CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

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


SUBJECT: Sanctuary at Whispering Meadows,

Petitioner,

DATE: June 14, 2004

             - v -

 

Centers for Medicare & Medicaid Services

 

Docket No. A-03-97
Civil Remedies CR1060
Decision No. 1925
DECISION
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FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE D
ECISION

Sanctuary at Whispering Meadows (Sanctuary) appealed a June 27, 2003 decision by Administrative Law Judge (ALJ) Alfonso J. Montano upholding the determination by the Centers for Medicare & Medicaid Services (CMS) (1) to impose a $2,800 per instance civil money penalty (CMP) against Sanctuary for failure to comply substantially with a single Medicare participation requirement. Sanctuary at Whispering Meadows, DAB CR1060 (2003)(ALJ Decision).

For the reasons stated below, we conclude that the ALJ's findings are supported by substantial evidence in the record as a whole and that there are no errors in his conclusions of law. We thus affirm the ALJ Decision in its entirety and sustain the CMP of $2,800.

Legal Background

Sanctuary is a long-term care facility that participates in the Medicare and Medicaid programs. Medicare and Medicaid participation requirements for long-term care facilities are set forth in 42 C.F.R. Part 483. Compliance with these requirements is verified through a survey and certification process set forth in 42 C.F.R. Part 488, Subpart E. Compliance surveys are generally conducted by a state agency under agreement with CMS. Survey findings are presented in a Statement of Deficiencies (SOD), (2) which identifies and discusses each alleged failure by the facility to meet a participation requirement. See CMS State Operations Manual (SOM) Appendix P, IV. (3)

If a survey reveals that a facility is not in "substantial compliance" with a participation requirement, the facility must submit a Plan of Correction for the cited deficiencies for approval by the survey agency. 42 C.F.R. 488.402(d), 488.408(f). "Substantial compliance" is defined as "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." 42 C.F.R. 488.301. "Noncompliance" is defined in 42 C.F.R.  488.301 of the regulations to mean "any deficiency that causes a facility to not be in substantial compliance."

CMS enforces participation requirements, in part, by imposing remedies for a facility's failure to maintain compliance. See 42 C.F.R. Part 488, Subpart F. "The purpose of the remedies is to ensure prompt compliance with program requirements." 42 C.F.R. 488.402(a). CMS selects the appropriate remedy, if any, based on factors including the "seriousness of the deficiencies." 42 C.F.R. 488.404(a). "Seriousness" is assessed by determining "(1) Whether a facility's deficiencies constitute - (i) No actual harm with a potential for minimal harm; (ii) No actual harm with a potential for more than minimal harm, but not immediate jeopardy; (iii) Actual harm that is not immediate jeopardy; or (iv) Immediate jeopardy to resident health or safety. (2) Whether the deficiencies - (i) Are isolated; (ii) Constitute a pattern; or (iii) Are widespread." 42 C.F.R. 488.404(b). Deficiencies are categorized by letters A-L, which is a function of their "seriousness" (severity and scope). 42 C.F.R. 488.408; SOM  7400E.1; SOM Appendix P, V.; CMS Ex. 12 at 1.

CMS may impose a CMP "for either the number of days a facility is not in substantial compliance with one or more participation requirements or for each instance that a facility is not in substantial compliance . . . ." 42 C.F.R. 488.430. The amount of the CMP is determined by the facility's history of noncompliance (including repeat deficiencies), its financial condition, the factors set forth in 42 C.F.R. 488.404, and the facility's degree of culpability. 42 C.F.R. 488.438(f). (4) When CMS imposes a CMP for an instance of noncompliance, the amount of the CMP will be between $1,000 and $10,000 per instance. 42 C.F.R.  488.438(a)(2).

When an ALJ determines that CMS had a basis for imposing a CMP, the ALJ may not review CMS's exercise of discretion in selecting the CMP as a remedy. 42 C.F.R. 488.438(e)(2). A facility may, however, appeal the state survey agency's certification of noncompliance that leads to the selection of a CMP and the reasonableness of the amount of the CMP. 42 C.F.R. 488.408(g), 488.438(e). These appeals are governed by regulations set forth in 42 C.F.R. Part 498. 42 C.F.R.  498.3(a)(3)(ii).

Factual Background

The following summary is drawn from the ALJ Decision and the record before the ALJ. It is intended to provide a general framework for understanding the ALJ Decision and is not a substitute for the ALJ's findings.

On October 26, 1999, a surveyor employed by the Ohio Department of Health (State Agency), performed a complaint survey at Sanctuary. During the survey, she observed nine pressure sores on the feet and heels of Resident 2 (R2). The surveyor determined that R2 had been admitted to Sanctuary without pressure sores and developed them after he was prescribed psychoactive drugs that decreased his mobility. Although the complaint survey did not concern R2 or pressure sores, based on her initial observation of R2 during the complaint survey, Ms. Davis and another surveyor were instructed to return to Sanctuary to perform an extended survey relating to pressure sores. On November 3, 1999, the day the surveyors returned to Sanctuary, R2 had his right leg amputated above the knee because of tissue necrosis and infection related to pressure sores. In the course of the extended survey on November 3, 1999, Ms. Davis concluded that R2's pressure sores were not unavoidable. Based on her observations regarding R2, the State Agency found Sanctuary out of compliance with the requirement for Quality of Care at 42 C.F.R. 483.25(c) (Tag F-314). The State Agency notified Sanctuary and CMS of its findings in a SOD forwarded to Sanctuary by letter dated November 12, 1999. CMS Exhibit (Ex.) 2. Sanctuary responded with a Plan of Correction dated November 22, 1999. CMS Ex. 5.

By letter dated December 3, 1999, CMS advised Sanctuary that CMS was imposing a per instance CMP of $2,800 based on the noncompliance with section 483.25(c) found as a result of the survey completed on November 3, 1999. CMS Ex. 6. (5)

Sanctuary timely requested a hearing to challenge CMS's determination of noncompliance. The ALJ entered a decision upholding CMS's determinations and Sanctuary appealed. The ALJ Decision contains two numbered Findings of Fact and Conclusions of Law (FFCL). ALJ Decision at 5, 10. The ALJ determined that Sanctuary was not in substantial compliance with 42 C.F.R.  483.25(c) and that the amount of the per-instance CMP was reasonable.

Issues

Sanctuary's request for review (Request for Review or RR) raises legal and factual issues. First, Sanctuary argued that allocating the burden of proof to Sanctuary by a preponderance of the evidence, under Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd Hillman Rehabilitation Center v. United States, No. 98-3789 (GEB)(D.N.J. May 13, 1999) (hereinafter, "Hillman"), conflicts with the Administrative Procedure Act (APA) and cited case law. RR at 3. Second, Sanctuary argued that the Hillman standard should have been promulgated pursuant to rulemaking procedures set forth in the APA and that section 205(a) of the Social Security Act also required publication of a rule on burden of proof. RR at 5. Third, Sanctuary excepted to both the FFCLs made by the ALJ. RR at 7.

 

Standard of Review

The standard of review on a disputed conclusion of law is whether the decision is erroneous. The standard of review on a disputed finding of fact is whether the ALJ's finding is supported by substantial evidence in the record. Guidelines -- Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs (Guidelines), 4(b), (at http://www.hhs.gov/ dab/guidelines/ prov.html); South Valley Health Care Center, DAB No. 1691 (1999), aff'd South Valley Health Care Center v. HCFA, 223 F.3d 1221 (10th Cir. 2000).

Substantial evidence is "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401 (1971), quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). Under the substantial evidence standard, the reviewer must examine the record as a whole and take into account whatever in the record fairly detracts from the weight of the decision below. Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951). The reviewer does not, however, reweigh the evidence nor substitute his or her judgment for that of the initial decision-maker. Casias v. Secretary of Health & Human Services, 933 F.2d 799, 800 (10th Cir. 1991). Thus, the reviewer must not displace a "choice between two fairly conflicting views," even though a different choice could justifiably have been made if the matter had been before the reviewer de novo. Universal Camera, 340 U.S. at 488. The reviewer must, however, set aside the initial conclusions when he or she "cannot conscientiously find that the evidence supporting that decision is substantial, when viewed in the light that the record in its entirety furnishes, including the body of evidence opposed to the [initial decision-maker's] view." Id. In addition, the Board has held that an ALJ need not "cite to everything in the record which supports" the findings, but that the "evidence that the ALJ does cite must support the findings made." Reconsideration of Wesley Hal Livingston and Shoals Medical Equipment and Supply Co., Inc., DAB No. 1406, at 3 (1993).

ANALYSIS
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Below, we first discuss whether the Board's holding in Hillman is a substantive rule requiring notice and comment rulemaking under the APA. We then discuss whether the absence of a regulation specifying the burden of proof in this administrative proceeding violates section 205(a) of the Social Security Act (Act). Next, we discuss whether allocating to Sanctuary the ultimate burden of persuasion on the issue of substantial compliance conflicts with the APA or cited case law. Since Sanctuary's arguments on these threshold issue were identical to arguments we addressed in Batavia Nursing and Convalescent Center, DAB No. 1904 (2004)(presumably because the two facilities were represented by the same counsel), our analysis is the same. (6) Rather than merely incorporating the analysis by reference, however, we have set it out below for the convenience of the reader. After discussing these threshold legal issues, we continue by discussing whether substantial evidence and applicable law support the ALJ's determination that Sanctuary was not in substantial compliance with 42 C.F.R.  483.25(c) and whether the amount of the CMP is reasonable.

The Board's conclusion in Hillman regarding ultimate burden of persuasion is not a rule requiring notice and comment rulemaking pursuant to the APA.

Sanctuary argued that the "Hillman standard" is a rule that should have been promulgated pursuant to notice and comment rulemaking provisions under section 553 of the APA, rather than determined through "mere adjudication." RR at 5-6, citing 5 U.S.C. 553 (b),(c). In Batavia, DAB No. 1904, we rejected this argument. Below we repeat our discussion of this issue as set forth in Batavia.

Administrative agencies establish governing standards through formal notice and comment rulemaking or through adjudication, absent limited exceptions not applicable here. 5 U.S.C. 553, 554. Adjudication is the "agency process for the formulation of an order," 5 U.S.C. 551(7), and applies in cases "required by statute to be determined on the record after opportunity for an agency hearing . . . ." 5 U.S.C. 554(a). An order is "the whole or part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rule making . . . ." 5 U.S.C. 551(6) (emphasis added). (7) The Supreme Court has long acknowledged that the "the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency." SEC v. Chenery, 332 U.S. 194, 203 (1947), citing Columbia Broadcasting System v. U.S., 316 U.S. 407, 421 (1942)(parallel citations omitted); Bell Aerospace, 416 U.S. at 293.

Cases involving the termination of a provider agreement, as in Hillman, must be adjudicated in hearings on the record pursuant to section 205(b) of the Act. See section 1866(h)(1) of the Act. Since the agency process by which the Hillman decision was issued was conducted pursuant to a statutory requirement for a hearing on the record, it was an "adjudication" under the APA. The regulations that establish procedures for hearings on termination of provider agreements, and for other appealable initial determinations related to participation in Medicare, are at 42 C.F.R. Part 498. These regulations do not specify who bears the burden of proof in each of the different types of cases.

In Hillman, CMS took exception to the legal conclusion reached by the ALJ who conducted the hearing that "[CMS] has the burden of proving that Petitioner failed to comply with a condition of participation in Medicare." The Board concluded that the ALJ erred in determining that CMS had the burden of proof (in the sense of the ultimate burden of persuasion), reversed the ALJ's conclusion, and substituted the following:

FFCL 1A. [CMS] 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, [CMS] 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 CMS 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.

The major reasons for these conclusions of law were as follows:

  • The rationale for the ALJ's conclusion regarding burden of proof failed to distinguish clearly the burden of going forward from the ultimate burden of persuasion, and misconstrued the effect of requiring CMS to make a prima facie case.
  • Congress authorized payments to be made to providers such as rehabilitation agencies only if they qualified--not only by filing a provider agreement, but also by meeting applicable conditions of participation, as shown by an affirmative determination of compliance, generally made by CMS on the basis of state survey agency findings. A mere determination on appeal that it is only "as likely" that the conditions were substantially met as that they were not met could result in payment contrary to statutory intent. The purpose of the conditions--to protect the health and safety of the patients who are the intended beneficiaries of the program--requires that an affirmative determination of substantial compliance be made.
  • Contrary to what the ALJ found, there is no distinction, relevant for who bears the burden of proof, between a provider first seeking to participate in the program and a provider whose agreement is terminated. The provider agreement is not a contract which should be presumed to continue in effect unless CMS can prove at a hearing that its terms were violated. The provider's obligation to meet the conditions of participation in order to qualify for payment does not arise from the agreement, but from the statute. While CMS must make a determination consistent with the statutory and regulatory requirements for termination of a provider agreement, that determination alone is a basis for termination, effective on the date set by CMS in the notice of its determination. In any event, a provider agreement by itself is not sufficient to show that payment under the statute is authorized. Under the regulations, a finding of noncompliance supersedes any previous certification.
  • The ALJ's allocation of the burden of proof was inconsistent with the relevant case precedent and relied on analogies to types of cases that are inapposite.

  • Nothing in the due process cases on which Hillman relied requires that CMS bear the burden of persuasion. Contrary to what Hillman implied, the courts have not found any provider expectation of continued participation that outweighs CMS's interest in protecting the patients and program. At most, they have held that a provider has a right to reasonable notice and an opportunity for a hearing, which in most cases can be satisfied by a post-termination hearing or an informal pretermination hearing followed by a post-termination evidentiary hearing.
  • The underlying concerns about fairness to the provider, reflected in the ALJ analysis, can be met without placing the ultimate burden of persuasion on CMS.
  • In deciding who has the burden of proof, it is traditional (and based on fundamental fairness) to consider who has knowledge of the facts involved. Any evidence which CMS had gathered came from a survey of the provider's own records and facilities, and the provider is the one in possession of the most complete evidence of the state of its compliance. Thus, the Board noted: "While it is fair to require CMS to come forward with the evidence of noncompliance which CMS has obtained from the provider, it is unfair under the circumstances to place the ultimate burden of persuasion on CMS."

The provider in Hillman appealed, challenging the Board's legal conclusions on burden of proof, and the court upheld the conclusions. Hillman Rehabilitation Center v. United States, No. 98-3789 (GEB) (D.N.J. May 13, 1999).

The Board and ALJs have cited the Hillman decision as precedent when discussing burden of proof, and sometimes have used terms such as "standard" or "rule" as shorthand for the legal conclusions in that decision; use of such terms does not change the nature of the conclusions, however. If the Board were persuaded that our conclusions on the burden of proof in Hillman were inapplicable to a particular type of case or were unconstitutional or otherwise in error, we would not be bound to apply those conclusions.

As shown by the decision in Cross Creek Health Care Center, DAB No. 1665 (1998), the Board has not treated the legal conclusions in Hillman as a binding rule, applicable to all Part 498 proceedings. There, the Board briefly addressed an argument (made for the first time in petitioner's reply brief) that the ALJ had erred in determining that the conclusions in Hillman on burden of proof applied to a case involving a finding that a skilled nursing facility (SNF) was not complying substantially with Medicare requirements, resulting in imposition of a CMP. The Board recognized that program requirements for SNFs under Medicare (and other long-term care facilities under Medicaid) differ somewhat from requirements for other providers (such as Hillman, which was a rehabilitation agency) and that CMPs might raise some issues different from termination as a remedy. The Board concluded, nonetheless, that the rationale for allocating the burden of proof as discussed in Hillman applied in this context as well. Cross Creek Health Care Center, DAB No. 1665, at 13, n.10 (1998).

Subsequently, an ALJ decision applying the Hillman conclusions in the context of a CMP imposed on an SNF was challenged before the Board and in court. The Board held, and the court affirmed, that allocation of burden of proof is material only where the evidence is in equipoise and that the evidence was not in equipoise in that case. Fairfax Nursing Home, Inc. v. U.S. Dep't of Health and Human Services, 300 F.3d 835, 840, n.4 (7th Cir. 2002), on appeal from Fairfax Nursing Home, Inc., DAB No. 1794 (2001), cert. denied 537 U.S. 1111 (2003). (8)

Accordingly, the legal conclusions in Hillman on the burden of proof fall within the definition of an "order," as do subsequent decisions adopting the rationale and conclusions from Hillman in other contexts. See Fairfax Nursing Home, DAB No. 1794, at 8 (2002)("The Board's decision in Hillman is thus in the nature of an order which, while establishing precedent for the ALJs hearing these cases, is not a 'rule' under the APA.") The APA definition of "order" excludes the concept of rulemaking. We therefore reject Sanctuary's argument that the allocation of the burden of proof in Hillman is a substantive rule that required notice and comment rulemaking. (9)

Section 205(a) of the Act provides no basis for reversal of the ALJ's allocation of burden of proof in this case.

Sanctuary also argued that Congress intended that the agency promulgate rules and regulations to govern "the nature and extent of the proofs" presented at the hearing. Sanctuary argued that section 205(a) of the Act (42 U.S.C. 405(a)) mandates that CMS undertake formal rulemaking to "adopt rules and regulations" governing the burden of proof in a case involving a CMP. RR at 6. (10) In Batavia, DAB No. 1904, we rejected this argument. Below we repeat our discussion of this issue as set forth in Batavia.

Section 205(a) reads as follows:

The Commissioner of Social Security shall have full power and authority to make rules and regulations and to establish procedures, not inconsistent with the provisions of this title, which are necessary or appropriate to carry out such provisions, and shall adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in order to establish the right to benefits hereunder.

(Emphasis added.) Section 1872 of the Act incorporates certain provisions of section 205 into the Medicare statute, including section 205(a), "to the same extent that they are applicable with respect to title II [Social Security disability cases]."

First, we note that the rights to benefits under the Medicare program accrue to the beneficiaries of the program, not to the providers of services. One of the benefits to which a Medicare-eligible individual is entitled is "to have payment made on his behalf" for certain extended care services provided by an SNF. Sections 1812(a)(2)(A) and 1861(h) of the Act (42 U.S.C.  1395d(a)(2)(A) and 1395x). Sanctuary did not point to any decisions applying section 205(a) to provider participation requirements, rather than to Medicare beneficiaries' rights, however. (11)

In any event, our conclusions in Hillman and the subsequent cases were based on an examination of the applicable statute and regulations, which do establish the requirements for providers to participate in the Medicare program (a prerequisite for receiving payments on behalf of a beneficiary), the method for providing evidence of compliance - that is, the survey and certification process, and the nature of the documentation that the providers must maintain and furnish upon request, such as resident assessments, plans of care, and medical records. See generally, 42 C.F.R. parts 483, 488, and 489. Moreover, while Part 498 does not specify burden of proof, it does establish how the evidence regarding substantial compliance with program requirements will be taken and furnished during a hearing on an initial determination that a provider is not in substantial compliance. Thus, read as a whole, the regulations do provide for the "nature and extent of the proofs and evidence and the method of taking and furnishing the same" with respect to provider participation in Medicare.

Finally, even if Sanctuary were correct in reading section 205(a) as requiring a rule or regulation explicitly addressing burden of proof in proceedings under Part 498, Sanctuary did not explain how the mere absence of such a rule or regulation would provide a basis for applying a different burden of proof than that applied by the ALJ in this case.

Allocating the burden of proof to Sanctuary does not violate the APA since Sanctuary is the proponent of an order finding it in substantial compliance with Medicare participation requirements.

Sanctuary also argued that Hillman violates section 7(c) of the APA, which, Sanctuary said, requires that CMS bear the "ultimate burden of proof" as the "proponent of a rule or order" imposing the CMP. Id., citing 5 U.S.C. 556(d). (12) In Batavia, DAB No. 1904 (2004), we rejected this argument. Below we repeat our discussion of this issue as set forth in Batavia.

Sanctuary's reading of the APA and cited case law is flawed. "As fully discussed in Hillman, a provider participating in the federally-funded health care programs undertakes to maintain and demonstrate compliance, at all times, with all participation requirements." Meadow Wood Nursing Home, DAB No. 1841, at 7 (2002), citing Hillman, DAB No. 1611, at 12-17 (1997). Once found out of substantial compliance, Sanctuary required certification of compliance to continue participating in, and receiving payment from, the Medicare program. 42 C.F.R.  488.330(b)(1). In Hillman, the Board noted that a provider found out of compliance with program requirements "is the proponent of an order certifying it as qualified to participate in the program and to receive Medicare payment for services rendered . . . ." Hillman, DAB No. 1611, at 17 (1997).

Sanctuary conceded that the Supreme Court has placed the burden of proof on the claimant for governmental benefits when evidence is evenly balanced. RR at 4, citing Greenwich Collieries, 512 U.S. at 281 (benefits claimant bears the burden of persuasion). (13) Even when the claim is for a non-monetary benefit or privilege, the burden remains on the claimant as the proponent of the rule or order. See, e.g., U.S. Steel Corp. v. Train, 556 F.2d 822, 834 (7th Cir. 1977)("U.S. Steel, as the applicant for a permit without which it would be forbidden by law to discharge pollutants, is the proponent."); Day v. NTSB, 414 F.2d 950, 952 (5th Cir. 1969)(Section 556(d) technically inapplicable, but burden of proof properly on pilot for certification of fitness to fly). The Medicare statute governs payment for SNF services; like for other providers, having a provider agreement is not sufficient as a basis for determining that payment to an SNF on behalf of a beneficiary is authorized. (14) While section 1819(g) of the Act permits the Secretary to make payments to some facilities not substantially complying with the requirements, there are statutory conditions for such payments, restrictions on the period of time during which such payments may be made, and, if the denial of payments remedy is invoked, also restrictions on for whom the payments may be made. (15) An SNF appealing a finding that it is not substantially complying with the requirements is seeking to have payments made without those restrictions.

In summary, Sanctuary seeks from the government an order certifying that it is in substantial compliance with SNF requirements, so that it may continue to participate in the Medicare program with no restrictions on payment. Thus, placing the burden of proof on Sanctuary to show that it is in substantial compliance is consistent with section 7(c) of the APA.

We also reject Sanctuary's argument that CMS should bear the burden of proof here because governmental entities bear the "burden of proof" when imposing a fine or sanction. (16) RR at 4. Sanctuary cited as support Steadman v. SEC, 450 U.S. 91 (1981), which involved disciplinary proceedings against a broker for violations of numerous federal securities laws in managing mutual funds. Id. at 93. However, as explained in Greenwich Collieries, "it was uncontested in [Steadman] that the burden of persuasion was on the Government in a securities disciplinary proceeding." Greenwich Collieries, 512 U.S. at 290 (Souter, J., dissenting). The Steadman proceedings were governed by entirely different statutory and regulatory provisions than the survey and certification structure established for providers seeking to participate in the Medicare program. Steadman is inapposite.

Similarly, Sanctuary's reliance on Merritt v. Federal Maritime Commission, 960 F.2d 15 (7th Cir. 1992) and Bosma v. U.S. Dept. of Agriculture, 754 F.2d 804 (9th Cir. 1984) is also misplaced. Indeed, rather than undermine the Hillman rationale, Merritt and Bosma actually support it. (17) Merritt requires only that an agency "introduce initial evidence on an issue . . . ." Merritt, 960 F.2d at 18. Bosma also states that the agency "was . . . required to produce evidence . . . ." Bosma, 754 F.2d at 810. Although they involve different statutory and regulatory structures, Merritt and Bosma support our conclusion that CMS, the agency in this case, must come forward with or produce sufficient evidence on disputed facts that, together with the undisputed facts, will establish a prima facie case. We find no basis for Sanctuary's contention that they require that we place the ultimate burden of persuasion upon CMS.

Even if Sanctuary were not the proponent of the rule or order in this case (and we find that it is), section 7(c) provides for allocating the burden of proof to the proponent "[e]xcept as otherwise provided by statute . . . ." 5 U.S.C. 556(d). Hillman provides a detailed analysis of how the statutory and regulatory structure of the Medicare program places the burden of proving substantial compliance generally on the provider of services. Hillman, DAB No. 1611, at 12-17 (1997). This analysis was affirmed by the United States District Court for the District of New Jersey, which found no inconsistency between the allocation of the burden of proof under Hillman and the provisions of the APA. Hillman, No. 98-3789, at 25-27 (GEB)(D.N.J. May 13, 1999). (18) Sanctuary pointed to no new authority calling for a different result, and we see nothing in the record to suggest one.

Further, as we noted in Hillman, Congress had the opportunity to reject the agency's historical allocation of the burden of proof to the provider and has not done so. Hillman, DAB No. 1611, at 17-20 (1997)("These decisions evidence a long-standing interpretation [allocating the ultimate burden of persuasion to the provider], which Congress has not acted to overturn.") The CMP remedy was added as a remedy for facility noncompliance in the Nursing Home Reform Act, a part of the Omnibus Budget Reconciliation Act of 1987. Pub. L. 100-203, 4203. The agency had historically placed the burden of proving substantial compliance on the provider in termination hearings. Hillman, DAB No. 1611, at 18 (1997)(citations omitted). (19) When enacting the Nursing Home Reform Act, Congress did not revise this standard, and "[C]ongressional failure to revise or repeal the agency's interpretations is persuasive evidence that the interpretation is the one intended by Congress." Bell Aerosopace, 416 U.S. at 275.

While Congress did provide other remedies, including CMPs, as alternatives to termination when an SNF is found not to be in substantial compliance, Sanctuary pointed to nothing in the history or language of these provisions that would indicate that the burden of proof on the issue of substantial compliance should vary, depending on the remedy chosen. If anything, the Nursing Home Reform Act reinforced the importance of the survey and certification process and the Secretary's responsibility to assure that the requirements for the provision of care in SNFs, and the enforcement of such requirements, are adequate to protect the health, safety, welfare, and rights of residents and to promote the effective and efficient use of federal moneys. See, e.g., sections 1819(f) and (g) of the Act. We therefore conclude that the statute places the burden of proof upon an SNF to show that it was in substantial compliance.

For the above reasons, we reject Sanctuary's argument that the APA requires that CMS has the burden to prove that Sanctuary was not in substantial compliance with program requirements.

Sanctuary's general objections do not provide a basis for reversing the ALJ Decision.

In challenging all FFCLs, Sanctuary raised two general objections as threshold issues.

First, Sanctuary argued that the ALJ failed to consider adequately Sanctuary's documentary and testimonial evidence. RR at 7-8. Sanctuary contended, instead, that the ALJ relied upon "selective portions of the facility's records . . . ." Id.

As stated above, we uphold an ALJ decision when it is supported by substantial evidence and free of legal error. Substantial evidence is "relevant evidence" which a reasonable person "might" accept to reach the conclusion drawn. See supra p. 5 of decision. The ALJ is not required to cite all evidence in the record supporting his or her findings, so long as substantial evidence in the record as a whole supports these findings. Id. In any event, contrary to Sanctuary's contention, the ALJ Decision cites to and considers Sanctuary's documentary and testimonial evidence. In fact, as discussed below, the ALJ explained why he found the evidence Sanctuary cites on appeal to be irrelevant or unpersuasive.

Second, Sanctuary contended that the ALJ failed to consider R2's alleged refusal of care. RR at 8 (also at 15). It argued that a facility is required only to provide "the highest practicable care and services" and that "the resident's right to refuse treatment or care" should be "an essential component" in considering whether that standard is met. RR at 8, citing section 1819(b)(4)(A) of the Act.

This argument misstates the statutory standard and, in any event, is unpersuasive. The regulations recognize a resident's right to refuse care (42 C.F.R.  483.10(b)(4)), and the preamble to the regulations recognizes that such a refusal may affect a resident's outcome. See 56 Fed Reg. 48,826, 48,850 (September 26, 1991). However, the regulations also require that, when a facility does not provide care because a resident refuses care, the facility must document its decision in its care planning process. Section 483.20(k)(1)(ii) provides the care plan must describe:

[a]ny services that would otherwise be required under  483.25 but are not provided due to the resident's exercise of rights under  483.10, including the right to refuse treatment under 483.10(b)(4).

The record indicates that R2 was combative, hitting and kicking caretakers. His combativeness was being treated with medication that made him more lethargic but which did not completely overcome his resistance to care. R2's care plan does not, however, address his alleged refusal of care or contain any description of preventive services withheld because of his refusal of care. Plainly, Sanctuary's equating R2's behavior to a refusal of care that would justify not providing necessary preventive services is an after-the-fact attempt to rationalize its failure to provide such services.

Further, if Sanctuary is arguing that the ALJ failed to adequately consider how R2's combativeness and resistance made its provision of care more difficult and less effective, that argument clearly lacks merit. Resistance to care by a demented resident does not justify, by itself, a failure to provide effective care. Rather, Sanctuary must first show that it reasonably tried to address such resistance. For example, as to positioning, Sanctuary asserted that R2 "repositioned himself frequently, preferring to lie on his back and constantly moving himself to lie in that position." RR at 11. However, as the surveyor pointed out, a resident who repositions himself should be "propped on one side or another by pillows or devices" to maintain the position. Tr. at 96. The surveyor found no evidence in the record, and Sanctuary cited no evidence, which would indicate how Sanctuary's staff tried to keep R2 from repositioning himself.

Thus, we conclude that Sanctuary's general objections to the ALJ's analysis are without merit.

The ALJ's FFCLs are supported by substantial evidence in the record as a whole and are legally correct.

Having rejected Sanctuary's general objections, we now turn to its specific challenges.

1. The ALJ did not err in concluding that Sanctuary was not in substantial compliance with 42 C.F.R.  483.25(c).

Sanctuary challenged FFCL 1 in which the ALJ concluded "Petitioner was not in substantial compliance with the program participation requirement found at 42 C.F.R. 483.25(c) (Quality of Care)." Section 483.25(c) sets forth a long-term care facility's obligations regarding quality of care with respect to the prevention and treatment of pressure sores. It states:

Based on the comprehensive assessment of a resident, the facility must ensure that - (1) A resident who enters the facility without pressure sores does not develop pressure sores unless the individual's clinical condition demonstrates that they were unavoidable; and (2) A resident having pressure sores receives necessary treatment and services to promote healing, prevent infection and prevent new sores from developing.

"In meeting this particular requirement, a facility must ensure no resident develops pressure sores unless clinically unavoidable in order for the facility to meet the overall quality of care requirement to provide what is necessary for each resident to 'attain or maintain the highest practicable . . . well-being.'" Koester Pavilion, DAB No. 1750, at 32 (2000), citing 42 C.F.R.  483.25; see also 56 Fed. Reg. 48,826, at 48,850 (Sept, 26, 1991). Under this regulatory standard, "a facility should go beyond merely what seems reasonable to, instead, always furnish what is necessary to prevent new sores unless clinically unavoidable . . . ." Id.

It is undisputed that, at the time R2 was admitted to Sanctuary on December 2, 1998, he was free of pressure sores. CMS Ex. 9, at 2; Tr. 48-49. It is also undisputed that by August 12, 1999, R2 had three pressure sores; by August 31, 1999, R2 had six pressure sores; by September 13, 1999, R2 had 12 pressure sores. The ALJ found that CMS made a prima facie case of noncompliance with section 483.25(c) and that Sanctuary had failed to prove, by a preponderance of the evidence, that it had provided necessary treatment and services to prevent the development of pressure sores and that R2's clinical condition demonstrated that these sores were unavoidable. ALJ Decision at 5.

Sanctuary challenged the ALJ's conclusion with arguments under three headings: (1) R2 "entered the facility with many chronic medical conditions which made him very frail and susceptible to pressure sores" (RR at 9); (2) it "employed aggressive preventive and treatment measures to avoid R2's pressure sores" (RR at 9); and (3) R2's attending physician "credibly, unequivocally and unambiguously confirmed that Resident 2's pressure sores were unavoidable" (RR at 13). As explained below, these arguments are not persuasive.

First, the fact that R2 had chronic medical conditions that made him frail and susceptible to pressure sores does not establish that these sores were clinically unavoidable. (20) Clinically unavoidable means "not just unsurprising given the clinical condition of the resident, but incapable of prevention despite appropriate measures taken in light of the clinical risks." Josephine Sunset House, DAB No. 1908, at 7 (2004). Thus, as the ALJ explained, susceptibility does not mean that pressure sores are unavoidable; susceptibility to pressure sores means that Sanctuary must intervene aggressively to try to prevent pressure sores. ALJ Decision 8.

Second, the ALJ correctly found that, contrary to Sanctuary's argument here, Sanctuary did not intervene aggressively, i.e., did not employ appropriate measures to prevent pressure sores in light of R2's clinical condition. Sanctuary raised a number of different arguments to support its position that it had provided aggressive and appropriate care. Sanctuary devoted great energy to discussing interventions that Sanctuary implemented after the pressure sores developed. RR at 10-11. Sanctuary also asserted that the fact the pressure sores on R2's arms and buttocks healed, even though the sores of his feet did not, demonstrates that it provided appropriate skin care. RR at 11. These arguments are irrelevant to the focus of the SOD and the ALJ Decision, i.e., Sanctuary's failure to prevent pressure sores rather than a failure to adequately treat pressures sores after they had developed.

In support of his finding that Sanctuary did not employ appropriate preventive measures, the ALJ discussed the following evidence.

In a care plan dated June 3, 1999, Sanctuary identified only two factors that put R2 at risk for the development of pressure sores: his inability to ambulate and incontinence. CMS Ex. 15. The resulting care plan required staff to -

1. assess skin condition daily + report weekly;
2. change +/or check [incontinence briefs] Q2 [every two hours];
3. pericare [with] incontinence;
4. turn and reposition Q2 [every two hours];
5. monitor dietary intake.

CMS Ex. 15.

While Sanctuary contended that R2's medical conditions, including peripheral vascular disease, made these pressure sores unavoidable, the care plan does not identify peripheral vascular disease or his other medical conditions as risk factors.

In another care plan document, also dated June 3, 1999, Sanctuary addressed R2's combative behavior CMS Ex. 14. The plan included the use of two psychoactive drugs, Depakote and Zyprexa (Id.), both of which are known to have a sedative effect. Tr. 76. On August 7 and August 9, 1999, the care plan for combativeness was modified to include two additional psychoactive drugs, Trazodone and Risperdal (CMS Ex. 14), both of which may cause drowsiness. CMS Exs. 24, at 2; 25, at 2.

With the August medication change, R2 became lethargic and began to develop skin problems on the lower half of his body. On August 8, 1999, a nurse's note records that R2 was very lethargic. CMS Ex. 12, at 11. On August 9, 1999, R2's family expressed concern to Sanctuary's staff about R2's increased lethargy. Id. On a number of occasions throughout August, the nurses' notes document that R2 experienced periods of lethargy. Id. at 11-13.

On August 8, the same day that a nurse charted R2's increased lethargy, a nurse noted a problem with R2's skin on the lower half of his body. (21) The note stated that his left hip was "very red." Id. On August 12, a nurse documented that R2 had three pressure sores, one on the right buttock (stage II), one on the left ankle and outer foot (stage I), and one on the left heel (unstaged). CMS Ex. 19, at 1. By August 31, 1999, R2 had six pressure sores, including one stage III sore on his left ankle and a large stage II sore on his right foot. Id. Neither Sanctuary nor the physician ordered any changes to R2's care routine until August 30, 1999. By September 13, 1999, R2 had 12 pressure sores on his left hip, feet, heels, and ankles. Id. at 2-3.

The surveyor testified as follows. The standard regime in nursing homes for minimizing the risk of pressure sores on non-ambulatory residents is to turn or reposition them every two hours. Tr. at 35-36. Repositioning a resident redistributes weight and thereby relieves pressure and aids in circulation. Id. at 42-43. A diminished level of consciousness increases the risk of pressure sores because the resident is less mobile, less able to voice needs, and more subject to unrelieved pressure. Id. at 36-37; 52-53.

The ALJ could reasonably infer from this evidence that Sanctuary had not adequately taken into account the effect of R2's decrease in mobility in its care planning, that Sanctuary was not in fact repositioning him as planned, and that Sanctuary did not respond adequately once it knew that pressure sores were developing.

Sanctuary relied on its June 3 care plan to support its position that it did aggressively intervene to prevent pressure sores and observed that the ALJ did not find that it had failed to implement that care plan. This reliance is misplaced. Sanctuary did not offer any reasons as to why it thought the ALJ's failure to specifically address the care plan was significant. RR at 10. To the extent that Sanctuary's argument suggests that compliance with a plan of care insulates a facility from findings of noncompliance with section 483.25, we disagree. The Board has rejected such an argument in Western Care Management Corp., d/b/a Rehab Specialties Inn, DAB No. 1921, at 34-36 (2004) and Alden-Princeton Rehabilitation & Health Care Center, DAB No. 1873, at 6-7 (2003). For the reasons set out in those decisions, we concluded that section 483.25, as a whole, may not reasonably be read as requiring only those services specifically included in a comprehensive assessment and/or plan of care.

In any event, the record does not support a finding that Sanctuary followed the pressure sore plan of care that it adopted on June 3. While the plan called for daily skin assessments, there is no evidence to indicate daily assessments were made. In fact, the physician's orders and the treatment records called for weekly, not daily, assessments. (22) CMS Ex. 13, at 1-3, 5, 7, 9; CMS Ex. 16, at 1-3, 11, 14. Nor is there evidence that even weekly assessments were conducted. Rather, the records for July and August document occasional, but less than weekly, skin assessments. CMS Ex. 16, 2, 3; Tr. at 67-68. Further, the plan called for weekly reports on skin condition but the only reports in the record are dated July 23, August 4, August 12, August 31, September 13, September 21, and November 9. CMS Ex. 19. In addition, while the plan called for repositioning every two hours, the treatment records did not reflect any orders for repositioning (CMS Ex. 16, at 1-16) and the nurses notes for this period document repositioning only very sporadically. CMS Ex. 12. (23)

Moreover, even if Sanctuary did follow that plan of care, the surveyor testified to the following professional standards of care that Sanctuary did not meet when it failed to modify R2's care after he became lethargic and after he began developing red areas and pressure sores. The surveyor testified that the plan of care provided standard protections for nonambulatory residents. The medication changes over the first week of August increased R2's lethargy. Because a diminished level of consciousness increases the risk of pressure sores, the surveyor testified that R2 should have been repositioned with greater frequency after August 8, "possibly every hour, every half hour, depending on the resident's care needs." Tr. at 42; 70, 71. Further, when R2 developed a red area (August 8) or pressure sores (August 12), the surveyor testified that Sanctuary should have notified the physician and modified his treatment regime to address the fact that R2 was experiencing skin breakdown on his lower body. Tr. at 66. In spite of R2's deteriorating situation, the first change in R2's care occurred on August 30 when the doctor ordered Heelbo lifters and August 31 when the doctor ordered hourly turning and elevation of R2's feet. (24) P. Ex. 1, at 67, 69. These measures came three weeks after the medication change that increased R2's susceptibility to pressure sores and two and a half weeks after the identification of three pressure sores. By the time these changes were ordered, R2 had six pressure sores.

Indeed, there is evidence in the record that, even when Sanctuary and the physician recognized that R2's care needed to be modified, the ordered interventions were not provided. The surveyor found no documentation that the Heelbo lifters were ever provided. (25) The order for hourly turning was never entered on the Physician Order sheets (CMS Ex. 13) or the treatment record (CMS Ex. 16), and the surveyor did not find documentation in the nursing notes that R2 was being repositioned hourly or that his feet were elevated. In fact, she found that the notes from September 8 indicated he was being turned every two hours. Tr. at 85; CMS Ex. 12, at 14. When the surveyor observed R2 on October 26, his heels were not elevated as ordered by the doctor. Tr. at 38. Between August 30, when these interventions were ordered, and September 13, R2 developed six more pressure sores, for a total of twelve. No additional interventions were ordered until September 14 when an air mattress was provided. CMS Ex. 16, at 9; CMS Ex. 12, at 15.

Sanctuary did not provide evidence that it was providing all of the interventions planned or ordered, nor did it explain why it did not provide an air mattress sooner. Instead, Sanctuary complained that the surveyor did not talk with R2's "caregivers" including the attending physician, the medical director, R2's psychiatrist, or the wound care consultant who reported on R2 on October 4, 1999 and November 12, 1999. (26) RR at 12. This allegation does not help Sanctuary. The survey process produced ample evidence to support the ALJ's finding that Sanctuary failed to provide necessary care and services. If these caregivers had something material to say about the care and services provided to R2 or about R2's clinical condition, Sanctuary could have produced their testimony. (The letter from the treating physician is discussed below.) Absent such testimony, the inferences the ALJ drew from the evidence in the record are reasonable.

Thus, we reject Sanctuary's general argument that we should find that it did intervene aggressively and appropriately to prevent R2's pressure sores.

Sanctuary's third major argument on appeal of FFCL 1 was that the ALJ erred in rejecting the evidence from R2's treating physician who, according to Sanctuary, "credibly, unequivocally and unambiguously confirmed that Resident 2's pressure sores were unavoidable." RR at 13-14 (citing P. Ex. 4, at 4 (letter) and P. Ex 1, at 77 (chart note)). As the ALJ concluded, this argument and evidence are not persuasive for a number of reasons.

First, even if a facility determines that a resident has a condition that may make pressure sores unavoidable, it still must "take necessary actions in the face of high-risk conditions in order to prevent new sores." Josephine Sunset Home, DAB No. 1908, at 7. The relevant question is: did the facility take all necessary actions to prevent new sores from developing? If so, and the resident develops sores anyway, there would be no deficiency. But where the evidence establishes that the facility fell short of taking all necessary actions, and the resident develops pressure sores, then the facility has failed to meet the requirement. Koester, DAB No. 1750, at 32.

Second, the ALJ offered a reasoned basis for adopting the conclusions of the surveyor over those of the treating physician. The ALJ observed that the surveyor testified under oath at the hearing and was subject to cross-examination while the doctor did not appear and his chart notes and letter were not given under oath. (27) The ALJ noted that the doctor's statements would have been more credible had they been made before it became apparent that R2 was suffering a bad outcome. Instead, the chart note was made November 4, the day after R2's leg was amputated, and the letter was written on November 17, 1999, four days after R2's death and the issuance of the SOD. Finally, the ALJ noted that, while the doctor stated that the pressure sores were unavoidable, he did not provide any explanation for his opinion, nor discuss R2's condition at the outset of the development of the sores, nor identify any interventions provided prior to mid-September, by which time R2 had developed 12 pressure sores.

Not only did Sanctuary fail to cite to evidence to support the doctor's conclusory assertions, but the record contains the following undisputed evidence that indicates that R2's sores were not the unavoidable consequence of peripheral vascular disease. First, Sanctuary did not identify peripheral vascular disease as a risk factor in R2's care plan for skin breakdowns. CMS Ex. 15. Presumably, if R2's peripheral vascular disease was so severe as to make skin breakdowns unavoidable, someone would have noted the presence of peripheral vascular disease in care planning process or on the diagnosis portion of the Physician's Order form (CMS Ex. 13). Second, on Sanctuary's form titled "wound assessment flow sheet," staff staged these wounds as pressure sores rather than identifying them as ulcers resulting from peripheral vascular disease. CMS Ex. 19. The surveyor testified that only pressure sores are staged. Tr. at 92. Third, on September 2, 1999, the physician noted that R2's bilateral pedal pulses were palpable. CMS Ex. 17, at 2. The surveyor testified, and Sanctuary offered no contradictory evidence, that a palpable pedal pulse (the pulse at the top of the foot) means that there was arterial profusing circulation to the feet. Tr. at 89, 106. Fourth, on September 15, 1999 an ultrasound of R2's lower extremities was performed to evaluate his circulation and the results were normal. CMS Ex. 21; CMS Ex. 12, at 15.

Therefore, we conclude that the ALJ properly concluded that Sanctuary had failed to show, by a preponderance of the evidence, that it furnished care and services to ensure that R2 did not develop new pressure sores and that R2's clinical condition demonstrated that these pressure sores were unavoidable.

2. The ALJ did not err in sustaining the $2,800 per instance CMP imposed by CMS.



Sanctuary challenged FFCL 2 in which the ALJ concluded "The amount of the per instance CMP imposed against Sanctuary, $2,800, is reasonable." The ALJ cited to 42 C.F.R.  488.438(f) and to the Board's decision in CarePlex of Silver Spring, DAB No. 1683, at 8 (1999) as the standards guiding his analysis. ALJ Decision at 10. In concluding that the CMP was reasonable, the ALJ noted that the amount of the CMP imposed was at the lower end of the range ($1,000 to $10,000) for deficiencies of this type; that Sanctuary bore some culpability for R2's poor outcome due to its failure to provide appropriate care to prevent pressure sores; and that the deficiency was serious, causing actual harm to R2 (development of multiple pressure sores, and an above-the-knee amputation of his right leg.) Id. (Additionally, Sanctuary had been cited for deficiencies under section 483.25(c) in the prior annual survey. Tr. at 28-29; 56.) The ALJ found that Sanctuary's financial condition was not a basis for reducing the CMP.

On appeal, Sanctuary argued that the ALJ had not properly considered the testimony of the Chief Financial Officer (CFO) of its parent corporation concerning its poor financial condition. RR at 16-17. Section 488.438(f)(2) provides a facility's financial condition is a factor in determining the reasonableness of a CMP. In considering financial condition, the ALJ must determine whether facility has adequate assets to pay the CMP without having to go out of business or compromise resident health and safety. See Windsor Health Care Center, DAB No. 1902, at 18 (2003); Wisteria Care Center, DAB No. 1892, at 12-13 n.6 and n.7 (2003).

The CFO testified as follows. Sanctuary had lost more than $970,000 over the previous four years and more than $207,000 for that year. The projected loss for the year was $300,000. Accounts payable at that time exceeded $533,000 while accounts receivable were $164,000. Sanctuary had no cash for capital improvements. Tr. at 174. Sanctuary had a declining census that was causing fixed costs to rise. Id. at 175. Payment of a CMP might affect Sanctuary's ability to provide services by rendering it unable to pay its creditors, including, possibly, the electric company or the water company. Id. at 176-178. However, Sanctuary's utilities had never been terminated even though the CFO had received utility termination notices in the past. Id. at 177-178. He had never asked CMS if Sanctuary could have a payment plan for a CMP. Id. at 178.

We conclude the ALJ correctly determined that Sanctuary failed to show that payment of a $2,800 CMP would cause Sanctuary to go out of business or compromise resident health and safety. As the ALJ pointed out, on direct examination the CFO did not testify that the payment of the CMP would cause Sanctuary to go out of business or compromise resident health and safety, and, in fact, he did not even address the impact of the CMP on Sanctuary. ALJ Decision at 10. As the ALJ further pointed out, on cross examination the CFO suggested the payment might affect Sanctuary's future utility services but this testimony was speculative and therefore unpersuasive.

In any event, financial condition is only one of the relevant factors, and the CMP here is a relatively low, per instance amount. Thus, we conclude that the ALJ did not err in determining that the amount of the CMP was reasonable.

Conclusion

For the above reasons, we affirm the ALJ Decision in its entirety and sustain the CMP of $2,800 imposed in this case. In doing so, we affirm and adopt all of the FFCLs made by the ALJ.

JUDGE
...TO TOP

Cecilia Sparks Ford

Donald F. Garrett

Judith A. Ballard
Presiding Board Member

FOOTNOTES
...TO TOP

1. CMS was previously named the Health Care Financing Administration (HCFA). 66 Fed. Reg. 35,437 (July 5, 2001).

2. A "deficiency" is defined as a facility's "failure to meet a participation requirement" set forth in the Social Security Act or in 42 C.F.R. Part 483. 42 C.F.R. 488.301.

3. Surveyors gather information during compliance surveys through personal observation, interviews, and medical record review. SOM Appendix P, Task 5, at P-24 through 27. CMS advises surveyors to document information on forms that include "Surveyor Notes Worksheet" (HCFA 807) and "Resident Review Worksheet" (HCFA 805). Id. at P-14, 30. CMS advises surveyors that "[t]his documentation will be used both to make deficiency determinations and to categorize deficiencies for severity and scope." Id. at P-25.

4. The absence of culpability is not a mitigating circumstance in reducing the amount of the CMP. 42 C.F.R. 488.438(f)(4).

5. The ALJ was unable to determine from the record whether or not the remedy of denial of payment for new admissions (DPNA) was imposed. ALJ Decision at 2 n.3. He concluded that, "[g]iven that I find Petitioner to have been out of substantial compliance, however, CMS was authorized to impose the remedies of DPNA or CMP, or both." Sanctuary did not raise any issue as to the DPNA on appeal.

6. Unlike Sanctuary, which did not file a reply brief, Batavia argued in its reply brief that, in placing the burden of proof on Batavia, the ALJ failed to follow the regulatory requirements for hearings imposing a CMP, citing provisions of 42 C.F.R. Part 1005. While we explained that Batavia was incorrect in asserting that Part 1005 applied to hearings related to imposition of CMPs on long-term care facilities pursuant to 42 C.F.R. Part 488, we did address, as implicit in Batavia's argument, the issue of whether CMPs imposed on an SNF under section 1819 of the Act should be subject to the same burden of proof as CMPs under Part 1005. We concluded that the fact that different statutory hearing rights apply to CMPs imposed on SNFs than apply to provider terminations generally is not a basis for applying a different burden of proof on the issue of substantial compliance.

7. A "rule" is defined, in relevant part, as "the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency . . . ." 5 U.S.C. 551(4).

8. The Seventh Circuit declined to address Hillman challenges concerning rulemaking, the APA, and applicability to CMP cases because the evidence was not in equipoise and because the Board therefore had not provided a comprehensive analysis of the issues. Id. As later discussed, the evidence is clearly not in equipoise in this case on the issue of whether Sanctuary was in substantial compliance. However, Sanctuary's Request for Review raises yet again the issues for which the Seventh Circuit requested the Board's analysis, as well as related issues, and the parties have sufficiently addressed those issues in their pleadings. We thus resolve those issues here. Cf. Georgian Court Nursing Center, DAB No. 1866, at 11-12, n.10 (2003); Milpitas Care Center, DAB No. 1864, at 19-20 (2003).

9. We note that, even if either the APA or section 205(a) of the Act required that the burden of proof be set by rule using notice and comment procedures (and we find that they do not), the issue before the ALJs and the Board in an individual case is how to allocate the burden in the absence of a rule so promulgated. Hillman and its progeny reflect an examination of the relevant Medicare statute and regulations, during adjudication, to reach a result consistent with their language and purpose.

10. Sanctuary also argued, more narrowly, that the statute concerning termination of provider agreements implicates the hearing provisions of section 205(b) of the Act (42 U.S.C. 405(b)). RR at 5-6, citing 42 U.S.C. 1395cc(h)(1) (section 1866(h)(1) of the Act). This is true, but irrelevant here. Congress elected to address hearings on CMPs not through section 1866(h)(1) of the Act, but through section 1819(h)(2)(B)(ii) (42 U.S.C. 1395i-3(h)(2)(B)(ii)). That section cross-references certain subsections of section 1128A of the Act (42 U.S.C.  1320a-7a), which apply to CMPs "in the same manner as such provisions apply to a penalty or proceeding under section 1320a-7a(a) . . . ." 42 U.S.C. 1395i-3(h)(2)(B)(ii). Those subsections in turn set forth procedures for a hearing when a CMP is the chosen remedy, including the right of the affected party "to be represented by counsel, to present witnesses, and to cross-examine witnesses against the person." 42 U.S.C. 1320a-7a(c)(2). Neither section 1819 nor section 1128A references section 205 or specifically addresses burden of proof.

11. Sanctuary cited Pulido v. Heckler, 568 F. Supp. 627 (D. Colo. 1983) and Salling v. Bowen , 641 F. Supp. 1046 (W.D. Va. 1986) as examples of cases requiring an agency to promulgate regulations pursuant to section 205(a) of the Act. RR at 6. The Pulido court required the Secretary to promulgate regulations governing payment of certain travel expenses of benefit claimants. The Salling court struck down a Social Security pilot program creating agency advocates for disability hearings, as it had not been promulgated by regulation after the pilot period ended. Both cases are fact intensive, involve different regulatory structures, and involve Social Security disability benefits to individuals, not issues about provider participation in Medicare. They are inapposite to the instant case.

12. Sanctuary uses the terms "burden of proof" and "burden of persuasion" interchangeably throughout its Request for Review. As discussed in Hillman, the term "burden of proof" can mean either burden of production (going forward) or ultimate burden of persuasion. The term "burden of proof" in the APA refers to the burden of persuasion. Director, OWCP v. Greenwich Collieries, 512 U.S. 267, 276 (1994). We use the term burden of proof here to mean burden of persuasion.

13. This allocation is consistent with the Court's recognition that in Social Security disability cases, the claimant carries the "continuing burden of showing" satisfaction of statutory requirements. Mathews v. Eldrige, 424 U.S. 319, 336 (1976).

14. Section 1866(a) sets out requirements for provider agreements. Having a provider agreement is not enough to qualify for program participation, however. The lead-in language to section 1866(a)(1) states: "Any provider of services . . . shall be qualified to participate . . . and shall be eligible for payments . . . if it files with the Secretary an agreement . . . ." (Emphasis added.) The definition of "provider of services" for purposes of Medicare includes a "skilled nursing facility." Section 1861(u) of the Act. Section 1861(j) of the Act defines a "skilled nursing facility" by cross-reference to the term in section 1819(a) of the Act. The definition in that section in turn provides that, among other things, to qualify as a skilled nursing facility, an institution (or distinct part of an institution) must meet the requirements of section 1819, relating to provision of services, residents' rights, administration, and other matters. The survey and certification process is the means for determining whether these requirements are met. Because some nursing facilities participate in both Medicare and the Medicaid program (providing for grants to States to provide medical assistance to needy individuals), section 1819(g)(1) of the Act now sets out the relative federal and state responsibilities in the survey and certification process, pursuant to an agreement under section 1864 of the Act. Under section 1819(g)(2), each skilled nursing facility shall be subject to a "standard" survey, to be conducted without any prior notice to the facility, initially and not later than 15 months after the date of the previous standard survey. A facility may also be subject to "extended" or "partial extended surveys" or to complaint investigations.

15. Specifically, section 1819(g)(2) of the Act provides:

(C) CONTINUATION OF PAYMENTS PENDING REMEDIATION.-- The Secretary may continue payments, over a period of not longer than 6 months after the effective date of the findings, under this title with respect to a skilled nursing facility not in compliance with a requirement of subsection (b), (c), or (d), if-
(i) the State survey agency finds that it is more appropriate to take alternative action to assure compliance of the facility with the requirements than to terminate the certification of the facility,
(ii) the State has submitted a plan and timetable for corrective action to the Secretary for approval and the Secretary approves the plan of corrective action, and
(iii) the facility agrees to repay to the Federal Government payments received under this subparagraph if the corrective action is not taken in accordance with the approved plan and timetable. . . .

(Emphasis added.)

16. A CMP is one of several alternative remedies available to CMS for a facility's noncompliance with program requirements. A CMP does not possess the punitive characteristics akin to a "fine or sanction" imposed by other statutes or regulations. As we have noted, the purpose of a CMP "is not to punish individual violations but to pursue attainment and maintenance of a state of substantial compliance with federal requirements." Regency Gardens Nursing Center, DAB No. 1858, at 11 (2002).

17. Both Merritt and Bosma predate the Supreme Court decision in Greenwich Collieries and do not clearly reflect the Court's distinctions between burdens of production, persuasion, and proof.

18. Indeed, the Hillman court noted that the APA arguably did not apply at all, given the allocation of the burden of proof implicit in the Medicare statutes. Id. at 27, n.9.

19. The Supreme Court has endorsed a review of an agency's "early decisions, the purpose and legislative history of [the governing statute], the Board's subsequent and consistent construction of the Act . . . , and the decisions of the courts of appeals" in affirming an agency's interpretation of its governing statute. NLRB v. Bell Aerospace, 416 U.S. 267, 289 (1974). The analytical approach taken in Hillman reflects these standards.

20. R2's diagnoses listed on the Physicians Order form for May through November 1999 were dementia, congestive heart failure, arteriosclerotic heart disease, atrial fibrillation, vertigo, vitamin B12 deficiency, and Parkinsonism. CMS Ex. 13. After R2's lower leg had to be amputated on November 3, 1999 because of infected pressure sores, the treating physician stated in the progress notes that R2 had a "history of PVD [peripheral vascular disease]." P. Ex. 1, at 77. In a letter written after R2 died, the physician stated that R2 had "arterial insufficiency of both feet." P. Ex. 4, at 4.

21. Sanctuary complained that the ALJ found that R2's pressure sores were first documented in mid-August even though R2 actually began developing sores in late July 1999. RR at 10 citing Tr. at 90, CMS Ex. 19, at 1. The July skin breakdowns were limited to R2's right arm. CMS Ex. 19, at 1. The skin breakdowns at issue in this case are lower body pressure sores that, as the ALJ noted, were first charted shortly after R2's sedatives were increased.

22. The surveyor also testified that she did not see the June 3 plan of care on November 3 when she conducted the survey, and the director of nursing told her it was unavailable. Tr. at 79. The fact that the plan of care was unavailable to the surveyor indicates that it was not readily available to staff and makes it more likely that the staff was relying on the doctor's orders (CMS Ex. 13) and the treatment records (CMS Ex. 16) which called for weekly skin inspections rather than daily skin inspections.

23. The surveyor testified that good nursing practice calls for documenting repositioning on the treatment sheet or the nurses notes. Tr. at 85. The surveyor could not recall seeing a separate chart in the room for documenting repositioning (Tr. at 95), and Sanctuary produced no such chart for the hearing.

24. Sanctuary points to the frequency of the physician's visits to R2, stating that the physician saw him nine separate times between July 8 and October 14. RR at 12. However, the Physician's Progress Notes do not reflect that the physician was even aware that R2 was developing pressure sores on his lower body until the September 2 entry. The entries August 14, August 19 and August 26 say nothing about pressure sores. CMS Ex. 17, at 1. The August 14 entry, two days after Sanctuary documented three pressure sores, expressly says "no new problems." Id. Therefore, the fact that the doctor was visiting frequently does not, in itself, demonstrate that R2 was receiving appropriate preventive care, nor that the physician had been notified about the pressure sores. See 42 C.F.R.  483.10(b)(11).

25. Sanctuary asserted that the fact that Heelbo lifters were not in use when the surveyor saw R2 on October 26 is irrelevant because R2 had a pressure relief mattress. RR at 12. However, no air mattress was provided until September 14. Assuming, only for purposes of argument, that Heelbo lifters were not needed after September 14, a question remains as to why they were not provided between August 30 and September 14 when R2 developed six new pressure sores, at least five of which were on his feet or ankles. CMS Ex. 19, at 2-3.

26. Faulting the surveyor for not talking with the resident is particularly unwarranted. First, R2 suffered from dementia and was sedated and "unresponsive" on October 26 (Tr. at 53), so there is no reason to believe he could have provided reliable information to the surveyor. Second, when the surveyor returned to Sanctuary on November 3 to conduct a survey related to R2's care, R2 was in the hospital having his right leg amputated because of the infected pressure sores. CMS Ex. 22, at 3.

Further, we note that, in the space for recording "Current (new) Medical Problems" on the treating psychiatrist's "Psychiatric Consultation Follow-up Visit" forms for August, September, and October, the psychiatrist wrote "none reported." P. Ex. 1, at 151-153. Therefore, it is not apparent that the psychiatrist was aware of the development of pressure sores.

27. The ALJ determined that an in-person hearing in this case was necessary because "the ultimate issue turned on my weighing the probative value of the opinions of [the doctor] and the surveyor]." ALJ Decision at 9, n.5. The ALJ twice stressed to Sanctuary the importance of having the doctor testify at the hearing. Id.

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES