civil Remedies Division to challenge CMS’s determination of noncompliance and imposition of penalties, resulting in my designation to hear and decide this case.  I issued an Acknowledgment and Pre-hearing Order (Pre-hearing order) that established a briefing schedule and directed the parties to file pre-hearing submissions that included written direct testimony for all proposed witnesses, proposed exhibits, and pre-hearing briefs.

CMS filed a pre-hearing brief and motion for summary judgment (CMS Br.) and 42 proposed exhibits (CMS Exs. 1-42).  Petitioner filed a pre-hearing brief and response opposing summary judgment (P. Br.) and 17 proposed exhibits (P. Exs. 1-17).  CMS identified and provided declarations for three witnesses:  Alan Siegal, M.D., Denise O’Donnell, R.N., and Rhonda Faust, R.N., B.S.N., M.S.N.  Petitioner identified and provided declarations for four witnesses:  Julie Maldonado, Moshe Ben-Jacob, Joseph Conti, Sandra Pencook, and Brittany Thomas.  Both parties sought the opportunity to cross-examine the opposing party’s witnesses.

II.   Admission of Exhibits and Evidentiary Rulings

Petitioner objects to the testimony of all of CMS’s witnesses (CMS Exs. 37, 40, 42), asserting none are fact witnesses, that the surveyors’ testimony is hearsay, and that Dr. Siegal did not have sufficient expertise to provide a foundation for his testimony.  P. Objections at 1-3.  Petitioner also objects to CMS Exhibits 24, 27, 28, 34, and 35 for violating the Federal Rules of Evidence and to CMS Exhibits 30, 32, and 33 as irrelevant.  Id. at 3.  Petitioner’s objections are overruled.  The Federal Rules of Evidence do not apply in these proceedings and do not provide a basis to bar records or testimony.  See 42

Page 3

C.F.R. § 498.61.  Dr. Siegal’s understanding of the PASSR program is not in dispute.  Whether his opinion is equally applicable to the program’s workings in New Jersey as to Connecticut speaks to the weight I should give his opinion, not its relevance.  CMS Exhibits 30, 32, and 33 are at least minimally relevant to provide context and background to the IIDR process.

CMS objects to Petitioner Exhibit 2, a declaration by Petitioner’s counsel, as it simply relays the hearsay testimony of a witness Petitioner attempted to secure by subpoena, Dr. Robert Eilers, the Medical Director for New Jersey’s mental health and addiction services department.  CMS Objection at 2.  CMS also points out the impropriety of counsel for one of the parties acting as a fact witness.  Id. at 3.  This latter objection is now moot, as Mr. Ben-Jacob has since withdrawn his appearance from this matter.  However, CMS’s remaining objection is well-taken.  I denied Petitioner’s request for a subpoena to obtain Dr. Eilers’ testimony because his testimony would be irrelevant.  That testimony gains no more relevance as hearsay from an “interview” with Mr. Ben-Jacob.  CMS’s objection to Petitioner Exhibit 2 is sustained.

CMS also objects to Petitioner Exhibit 12 because it is a duplicate of CMS Exhibit 31.  Id.  CMS correctly observes parties should not submit duplicate exhibits already submitted by the opposing party.  Pre-hearing Order at 5; Civ. Remedies Div. P. § 14(a).  CMS’s objection to Petitioner Exhibit 12 is sustained.

For the foregoing reasons, CMS Exhibits 1 through 42 are admitted into the record.  Petitioner Exhibits 1 through 17, excluding Petitioner Exhibits 2 and 12, are admitted into the record.

III.  Issues

1. Whether summary judgment is appropriate;
2. Whether Petitioner was in substantial compliance with Medicare participation requirements at 42 C.F.R. § 483.25(d)(1)-(2) (Tag F689);
3. If Petitioner was not in substantial compliance, whether the CMP imposed by CMS is reasonable.

IV.  Jurisdiction

I have jurisdiction to hear and decide this case.  42 U.S.C. § 1395i-3(h)(2)(B)(ii), incorporating by reference 42 U.S.C. § 1320a-7a(c)(2); 42 C.F.R. §§ 488.408(g), 488.434(a)(2)(viii), 498.3(b)(13).

Page 4

V.  Legal Authority for the Imposition of Penalties

The Social Security Act (Act) sets forth requirements for skilled nursing facilities to participate in the Medicare program.  It authorizes the Secretary of Health and Human Services to promulgate regulations implementing those statutory provisions.  42 U.S.C. § 1395i-3.  These regulations are found at 42 C.F.R. parts 483 and 488.

To participate in the Medicare program, skilled nursing facilities must maintain substantial compliance with program participation requirements.  To be in substantial compliance, a facility’s deficiencies may “pose no greater risk to resident health or safety than the potential for causing minimal harm.”  42 C.F.R. § 488.301.  A deficiency is a violation of a participation requirement established by 42 U.S.C. § 1395i-3(b)-(d), or the Secretary’s regulations at 42 C.F.R. pt. 483, subpt. B.  Id.  “Noncompliance” means “any deficiency that causes a facility to not be in substantial compliance.”  Id. 

The Secretary contracts with state agencies to conduct periodic surveys to determine whether skilled nursing facilities are in substantial compliance with the participation requirements.  42 U.S.C. § 1395aa(a); 42 U.S.C. § 1395i-3(g); 42 C.F.R. §§ 488.10(a), 488.308.  The Act authorizes state agencies to impose or recommend to the Secretary enforcement remedies to be imposed against skilled nursing facilities not in substantial compliance with program participation requirements.  42 U.S.C. 1396r(h); 42 U.S.C. § 1395i-3(h)(1).

The Secretary can impose enforcement remedies with or without a state agency’s recommendation.  42 U.S.C. § 1395i-3(h)(2).  The Secretary’s regulations specify the enforcement remedies that CMS or a state agency may impose if a facility is not in substantial compliance.  See 42 C.F.R. § 488.406.  Among them, CMS may impose a per-day CMP for the number of days a facility is not in substantial compliance.  42 C.F.R. § 488.430(a).  At the time CMS imposed the penalties at issue here, a per-day CMP could range from $112 to $6,695 for less serious noncompliance and $6,808 to $22,320 for more serious noncompliance that poses immediate jeopardy2 to the health and safety of residents.  42 C.F.R. § 488.438(a)(1); 45 C.F.R. § 102.3; 85 Fed. Reg. 2869, 2880 (Jan. 17, 2020).

A skilled nursing facility subject to a remedy based on a determination of noncompliance may request a hearing before an ALJ to determine whether a basis existed for the deficiency findings that led to the imposition of the remedy.  42 U.S.C. §§ 1320a-7a(c)(2), 1395i-3(h)(2)(B)(ii); 42 C.F.R. §§ 488.408(g), 488.434(a)(2)(viii), 498.3(b)(13).  However, neither CMS’s choice of remedies nor the process by which it selects remedies are subject to review.  42 C.F.R. § 488.408(g)(2).

Page 5

VI.  Burdens of proof and persuasion

Congress established that unless otherwise provided by statute, “the proponent of a rule or order has the burden of proof” in adjudications under the Administrative Procedures Act (APA).  5 U.S.C. § 556(d).  The Social Security Act, which authorizes this proceeding, does not “otherwise provide” the burden of proof.  It would therefore be reasonable to conclude that CMS, the party seeking to impose penalties authorized by the Act, bears the burdens of proof and persuasion to justify doing so.

Nevertheless, the Departmental Appeals Board has imposed a burden-shifting regime in cases involving the imposition of enforcement penalties against providers whose appeals are adjudicated under 42 C.F.R. Part 498.  Hillman Rehab. Ctr., DAB No. 1611 (1997), aff’d, Hillman Rehab. Ctr. v. U.S. Dep’t of Health & Human Servs., No. Civ. A. 98-3789 (GEB), 1999 WL 34813783 (D.N.J. May 13, 1999); VITAS Healthcare Corp. of Calif., DAB No. 1782 at 4 (2001); Cross Creek Health Care Ctr., DAB No. 1665 (1998) (applying the burden-shifting regime to cases involving skilled nursing facilities); Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004), aff’d sub nom., Batavia Nursing & Convalescent Ctr. v. Thompson, 143 F. App’x 664 (6th Cir. 2005).

Under this regime, CMS has the burden to come forward with evidence sufficient to make a prima facie showing3 it had a basis to impose a penalty.  In Hillman, the Board identified the elements it believed necessary for CMS to make such a showing: 

[CMS] must identify the legal criteria to which it seeks to hold a provider.  Moreover, to the extent that a provider challenges [CMS’s] findings, [CMS] must come forward with evidence of the basis for its determination, including the factual findings on which [CMS] is relying and, if [CMS] has determined that a condition of participation was not met, [CMS’s] evaluation that the deficiencies found meet the regulatory standard for a condition-level deficiency. 

DAB No. 1611 at 8.

Once CMS makes a prima facie showing of noncompliance, the Board held the facility bears “the ultimate burden of persuasion” and can only prevail if it proves, by a

Page 6

preponderance of the evidence of record, that it substantially complied with statutory and regulatory requirements.  Id. at 7.

A skilled nursing facility subsequently appealed CMS’s imposition of a CMP, arguing the Board’s burden-shifting regime would be improper in hearings proceeding under the APA.  Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004), aff’d sub nom., Batavia Nursing & Convalescent Ctr. v. Thompson, 143 F. App’x 664 (6th Cir. 2005).  The Board rejected this claim, asserting the Supreme Court had, in other contexts, approved placing the burden of proof “on the claimant for governmental benefits when evidence is evenly balanced” because the party seeking the benefit, including a “non-monetary benefit or privilege,” would be “the proponent of the rule or order.”  Id. at 10 (citing Director, OWCP v. Greenwich Collieries, 512 U.S. 267, 276 (1994); U.S. Steel Corp. v. Train, 556 F.2d 822, 834 (7th Cir. 1977) (the applicant for a permit to discharge pollutants is a “proponent”); Day v. NTSB, 414 F.2d 950, 952 (5th Cir. 1969) (placing the burden of proof on a pilot seeking the government’s certification of fitness to fly).

The Board reasoned that by appealing the penalties imposed by CMS, Batavia Nursing in essence sought “from the government an order certifying that it is in substantial compliance with [skilled nursing facility] requirements, so that it may continue to participate in the Medicare program with no restrictions on payment.”  Id.  The Board therefore found it reasonable to place the burden of proof on Batavia to show its return to substantial compliance.  Id. 

The Board’s characterization of the nature of the remedy sought in these proceedings would apply more squarely to a provider challenging its termination from the Medicare program.  In that case, the appealing facility would seek a rule or order overturning CMS’s termination action and thus allow its continued participation as a provider.4  But for facilities like Batavia appealing the imposition of lesser penalties like CMPs, the rationale is less persuasive.  Batavia was not restricted from participating in the Medicare program as a provider during the pendency of its appeal.  It instead sought a ruling that CMS did not have a basis to impose penalties under the Act.

The characterization of penalized facilities as proponents of a rule or order is also incongruous to the limitation of ALJ and Board jurisdiction to only challenges where CMS opts to impose a penalty.  42 C.F.R. § 488.408(g)(1) (“A facility may appeal a certification of noncompliance leading to an enforcement remedy.”); 42 C.F.R. § 498.3(b)(13); Columbus Park Nursing & Rehab. Ctr., DAB No. 2316 at 7 (2010) (a facility cannot contest survey deficiency findings unless CMS has imposed a remedy).

Page 7

If facilities penalized for noncompliance with Medicare program participation rules are properly seen as proponents of a rule or order certifying their substantial compliance, it is unclear why Congress would not afford appeal rights under the Act to unpenalized facilities which have been found noncompliant and seek the same certification.  But if CMS is the proponent of a rule or order affirming its choice to impose penalties, the rationale to exclude unpenalized facilities from challenging deficiency findings under the Act becomes appreciable; in that circumstance, there would be no action for which CMS could seek a rule or order from an ALJ or the Board.

The legitimacy of the burden-shifting regime thus rests largely on the notion that facilities who appeal the imposition of a penalty under the Act are in fact proponents of a rule or order certifying their substantial compliance with Medicare program participation rules.  To date, federal district and circuit courts have declined to reach the propriety of the Board’s burden-shifting regime on due process or other grounds.  See, e.g., Hillman Rehab. Ctr., DAB No. 1611 (1997), aff’d, Hillman Rehab. Ctr. v. U.S. Dep’t of Health & Human Servs., No. Civ. A. 98-3789 (GEB), 1999 WL 34813783 (D.N.J. May 13, 1999); Fairfax Nursing Home, Inc., DAB No. 1794 (2001), aff’d, Fairfax Nursing Home v. Dep’t of Health & Human Servs., 300 F.3d 835 (7th Cir. 2002), cert. denied, 2003 WL 98478 (Jan. 13, 2003); Batavia Nursing & Convalescent Inn, DAB No. 1911 (2004), aff’d sub nom., Batavia Nursing & Convalescent Ctr. v. Thompson, 143 F. App’x 664 (6th Cir. 2005).

The Supreme Court has since examined the scope of the Secretary’s rulemaking authority in the context of Medicare reimbursement and held that under section 1871 of the Act, the Secretary must comply with notice-and-comment rulemaking to impose any requirements upon regulated entities constituting a change in a substantive legal standard pertaining to the payment for services by the Medicare program or eligibility to furnish or receive services or benefits to that program.  Azar v. Allina Health Servs., 587 U.S. 566, 139 S. Ct. 1804 at 1809-14 (2019); 42 U.S.C. § 1395hh(a)(2).  It is unclear whether the Board’s imposition of burden-shifting in the adjudication of enforcement penalties and enrollment-related actions against regulated entities, absent statutory or regulatory authority to do so, constituted a change in a substantive legal standard affecting eligibility to furnish services or receive payments from the Medicare program within the meaning of the Allina decision.

The Court has also formally repudiated its longstanding interpretive rule, known as Chevron deference, which required courts reviewing an agency action to defer to agency interpretation of ambiguity in a statute authorizing or directing that action.  See Loper Bright Enters. v. Raimondo, 603 U.S. 369, 144 S. Ct. 2244 (2024); see also Hillman Rehab. Ctr., DAB No. 1611 at 17-20 (relying in part on the Board’s predecessor body’s “long-standing interpretation” of the Act to justify burden shifting).

Page 8

It remains to be seen whether federal courts will consider the Board’s burden-shifting regime a “change in a substantive legal standard” under Allina or, in the absence of Chevron deference, more broadly reject the Board’s interpretation of section 7 of the APA to identify entities challenging enforcement actions taken by the government as proponents of an order or rule.  Until such judicial scrutiny demands otherwise, and absent modification of the Act or CMS’s implementing regulations, I apply the Board’s burden-shifting regime.

VII.  Summary Judgment

While neither the APA nor the Act explicitly authorize summary judgment in these matters, the Departmental Appeals Board has endorsed its use, observing that “an in-person hearing is not required or even meaningful in every case.  In some cases, parties waive that right; in others, no issue of material fact is presented; and, in some cases, any factual issue is resolved on the face of the written record because the proffered testimony, even if accepted as true, would not make a difference.”  Big Bend Hospital Corp., d/b/a Big Bend Hospital Center, DAB No. 1814 at 13 (2002); see also Everett Rehab. & Med. Ctr., DAB No. 1628 (1997), citing Travers v. Shalala, 20 F.3d 993, 998 (9th Cir. 1994) (holding “[a] requirement affording the opportunity for an evidentiary hearing is not contravened by a summary disposition if there are no genuine issues of material fact.”); Glenburn Home, DAB No. 1806 at 16-17 (2002) (interpreting the Act and the regulations to afford an in-person hearing only “where there are material facts in dispute for which testimonial evidence is required.”).

The Board rejected due process attacks on the use of summary judgment in these proceedings, observing “[t]o convene an in-person hearing where no proffered evidence would have any effect on the outcome would be an empty formalism and a waste of administrative and litigant resources.”  Big Bend, DAB No. 1814 at 13-14); see also Livingston Care Ctr. v. U.S. Dep’t of Health & Human Servs., 388 F.3d 168, 172 (6th Cir. 2004) (citing Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743 (6th Cir. 2004) (affirming use of summary judgment by an ALJ “appropriate.”)).

Rule 56 of the Federal Rules of Civil Procedure provides the framework for summary judgment in these proceedings.  Civ. Remedies Div. P. § 19(a)(iii) (“Matters presented to the administrative law judge for summary judgment will follow Rule 56 of the Federal Rules of Civil Procedure and federal case law . . .”).  Applying that framework, summary judgment is appropriate where a moving party shows no genuine dispute exists about outcome-material facts and that it is entitled to judgment as a matter of law.  Emery County Care and Rehab. Ctr., DAB No. 3006 at 5 (2020), citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986); see also Anderson v. Liberty Lobby, 477 U.S. 242, 252 (1986) (a moving party can demonstrate the lack of a material factual issue to resolve by presenting evidence “so one-sided that [the movant] must prevail as a matter of law.”).

Page 9

If the moving party meets that initial burden, the non-moving party must “come forward with ‘specific facts showing that there is a genuine issue for trial.’”  Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986).  The non-moving party must “furnish evidence of a dispute concerning a material fact – a fact that, if proven, would affect the outcome of the case under governing law.”  Senior Rehab. and Skilled Nursing Ctr., DAB No. 2300 at 3 (2019) (citations omitted); Anderson, 477 U.S. at 249 (summary judgment can be granted if the non-moving party’s evidence is “merely colorable” or “not significantly probative[.]”).

To determine whether there are genuine issues of material fact for hearing, I view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.  Senior Rehab., DAB 2300 at 3; Anderson, 477 U.S. at 255 (“The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.”) (citation omitted).

VII.  Discussion

1. Regulatory frame for deficiencies related to accidents and supervision

Skilled nursing facilities are required to “ensure that residents receive treatment and care in accordance with professional standards of practice, the comprehensive person-centered care plan, and the resident’s choices.”  42 C.F.R. § 483.25.  This includes the obligation to ensure each resident’s environment “remains as free of accident hazards as is possible” and that each resident “receives adequate supervision and assistance devices to prevent accidents.”  42 C.F.R. § 483.25(d)(1)-(2).

Facilities satisfy the former obligation “by identifying and removing hazards, where possible, or where the hazard is unavoidable because of other resident needs, managing the hazard by reducing the risk of accident to the extent possible.”  Meadowwood Nursing Ctr., DAB No. 2541 at 2 (2013), citing Maine Veterans’ Home – Scarborough, DAB No. 1975 at 10 (2005).  They satisfy the latter by taking “all reasonable steps to ensure that a resident receives supervision and assistance devices that meet his or her assessed needs and mitigate foreseeable risks of harm from accidents.”  Briarwood Nursing Ctr., DAB No. 2115 at 11 (2007), citing Woodstock Care Ctr. v. Thompson, 363 F.3d 583, 590 (6th Cir. 2003) (providing facilities must take “all reasonable precautions against residents’ accidents”).

The regulations do not set forth specific parameters for compliance to cover every possible scenario but instead give facilities “the flexibility to choose the methods” to provide supervision or assistance devices to prevent accidents, so long as the chosen methods “constitute an ‘adequate’ level of supervision under all circumstances.”  Windsor Health Care Ctr., DAB No. 1902 at 5 (2003), aff’d, Windsor Health Care Ctr. v. Leavitt, 127 F. App’x 843 (6th Cir. 2005) (unpublished).

Page 10

Facilities must also develop and implement written policies and procedures that:  “(1) [p]rohibit and prevent abuse, neglect, and exploitation of residents and misappropriation of resident property, (2) [e]stablish policies and procedures to investigate any such allegations, and (3) [i]nclude training as required at paragraph § 483.95.”  42 C.F.R. § 483.12(b)(1)-(3).

A facility is required to develop, implement, and maintain an effective training program for all staff, including those hired under a contractual arrangement and volunteers.  Among the training topics, a facility must include training on abuse, neglect, and exploitation, and educate its staff on what activities constitute violations, the procedures for reporting any incidents, dementia management, and resident abuse prevention.  42 C.F.R. § 483.95(c)(1)-(3).

2. Palace’s Resident Safety Policy

Petitioner’s resident safety policy5 stated the facility “strives to make the environment as free from accident hazards as possible.  Resident safety and supervision and assistance to prevent accidents are facility-wide policies.”  CMS Ex. 2 at 23.  The policy provided facility staff would identify risk factors for residents including information obtained from medical history, physical examination, observation, and the Minimum Data Set (MDS).  Id.  The policy specified resident care teams would use this information to identify hazards specific to a resident and “target interventions to reduce the potential for accidents.”  Id. 

3. Undisputed Facts

1.  Resident 2

Resident 2 was 49 years old on his admission to Petitioner’s facility on September 24, 2019.  CMS Ex. 3 at 4.  His diagnoses included schizoaffective disorder, schizophrenia, paranoia, and auditory/visual hallucinations.  Id.  Before admission Resident 2 lived in an assisted living facility but in September 2019 transferred to a psychiatric hospital for treatment of schizophrenia with auditory hallucinations.  Id. at 6.

Prior to admission, Resident 2 underwent a Level I Preadmission Screening and Resident Review (“PASRR”) evaluation.6  Because he screened positive for serious mental illness,

Page 11

New Jersey’s Division of Mental Health and Addiction Services (DMHAS) conducted a Level II PASSR determination.  P. Br. at 3-4; P. Ex. 4.  Psychiatric Nurse Practitioner Deborah Kalszky conducted that evaluation and concluded Resident 2’s mental health treatment needs could be met in a nursing facility and did not demand specialized services like inpatient psychiatric hospitalization).  P. Ex. 4 at 13.  New Jersey’s mental health department therefore approved Resident 2’s placement in Petitioner’s facility.  P. Ex. 4.

MedOptions, a third-party psychiatric contractor, evaluated Resident 2 on September 26, 2019.  The contractor recommended increased social interaction and minimization of stressors but did not believe Resident 2 to be a danger to himself or others.  P. Ex. 5 at 2.  MedOptions clinicians continued periodic evaluations through August 2020 and consistently confirmed Resident 2 was not a danger to himself or others.  Id. at 5, 9, 13, 17, 21, 25, 29, 33.

The parties do not dispute that throughout the first year of his residence at the facility, Resident 2 was more or less compliant with his medications and exhibited limited aggressive behavior.  P. Br. at 5; CMS Ex. 3 at 6.  Beginning in October 2020, however, the record reflects Resident 2’s condition deteriorated significantly and required transfers to crisis centers and hospitalizations on several occasions.

On October 1, 2020, the facility conducted a Minimum Data Set (MDS) evaluation7 and assigned Resident 2 a Brief Interview for Mental Status (BIMS) score of 10. 8  CMS Ex. 4 at 1, 28.  But on October 12, 2020, Petitioner transferred Resident 2 for inpatient mental health treatment for combativeness with staff, damaging property, and refusing medication.  CMS Ex. 14 at 4; P. Ex. 7.  Resident 2 remained admitted for psychiatric treatment from October 14 to October 20, 2020.  CMS Ex. 3 at 6.  Petitioner again transferred Resident 2 for inpatient psychiatric treatment on October 22, October 29, November 16, and November 17, 2020, all for similar outbursts of combativeness with

Page 12

staff, screaming, damaging property, and refusing medication.  CMS Ex. 2 at 3, 6; P. Ex. 5 at 37-40; P. Ex. 8 at 1-2; P. Ex. 9.9 

On November 23, 2020, APN Debra Rapciewicz completed a medication management assessment and described Resident 2’s aggression as “severe,” “continuous,” and “worsening.”  CMS Ex. 3 at 13-14.  She noted Resident 2 had attacked, injured, or choked facility nurses and concluded he was a “severe risk for violence to both himself and others.”  Id.  APN Rapciewicz concluded Resident 2 “require[d] [inpatient] psychiatric treatment due to his increasingly aggressive behavior” and that “stabilization at [Petitioner’s] facility is not possible due to refusal of medications.”  Id. at 15.

Resident 2 continued to express combative and aggressive behavior towards facility staff in incidents recorded on November 24, November 27, and December 1,2, 3, and 4, 2020.  CMS Ex. 2 at 7-9, CMS Ex. 9 at 10-14.  On the last date, police restrained Resident 2 in handcuffs before Petitioner transferred him for crisis care.  CMS Ex. 2 at 9; CMS Ex. 25 at 27.  Resident 2 transferred from crisis care to a long-term psychiatric inpatient treatment on December 11, 2020.  CMS Ex. 10 at 1.  Resident 2 continued to exhibit mood swings, agitation, aggressiveness paranoia, and auditory and visual hallucinations.  CMS Ex. 10 at 3-7.

On December 15, 2020, prior to Resident 2’s discharge from the hospital, Social Worker Trevor Bailer completed a PASRR Level I evaluation which screened positive for serious mental illness and triggered a Level II evaluation.  CMS Ex. 11 at 5.  On December 17, 2020, Eboni Freeman, DNP, a DMHAS psychiatric consultant, completed the PASRR Level II evaluation and certified Resident 2 had a serious mental illness but that his mental health treatment needs could be met in a nursing facility and did not require specialized services.  Id. at 7-13.  On December 18, 2020, Virtua Social Worker Trevor Bailer informed Palace Social Worker Julie Maldonado by phone that Resident 2 would be discharged back to Palace pending DMHAS approval.  P. Ex. 11 at 24.

On December 21, 2020, DMHAS Nurse Practitioner Bolanle Popoola issued a PASRR Level II determination finding Resident 2’s mental health needs could be met in a nursing home facility.  CMS Ex. 11 at 14.  Nurse Practitioner Popoola recommended Petitioner provide Resident 2 psychiatric consultation upon admission, devise and implement a behavioral modification plan, and develop a crisis intervention and safety plan with Resident 2.  Id.  Petitioner readmitted Resident 2 on December 23, 2020.  CMS Ex. 2 at 9.  Petitioner placed Resident 2 in his own room through January 6, 2021.  CMS Ex. 25 at 27.

Page 13

2.  Resident 3

Resident 3 entered the facility on August 26, 2020 at age 78.  CMS Ex. 17 at 1.  He was nonverbal and dependent on staff for all activities of daily living.  CMS Ex. 19 at 11.  His diagnoses included bipolar schizoaffective disorder and severe cognitive impairment.  CMS Ex. 17 at 1; CMS Ex. 20 at 2-3.  The facility’s November 28, 2020 MDS evaluation indicated Resident 3 had limited ability to communicate or understand others, could not recall his location, the current season, or staff names and faces, and exhibited severely impaired cognitive skills; staff did not assign Resident 3 a BIMS score because he was “rarely/never understood.”  CMS Ex. 19 at 5-7.

3.  Rooming of Residents 2 and 3

On January 2, 2021, facility staff documented combative behavior by Resident 2, who began screaming, refused to use the bathroom after requesting assistance, and called staff “stupid idiots.”  CMS Ex. 2 at 10.  On January 7, 2021, Petitioner moved Resident 2 from his private room to share a room with Resident 3 due to the spread of COVID-19 throughout the facility.  CMS Ex. 25 at 27.  The decision was made jointly by the Interdisciplinary Care team, which included the Social Worker, Administrator, and Unit Manager.  Id. 

4.  Resident 2’s behavior in January 2021

On January 10, 2021, Resident 2 came into the hallway nude and refused to dress.  CMS Ex. 2 at 10.  On January 11, 2021, Petitioner updated Resident 2’s care plan to note episodes of verbal and physical agitation, acts of physical intimidation including charging at staff, and to establish behavioral goals for Resident 2, including not harming himself or others or striking others.  CMS Ex. 5 at 1.  On January 12, 2021, APN Rapciewicz completed a medication management assessment of Resident 2 and noted an “increase in physical aggression,” that Resident 2 was observed hitting a staff member, experiencing paranoia and delusions, and choking himself in bed while repeatedly yelling “help.”  CMS Ex. 12 at 3.  APN Rapciewicz estimated Resident 2 to be a severe risk of violence to himself and others.  Id.  She concluded Resident 2 required “[inpatient] psychiatric treatment due to his increasingly aggressive behavior as he is a harm to others. . . stabilization at the facility is not possible due to refusal of medications.”  Id. at 4.  APN Rapciewicz specified she communicated the threat of harm by Resident 2 to the unit manager, the facility administrator, and social services.  Id. at 3.  She documented that she conferred with another physician who “stressed the importance of sending [Resident 2] to the ER/crisis center.”  Id. at 5.  She again stated that she made the unit manager aware of these recommendations.

Page 14

5.  The January 17, 2021 Incident

Unit Manager LPN Brittany Thomas testified staff members conducted rounds every hour but were in Resident 3’s room more frequently because he required complete care.  CMS Ex. 25 at 29; CMS Ex. 26 at 21.  On January 17, 2021, Nurse Supervisor Carol Arrowood, RN observed both residents sleeping between 6:50 and 7:05 a.m.  CMS Ex. 26 at 3.  CNA Sharmin Sardar observed both residents at approximately 6:15 a.m. and noted both were sleeping without issue.  CMS Ex. 24 at 12-13.  Another CNA observed both residents sleeping in their beds at approximately 7:15 a.m.  Id. at 4.

At approximately 7:45 a.m., LPN Clarissa Armstrong noticed the call light in the residents’ room activated.  CMS Ex. 24 at 6.  At her request, CNA Cecelia Goldsboro entered the room and found Resident 3 with blood on his hands, a swollen and bloody face, blood coming from his nose, and his right eye closed.  CMS Ex. 2 at 11-12; CMS Ex. 25 at 10.  Resident 3 made no noise and “just laid in bed not moving.”  CMS Ex. 25 at 8.  When asked by staff, Resident 2 stated, “I did it.”  CMS Ex. 16 at 1.  Staff immediately called the facility administrator, who directed staff to call police and 911.  CMS Ex. 24 at 6.  The facility transferred Resident 3 to the hospital with facial bleeding and swelling.  CMS Ex. 17 at 3.

Petitioner meanwhile sent Resident 2 to JFK Medical Center crisis ward for evaluation.  CMS Ex. 12 at 6; CMS Ex. 14 at 1. Police arrived at approximately 9:30 a.m.  CMS Ex. 24 at 4.  Petitioner reported the abuse incident to state authorities at 10:10 a.m. that same day.  CMS Ex. 25 at 1.  An investigation concluded the event constituted resident-on-resident abuse with no prior incidents of altercations between either resident.  CMS Ex. 24 at 5.

Resident 3 died from his injuries on March 5, 2021.  CMS Ex. 34; CMS Ex. 35.

4. Petitioner did not substantially comply with 42 C.F.R. § 483.25(d) (Tag F689).

CMS argues Petitioner failed to substantially comply with its obligation to provide adequate supervision to Resident 2 because the interventions it implemented to account for his well-documented history of violent behavior were insufficient.  CMS Br. at 24-25.  CMS points out that while evaluating psychiatric clinician APN Rapciewicz twice concluded on November 23, 2020 and January 12, 2021 that Resident 2 required inpatient psychiatric treatment and was a danger to others, Petitioner implemented no additional measures or care plan changes.  Id. 

Petitioner responds that it reasonably relied both on DMHAS’s determination that Resident 2 could be safely housed at its facility as well as the care plan restrictions provided by Resident 2’s treating clinicians, which did not change even where those

Page 15

clinicians knew Resident 2 refused medication.  P. Br. at 21-30, 40-44.  It otherwise argues it could have not foreseen Resident 2’s assault of Resident 3 because he had no prior history of attacking other residents and only expressed combative tendencies towards staff before the January 2021 incident.  Id. at 36-40.  Petitioner asserts the level of supervision it provided Resident 2 was adequate and that it could not provide constant monitoring without violating Resident 2’s privacy or injectable medications, which are limited to inpatient settings.  Id. at 49-52.  Finally, the facility claims it cannot be held responsible for failing to act on APN Rapciewicz’s January 2021 assessment because its staff never received it.  Id. at 52-55.

Even drawing all inferences in favor of Petitioner, it cannot prevail.  First, while Petitioner correctly notes a facility may rely on physician’s orders that are not facially defective, that does not excuse a facility from exercising its own independent judgment about the level of supervision necessary to meet a particular resident’s needs.  Beverly Health and Rehab. – Spring Hill v. Health Care Financing Admin., DAB No. 1696 (1999); Lake Cook Terrace Nursing Ctr. v. Health Care Financing Admin., DAB No. 1745 at 44 (2000).10  The regulations impose an “affirmative duty” on skilled nursing facilities to achieve resident safety “to the highest practicable degree.”  Woodstock Care Ctr., DAB No. 1726 at 17.  That duty does not fall by the wayside when a treater provides guidance that informs the level of supervision a resident requires.

But critically, neither the PASRR determinations nor the crisis center discharge decisions upon which Petitioner attempts to rely opined as to the propriety of placing Resident 2 in a room with another resident.11  Nor did they specify interventions they believed would ensure Resident 2’s safety or that of other residents.  Petitioner’s effort to foist responsibility for assessing the level of supervision Resident 2 required upon outside treaters or state agency evaluators runs afoul of its obligation to secure the safety of its residents “to the highest practicable degree.”  Woodstock Care Ctr., DAB No. 1726 at 17.

Petitioner’s claim that it could not have foreseen Resident 2 turning his violent tendencies towards other residents because he had previously focused them solely on staff members

Page 16

is without merit.  Resident 2’s medical record documents a significant deterioration in his condition in the months preceding Petitioner’s decision to house him in a room with a completely defenseless fellow resident.  From October to December 2020, Petitioner documented ten occasions Resident 2 acted aggressively towards staff members, damaged property, or refused medication; on eight of those occasions, Petitioner found the resident’s violent behavior warranted transfer to another facility for crisis care.  CMS Ex. 2 at 2; CMS Ex. 14 at 4; P. Ex. 5 at 37-38; P. Ex. 6 at 1; P. Ex. 7 at 1, 11; P. Ex. 8 at 1-2.  On November 23, 2020, APN Rapciewicz evaluated Resident 2 and, noting he had attacked, injured, or choked facility nurses, characterized his aggression as “severe,” “continuous,” and “worsening.”  CMS Ex. 3 at 13-14.

Petitioner finally transferred Resident 2 for longer-term psychiatric care on December 11, 2020, but upon his return, facility staff documented his continued combative behavior only days before Petitioner opted to house him with Resident 3.  CMS Ex. 2 at 10.  Given these facts, it is patently absurd to claim that a skilled nursing facility could not have foreseen a resident with severe psychosis and a richly documented history of physical violence towards staff might, if given the opportunity, cause injury to a non-verbal elderly resident who could not defend himself or call for help.

Even if I were to credit the specious notion that a resident’s history of violent behavior towards staff would not signal the possibility of violence towards other residents, there is no dispute Petitioner was put on notice Resident 2’s behavior posed a risk of harm to other residents prior to its choice to house Residents 2 and 3 together.  When the facility transferred Resident 2 for crisis treatment on November 17, 2020, its own staff cited Resident 2’s aggression “towards staff & residents” as the basis for transfer.  CMS Ex. 14 at 3.  APN Rapciewicz’s November 23, 2020 assessment of Resident 2, which Petitioner does not contest receiving, described his aggression as “severe,” “continuous,” and “worsening.”  CMS Ex. 3 at 13-14.  She noted Resident 2 had attacked, injured, or choked facility nurses and concluded he was a “severe risk for violence to both himself and others.”  Id. 12  Yet mere weeks after his return from an extended stay at a psychiatric inpatient facility, Petitioner determined it appropriate to house Resident 2 with a resident who could not defend himself or even cry out for help.  Petitioner cannot plausibly claim it could not have foreseen the possibility Resident 2 would act violently towards another resident.

Page 17

Petitioner’s claim that it could not have better supervised Resident 2 without constant monitoring that would violate his privacy or using injectable medications it was not permitted to employ is a straw man argument.  P. Br. at 49-52.  CMS has not argued Petitioner was required to implement either measure to provide adequate supervision.  It instead argues Resident 2’s refusal of medication should have signaled to Petitioner that he required heightened, not constant monitoring, and that APN Rapciewicz had observed the psychiatric crisis center could have initiated long-acting injectable medications at Petitioner’s request, which the facility could then have continued to administer after Resident 2’s return.  CMS Br. at 32, 34; CMS Ex. 12 at 4.

But I need not determine whether the interventions proposed by CMS would have been adequate.  The question is whether Petitioner provided adequate supervision based on the risks it could reasonably foresee.  Petitioner claims it did so by providing at least hourly monitoring.  P. Br. at 45-49.  But as I have explained, Petitioner had every reason to foresee the distinct possibility Resident 2 would harm another resident.  Monitoring at any frequency was plainly inadequate to ensure a mentally unwell resident prone to violent outbursts did not harm himself or his roommate, particularly one that could not communicate or defend himself.  The critical mistake the facility made was to try and house Resident 2 with another resident at all.

In fact, Petitioner housed Resident 2 by himself from December 5, 2020 until January 7, 2021, excluding the period he was treated in an inpatient psychiatric facility.  Petitioner thus appeared to recognize the effectiveness of providing Resident 2 his own room when his condition deteriorated.13 

And there is no dispute that Resident 2’s aggressive behavior did not improve after his December 2020 inpatient psychiatric stay.  Days before Petitioner opted to house Resident 2 with Resident 3 on January 7, 2021, facility staff documented Resident 2’s combative behavior, including screaming at staff members and refusing to use the bathroom.  CMS Ex. 2 at 10.  Three days after it housed him with Resident 3, the facility documented an incident where Resident 2 left his room nude and refused to dress.  Id.  The next day, Petitioner updated Resident 2’s care plan to note episodes of verbal and

Page 18

physical agitation and acts of physical intimidation, including charging at staff.  CMS Ex. 5 at 1.  Petitioner’s decision to house Resident 2 with Resident 3 on January 7, 2021 and keep them together even as Resident 2’s behavior became increasingly erratic over the following days is incomprehensible.14  There is no feasible intervention the facility could have implemented to overcome that fundamental error in judgment.

Petitioner also protests CMS’s assertion that it should have permanently sought to transfer Resident 2 to an inpatient psychiatric facility, pointing out the considerable efforts it undertook to do just that.  P. Br. at 30-35, citing CMS Br. at 23.  I acknowledge Petitioner’s efforts to place Resident 2 elsewhere and recognize it received little to no assistance from DMHAS or other providers or treaters.  See CMS Ex. 15.  But Petitioner’s recounting of its efforts to place Resident 2 elsewhere serves to highlight its awareness that Resident 2’s condition was so severe as to require specialized supervision.  It is to Petitioner’s credit that it tried to transfer Resident 2.  But its inability to do so heightened its obligation to provide adequate supervision to ensure the safety of Resident 2 and other residents so long as he resided there.  That failure also highlights the inexcusability of the facility’s decision to house Resident 2 with Resident 3.  Petitioner’s stymied efforts to transfer Resident 2 are not a defense to its failure to provide adequate supervision.

By placing Residents 2 and 3 in the same room, Petitioner failed to comply with its own policy to identify hazards specific to a resident and provide targeted interventions to reduce the potential for accidents, CMS Ex. 2 at 23, and thus, its obligation to assess its residents’ needs and “mitigate foreseeable risks of harm from accidents.”  Briarwood, DAB No. 2115 at 11; 42 C.F.R. § 483.25(d).

5. The $11,300 per-instance CMP amount is reasonable.

CMS is authorized to impose enforcement remedies against a facility that is not in substantial compliance with a participation requirement.  42 U.S.C. § 1395i-3(h)(2); 42 C.F.R. § 488.406.  Among other enforcement remedies, CMS may impose a per-instance CMP for each instance a facility is not in substantial compliance.  42 C.F.R. § 488.430(a).  At the time CMS imposed remedies in this case, a per-instance CMP could range from $2,233 to $22,320.  42 C.F.R. § 488.438(a)(2); 45 C.F.R. § 102.3 (2020).

Page 19

To assess the reasonableness of the CMP, I apply the factors set forth at 42 C.F.R. §§ 488.438(f) and 488.404 (incorporated by reference into 42 C.F.R. § 488.438(f)(3)).  These factors include the seriousness of the deficiency, the facility’s compliance history, its financial condition, and its degree of culpability.  See id.  The Board has held that the CMP amount selected by CMS is presumptively reasonable based on the regulatory factors listed above and that the facility bears the burden “to demonstrate, through argument and the submission of evidence addressing the regulatory factors, that a reduction [in the penalty amount] is necessary to make the CMP amount reasonable.”  Crawford Healthcare & Rehab., DAB No. 2738 at 19 (2016).  I consider whether “the evidence presented on the record concerning the relevant regulatory factors supports a finding that the amount of the CMP is at a level reasonably related to an effort to produce corrective action by [Petitioner] with the kind of deficiencies found and in light of the” factors mentioned above.  Careplex of Silver Spring, DAB No. 1683 (1999).

Here, the seriousness of the deficiency is beyond dispute.  Petitioner’s failure to adequately supervise Resident 2 led to Resident 3’s battery while asleep and eventual death.  Petitioner’s culpability is high.  Facility staff documented seemingly countless incidents of combative and aggressive behavior by Resident 2.  On two occasions, APN Rapciewicz evaluated Resident 2 and made clear he was a danger to others.  Even assuming Petitioner did not know of her second evaluation in January 2021, the facility still had ample forewarning that Resident 2 was too dangerous to be housed with a highly vulnerable resident based on his behavior following the facility’s placement of the two residents in the same room.  I have considered the fact that Petitioner’s staff made every effort to transfer Resident 2 to a more appropriate inpatient psychiatric facility.  But the CMP selected by CMS falls in the middle of the range for a per-instance penalty, and thus more than accounts for any reduction in culpability this effort might warrant.

Resident 2’s rising level of aggression and poor compliance resulted in his transfer to a psychiatric facility in December 2020.  After his return, Petitioner made the inexplicable decision to house Resident 2 with a defenseless resident incapable of communication.  Petitioner persisted in this decision in the face of its own documentation of Resident 2’s ongoing violent outbursts throughout January 2021.  It made no effort to change Resident 2’s room assignment or consider other alternatives beyond providing half-hourly to hourly monitoring.  Petitioner’s indifference rose to the level of “neglect” and “disregard for resident care, comfort, or safety” within the meaning of 42 C.F.R. § 488.438(f)(4).  Having considered the regulatory factors, including the seriousness of the deficiency and the degree of Petitioner’s culpability, I find the $11,300 CMP imposed by CMS to be reasonable.

6. The NATCEP ban is appropriate.

The two-year ban on Petitioner’s NATCEP program is mandatory by operation of law where a facility is assessed a CMP of not less than $11,160.  42 U.S.C. § 1395i-

Page 20

3(f)(2)(B)(iii)(I)(b), (c); 42 C.F.R. § 483.151(b)(2)(iv); 45 C.F.R. § 102.3 (2020).  The imposed CMP of $11,300, which I have found to be reasonable, exceeds this threshold. I therefore sustain the imposition of a NATCEP ban.

VIII.  Conclusion

I affirm CMS’s determination that Petitioner was not in substantial compliance with a Medicare program participation requirement.  I find the $11,300 civil money penalty (CMP) reasonable and the two-year ban nurse aide training program ban warranted.