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CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
IN THE CASE OF  


SUBJECT: Community Nursing Home,

Petitioner,

DATE: January 11, 2002
           - v -

 

Centers for Medicare & Medicaid Services

 

Docket No. A-01-86
Civil Remedies CR770
Decision No. 1807
DECISION
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FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Community Nursing Home (Petitioner) appealed a May 2, 2001 decision by Administrative Law Judge (ALJ) Steve Kessel affirming a determination by the Center for Medicare and Medicaid Services (CMS)(1) to impose sanctions on Petitioner for its failure to comply substantially with federal requirements governing participation of long-term care facilities in Medicare and State Medicaid programs. Community Nursing Home, DAB CR770 (2001) (ALJ Decision). The ALJ sustained imposition against Petitioner of the following remedies: civil money penalties in the amount of $3,050 per day for each day of a period that began on March 12, 1999 and ran through April 1, 1999; civil money penalties in the amount of $1,000 per day for each day of a period that began on April 2, 1999 and ran through May 6, 1999; and denial of payment for new admissions for each day of the April 2 through May 6, 1999 period.

Petitioner raised the following issues on appeal from the ALJ Decision. Petitioner asserted the ALJ erred by refusing to admit some of Petitioner's exhibits, by finding that Petitioner failed to comply substantially with participation requirements cited in the April 1999 survey, by finding that Petitioner's failure to comply caused actual harm, and by finding that a CMP of $1,000 per day was reasonable for the period of April 2 through May 6, 1999. Petitioner also requested the Board to accept additional evidence not presented to the ALJ.

For the reasons explained below, we affirm the ALJ Decision and sustain all of the findings of fact and conclusions of law (FFCLs) therein. While we find that the ALJ erred in not admitting portions of three of Petitioner's exhibits and in admitting one of CMS's exhibits, we conclude that it was harmless error which does not require remand or reversal. Finally, we decline to admit additional evidence not presented to the ALJ.

Legal Background

Requirements for long-term care facilities that seek to participate in the Medicare program as a skilled nursing facility under section 1819 of the Social Security Act (Act), or in the Medicaid program as a nursing facility under section 1919 of the Act, are set out at 42 C.F.R. Part 483.

Compliance with these requirements is determined through the survey and certification process, set out at 42 C.F.R. Part 488, Subpart E. Surveys are generally conducted by a state survey agency under an agreement with CMS (although CMS may itself conduct surveys and revisits). Subpart F of Part 488 specifies the remedies that may be imposed by CMS (or a state where appropriate) based on a finding that a facility is not in substantial compliance with the requirements.

One of the available remedies is a civil money penalty (CMP). The regulations specify different ranges of CMPs, with an upper range of $3,050 to $10,000 per day to be imposed for deficiencies constituting immediate jeopardy to the facility's residents.

42 C.F.R. §§ 488.408, 488.438(a)(1)(i).(2) CMPs in the $50 to $3,000 per day range may be imposed for one or more deficiencies that constitute actual harm that is not immediate jeopardy. Section 488.408(d)(2)(ii).

A per day penalty "may start accruing as early as the date that the facility was first out of compliance" and be computed for the "number of days of noncompliance until the facility achieves substantial compliance" or is terminated from the program. 42 C.F.R. § 488.440; see also § 488.454. Substantial compliance must be established by a resurvey or by credible written evidence produced by the facility (verifiable without an on-site visit). 42 C.F.R. § 488.454(a)(1).

A facility may appeal a certification of noncompliance leading to an enforcement remedy, but may not appeal the choice of remedy or the finding that deficiencies pose immediate jeopardy. 42 C.F.R. §§ 488.408(g); 498.3(b)(12); 498.3(d)(10).

Under 42 C.F.R. Part 498 procedures, there is a right to request a hearing by an ALJ assigned to the Departmental Appeals Board and a right to request review of an ALJ decision by the Board itself. A request for review of an ALJ decision must specify the issues, the findings of fact or conclusions of law with which the party disagrees, and the basis for contending that the findings and conclusions are incorrect. 42 C.F.R. § 498.82(b).

Our Standard of Review

Before the ALJ, the sanctioned facility must prove substantial compliance by the preponderance of the evidence, once CMS has established a prima facie case that the facility was not in substantial compliance with relevant statutory or regulatory provisions. See Cross Creek Health Care Center, DAB No. 1665 (1998), applying Hillman Rehabilitation Center, DAB No. 1611 (1997)(Hillman), aff'd, Hillman Rehabilitation Center v. HHS, No. 98-3789(GEV), slip op. at 25 (D.N.J. May 13, 1999).

Upon review of an ALJ decision, the standard of review we apply on a disputed conclusion of law is whether the ALJ erred. Our standard of review on a disputed finding of fact is whether the ALJ's finding is supported by substantial evidence on the record as a whole. The bases for modifying, reversing or remanding an ALJ decision include the following: a finding of material fact necessary to the outcome of the decision is not supported by substantial evidence; a legal conclusion necessary to the outcome of the decision is erroneous; the decision is contrary to law or applicable regulations; a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations) was committed. Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs (Guidelines), ¶ 4(b); see also Hillman, at 6 (1997); Fairview Nursing Plaza, Inc., DAB No. 1715, at 2 (2000); South Valley Health Care Center, DAB No. 1691 (1999).

We have repeatedly held that the role of appellate review is not to substitute our evaluation of the evidence for that of the ALJ, but only to determine whether the factual findings made by the ALJ are supported by substantial evidence in the record as a whole. See Lake Cook Terrace Center, DAB No. 1745, at 6 (2000); Beverly Health and Rehabilitation - Spring Hill, DAB No. 1696, at 40 (1999).

Factual Background

Petitioner was surveyed in March 1999 (March 1999 survey) on behalf of CMS by representatives of the Texas Department of Human Services (Texas State survey agency). At the March 1999 survey, the surveyors found that Petitioner was not complying substantially with 11 Medicare participation requirements. In three of these 11 deficiency findings, the surveyors concluded that Petitioner's noncompliance was so serious as to constitute immediate jeopardy for residents of Petitioner.

Petitioner submitted a plan of correction in which it asserted that it had attained compliance with all participation requirements effective April 1, 1999. The Texas State survey agency responded to these allegations of compliance by scheduling a resurvey of Petitioner's facility. It completed the resurvey on April 13, 1999 (April 1999 resurvey). At the April 1999 resurvey the surveyors found that there were no deficiencies that remained at the immediate jeopardy level of noncompliance. However, on the statement of deficiencies (CMS Exhibit 4) the surveyors reported that Petitioner continued not to be complying substantially with three participation requirements.

The Texas State survey agency surveyors returned to Petitioner's facility for a second resurvey which they completed on May 7, 1999 (May 1999 resurvey). At the May 1999 resurvey they concluded that Petitioner had attained substantial compliance with all participation requirements.

The Texas State survey agency recommended to CMS that remedies be imposed against Petitioner that were based on the findings of noncompliance that were made at the March 1999 survey and at the April 1999 resurvey. These included: civil money penalties in the amount of $3,050 per day for each day of the period which began on March 12, 1999 and which ran through April 1, 1999; civil money penalties in the amount of $1,000 per day for each day of the period which began on April 2, 1999 and which ran through May 6, 1999; and denial of payments for new admissions for each day of the April 2 through May 6, 1999 period. CMS concurred with these recommendations and sent Petitioner a notice in which it advised Petitioner that it was imposing the remedies. CMS Ex. 2.

Petitioner requested a hearing on the imposition of the March 12 penalty and the April 2 penalty. CMS moved for partial summary disposition. Petitioner opposed the motion. The ALJ issued a ruling in which he granted partial summary disposition to CMS.(3) Ruling Granting Partial Summary Disposition dated April 25, 2000. In that partial summary disposition, which he reaffirmed in the ALJ Decision, the ALJ ruled as follows:

• Because Petitioner did not challenge the three findings of immediate jeopardy level deficiencies that were made at the March 1999 survey, CMS was authorized to impose immediate jeopardy level civil money penalties against Petitioner for each day of the period that began on March 12, 1999 and which ran through April 1, 1999.

• Civil money penalties of $3,050 per day for each day of the March 12 - April 1, 1999 period were reasonable in that they are the minimum penalties that may be imposed for immediate jeopardy level deficiencies.

• Petitioner challenged only two of the three alleged deficiencies that were identified at the April 1999 resurvey.

• Because Petitioner did not challenge all of the deficiency findings that were made at the April 1999 resurvey, CMS was authorized to impose civil money penalties against Petitioner for each day of the April 2 - May 6, 1999 period.

ALJ Decision at 3. However, the ALJ concluded that reasonableness of the amount of the CMP remained at issue.

After the ALJ issued the partial summary disposition, the parties agreed to have the remaining contested matters decided based on their written submissions in lieu of an in-person hearing. Amended Order dated December 11, 2000.

The ALJ established a schedule for the parties to exchange documents and simultaneously file briefs and proposed exhibits. CMS was ordered to give Petitioner the documents "it proposes to file with its brief as exhibits by no later than January 10, 2001." ALJ Order dated December 4, 2000. Petitioner was ordered to give CMS its proposed exhibits by January 24. Both parties were then to file simultaneous briefs with exhibits. CMS offered 16 proposed exhibits (CMS Ex. 1 - CMS Ex. 16) as part of its initial submission. Petitioner offered 6 proposed exhibits (P. Ex. 1 - P. Ex. 6) as part of its initial submission. Neither party objected to the receipt of the other party's proposed exhibits into evidence and they were admitted.

On March 21, 2001 the parties submitted reply briefs. Each party submitted additional proposed exhibits with its reply brief. The ALJ refused to admit the additional proposed exhibits into evidence because he determined they were untimely.

The ALJ Decision

In his decision, the ALJ made the following numbered FFCLS:

1. Civil money penalties of $1,000 per day are reasonable for each day of the April 2 - May 6, 1999 period based on the seriousness of the deficiencies that Petitioner manifested at the April 1999 resurvey.

a. Petitioner manifested three failures to comply substantially with participation requirements as of the April 1999 resurvey.

i. Petitioner did not comply substantially with the participation requirement that is stated at 42 C.F.R. § 483.10(b)(11).

ii. Petitioner did not comply substantially with the participation requirement that is stated at 42 C.F.R. § 483.15(h)(2).

iii. Petitioner failed to comply substantially with the participation requirement that is stated at 42 C.F.R.
§ 483.25.

b. Petitioner's failure to comply substantially with participation requirements caused actual harm.

c. Civil money penalties in the amounts of $1,000 per day are justified by the seriousness of the deficiencies that Petitioner manifested at the April 1999 survey.

d. It is reasonable to conclude that the deficiencies that were identified at the April 1999 resurvey were extant as of April 2, 1999.

2. CMS was authorized to impose civil money penalties of $1,000 per day against Petitioner for each day of a period which began on April 2, 1999 and which ran through May 6, 1999.

3. CMS was authorized to impose against Petitioner the remedy of denial of payment for new admissions effective April 2, 1999. I have no authority to decide whether CMS's imposition against Petitioner of denial of payment for new admissions was an appropriate choice of a remedy.

ALJ Decision at 7 - 15.

Under each of his major findings and conclusions, the ALJ set out the survey findings, and then discussed his findings based on the evidence presented. We do not here repeat the detailed findings from the ALJ Decision, except to the extent necessary to address Petitioner's arguments on appeal.

Issues on Appeal

Petitioner raised the following issues on appeal from the ALJ Decision. Petitioner asserted the ALJ erred by --

  • refusing to admit four exhibits offered by Petitioner with its Reply Brief;


  • finding that, in the April 1999 resurvey, Petitioner failed to comply substantially with the participation requirements set forth at 42 C.F.R. §§ 483.10(b)(11), 483.15(h)(2), and 483.25;


  • finding that Petitioner's failure to comply with the participation requirements caused actual harm;


  • finding that a civil money penalty of $1,000 per day was reasonable for each day of the April 2 - May 6 period.

Petitioner also requested that the Board accept the following additional evidence submitted for the first time with its appeal: an income statement with a cover letter dated June 5, 2000 (P. Ex. A), a set of nursing notes that was allegedly rediscovered by Petitioner in June 2001 (P. Ex. B), and an administrative hearing decision of the Texas State Office of Administrative Hearings dated August 6, 2001 (P. Ex. C).

ANALYSIS
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1. Admissibility of Petitioner's Proposed Exhibits 7 - 9.

The ALJ refused to admit four exhibits Petitioner submitted with its reply brief. Proposed Exhibits 7, 8 and 9 are affidavits of nursing staff and nursing notes concerning care provided to Resident 2, the subject of two of the deficiency findings. Below we describe the uncontroverted facts pertaining to Petitioner's care of Resident 2, and then we discuss each of these exhibits. We conclude that the ALJ erred in not admitting portions of the exhibits but that the error was harmless and does not require remand or reversal.

The deficiencies involve Petitioner's care of Resident 2 from Saturday, April 10, 1999 to Tuesday, April 13, 1999. On Saturday, Resident 2 fell from her wheelchair. That day Petitioner faxed a report of the incident to Resident 2's doctor. The report stated:

PT stood up from wheelchair and sat on floor. [Range of motion] very good both legs but [complains of] pain from [left] hip to groin area, worse in groin area. No displacement of hip/leg or abnormal rotation of foot.

CMS Ex. 9.

The nursing notes of April 11 reflect that by Sunday Resident 2 had developed a large bruise on her left thigh and complained of pain when her left leg was moved. CMS Ex. 10, at 1-2.

The nursing notes of April 12 reflect that Resident 2 continued to complain of left leg pain at the hip. Id. at 2-3. She was given pain medication but the notes reflect "no results from medication." Id. at 3. On Monday afternoon, April 12, Petitioner received a fax back from the doctor's office with the instruction "continue to monitor." CMS Ex. 9.

The entry at 5:00 A.M. on April 13 states:

Awake, yelling, "I have to have some help" - [complains of] soreness [and] pain in [left] leg at hip. Large bruise noted on [left] hip - Resident will not move or let anyone help her - States she needs to go to [bathroom], but will not move.

CMS Ex. 10, at 3.

At 5:45 AM, Resident 2 was given pain medication. Id.

At 10:00 AM, the morning of April 13, Resident 2 was interviewed by a surveyor, Billie Brown. In the presence of Petitioner's director of nursing, Ms. Brown examined Resident 2. In the statement of deficiencies of the April 1999 resurvey, Ms. Brown reported:

Resident 2 was observed to have a large, deep purple bruise, measuring approximately 10 x 20 centimeters on the upper, lateral aspect of the left thigh. Visually the left thigh appeared to be edematous and larger in size than the right thigh. Additionally, while lying recumbent, Resident 2 could not lift the left leg.(4)

CMS Ex. 4, at 7.

Ms. Brown asserted in the statement of deficiencies that Resident 2's symptoms "are generally considered to be suspect of possible hip fracture." Id.

Subsequently, an x-ray established that Resident 2 had a subcapital femoral neck fracture of the left hip. P. Ex. 6. On April 14, the fracture was repaired surgically by cannulated screw fixation. CMS Ex. 12.

Petitioner's Proposed Exhibits 7 and 8 are affidavits by Petitioner's assistant director of nursing and a licensed vocational nurse. Petitioner's Proposed Exhibit 9 contains excerpts from nursing notes, mental health therapy progress notes, and social service progress notes for Resident 2. The exhibits were proffered in response to CMS Exhibit 5, which was an affidavit from Ms. Brown, which CMS first provided to Petitioner with its initial brief. In the affidavit, Ms. Brown asserted that Resident 2 was "cogent and alert"; that Resident 2's symptoms were indicative of a hip fracture; and that the doctor's nurse practitioner, who was at the facility that morning (April 13), told Ms. Brown that no one had asked her to evaluate Resident 2. Petitioner asserted that its affidavits were admissible to show that Petitioner's staff had requested the doctor's nurse practitioner to examine Resident 2 prior to Ms. Brown's intervention on April 13 and that Resident 2 was a confused rather than cogent person.

For the following reasons, we conclude that discrete portions of Petitioner's Proposed Exhibits 7, 8 and 9 should have been admitted, but that the ALJ did not err in refusing to admit the documents in their entireties.

  • CMS was ordered to provide copies of the documents on which it intended to rely prior to briefing but did not produce the Brown affidavit until it filed its initial brief. Presumably CMS could have provided Ms. Brown's affidavit to Petitioner by preparing it prior to the production date. Where a party could but does not provide a document, such as an affidavit, until during briefing, fairness requires that the other party be allowed to respond to the document if the document raises facts or issues which could not reasonably be foreseen by the other party.


  • In this case, the only representation in the affidavit which was not made in the statement of deficiencies and which Petitioner could not have reasonably foreseen was Ms. Brown's assertion that Resident 2 was "cogent." CMS Ex. 5, at 1. The term "cogent" is defined as "appealing forcibly to the mind or reason, convincing." Webster's Third New International Dictionary. In the statement of deficiencies, there were no representations as to Resident 2's cogency or credibility; therefore, Petitioner should have been allowed to submit evidence to rebut this assertion of cogency or that portion of the affidavit should have been stricken.

  • Some parts of Petitioner's Proposed Exhibits 7 - 9 go to whether Resident 2 should be regarded as cogent. Rather than portraying a cogent resident, these documents would support a finding that Resident 2 had an obsessive compulsive disorder, was often confused, or less than well oriented, and often cried out "I need help" or "help me help me" when she merely wanted to know what day it was or some other routine fact. Petitioner contended that this information is relevant because it helps to explain the staff's failure to correctly evaluate Resident 2's condition prior to the intervention of Ms. Brown.

  • The remainder of what Ms. Brown discussed in the affidavit had been provided to Petitioner in the statement of deficiencies in April 1999 and did not raise facts or issues which could not reasonably be foreseen by Petitioner. Specifically, in the statement of deficiencies, Ms. Brown said that Resident 2 told her that she had repeatedly complained of pain and told the staff she thought her hip was broken, that the doctor's nurse practitioner told Ms. Brown that she was not scheduled to see Resident 2 on April 13, and that Resident 2's symptoms of pain, bruising and inability to do a straight leg lift were indicative of hip fracture.

  • The deficiencies for which Petitioner was cited concerned whether Petitioner had properly notified and updated Resident 2's doctor of her condition and whether Petitioner had provided appropriate care to Resident 2 by allowing days to elapse before recognizing that she needed to be evaluated further for a possible hip fracture. The surveyor's findings as to the facts supporting her determination as to these deficiencies were clearly set out in the statement of deficiencies. The statement was provided to Petitioner in April of 1999. If Petitioner had evidence which would tend to show that Resident 2 had not repeatedly complained of pain and told the staff she thought her hip was broken, or that the doctor's nurse practitioner had been asked to evaluate Resident 2 prior to Ms. Brown's intervention, or that Resident 2's symptoms were not indicative of a hip fracture, Petitioner should have provided that evidence to CMS in its document production and also presented that evidence with its initial brief.(5) As the ALJ stated, "Petitioner was given ample opportunity to make these contentions at a time when HCFA could have replied to them. It did not do so and may not do so at this late stage of the case." ALJ Decision at 4.

Although we conclude that the portions of Petitioner's Proposed Exhibits 7 - 9 relating to Resident 2's cogency should have been admitted, we also conclude that the failure to admit them constituted harmless error. Petitioner's violation of the participation requirements involved its failure to correctly evaluate Resident 2's symptoms and update the doctor on the development of those symptoms after her fall on Saturday. Resident 2's symptoms were bruising, pain (both of which were reflected in the nursing notes in the record as of Sunday), and her inability to lift her left leg. According to the statement of deficiencies, these symptoms are indicative of a hip fracture. While the staff communicated the fact of the fall and the report of initial pain to the doctor on Saturday, between Saturday and Monday, it is undisputed that the doctor was never informed that bruising had appeared and the pain had continued. The ALJ determined these symptoms were sufficient to warrant updated notice to the doctor. ALJ Decision at 10. These symptoms were not affected by Resident 2's cogency. Nor did the staff employ the straight-leg lift test, which Ms. Brown asserted in the statement of deficiencies was needed in this case to evaluate Resident 2 for a possible hip fracture. Again, this failure is not related to Resident 2's cogency. Finally, nothing in the ALJ Decision suggests that the ALJ relied on whether or not Resident 2 was a cogent patient. Therefore, there is substantial evidence in the record which is unrelated to whether or not Resident 2 was a cogent patient to support the ALJ's finding Petitioner was not in substantial compliance with participation requirements. Accordingly, the ALJ's decision not to admit Petitioner's evidence concerning cogency constitutes harmless error.

2. Admissibility of Petitioner's Proposed Exhibit 10.

Petitioner's Proposed Exhibit 10 consists of financial data, including income and expense data, for Petitioner. Petitioner first offered this exhibit with its reply brief to show that the amount of the CMP was unreasonable in light of its poor financial condition.

The ALJ declined to admit the proposed exhibit on the grounds that --

[t]he exhibit addresses an argument Petitioner never made at any time prior to submitting its reply brief. . . . Petitioner knew or should have known that it could have raised this issue [financial condition] during the more than two years this case has been pending. It is obvious from a review of P. Ex. 10 that the information contained in the exhibit is not something Petitioner was denied access to until the last moment. Much of the financial information that is contained in the exhibit relates to Petitioner's 1999 income and expenditures.

ALJ Decision at 5-6.

Additionally, the ALJ stated "I make no finding about Petitioner's financial condition." Id. at 7.

The ALJ rejected Proposed Exhibit 10 as untimely since it was first offered with Petitioner's reply brief. As we explain in section 5, while CMS must and an ALJ may consider a facility's financial condition in determining whether the amount of a CMP is within a reasonable range, it is the facility's responsibility to raise the issue as a basis for disputing the reasonableness of the amount of the CMP if the facility believes its financial condition renders the amount of the CMP unreasonable. Petitioner did not raise the issue in its Request for Hearing, its response to CMS's motion for summary disposition, or its initial brief. Therefore, Exhibit 10 is not relevant to any timely-raised issue in dispute before the ALJ, and the ALJ properly exercised his discretion by excluding it.

Petitioner also argued that Proposed Exhibit 10 was admissible because it was offered to rebut CMS' representation in its initial brief that "[a]t the time of the imposition of the remedies, [Petitioner] was in good financial condition" (CMS Br. before ALJ at unnumbered 9) and CMS Exhibit 15 which CMS filed with its initial brief. Exhibit 15, which is dated March 29, 1999, is titled "Facility Records Review Worksheet" and appears to be have been prepared by the Texas Department of Human Services. It contains information about Petitioner's financial condition but does not reflect Petitioner's expenses or contain any indication that Petitioner was experiencing financial difficulties as alleged by Petitioner. CMS did not provide Exhibit 15 to Petitioner when it produced documents on January 9, 2001. The ALJ admitted CMS Exhibit 15. Petitioner did not object to its admission.

We conclude that the ALJ erred in admitting CMS Exhibit 15. CMS had an opportunity to provide this document to Petitioner prior to Petitioner's document production and briefing if it intended to rely on Petitioner's financial condition as a basis for the amount of the penalty. Since CMS did not disclose Exhibit 15 to Petitioner at the time provided by the ALJ, CMS did not timely raise it as a justification for the amount of the CMP. Since the ALJ excluded Petitioner's Proposed Exhibit 10, he should also have excluded CMS Exhibit 15 as untimely, even though Petitioner did not object to its admission.

The admission of CMS Exhibit 15 constitutes harmless error. The ALJ expressly noted that he made no finding as to Petitioner's financial condition; therefore, the ALJ did not rely on CMS Exhibit 15 and it was irrelevant to his decision. Further, as explained in section 5, since neither party put Petitioner's financial condition at issue in a timely manner, the ALJ was under no obligation to make a finding as to financial condition.

3. The ALJ's finding that in April 1999 Petitioner failed to comply substantially with the participation requirements set forth at 42 C.F.R. §§ 483.10(b)(11), 483.15(h)(2), and 483.25 is supported by substantial evidence.

The ALJ found that in April 1999 Petitioner failed to comply substantially with each of the participation requirements set forth at 42 C.F.R. §§ 483.10(b)(11), 483.15(h)(2), and 483.25.(6) For the following reasons, we conclude that the ALJ's finding is supported by substantial evidence.

a. 42 C.F.R. § 483.10(b)(11)

In the report of the April 1999 resurvey, the surveyors found that Petitioner had failed to comply substantially with 42 C.F.R. § 483.10(b)(11). This regulation requires that a long-term care facility immediately inform a resident's physician of any significant change in the resident's physical, mental, or psychosocial status. The surveyors concluded that Petitioner failed to properly notify Resident 2's doctor as to the injury to her hip.

For the following reasons, we conclude that the ALJ properly entered summary disposition in favor of CMS as to this finding. Under 42 C.F.R. § 498.40, a facility is required to file a request for hearing as to disputed issues. Section 498.40(b) sets forth specific requirements as to the content of this request:

The request for hearing must -
(1) Identify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees; and
(2) Specify the basis for contending that the findings and conclusions are incorrect.

The surveyors' finding as to the noncompliance with 42 C.F.R.
§ 483.10(b)(11) was cited in the statement of deficiencies under Tag 157. Petitioner's request for hearing did not identify Tag 157 as disputed. Request for Formal Hearing dated May 18, 1999. Additionally, the ALJ allowed Petitioner to expand the allegations made in its initial request for hearing with the additional assertions made in its response to CMS's request for summary disposition. Ruling Granting Partial Summary Disposition dated April 25, 2000. However, even in that response, Petitioner did not cite Tag 157 as disputed. Therefore, the ALJ correctly determined that Petitioner had not requested a hearing as to whether it had complied with 42 C.F.R. § 483.10(b)(11) and properly entered a summary disposition for CMS as to this issue. ALJ Decision at 8.

b. 42 C.F.R. § 483.15(h)(2)

In the report of the April 1999 resurvey, the surveyors found that Petitioner had failed to comply substantially with the participation requirement as stated in 42 C.F.R. § 483.15(h)(2). This regulation requires that a facility provide housekeeping and maintenance services necessary to maintain a sanitary, orderly, and comfortable interior. In the April 1999 resurvey, as in the March 1999 survey, the surveyors cited 14 specific instances in occupied rooms, based on personal observations, in which Petitioner failed to maintain a sanitary or orderly facility. These findings included the presence of fecal stains in several of the resident's rooms. As the ALJ properly concluded, Petitioner failed to offer any meaningful defense to these allegations. It merely stated that its staff was overworked and it was doing the best it could to clean its facility. The ALJ found the observations of the surveyors as recorded in the April 1999 resurvey to be credible in the absence of any evidence from Petitioner that refuted their findings. ALJ Decision at 9.

On appeal of the ALJ Decision, Petitioner reiterated the practical problems it had in bringing its facility into compliance with 42 C.F.R. § 483.15(h)(2) and asserted that the process was ongoing at the time of the April 1999 resurvey. Petitioner Br. at 19-20. As the ALJ found, assertions that efforts are being made to come into compliance or that Petitioner's staff is overworked do not constitute a meaningful defense to the allegations of noncompliance. ALJ Decision at 9.

c. 42 C.F.R. § 483.25

In the report of the April 1999 resurvey, the surveyors found that Petitioner had failed to comply substantially with 42 C.F.R. § 483.25. That regulation requires:

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

The surveyors concluded that Petitioner had failed to provide necessary care and services by failing to assess Resident 2's condition properly and by failing to provide her doctor with appropriate information about her condition.

The record contains the following substantial evidence to support the ALJ's determination that Petitioner violated this standard of care. Resident 2 fell on April 10. The report to the doctor of the incident indicates at the time she fell she experienced pain from her left hip to the groin area. P. Ex. 3. The nursing notes reflect that by the next day, April 11, she had a large bruise on her left thigh and complained of pain when her left leg was moved. CMS Ex. 10, at 2. The April 12 notes reflect that Resident 2 continued to complain of pain and was agitated. Id. at 3. She was given Tylenol for pain and Ativan for agitation. However, the subsequent notes state that "there were no results from medications. Resident continues to complain of pain in leg and hip. Resident remains agitated." Id. Petitioner's staff did not inform Resident 2's doctor of these developing symptoms. Early in the morning of April 13, Resident 2 again called a nurse for pain and refused to move even though she said she needed to go to the bathroom. She was given medication for pain. Id. Mid-morning of April 13, Resident 2 was interviewed by Ms. Brown, a surveyor. Ms. Brown observed that Resident 2 had a large deep purple bruise on her upper thigh, her left thigh was edematous, and that while lying down, Resident 2 could not lift her left leg. CMS Ex. 4, at 7.

According to the information in the statement of deficiencies, Resident 2's symptoms (pain, bruising, inability to do a straight leg lift) were indicative of a hip fracture. As shown by the nursing notes, the pain existed three days before the surveyor's arrival, and the bruising existed two days prior to the surveyor's arrival. Additionally, Petitioner's staff never initiated a straight leg lift diagnostic procedure to gauge whether Resident 2 needed to be evaluated further for a hip fracture. There is no evidence in the record to indicate that this would not have been an effective diagnostic tool as of the day of the fall. These symptoms, the failure of Petitioner's staff to inform the doctor of the bruising and continued pain, and the failure of Petitioner's staff to employ the straight leg lift diagnostic procedure support the ALJ's finding that Petitioner failed to evaluate Resident 2's condition properly and thereby failed to provide her with necessary care as required by 42 C.F.R. § 483.25.

Additionally, CMS took the position that, but for the intervention of the surveyor, Resident 2 would not have been evaluated by the doctor's nurse practitioner on April 13 and would not have been sent to the hospital for x-rays. The ALJ found it unnecessary to determine whether CMS was correct because he found Petitioner had failed to comply substantially with section 483.25 even if its staff had requested an evaluation by the nurse practitioner on Tuesday morning.(7) We conclude that there is substantial evidence to support a finding of a deficiency without resolving this question.

4. The ALJ's finding that Petitioner's failure to comply substantially with the participation requirements caused actual harm is supported by substantial evidence.

The ALJ determined that Petitioner's failure to properly evaluate Resident 2's condition caused delay in addressing the fractured hip and unnecessary pain. According to the information in the statement of deficiencies, Resident 2's symptoms as of April 11 were indicative of a hip fracture and yet Resident 2 was not x-rayed until April 13, which delayed the surgery until April 14. The ALJ properly determined that the unnecessary pain resulting from the delay constituted actual harm to Resident 2.

5. The ALJ's finding that a civil money penalty of $1,000 per day was reasonable for each day of the April 2 - May 6 period is supported by substantial evidence.

Petitioner challenged this FFCL on two grounds. First, Petitioner argued that CMS had failed to prove before the ALJ that it considered Petitioner's financial condition in setting the CMP and therefore CMS had failed to prove an element of its prima facie case as to the reasonableness of the CMP. Second, Petitioner argued that, even if Resident 2 should have been x-rayed sooner for a hip fracture, any harm caused by the delay was minimal and did not justify the amount of the CMP. Below we consider both of these arguments.

Petitioner asserted that CMS was required to prove before the ALJ how it took into account a facility's financial condition in determining the amount of a CMP. Petitioner argued that CMS's failure to do so meant that the penalty should have been overturned by the ALJ. Petitioner relied on 42 C.F.R. § 488.438(f).(8) Section 488.438(f)(2) provides that, in determining the amount of a CMP, one of the factors CMS must take into account is the facility's "financial condition."

The Board recently addressed the operation of this regulation in relation to a facility's right to review by an ALJ. Emerald Oaks, DAB No. 1800 (2001). The Board determined that, while the ALJ must consider evidence which is properly presented to him concerning any of the factors listed in 42 C.F.R. § 488.438(f), including financial condition, in evaluating whether the CMP is within a reasonable range, CMS does not automatically have to offer such evidence as part of its prima facie case. Rather, if a facility contends that its financial condition or some other factor makes a CMP unreasonable, then the facility must raise that contention on a timely basis before any question would arise as to CMS's responsibility for producing evidence as to that factor.

In Emerald Oaks, we noted that in Hillman the Board set out the following framework for ALJ hearings on disputed issues of fact in provider termination cases as to whether a facility is in substantial compliance:

FFCL 1A. HCFA must set forth the basis for its determination terminating a provider with sufficient specificity for the provider to respond, including the basis for any finding that a condition-level deficiency exists. The provider must then identify which of the findings material to the determination the provider disputes, and must also identify any additional facts the provider is asserting.
FFCL 1B. At the hearing, HCFA has the burden of coming forward with evidence related to disputed findings that is sufficient (together with any undisputed findings and relevant legal authority) to establish a prima facie case that HCFA had a legally sufficient basis for termination.
FFCL 1C. At the hearing, the provider has the burden of coming forward with evidence sufficient to establish the elements of any affirmative argument or defense which it offers.
FFCL 1D. The provider bears the ultimate burden of persuasion. To prevail, the provider must prove by a preponderance of the evidence on the record as a whole that it is in substantial compliance with the relevant statutory and regulatory provisions.

Hillman, DAB No. 1611, at 65; see also Cross Creek Health Care Center, DAB No. 1665 (1998)(same framework applies in cases involving CMPs).

In Emerald Oaks, we determined that this analysis is applied to decide disputed questions of fact regarding whether a basis exists to impose a sanction, and not to second-guess the selection of the appropriate sanction. The ALJ's review of the decision to impose a CMP of a particular amount is not co-extensive with CMS's discretion in making this choice initially. Board precedents have derived this conclusion from a careful review of the statute, regulations, and the preamble to the regulations at 42 C.F.R. Part 488. CarePlex of Silver Spring, DAB No. 1683, at 13-17 (1999). Those authorities essentially demonstrate an intention "to permit review of the factual underpinnings on which the remedy is based (including the specific factual elements on which the amount of the CMP is determined) but to make unreviewable the decision to impose a remedy and the choice of that remedy." Id. at 16-17. Therefore, once the ALJ has determined that a basis exists to impose a CMP, the ALJ "may take evidence on contested issues as to the facility's history of noncompliance, financial condition, and degree of culpability (if used as an aggravating factor). . . ." Id.

However, Petitioner took the position that, absent the presentation of any evidence by CMS on its consideration of the regulatory factors such as financial condition, the CMP could not be sustained at all.

We disagree. As we said in Emerald Oaks, our decisions, and the regulations, do not require an ALJ to make any finding concerning how CMS exercised its discretion in selecting a remedy or setting the amount of a penalty. In CarePlex, the Board held expressly that the ALJ should not look into the "internal decision-making processes of the officials at HCFA or the State." DAB No. 1683, at 8.(9) Rather, the ALJ is to 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 a provider with the kind of deficiencies found and in light of the other factors involved (financial condition, facility history, and culpability).

Id. In assessing the reasonableness of the amount imposed, the ALJ is thus constrained by the regulations which present objective factors to guide the determination. Id. This limitation on the ALJ's review is based inter alia on the regulatory provision that an ALJ may not "consider any factors in reviewing the amount of penalty" other than those discussed above that CMS is to consider. 42 C.F.R. § 488.438(e)(3).

As to those factors, the ALJ's role as defined both in the regulations and by our precedents is that of an impartial reviewer. The ALJ is neither bound to defer to CMS's factual assertions nor free to make a wholly independent choice of remedies without regard for CMS's discretion. The ALJ is rather to determine whether the amount of any CMP imposed by CMS and challenged by the facility is within reasonable bounds in light of the purpose of the statute and regulations. If the facility presents evidence relevant to any of the regulatory factors in order to contest the reasonableness of the amount of the CMP, the ALJ is to weigh that evidence, along with all the evidence presented by CMS, in making that determination. As the Board explained in CarePlex:

It is correct that the ALJ decision is not a quasi-appellate review of the regularity of HCFA's determination but rather a determination of the reasonableness of the amount based on evidence in the record as a whole as developed before the ALJ. Thus, if evidence is developed at the hearing as to a relevant factor, the ALJ must take that evidence into account even if it was not available to or considered by HCFA. . . . The ALJ [may not simply substitute his or her judgment and] is not obligated to presume that HCFA correctly assessed the evidence and factors, but is bound to follow the regulatory procedures to make an independent determination of whether the amount set by HCFA is reasonable based on the evidence as fully developed in the hearing.

DAB No. 1683, at 17-18 (citation omitted).

Thus, the purpose of the hearing here was not to determine whether CMS followed the correct procedure in determining to impose a CMP or setting the amount of the CMP. The hearing at the ALJ level in such cases is intended to determine two fundamental questions: (1) whether a basis existed to support the imposition of the CMP under the governing statutory and regulatory authorities, and (2) whether the amount of the CMP fell within a reasonable range based on the applicable law. The ALJ resolves these issues de novo in the sense that the determination is based on the evidence as it is developed before the ALJ and not on how CMS evaluated the evidence as it stood at whatever point CMS made its assessment.

The ALJ in this case conducted the correct inquiry as to reasonableness based on the evidence in the record, and his determination is supported by substantial evidence. See ALJ Decision at 5-6, 12-13. He found that Petitioner had presented no timely evidence as to its financial condition and why its financial condition should result in a reduction of the CMP. Id. at 5-6. He concluded that, since two of the three deficiencies at issue caused actual harm, a CMP of $1,000 per day, which was mid-point in the allowable range of $50 to $3,000 per day, was well-justified by the seriousness of the deficiencies. Id. at 7, 13. He found it unnecessary to consider whether Petitioner's compliance history would provide additional support for the amount of the CMP. Id. at 7. Also, contrary to Petitioner's assertion, the fact that Resident 2 experienced no apparent complications as a result of the delay and unnecessary pain she suffered does not necessarily mean that the penalty imposed was unreasonable. Rather, it merely means some of the potential for harm did not result in actual harm, but does not undercut the finding that the resident did suffer actual harm - unnecessary pain.

We conclude therefore that the ALJ correctly reviewed the prescribed factors for evaluating the reasonableness of the amount of a CMP and affirm his finding as to the reasonableness of the amount of the CMP here.

6. The ALJ's finding that HCFA was authorized to impose a CMP for each day of a period which began on April 2, 1999 and which ran through May 6, 1999 is supported by substantial evidence.

The ALJ concluded that Petitioner's treatment of Resident 2 was indicative of an overall failure by its staff to understand its obligation to keep a doctor informed of a patient's evolving condition and to properly evaluate possible hip fractures. ALJ Decision at 14. The beginning date of the penalty at issue was April 2, 1999. April 2 was the date by which Petitioner represented that the deficiencies identified in the March 1999 survey had been corrected. Those deficiencies had been found to result in immediate jeopardy and the resulting penalty was $3,000 per day, which CMS imposed from March 12, 1999 (the date of the March survey) through April 1, 1999. May 7, 1999 was the completion date identified by Petitioner in its Plan of Correction for the correction of the deficiencies identified in the April 1999 resurvey. HCFA Ex. 4. Petitioner did not present evidence to show that the various tasks in its Plan of Correction were completed prior to May 7. In the absence of contrary evidence or argument by Petitioner concerning the state surveyors' findings as to the duration of the deficiency, the ALJ reasonably concluded that the deficiencies identified on April 13 in the April 1999 resurvey existed as of April 2, 1999 and continued through May 6, 1999. Id.

On appeal, Petitioner argued that the deficiency lasted, at most, from April 10 to April 13, 1999. Petitioner did not raise this three-day argument before the ALJ, and we therefore do not consider it.(10) Our review of an ALJ decision is not a de novo review of CMS's remedies. Our review is limited to whether the ALJ decision was erroneous as a matter of law or unsupported by substantial evidence on the record as a whole. Petitioner presented no evidence that it remedied the systemic failure identified by the surveyors and upheld by the ALJ by April 14 and consequently the ALJ never addressed the issue in his decision. We therefore have no basis for now finding that the duration of the deficiency was only April 10 through April 13. Brier Oak Terrace Care Center, DAB No. 1798 (2001).

7. We decline to admit Petitioner's additional evidence.

On appeal, Petitioner submitted three additional exhibits.

Under the regulations, the Board has authority to admit additional evidence on appeal "if the Board considers that the additional evidence is relevant and material to an issue before it." 42 C.F.R. § 498.86(a). However, this regulation is permissive and does not require the Board to admit additional evidence even if it is material and relevant. As to such additional evidence, our Guidelines provide:

While the panel may admit evidence into the record . . ., the panel will only do so if it considers the additional evidence to be relevant and material to an issue before it and the proponent demonstrates good cause for not producing the evidence during proceedings before the ALJ.

We decline to admit these proposed exhibits for the following reasons.

Proposed Exhibit A is a letter dated June 5, 2000 with attached financial information concerning Petitioner's financial condition. This exhibit goes to Petitioner's financial condition; the attached financial information appears to be a copy of Petitioner's Proposed Exhibit 10. In section 2 and 5, we explained why evidence concerning financial condition is not relevant to any issue which was timely raised before the ALJ.

Proposed Exhibit B is an excerpt from a log which Petitioner represented was used by its staff between February and May 1999 to communicate with the doctor's nurse practitioner. Petitioner's counsel represented that Petitioner's staff forgot about this log and did not discover it until June of 2001, after the ALJ proceeding. The excerpt would support a finding that Petitioner's staff requested the nurse practitioner to see Resident 2 prior to the surveyor's intervention. Since we do not base our decision on whether the staff made such a request, we do not find this evidence relevant or material.

Proposed Exhibit C is a hearing decision by the Texas Office of Administrative Hearings concerning state penalties that were imposed on Petitioner for its care of Resident 2 in April 1999. We decline to admit this document for the following reasons. All of the evidence put before the Texas ALJ and which is reflected in that decision could have been produced for the ALJ in this proceeding. To the extent that such evidence was before the ALJ in this proceeding, the Texas decision is redundant. To the extent that the evidence was not produced for the ALJ in this proceeding, Petitioner has failed to assert good cause for not producing it in the proceeding below. To the extent the decision reflects a state ALJ's conclusions, we decline to admit those conclusions in this proceeding because CMS was not a party to the state proceeding and because the function of the CRD ALJ is to make such conclusions based on the evidence presented in this forum.

Conclusion

Based on the above analysis, we sustain the ALJ Decision in its entirety and affirm and adopt FFCLs 1 - 3.

JUDGE
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Judith A. Ballard

Donald F. Garrett

Marc R. Hillson
Presiding Board Member

FOOTNOTES
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1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001). We use "CMS" in this decision unless we are quoting directly from documents that refer to HCFA.

2. "Immediate jeopardy" is defined in the regulations as a situation in which a provider's noncompliance "has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident." 42 C.F.R. § 488.301.

3. Petitioner was not represented by an attorney when it filed its request for a hearing or at the time the ALJ issued the partial summary disposition. Petitioner obtained an attorney after the partial summary disposition and prior to the exchange of documents and briefing.

4. In its response to CMS's motion for partial summary disposition, Petitioner cited portions of the nursing notes which were not in the record. Petitioner stated that they provided that Resident 2 was "[a]sked by B. Brown RN-State Surveyor about raising left leg while holding out straight. Only lifted approximately ½-1 inch off sheet. Raised right leg up." Response dated March 2, 2000 at unnumbered 2-3.

5. Petitioner misstated our holding as to the burden of proof in CMP cases. Petitioner cited Hillman Rehabilitation Center, DAB CR500 (1997) for the proposition that CMS has the burden of proof to show that a facility was not in substantial compliance with participation requirements. P. Br. at 2. Petitioner argued that since CMS had the burden to prove noncompliance, Petitioner's exhibits were offered as rebuttal to CMS's proof. However, DAB CR500 was reversed in Hillman, DAB No. 1611. As discussed more fully in section 5, Hillman, DAB No. 1611, held that "the provider must prove by a preponderance of the evidence on the record as a whole that it is in substantial compliance with the relevant statutory and regulatory provisions." Id. at 65. Since the parties had waived an in-person hearing and were filing simultaneous briefs, Petitioner had a responsibility to offer evidence in conjunction with its initial brief to address the bases set forth by CMS in its documentary evidence for CMS's findings of noncompliance.

We also note that counsel for Petitioner repeatedly made assertions of fact before the ALJ and on appeal that were not supported by evidence in the record below. (For example, counsel asserted that the doctor's nurse practitioner had been asked to evaluate Resident 2 prior to the surveyor's intervention (P. Opening Br. before ALJ at 3, 4, 7-10), that possibly Resident 2 broke her hip in a separate incident on April 11 (P. Reply Br. before the ALJ at 3, 6; P. Br. at 10), that this resident would not have been able to differentiate the pain she was experiencing from her fall and the pain she regularly experienced from her medical conditions (Id. at 11), and that the nature of Resident 2's fracture (i.e., the infrequency of impacted fractures versus separation fractures) explained the staff's failure to evaluate it as a possible fracture (Id. at 7, 8, 10, 12, 13). Counsel's assertions about events or standards of medical care are not competent evidence and are properly disregarded.

6. The regulation at 42 C.F.R. § 488.301 defines substantial compliance as follows:

Substantial compliance means a level of compliance with the requirements of participation such that any identified deficiencies pose no greater risk to resident health or safety than the potential for causing minimal harm.

(Italics in original). We therefore read the ALJ findings as meaning that each deficiency had the potential for causing more than minimal harm.

7. The ALJ found that "the staff failed to communicate effectively to a physician that the resident was experiencing these escalating signs or symptoms prior to April 13, 1999." ALJ Decision at 10. The ALJ also concluded that Petitioner had an obligation to communicate directly with the doctor and therefore notice to the nurse practitioner on April 13 would not have constituted compliance. ALJ Decision at 12. We agree with the ALJ's conclusion as to Petitioner's failure to inform the doctor prior to April 13 of the changes in Resident 2's condition which were symptomatic of a hip fracture. We do not reach the question of whether notice to the nurse practitioner on April 13 would not have resulted in compliance because the Petitioner did not directly challenge this conclusion.

8. Section 488.438(f) provides for the consideration of four factors in selecting the amount of a CMP:

(1) The facility's history of noncompliance, including repeated deficiencies.
(2) The facility's financial condition.
(3) The factors specified in § 488.404.
(4) The facility's degree of culpability. Culpability for purposes of this paragraph includes, but is not limited to, neglect, indifference, or disregard for resident care, comfort or safety. The absence of culpability is not a mitigating circumstance in reducing the amount of the penalty.

42 C.F.R. § 488.438(f)(italics in original). The factors specified in § 488.404 are those considered in selecting any particular remedy. The regulation calls for an initial assessment by CMS of the seriousness of the deficiency, including the degree of harm or risk of harm that the deficiencies involved present and whether they are isolated, part of a pattern, or widespread. 42 C.F.R. § 488.404(b). In addition, CMS may consider "other factors, which may include, but are not limited to," how the deficiencies relate to each other and what prior history exists of "noncompliance in general and specifically with reference to the cited deficiencies." 42 C.F.R. § 488.404(c).

9. In addition to CarePlex, several other Board decisions have expressly rejected the concept of an ALJ review of CMS's internal process in setting a CMP amount. In Capitol Hill Community Rehabilitation and Speciality Care Center, DAB No. 1629 (1997), the Board held that ALJ review of a CMP under 42 C.F.R. § 488.438 (e) and (f) does not extend to "the particular process which HCFA utilized to establish the amount of the CMP, including what process HCFA utilized to determine the financial condition of the provider." DAB No. 1629, at 5. Similarly, the Board found that an ALJ's critique of the process used by CMS went beyond the bounds of the ALJ's authority under the regulations and held that "[w]e agree with HCFA that the ALJ should not review the process used to reach a recommendation of the CMP amount, but should focus instead on whether that amount is unreasonable." South Valley Health Care Center, DAB No. 1691, at 18 (1999).

10. Paragraph 4.(c) of the Guidelines provides that "[t]he Board will not consider issues not raised in the request for review, nor issues which could have been presented to the ALJ but were not."

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES