SUBJECT: Aase Haugen Homes, Inc.,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

By letter dated April 5, 2005, Aase Haugen Homes, Inc. (Aase Haugen) appealed the January 31, 2005, decision of Administrative Law Judge (ALJ) Carolyn Cozad Hughes upholding the imposition by the Centers for Medicare & Medicaid Services (CMS) of a per instance civil money penalty (CMP) of $2,000. Aase Haugen Homes, Inc., DAB CR1273 (2005) (ALJ Decision). The CMP was imposed for "past noncompliance" with the regulatory requirement that each resident receive adequate supervision and assistance devices to prevent accidents. Past noncompliance is "noncompliance with participation requirements between standard surveys." North Ridge Care Center, DAB No. 1857, at 13 (2002) (quoting 59 Fed. Reg. 56,116, 56,199 (Nov. 10, 1994)). The past noncompliance cited here involved two separate incidents in which residents eloped from the facility and were found by neighbors who called the facility to report the residents' presence outside. CMS cited the past noncompliance at the level of immediate jeopardy.

[Page 2] For the reasons explained below, we uphold the ALJ's conclusions that CMS had a basis for imposing a CMP and that the per instance CMP imposed was reasonable in amount.

Background

The following background information is drawn from the ALJ Decision and the record before the ALJ and summarized here for the convenience of the reader, but should not be treated as new findings. ⁽¹⁾ Aase Haugen is a long-term care facility in Iowa certified to participate in the Medicare and Medicaid programs. ALJ Decision at 1. An annual survey was conducted by the Iowa Department of Inspections and Appeals (State agency) at Aase Haugen from April 16 through April 20, 2001 (April survey). The surveyors found that Aase Haugen was not in substantial compliance with numerous participation requirements. ALJ Decision at 1-3; Petitioner (P.) Ex. 1. In addition, the surveyors determined at the April survey that two incidents which had occurred since the prior annual survey demonstrated that Aase Haugen had failed to ensure that "[e]ach resident receives adequate supervision and assistance devices to prevent accidents," as required by 42 C.F.R. § 483.25(h)(2). ALJ Decision at 2-3; P. Ex. 1. Both incidents involved residents who had been identified as having a propensity for wandering and who had been provided with bracelets designed to trigger an alarm system if they exited the facility. ALJ Decision at 3-5. In the first incident, on August 1, 2000, while the facility was on generator power after a storm, a neighbor reported seeing Resident 22 (R22) walking by a dike about 180 feet from the facility. Id. at 5-6. No alarm had sounded. Id. In the second incident, on October 1, 2000, a neighbor called to report finding Resident 15 (R15) across the street from the facility outside the neighbor's apartment. Id. at 6. The front door alarm did sound ten minutes before the call, but was apparently turned off. Id. Staff members had checked the alarm system and surveillance monitor but had not investigated further or determined that R15 was missing. Id.

[Page 3] Applicable legal authority

The Act sets forth requirements for participation by long-term care facilities in the Medicare and Medicaid programs, and authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations implementing the statutory provisions. Act §§ 1819 and 1919. The Secretary's regulations governing nursing facility participation in the Medicare program are found at 42 C.F.R. Part 483. Regulations governing survey, certification, and enforcement procedures, regulations governing provider agreements, and regulations governing appeals procedures are found at Parts 488, 489, and 498 respectively. Under these provisions, facilities periodically undergo surveys to determine whether they comply with applicable statutory and regulatory requirements and must maintain substantial compliance with program requirements to avoid possible imposition of remedies. "Substantial compliance" means that a facility's deficiencies may pose no greater risk to resident health and safety than "the potential for causing minimal harm." 42 C.F.R. § 488.301. "Noncompliance," in turn, is defined as "any deficiency that causes a facility to not be in substantial compliance." 42 C.F.R. § 488.301.

If a facility is not in substantial compliance with program requirements, CMS has the authority to terminate the facility and/or to impose alternative enforcement remedies. 42 C.F.R. § 488.406. Among the remedies CMS may impose is a CMP for the number of days that the facility is not in substantial compliance with one or more program requirements or for each instance that the facility is not in substantial compliance. 42 C.F.R. § 488.430(a). CMS may elect to impose a CMP per day, in which case the applicable range is $3,050 to $10,000 per day for deficiencies constituting immediate jeopardy or $50 to $3,000 per day where the noncompliance does not constitute immediate jeopardy. 42 C.F.R. § 488.438. The regulations also authorize CMS to impose a per instance CMP in the single range of $1,000 to $10,000. Since a per instance CMP has only one range, the range is not affected by the existence of immediate jeopardy. 42 C.F.R. §§ 488.408, 488.438.

A facility has a right to appeal a "certification of noncompliance leading to an enforcement remedy." 42 C.F.R. § 488.408(g)(1); see also 42 C.F.R. §§ 488.330(e) and 498.3. However, the choice of remedies by CMS or the factors CMS considered in selecting a remedy are not subject to review. 42 C.F.R. § 488.408(g)(2). A facility may challenge the scope and severity level of noncompliance found by CMS only if a successful challenge would affect either the range of the CMP that CMS could [Page 4] collect or a finding of substandard quality of care that leads to the loss of approval for a facility's nurse aide training program. 42 C.F.R. §§ 498.3(b)(14), (b)(16), and (d)(10)(i). CMS's determination as to the level of noncompliance, including a finding of immediate jeopardy, "must be upheld unless it is clearly erroneous." 42 C.F.R. § 498.60(c)(2); Woodstock Care Center, DAB No. 1726, at 9, 38 (2000), aff'd, Woodstock Care Center v. U.S. Dept. of Health and Human Services, 363 F.3d 583 (6th Cir. 2003).

Standard of Review

Our standard of review on a disputed finding of fact is whether the ALJ decision is supported by substantial evidence on the record as a whole. Our standard of review on a disputed conclusion of law is whether the ALJ decision is erroneous. Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs, www.hhs.gov/dab/guidelines/prov.html; see also Lake Cook Terrace Nursing Center, DAB No. 1745 (2000); 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). Thus, we review the findings to determine, among other things, whether conflicting evidence in the record has been addressed by the ALJ and whether the inferences drawn by the ALJ are reasonable. Barry D. Garfinkel, M.D., DAB No. 1572 (1996).

Issues on appeal

Aase Haugen identifies five areas of disagreement with the ALJ Decision. Aase Haugen Br. at 6-7.

• Did the ALJ properly frame the issue before her as whether Aase Haugen was in substantial compliance with 42 C.F.R. § 483.25(h)(2) on each of the dates when residents eloped from the facility (August 1, 2000, and October 1, 2000)?

• [Page 5] Did the ALJ erroneously apply a strict liability standard in evaluating Aase Haugen's compliance with 42 C.F.R. § 483.25(h)(2)?
• Are the ALJ's findings of fact about the residents who eloped and the facility's actions in response supported by substantial evidence?
• Having found legal authority for CMS to impose a CMP, should the ALJ have extended her review to include some other issues, including whether CMS's decision to impose a CMP complied with a provision of the State Operations Manual (SOM) addressing when surveyors should cite facilities for past noncompliance?
• Should the other deficiencies cited during the April 2001 survey, which the ALJ declined to review, be dismissed?

Below, we first address Aase Haugen's assertions related to the merits of the ALJ's conclusion that the facility was not in substantial compliance with the participation requirements. We then discuss the additional contentions on appeal about issues not addressed by the ALJ.

1. The ALJ properly evaluated Aase Hagen's compliance as of the dates of the elopement incidents.

Aase Haugen argues that the parties identified, as an issue before the ALJ, whether "at the time of the annual survey in April 2001" the facility was in substantial compliance with Tag F-698(42 C.F.R. 483.25(h)). Aase Haugen Br. at 8. While acknowledging that this formulation does "not specify the time period for examination of whether the facility was in substantial compliance," Aase Haugen nevertheless argues that the ALJ should have focused only on its compliance as of the date of the April 2001 survey. Aase Haugen Br. at 7-8. The ALJ, on the contrary, determined that evaluating whether CMS was authorized to impose the CMP here involved review of the facility's compliance as of the dates the elopement incidents occurred. ALJ Decision at 3.

Other F-tags addressed by the parties, which we discuss later, do involve the facility's compliance during the survey. Tag F-698, however, relates only to instances of past noncompliance resolved prior to the survey. It would be meaningless to evaluate past noncompliance (which by definition was corrected by the time of the survey) only by looking at the state of compliance with the relevant requirement at the time of the survey.

[Page 6] Many Board decisions have recognized that annual surveys include measures such as record reviews and interviews with residents and staff aimed at examining conditions at a facility at a time prior to the arrival of the surveyors, in addition to the observations made during the visits themselves. See, e.g., The Windsor House, DAB No. 1942 (2004); Mountain View Manor, DAB No. 1913 (2004). Indeed, limiting review of compliance by a facility to the very few days during which surveyors could be present would have been a very odd choice by Congress and the agency charged with protecting the well-being of residents served by Medicare. Not surprisingly, then, both the Act and the regulations expressly provide that a CMP may be imposed for noncompliance found to have occurred at a time before the current survey, even where the facility is in substantial compliance at the time of the survey.

The Act provides as follows:

If a State finds that a skilled nursing facility meets the requirements of subsections (b), (c), and (d), but, as of a previous period, did not meet such requirements, the State may recommend a civil money penalty . . . for the days in which it finds that the facility was not in compliance with such requirements.

Section 1819(h)(1) of the Act. ⁽²⁾ Consistent with this statutory mandate, the implementing regulations provide that CMS may impose a CMP "for the number of days of past noncompliance since the last standard survey, including the number of days of immediate jeopardy." 42 C.F.R. § 488.430(b); accord, North Ridge Care Center.

These statutory and regulatory provisions on their face support the ALJ's considering whether the facility was in substantial compliance on the days on which CMS alleged that the circumstances of and facility response to the two elopements demonstrated noncompliance. In its reply brief, Aase Haugen admitted as much by acknowledging that "an ALJ may consider incidents that occur between surveys." Aase Haugen Reply Br. at 2.

We conclude that the ALJ did not err in evaluating whether Aase Haugen was in substantial compliance on the days on which CMS [Page 7] alleged that noncompliance occurred rather than as of the time of the April survey itself.

2. The ALJ did not err in the standard by which she evaluated Aase Haugen's compliance with the regulatory requirement.

Aase Haugen contends that the ALJ improperly applied a strict liability standard in assessing its compliance with the regulation requiring that the facility provide "adequate supervision and assistance devices" to prevent accidents. Aase Haugen Br. at 25; 42 C.F.R. § 483.25(h)(2). Much of Aase Haugen's discussion of this contention amounts to disputing the factual findings and the inferences which the ALJ drew from them. We discuss those disputes in the next section. In this section, we address the broad assertion that the standard by which the ALJ weighed what would constitute noncompliance was somehow too strict.

The Board has articulated in many prior decisions the correct standard to be used in applying 42 C.F.R. § 483.25(h)(2). See, e.g., Residence at Kensington Place, DAB No. 1963 (2005); Northeastern Ohio Alzheimer's Research Center, DAB No. 1935 (2004). The Board has held that section 483.25(h)(2) does not make facilities "guarantors of [the] favorable outcomes" sought by the regulation. Woodstock Care Center, DAB No. 1726, at 25 (2000), aff'd, Woodstock Care Center v. U.S. Dept of Health and Human Services, 363 F.3d 583 (6^th Cir 2003). ⁽³⁾ Instead, the Board has found that the regulation obligates the facility to provide supervision and assistance devices adequate to meet the residents' assessed needs and to mitigate foreseeable risks of harm from accidents. Id.; see also Tri-County Extended Care Center, DAB No. 1936 (2004); Odd Fellow and Rebekah Health Care Facility, DAB No. 1839 (2002).

The difficulty in disentangling the two threads in Aase Haugen's argument is illustrated by the fact that Aase Haugen does not point to a single instance in which the ALJ misstated the governing standard. Instead, Aase Haugen argues that finding noncompliance under the specific facts as Aase Haugen couches them amounted to an unspoken strict liability standard. For example, Aase Haugen argues that the ALJ "inappropriately applied a strict liability standard by expecting that the Facility should have known that the contractor it hired to install the WatchMate alarm system into the emergency generator failed to wire all of the door [Page 8] alarms to the generator." Aase Haugen Br. at 27. Or again, Aase Haugen argues that the ALJ "inappropriately applied a strict liability standard to R15's elopement by expecting that R15 should have been immediately discovered by the Facility staff." Id. at 28. In each case, Aase Haugen argues that the ALJ should have instead found that the facility had justifiable explanations for the elopements under a totality of the circumstances test. Id. at 29.

In both of its assertions quoted above, Aase Haugen sets up a straw man by mischaracterizing the ALJ's bases for determining that the facility indeed "fell short of taking reasonable steps to mitigate foreseeable risks of harm" to its residents under the circumstances involved in the each of the two elopements. ALJ Decision at 6. In the case of R22, the ALJ did not claim that Aase Haugen should have known about the wiring flaws that Aase Haugen attributes to the contractor. Aase Haugen, however, could reasonably have been expected to test the alarm system while the emergency generator was on, since the facility was clearly conscious that power outages were possible. Yet, Aase Haugen did not perform such testing, even after R22 eloped during emergency generator service without triggering an alarm, until the surveyors arrived and pressed to find the reason why the alarm failed to sound. In the case of R15, the ALJ did not rely merely on a failure by the facility staff to discover the elopement immediately. Instead, the ALJ relied on the facts that staff shut off the alarm and did not investigate whether a resident had left the building beyond looking at a security monitor. ALJ Decision at 6. Moreover, merely turning off the sounding alarm and looking at the monitor were not reasonable steps in light of the purpose of the alarms and the known risk of elopement they addressed.

We conclude that Aase Haugen's assertion that the ALJ applied a strict liability standard is without merit.

3. The ALJ's findings of fact about the residents who eloped and the facility's actions in response are supported by substantial evidence.

Aase Haugen disputes several details relating to the two elopements. Aase Haugen Br. at 30-40. The points raised by Aase Haugen do not directly challenge the evidence supporting the ALJ's findings. Instead, Aase Haugen mainly argues that the ALJ should have made additional findings or should have viewed the facts differently.

Aase Haugen asserts that it is not asking the Board to "reweigh the evidence" or "substitute its judgment" for that of the ALJ, [Page 9] but rather to "correct clearly prejudicial omissions of facts." Aase Haugen Br. at 34. To be prejudicial, however, an omission of a factual finding by an ALJ would have to be material. Aase Haugen implicitly recognizes this standard and cites no authority requiring an ALJ to make every factual finding which could possibly be made on the record evidence. ⁽⁴⁾ An ALJ must, of course, make those findings which are indeed necessary to resolve the material issues in a case and may not simply ignore without explanation evidence concerning facts which tend to undercut findings on which the ALJ relies. See, e.g., Cotter v. Harris, 642 F.2d 700, 705 (3d Cir. 1981); Innsbruck HealthCare Center, DAB No. 1948, at 5-7 (2004); Regency Gardens Nursing Center, DAB No. 1858, at 12 (2002).

The additional facts which Aase Haugen wishes the ALJ to have taken into account do not, however, undercut the bases for the ALJ's resolution of the relevant issues. For example, Aase Haugen points to stipulations made by the parties to the effect that R22 made many other attempts to leave the facility, apart from the elopement involved here, which were not successful, and that the facility responded to those attempts with medication, in addition to the use of the wrist alarm system noted by the ALJ. Aase Haugen Br. at 30.

These added details do not alter the material facts that this resident was able to exit the facility without triggering an alarm, and that his absence went undetected and would have remained undetected but for a vigilant neighbor. Neither do they alter the significant fact that Aase Haugen did not address the wiring flaw that caused this event until the survey months later. We note that Aase Haugen has suggested no reason why it could not have done the testing performed during the survey immediately after the elopement. Had it done so, Aase Haugen would have discovered the failure to wire some doors into the generator at an earlier date. Aase Hagen's residents who were elopement risks remained at risk until Aase Hagen investigated the reason for the alarm failure and corrected it.

Aase Haugen also disagrees with the ALJ's statement that the facility "recognize[d] that, given the opportunity," R22 "would attempt an elopement." ALJ Decision at 5. Aase Haugen states [Page 10] that it would be "much more accurate to say that the resident may be predisposed to attempt an elopement," since the recognized risk and repeated attempts did not suffice to demonstrate that R22 would elope "at all times". Aase Haugen Br. at 30-31. This quibble over semantics does nothing to dilute the undisputed fact that the facility identified R22 as a high risk for elopement and assigned R22 a wrist alarm for that reason. Given that the facility identified this high risk and elected the alarm system as one means to mitigate it, the facility had a duty to ensure that the system was functional in the aftermath of a power failure. Plainly, the facility foresaw possible power failures, since it had an emergency generator. That generator was obviously of no use unless it would provide power to essential systems, including the alarmed doors, if called into service during an emergency.

Similarly, Aase Haugen's insistence that the ALJ failed to "take into account" various interventions the facility made to monitor the resident before his elopement does not address the flaws in the alarm system's preparation for power failure or the facility's inadequate action after the elopement occurred to ascertain the cause of the alarm system failure. Aase Haugen Br. at 32-33. ⁽⁵⁾

As to the last point, Aase Haugen admits that the ALJ correctly found that the maintenance man "rearmed the system per his normal protocol" and acknowledges that it "was not until later that the Facility discovered the problem with the emergency generator." Aase Haugen Br. at 34, quoting ALJ Decision at 6. Aase Haugen argues, however, that the ALJ "fails to include that the maintenance man was in the building and was contacted immediately." Aase Haugen Br. at 34. Again, the added detail is inapposite. The crux of the problem is that the system was merely rearmed without anyone determining how it had been defeated.

Turning to the facts concerning R15's elopement, Aase Haugen argues that the ALJ failed to "take into account" the immediate actions of three staff members after the alarm sounded. Aase Haugen Br. at 36. Aase Haugen asserts that one staff member (whom it refers to as Staff A) immediately turned on a surveillance camera at the front door but did not see anybody outside. Id. Another staff member was "physically in the area" of the door while Staff A was "electronically present." Id. at 37. The ALJ [Page 11] described the activities of both these staff members in her decision. ALJ Decision at 6. The ALJ found that the second staff member (referred to as Staff P) did not go to the front door to check if a resident left the building even though she determined from a detection unit that the alarm was triggered at the front door. Id. The ALJ noted that Aase Haugen never succeeded in determining who reset the door alarm (nor in showing that the individual took any other action in response to the alarm besides turning it off). Id. Aase Haugen nevertheless refers to this unknown person as further evidence of its immediate response to the alarm. Aase Haugen Br. at 37. Aase Haugen cites nothing that would require us to overturn the ALJ's finding about the activities of the staff members. ⁽⁶⁾

Aase Haugen's real quarrel is that it disagrees with the ALJ's characterization of its staff's actions as falling "short of taking reasonable steps." ALJ Decision at 6. Aase Haugen contends that the actions were not unreasonable since looking at the monitor was the quickest way to see what was happening. Aase Haugen Br. at 37. The point, however, is not that it was unreasonable to check the monitor but that the facility staff did not take any other measures to determine if a resident had exited. It is not enough that the action the facility took was not an unreasonable one if it omitted addressing aspects of the situation that a reasonable person faced with the situation would have known needed to be addressed. That is what the ALJ found here.

Aase Haugen asserts that false alarms are not uncommon, but does not establish that it was therefore reasonable to simply reset the alarm without determining that a false alarm was the cause in a given instance. Aase Haugen Br. at 37. Aase Haugen also disagrees with the ALJ's critique of the absence of any clear assignment of responsibility to a staff member to investigate a "possible (if not likely) elopement." Aase Haugen Br. at 37, quoting ALJ Decision at 6. Aase Haugen argues that the staff did [Page 12] not have reason to know of a possible elopement without the benefit of hindsight and that there was no evidence that R15 "had been previously agitated that night, or even was up." Aase Haugen Br. at 37. Aase Haugen again misses the point. The facility had an alarm system because it housed residents at high risk of elopement. It was not necessary for the staff to have observed one particular resident up or agitated for the staff to have understood that an alarm going off implied a possible elopement. While other events could cause the alarm to go off, the ALJ reasonably concluded that the staff should have investigated the cause beyond merely checking a monitor and resetting the alarm.

Finally, Aase Haugen argues that the ALJ failed to "take into account" the stipulations about the facility's interventions after R15's elopement. Aase Haugen Br. at 38. Specifically, Aase Haugen argues that the staff rapidly retrieved the resident (after being called by a neighbor), determined that the resident sustained no injury, and put into place new policies. Id. The new policies required nursing staff to cover for each others' breaks when monitoring wandering residents and instructed staff to respond to all alarms immediately and "not to do another thing until they were sure" a resident triggering the alarm has been accounted for. Id.

The ALJ did note that neither resident was hurt and that each was returned to the facility in a relatively short time. The ALJ concluded, however, that this was due largely to the "vigilance of facility neighbors." ALJ Decision at 6. In any event, substantial compliance is not established by the mere absence of harm because even a potential for more than minimal harm suffices to support a finding of noncompliance. Id. As for the new policies implemented after the elopement, they establish, if anything, that there were reasonable measures that could have been implemented earlier and would have greatly reduced the likelihood of staff responding inadequately to an alarm as occurred in the situation involving R15.

In short, Aase Haugen failed to demonstrate that the ALJ lacked substantial evidence for any finding which she made and equally failed to show that any of the additional findings of fact which Aase Haugen proposed were material to showing that the facility was in substantial compliance at the relevant times.

4. The State Operations Manual guidance on citing past noncompliance is not a bar to imposing a CMP here.

Aase Haugen contends that the ALJ's review should have been constrained by the following provision of the SOM:

[Page 13] Past noncompliance. HCFA ⁽⁷⁾ or the State should consider imposing a civil money penalty as a remedy for serious past noncompliance which would include immediate jeopardy that is corrected at the time of the current survey. However, if the facility has been out of compliance with a regulatory requirement between two surveys which found it in compliance, the past noncompliance should not be cited by the survey team if a quality assurance program is in place and has corrected the noncompliance. An exception to this policy should be made in cases of egregious past noncompliance, such as when the noncompliance has caused the death of a resident.

SOM, § 7510A (1999). ⁽⁸⁾

Aase Haugen argues that CMS is precluded by this provision from imposing a CMP for any past noncompliance which was corrected by the time of the current survey, absent a finding that the noncompliance was "egregious" in nature. Since the ALJ did not make an explicit finding of egregiousness, according to Aase Haugen, she should not have upheld the CMP. ⁽⁹⁾

[Page 14] Aase Haugen asserts that the ALJ should have narrowly tracked the statement of issues and stipulations developed by the parties. The statement of issues and stipulations were, however, submitted by the parties in anticipation of a summary judgment process which was abandoned. See Letter to ALJ from counsel to Aase Hagen, dated November 18, 2002 (stating parties' agreement for the ALJ to decide the case on the record without an in-person hearing rather than on summary judgment motions). Aase Haugen argues that the parties had identified an issue arising under section 7510A of the SOM concerning whether "the facts underlying the alleged deficiency at F-698 are egregious, such that there is a sufficient legal basis to impose a deficiency for a past allegedly deficient practice . . . ." Aase Haugen Br. at 8. ⁽¹⁰⁾ According to Aase Haugen, the ALJ was obliged to make a preliminary finding that the deficiency was "egregious" as a prerequisite to upholding the CMP. ⁽¹¹⁾

[Page 15] There are several problems with Aase Haugen's position, however. A key point in considering this issue is that this particular SOM provision does not constitute an interpretation by CMS of the meaning of its governing statute or of its regulations. Rather, as CMS argues, this provision was issued as guidance to state surveyors in focusing limited enforcement resources and setting enforcement priorities. Both the statute and the regulations unambiguously permit imposition of a CMP for past noncompliance which occurred after the last standard survey. Moreover, the very cases cited by Aase Haugen make clear this distinction between interpreting the substantive rules in a regulation and setting out enforcement guidance for the conduct of surveys. See, e.g., Beverly Health & Rehabilitation Srvcs., Inc. v. Tommy Thompson, 223 F. Supp. 2d. 73, 99, 100 (D.D.C. 2002), quoting American Hosp. Ass'n v. Bowen, 834 F.2d 1037, at 1057 n.4, and 1052 (D.C. Cir. 1987). As the Beverly court put it in regard to the survey protocol, this provision is in the nature of "a compliance handbook issued to federal and state officials charged with conducting the surveys in compliance with OBRA '87's requirements." See Cmty. Nutrition Institute v. Young, 818 F.2d 943, 949 (D.C. Cir. 1987) (recognizing that agencies may develop written guidelines without the risk of 'having a court transmogrify those guidelines into binding norms'). 223 F. Supp. 2d. at 101 (additional citations and footnote omitted).

Thus, regardless of the fact that the parties at one point identified an issue arising under the SOM, the ALJ properly concluded that the SOM provision at issue does not bar CMS from enforcing substantive regulatory and statutory requirements. ALJ Decision at 8.

Moreover, Aase Haugen failed to show that it met the factual predicates for the provision at issue to apply. Therefore, as explained below, even were we to find that the ALJ should have addressed the SOM provision, this would not matter since addressing the provision would not have changed the outcome.

On its face, the SOM provision advises state surveyors not to issue a citation for past noncompliance that has been corrected by the time of a survey "if a quality assurance program is in place and has corrected the noncompliance." SOM, § 7510A. Aase Haugen [Page 16] asserts that its quality assurance (QA) program corrected the deficient conditions, but cites no record evidence in support of this assertion. Aase Haugen Br. at 9; Aase Haugen Reply Br. at 18 (citing only the absence of a citation for QA problems at the April 2001 survey). ⁽¹²⁾ The facility's response to the survey findings did not even reference any meeting or activity by the QA committee in response to the two elopements. P. Ex. 1, at 18-25. While there is some evidence that the facility put some additional measures in place after the elopements (such as instructions to staff to use a buddy system to cover supervision of residents known to wander), it is undisputed that the failure to wire some of the exit doors into the emergency generator system was not even discovered until the survey, months later. Thus, there would have been no basis for the ALJ to conclude that Aase Haugen had a QA program in place which had corrected the noncompliance. ⁽¹³⁾

Furthermore, the SOM provision advises not issuing a citation only when "the facility has been out of compliance with a regulatory requirement between two surveys which found it in compliance." SOM, § 7510A (emphasis added). Aase Haugen treats this requirement as if it need only show compliance with the single regulatory provision with which it failed to comply during the inter-survey period, but cites no authority for this [Page 17] interpretation. ⁽¹⁴⁾ In fact, it is plain on the record that the April 2001 survey found Aase Haugen not to be in substantial compliance since the surveyors cited deficiencies other than the elopements at issue here. In addition, Aase Haugen appears to concede that it was not found in compliance in its 2000 survey as well, while insisting that the noncompliance did not involve the same deficiency as here. P. Exs. 1, 13, 34; see Aase Haugen Reply Br. at 18.

Finally, even had we accepted Aase Haugen's interpretation of the SOM provision and its claim to have met required factual prerequisites (which we do not), it is difficult to see how Aase Haugen could have shown that the deficiency was not egregious when, as we discuss below, Aase Haugen did not timely place in dispute CMS's finding that the deficiency constituted immediate jeopardy.

We conclude that the events here, where vulnerable residents were outside of the facility unsupervised without staff even noticing their absence, can reasonably be viewed as egregious. But for the fortuitous vigilance of the facility's neighbors, these residents may well have sustained serious, even fatal, injuries. Aase Haugen has thus failed to show that its past noncompliance was of the kind for which the SOM provision advised surveyors not to issue citations. Therefore, even if the ALJ had reached the SOM provision criteria, the outcome here would have been the same.

5. The ALJ did not err in declining to review CMS's immediate jeopardy determination.

The ALJ declined to reach the appropriateness of the immediate jeopardy determination because she found that such review is precluded in the case of a per instance CMP, where the decision on immediate jeopardy "does not affect the range of CMPs that CMS could collect." ALJ Decision at 4. Aase Haugen argues that the immediate jeopardy determination constituted a finding of substandard quality of care which triggered an extended survey and resulted in automatic application of the remedy of loss of the [Page 18] ability to operate a Nurse Aide Training and Competency Evaluation Program (NATCEP), which would not have occurred absent immediate jeopardy being cited. Aase Haugen Reply Br. at 6.

CMS argues that Aase Haugen failed to preserve any challenge to the immediate jeopardy determination or to show that it was even entitled to appeal the level of noncompliance. According to CMS, "the level of noncompliance, in this case immediate jeopardy, can be appealed only if: (1) the range of CMP that can be imposed could change, or (2) a finding of substandard quality of care leads to the loss of approval" of a facility's NATCEP. CMS Br. at 5. CMS contends that Aase Haugen here failed to raise 5 in its prehearing brief any contention that it lost NATCEP approval as a result of the determination of the level of noncompliance or that it sought to appeal that determination.

Aase Haugen responds that it sufficiently placed in issue CMS's determination that the past noncompliance constituted immediate jeopardy. Aase Haugen Reply Br. at 4-9. Aase Haugen points to its hearing request which challenged all "matters that support or relate to enforcement actions proposed or taken as a result of the survey." Aase Haugen Reply Br. at 5-6, quoting P. Ex. 33, at 8. Aase Haugen also cites the parties' readiness report which identified as an issue whether "the scope and severity was properly cited at the level of Immediate Jeopardy." Aase Haugen Reply Br. at 5, quoting Readiness Report at 3. Aase Haugen argues that these statements sufficed to preserve its position that the immediate jeopardy determination was clearly erroneous. Aase Haugen asserts that it was not required to "specifically discuss on appeal the loss of nurse aide training." Id. at 7. Aase Haugen asserts that it did in fact have a NATCEP and that it would be adversely affected by its loss. Aase Haugen Request for Review at 2. Hence, according to Aase Haugen, the ALJ erred in declining to reach the issue of immediate jeopardy.

In the present case, however, the ALJ expressly warned the parties in her pre-hearing order that their pre-hearing briefs "must contain any argument that a party intends to make" and that argument or related evidence not presented in the pre-hearing brief might be excluded from consideration. Pre-hearing Order, dated April 26, 2002; see ALJ Decision at 8. The ALJ could reasonably consider that Aase Haugen's pre-hearing brief did not contain any argument that the ALJ should reverse the immediate jeopardy determination. The brief focuses on challenges to the finding of past noncompliance itself and on the claim that any such noncompliance should not be considered "egregious," mentioning the immediate jeopardy determination only in passing and never directly requesting that it be reversed. See Aase [Page 19] Haugen Pre-hearing Br. at 26-32. Aase Haugen's prehearing brief does not contain the argument that Aase Haugen makes here, that it was entitled to review of the immediate jeopardy determination based on its alleged resulting loss of a NATCEP program.

Aase Haugen cites only one authority for the proposition that it was entitled to a review of the immediate jeopardy determination. The ALJ decision on which Aase Haugen relies supports exactly the opposite conclusion. The ALJ in that case stated neither party had submitted evidence that the facility involved even had a NATCEP. Newton Presbyterian Manor, DAB CR1205, at 17 (2004). The ALJ in Newton went on to hold in the alternative that, even if the facility there had an approved NATCEP program and even if the immediate jeopardy determination were appealable, she would not find the immediate jeopardy determination there clearly erroneous. Id. This authority does not support Aase Haugen's claim that it did not need to set out its asserted basis to challenge the immediate jeopardy determination.

Furthermore, even if we agreed with Aase Haugen that it adequately set out in its brief a challenge to the immediate jeopardy determination (which we do not), our discussion above of the factual situation involved in the past noncompliance at issue makes clear that the ALJ would have had no basis in the record to overturn that determination. Therefore, we conclude that the ALJ did not err in declining to reach this issue, and that, even had there been an error, Aase Haugen has not shown that it was prejudiced.

6. The other deficiencies cited in the April 2001 survey should not be dismissed.

Aase Haugen argues that all the other deficiency findings made by the surveyors during the April 2001 survey should be dismissed. Aase Haugen Br. at 40. The ALJ concluded that she lacked jurisdiction to review the numerous other deficiency findings because no remedies were imposed based on those deficiencies (although she observed that some of them "appear pretty serious"). ALJ Decision at 1.

On appeal, Aase Haugen does not dispute the ALJ's interpretation of the regulations to preclude appeal of deficiency findings that do not form the basis of any remedy. Aase Haugen argues instead that, if it failed to challenge the other deficiency findings, they might be the basis for a CMP if the past noncompliance finding were eliminated. Aase Haugen Br. at 40. This hypothetical argument is moot here, since we have sustained above the ALJ's conclusion on the past noncompliance. Because the [Page 20] additional deficiency findings made at the April survey did not result in a remedy, there was no appealable initial determination resulting from the other deficiency findings. See 42 C.F.R. § 498.3.

Conclusion

For the reasons explained above, we affirm the ALJ Decision.

Judith A. Ballard

Sheila Ann Hegy

Cecilia Sparks Ford
Presiding Board Member

1. The ALJ admitted Petitioner's exhibits 1-30 in her decision, but the record also contains five additional exhibits marked as Petitioner's exhibits 31-35, which the ALJ does not mention. ALJ Decision at 3. Since the ALJ noted that there were no objections to exhibits and since she does not indicate that she excluded any exhibits, we assume that she intended to admit these exhibits. In any case, we conclude that they would not make any difference in the outcome here.

2. Subsections (b), (c), and (d) of section 1819 of the Act set out requirements applicable to skilled nursing facilities relating to their provision of services, the rights of their residents, and other matters such as administration and licensing.

3. The Sixth Circuit, paraphrasing the Board, stated that the facility must take "all reasonable precautions against residents' accidents." 363 F.3d 583, 590.

4. Aase Haugen asserts that the "additional findings of fact" which it espouses are "material and would demonstrate that the facility was in substantial compliance." Aase Haugen Br. at 35. As discussed in the text, we conclude that this assertion is simply wrong.

5. Although Aase Haugen insists that the alarm system did not fail, but rather the generator was not properly wired to some of the doors, we consider the provision of power to the alarm system part of its functional status. Thus, this is again a distinction lacking a difference.

6. Aase Haugen cites to stipulations 27 and 28. Parties' Stipulations, dated August 7, 2002, at 6. The stipulations support the ALJ's findings that Staff A reviewed a monitoring screen for the surveillance camera and Staff P checked the detection unit at the nurse's station. ALJ Decision at 6. The parties stipulated that neither Staff A nor Staff P went to the "main entrance to check and see if a resident left the building." Parties' Stipulations at 6. Stipulation 28 also states that the door alarm stopped sounding, indicating a reset but that the facility was unable to determine who reset the alarm. Id.

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

8. This provision was revised in 2004 to make the second sentence read as follows: "However, when (1) a facility has been out of compliance with a regulatory requirement between two surveys that found it in compliance, and (2) the noncompliance is not of the serious nature described in first sentence, and (3) the facility has a quality assurance program in place and has corrected the noncompliance, then past occurrence(s) should not be cited." SOM, section 7510 (2004) (emphasis in original). CMS argues that this change reflects a further clarification that sheds light on the provision as it was in effect in April 2001. Aase Haugen responds that the revised version reflected a new policy which should not be applied retroactively to events that occurred years earlier. Aase Haugen Reply Br. at 20.

9. Aase Haugen reads the SOM provision to require a "three-tier analysis" before the State agency could cite, CMS impose, or the ALJ sustain a deficiency for past noncompliance. Aase Haugen Reply Br. at 2. First, according to Aase Haugen, the State agency must determine that "serious past noncompliance" occurred, and must disregard corrected non-serious noncompliance. Id. If serious past noncompliance, including immediate jeopardy, occurred, the State agency must still not cite it under the "second tier," according to Aase Haugen, "if a quality assurance program is in place and has corrected the noncompliance, and the facility was in compliance with the regulation at issue at the time of the preceding survey and the current survey in which the corrected incident is discovered (i.e., it is found in compliance on two surveys, but was out of compliance in between)." Id. Finally, Aase Haugen asserts that the State agency must overcome a third tier by showing that the serious past noncompliance was egregious. Id. CMS proposes a reading of the SOM provision different from that articulated by Aase Haugen. CMS Br. at 7-8. CMS asserts that the first sentence calls for citing serious past noncompliance and that the second sentence calls for not citing past noncompliance if it is not serious. Id. at 7. According to CMS, this reading is more reasonable because under Aase Haugen's theory the first sentence is superfluous, i.e., the last two sentences standing alone would lead to the same result – serious past noncompliance should not be cited unless it meets the criteria in the second sentence and is also egregious. Id.

10. The parties' stipulations reference section 7510A of the SOM as the authority for finding a deficiency and state that "[i]n the absence of a finding of 'egregious noncompliance' there would not be a basis for citing a deficient practice under F698." Joint Stipulations, filed August 7, 2002, at 7.

11. In its reply brief, Aase Haugen expressly concedes that "the SOM is not legally binding." Aase Haugen Reply Br. at 21. Nevertheless, Aase Haugen argues that the ALJ should have deferred to the SOM provision since it constituted CMS's interpretation of its own regulations and since the parties' notice of issues and stipulations referenced the SOM provision framework. Id. at 19.

12. Aase Haugen alleged in its pre-hearing brief that surveyors were shown "the Quality Assurance completed on this matter" at the time of the first incident, but cited to no such QA report or protocol in the record before the ALJ. Aase Haugen Prehearing Br. at 25, 33.

13. Aase Haugen argues that the SOM provision should be read as precluding CMS from citing non-serious past noncompliance because the regulation requiring each facility to have a QA committee provides that "[g]ood faith attempts by the committee to identify and correct deficiencies will not be used as a basis" for sanctions. Aase Haugen Br. at 11, citing 42 C.F.R. § 483.75(o). This argument is neither relevant nor helpful in resolving the SOM provision's treatment of non-serious past deficiencies. The QA regulation deals with the potential disincentive for facility QA committees to uncover and address problems if their very discovery triggers sanctions against the facility. The regulation does not address distinguishing between serious and non-serious deficiencies but emphasizes the role of the QA committee in identifying and correcting deficiencies. The noncompliance here became evident to the surveyors as a result of reviewing records that revealed the two elopements, not as a result of QA activities.

14. In fact, the preamble to the regulation on past noncompliance supports the reading that both the current and the previous survey must have found the facility to be in substantial compliance. The preamble gives an illustrative example of a facility being found "in substantial compliance with all of the participation requirements" at two succeeding surveys, but having been found to have a specific deficiency in between based on record review. 59 Fed. Reg. 56,116, 56,199 (Nov. 10, 1994)(emphasis added).