SUBJECT: Rosewood Living Center,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

On June 17, 2005, Rosewood Living Center (Rosewood), a Michigan skilled nursing facility (SNF), appealed a decision by Administrative Law Judge (ALJ) Steven T. Kessel that upheld enforcement remedies imposed by the Centers for Medicare & Medicaid Services (CMS) based on findings of noncompliance with Medicare program requirements. Rosewood Living Center, DAB CR1293 (2005) (ALJ Decision). These remedies included civil money penalties and termination of Rosewood's participation in the Medicare program.

In this appeal, Rosewood challenges only the ALJ's conclusion that CMS had legally adequate grounds to terminate its Medicare participation effective September 4, 2003. Nothing in Rosewood's various arguments persuade us to disturb that conclusion. Accordingly, we affirm the ALJ Decision.

Regulatory background

To participate in the Medicare program, a SNF must comply with the requirements for participation found in 42 C.F.R. Part 483, subpart B. The SNF must also sign and adhere to a "provider [Page 2] agreement" that sets out other Medicare program requirements. See 42 C.F.R. Part 489.

Compliance with the participation requirements in Part 483 is verified through periodic surveys performed by state health agencies on CMS's behalf. See 42 C.F.R. Part 488, subpart E. "Deficiencies" found during a survey are designated in a Statement of Deficiencies using alpha-numeric "tags" that correspond to the requirements in Part 483. The survey agency rates the "seriousness," or level of noncompliance, of each deficiency found. 42 C.F.R. § 488.404(b). The most serious deficiency is one that places residents in "immediate jeopardy." ⁽¹⁾

CMS may impose one or more enforcement remedies on a SNF based on deficiencies constituting noncompliance with federal participation requirements that are found during a survey. 42 C.F.R. § 488.402(b), (c). The regulations define "[n]oncompliance" as "any deficiency that causes a facility to not be in substantial compliance." 42 C.F.R. § 488.301. A SNF is in substantial compliance when its "level of noncompliance is such that any identified deficiencies pose no greater risk . . . than the potential for causing minimal harm" to residents. Id. Regardless of the remedy or remedies CMS chooses to impose, a facility that is not in substantial compliance must submit a "plan of correction" for approval by CMS or the state survey agency unless the deficiency is isolated with potential for minimal harm but no actual harm. 42 C.F.R. §§ 488.402(d); 488.408(f).

The enforcement remedies available to CMS include termination of a SNF's Medicare provider agreement. 42 C.F.R. § 488.456. CMS may terminate a SNF's provider agreement if the SNF --

(i) Is not in substantial compliance with requirements of participation, regardless of whether or not immediate jeopardy is present; or

(ii) Fails to submit an acceptable plan of correction within the time-frame specified by CMS or the State.

42 C.F.R. § 488.456(b)(1) (emphasis added). Before terminating a SNF with non-immediate jeopardy deficiencies, CMS must notify the [Page 3] SNF and the public at least 15 calendar days before the effective date of termination. 42 C.F.R. § 488.456(c)(2). A single deficiency is sufficient to warrant termination if the deficiency causes the facility to be out of substantial compliance (that is, if the deficiency creates at least the "potential for more than minimal harm"). Hermina Traye Memorial Nursing Home, DAB No. 1810 (2002), aff'd Hermina Traeye Memorial Nursing Home v. U.S. Dept. of Health and Human Svcs., No. 02-2076 (4^th Cir., Oct. 29, 2003).

Moreover, the dispositive issue is not whether a facility came back into substantial compliance before the effective date of the termination, but whether the facility was in substantial compliance as of the day that the survey was completed. See Carmel Convalescent Hospital, DAB No. 1584, at 12 (1996) ("when the facility's participation is terminated because of alleged non-compliance, the critical date for establishing compliance is the survey date, not the subsequent effective date of the termination").

In addition to -- or in lieu of -- termination, CMS may impose civil money penalties (CMPs) and other intermediate remedies. See 42 C.F.R. §§ 488.406 and 488.408. A CMP may be imposed "for either the number of days the facility is not in substantial compliance (a per-day CMP), or "for each instance that [the] facility is not in substantial compliance" (a per-instance CMP). 42 C.F.R. § 488.430(a).

A SNF is entitled to an ALJ hearing to contest findings of noncompliance that result in the imposition of an enforcement remedy. See 42 C.F.R. § 488.408(g)(1).

Case Background

In late July 2003, Rosewood was surveyed twice. On July 22, the Michigan Bureau of Construction Codes and Life Safety (BCCLS) completed its survey to determine whether Rosewood was in compliance with the applicable provisions of the Life Safety Code (LSC), which are requirements of Medicare participation under 42 C.F.R. § 483.70(a). CMS Exs. 3 and 17. This survey (the July 22 survey) resulted in deficiency findings under 15 tags, including tag K130. CMS Ex. 3. Under tag K130, BCCLS cited Rosewood for noncompliance with section 101:2-1112 of the 1967 LSC, which requires a facility to maintain and operate itself in a manner that avoids undue danger to the lives and safety of its residents from fire, smoke, fumes or resulting panic. Id. at 14; Appendix [Page 4] to CMS Pre-Hearing Brief (May 10, 2004), Att. 1, at 131. ⁽²⁾

Then, on July 31, the Michigan Department of Consumer and Industry Services' Bureau of Health Systems (BHS) completed an "extended survey" to verify compliance with other requirements of Medicare participation. CMS Ex. 4. The extended survey resulted in deficiency findings under 45 tags, including:

• Tag F314 -- failure to provide appropriate and necessary care to prevent or treat a pressure sore on Resident 603, a violation of 42 C.F.R. § 483.25(c);

• Tag F318 -- failure to provide appropriate treatment services to increase and prevent further deterioration of Resident 603's range of motion, a violation 42 C.F.R. § 483.25(e)(2); and

• Tag F323 -- failure to ensure that the residents' environment remained as free of accident hazards as possible, a violation of 42 C.F.R. § 483.25(h)(1).

Id. at 60, 65, 73.

The deficiencies designated by tags K130 and F323 were found to have placed residents in immediate jeopardy between July 21 and July 24, 2003. CMS Ex. 3, at 14-15; CMS Ex. 4, at 73-85; CMS Ex. 1, at 1. Although Rosewood had by July 24 removed or abated the fire and other accident hazards that produced the immediate jeopardy situation, CMS and BHS determined that Rosewood was still, as of July 31, not in substantial compliance with the relevant participation requirements. See CMS Ex. 4, at 82 (noting under tag F323 that the facility "remained out of compliance with a widespread potential for more than minimal harm"); CMS Ex. 1, at 1 (noting removal of immediate jeopardy on July 24 but stating that facility "continued not to be in substantial compliance with Federal requirements").

The July surveys of Rosewood led to state enforcement action. On August 6, 2003, BHS issued an emergency order that revoked Rosewood's operating license and directed a transfer of residents [Page 5] to other facilities. CMS Ex. 2, at 2-4. On August 14, 2003, all remaining residents were evacuated from Rosewood due to the failure of its emergency generator during a multi-state power outage. ⁽³⁾ See Rosewood's Motion to Stay Proceedings (filed with the ALJ on April 19, 2004); Joint Ex. 12, at 204-06.

Meanwhile, in an August 12, 2003 letter, BHS notified Rosewood that it had recommended the imposition of various federal remedies, including CMPs and "immediate" termination of Rosewood's Medicare provider agreement. ⁽⁴⁾ CMS Ex. 2, at 11-12. BHS instructed Rosewood to submit a plan of correction by August 31, 2003 and indicated that the plan had to provide for completion of all corrective work within 50 days after completion of the extended survey. Id. at 11.

On August 14, 2003, CMS faxed and mailed Rosewood a Notice of Imposition of Remedies. CMS Ex. 1. This notice informed Rosewood of CMS's decision to impose the following enforcement remedies recommended by BHS:

•Four per-instance civil money penalties (ranging from $1,500 to $4,000) for the deficiencies designated by tags K130, F314, F318, and F323;

• Denial of payment of new admissions (DPNA) effective August 31, 2003; and

• Termination of the Rosewood's provider agreement effective September 4, 2003.

Id. The August 14 notice stated that Rosewood's provider agreement was being terminated "due to [its] failure to attain substantial compliance" with Medicare participation requirements. Id. at 4. The notice also called on Rosewood to submit an acceptable plan of correction within ten days after receipt of the notice. Id. at 5.

[Page 6] On August 28, 2003, Rosewood sent BHS a plan of correction that addressed findings of the extended survey. CMS Ex. 14. In a cover letter to the plan, Rosewood stated that "[a]ll resident-specific deficiencies have a correction date of 8/14/03, at which time the residents were evacuated from the facility," and that "remaining citations will have a correction date of October 25, 2003." Id. at 1. The plan was stamped "received" in BHS's office on September 2, 2003, a Tuesday. Id.

BHS found the plan unacceptable and relayed its concerns to Rosewood in a September 4, 2003 telephone call. CMS Ex. 16, at 2. One of the reasons BHS found the plan unacceptable was that it did not provide for completion of corrective action within the 50-day period specified in BHS's August 12 letter. Id. (item 1); CMS Ex. 63, ¶ 7. BHS instructed Rosewood to submit a revised plan of correction by September 8, 2003. CMS Ex. 16, at 2.

On September 12, 2003, BHS notified Rosewood that it was rejecting the plan of correction because Rosewood had failed to submit revisions to the plan by September 8. CMS Ex. 16, at 1. A BHS supervisor, Debra Wash, stated in a declaration that a revisit survey was not conducted because BHS did not accept the plan of correction. CMS Ex. 63, ¶ 7.

On October 10, 2003, Rosewood initiated an ALJ proceeding to contest the remedies imposed by CMS. The parties presented evidence concerning numerous alleged deficiencies. Before the scheduled hearing, Rosewood waived its right to an in-person evidentiary hearing, and the parties agreed to have the case decided solely on the basis of their briefs and documentary evidence.

The ALJ sustained all of CMS's enforcement remedies, describing in detail some of the egregious deficiencies found during the surveys. In doing so, he limited his discussion to the four deficiencies that CMS said were the bases for the four per-instance CMPs imposed by CMS. The ALJ found that because of each deficiency, Rosewood was not in substantial compliance during the July 2003 surveys, and therefore CMS was legally justified in imposing a per-instance CMP for each deficiency. ALJ Decision at 4-16. In addition, the ALJ found that the amount of each CMP was reasonable. ⁽⁵⁾ Id. at 16-19.

[Page 7] As for the DPNA and termination remedies, the ALJ found them justified because Rosewood had failed (in his judgment) to show that any of the four deficiencies mentioned earlier had been corrected by August 31, 2003, the effective date of the DPNA, or by September 4, 2003, the effective date of the termination decision. ALJ Decision at 19-22. The ALJ noted that Rosewood's "sole evidence" of post-survey corrective action was a plan of correction that "is not, in and of itself, credible evidence" that substantial compliance had been achieved. Id. at 20. He also observed that the cover letter to the plan of correction indicated that some deficiencies would not be corrected until after September 4, and that Rosewood had failed to present evidence of structural repairs, staff training, or other corrective measures completed prior to September 4. Id. at 20-21. In addition, the ALJ rejected Rosewood's argument that removal of the residents had served to bring the facility back into substantial compliance as of August 14, 2003. Id. at 21. Finally, the ALJ rejected a variety of other arguments, some of which Rosewood has raised again in this appeal. Id. at 21-22.

Standard of Review

The Board's standard of review on a disputed conclusion of law is whether the conclusion is erroneous. Britthaven of Goldsboro, DAB No. 1960 (2005). The standard of review on a disputed finding of fact is whether the finding is supported by substantial evidence in the whole record. Id.

Discussion

Rosewood takes no issue with the ALJ's findings that it was not in substantial compliance during the July 2003 surveys because of the deficiencies designated by tags K130, F314, F318, and F323. Nor does Rosewood challenge the ALJ's conclusion that CMS was justified in imposing a DPNA and a per-instance CMP for each deficiency, or his finding that the amount of each CMP was reasonable. ⁽⁶⁾ Because Rosewood has made no argument opposing the ALJ's findings of fact or conclusions of law in this regard, we affirm them without further discussion. See Wisteria Care Center, DAB No. 1892 (2003) (summarily affirming findings of [Page 8] fact and conclusions of law about which the appellant has made no argument).

1. The noncompliance found during the July surveys gave CMS adequate grounds to terminate Rosewood's Medicare provider agreement.

Rosewood's arguments in this appeal focus entirely on the ALJ's determination that CMS had valid and sufficient grounds to terminate its provider agreement. Among other things, Rosewood contends that termination was improper because the evidence showed that it came back into substantial compliance by September 4, 2003, the effective date of CMS's August 14 termination decision. Rosewood Br. at 15-21. Rosewood also contends that the ALJ applied the wrong legal standard in judging the adequacy and timeliness of its corrective actions. Id. at 14-15.

Before we address these (and other) contentions, we first clarify the termination issue since the ALJ erred in addressing whether the facility was in substantial compliance as of the effective date of the termination rather than as of July 31, 2003, the date the extended survey ended. As is clear from the discussion below, that error was harmless and has no effect on the outcome here.

As just noted, in deciding whether CMS had validly imposed termination, the ALJ indicated that the dispositive issue was whether Rosewood "failed to comply substantially with one or more participation requirements on the date that the remed[y] [was] imposed" -- that is, by September 4, 2003. ALJ Decision at 25 (italics added). Accordingly, the ALJ considered whether Rosewood had corrected its deficiencies by that date. Id. at 25-26. The assumption implicit in the ALJ's analysis is that termination would not become effective if Rosewood came back into substantial compliance by September 4. CMS's August 14 notice letter, however, advised Rosewood that its provider agreement "is being terminated September 4, 2003 due to [its] failure to attain substantial compliance[.]" CMS Ex. 1, at 4. The letter was issued two days after the state survey agency informed Rosewood of its recommendation to CMS for "immediate" termination based on the survey findings. CMS Ex. 2, at 11. CMS's notice did not state that the facility's submitting an acceptable plan of correction would operate to delay or prevent termination (much less indicate that mere attempts at doing so would suffice).

Section 488.412 authorizes CMS to terminate a facility that is not in substantial compliance even if there is no immediate jeopardy. Alternatively, CMS "may allow the facility to [Page 9] participate for no longer than 6 months from the last day of the survey" if certain conditions (including submission of an acceptable plan of correction) are met, but CMS is not required to do so. "[W]here immediate jeopardy has been abated but the facility remains out of substantial compliance which has not yet persisted for six months, CMS has discretion to proceed with termination and/or to select an alternative remedy." Beechwood Sanitarium, DAB No. 1906, at 27 (2004). In other words, CMS may act immediately to terminate a SNF based on a survey finding that the SNF is not in substantial compliance, without affording an opportunity to the SNF to correct the noncompliance. Id.; 59 Fed. Reg. 56,116, 56,213 (Nov. 10, 1994) ("Neither immediate jeopardy nor a full 6 months of noncompliance have to have occurred in order for the State or [CMS] to terminate a provider agreement").

The ALJ cited section 488.456(b)(1), which authorizes termination of a facility's provider agreement if the facility "[i]s not in substantial compliance with the requirements of participation . . . ." To the extent the ALJ was relying on the "is" in this provision for his view that the relevant time is the effective date of termination (although he provided no rationale), this reliance is misplaced. This provision, when read in context (particularly in light of section 488.412 and its history), cannot reasonably be read to mean "is not in substantial compliance" on the effective date of the termination.

Rosewood contends that BHS's August 12 and CMS's August 14 remedy notices "clearly" implied that termination would not be imposed if Rosewood submitted an acceptable plan of correction. Rosewood Br. at 22-23. Rosewood also contends that its "ongoing negotiations" with BHS in late August or early September 2003 reasonably led it to believe that termination would not be imposed if the negotiations produced an acceptable plan of correction. Id. at 18-19. In addition, Rosewood asserts that BHS was acting as CMS's agent during these negotiations, and that CMS was therefore bound to await their outcome before proceeding to terminate its provider agreement. Id.

There is no merit to Rosewood's contentions about the significance of the plan of correction process. The August 12 and August 14 remedy letters make it clear that CMS had approved the state survey agency's recommendation for "immediate" termination. ⁽⁷⁾ Although both notices solicited a plan of [Page 10] correction (in accordance with regulatory requirements), neither stated that Rosewood could avoid termination by correcting its deficiencies by a certain date. ⁽⁸⁾ CMS, not the state survey agency, makes the final decision about whether to impose an enforcement remedy such as termination on a SNF. Bergen Regional Medical Center, DAB No. 1832, at 18 (2002) ("the Act clearly provides that a state's role in the enforcement process is merely to recommend the imposition of remedies including CMPs where the state survey agency finds that a skilled nursing facility does not meet the Medicare conditions of participation, and that the Secretary is the ultimate decision-maker"). CMS was not obliged to await the outcome of any ongoing discussions with the state survey agency.

In short, we reject Rosewood's contention that CMS's termination decision was contingent on the outcome of the plan of correction process. To the contrary, CMS elected to proceed immediately with termination based on the deficiencies found during the July surveys, without giving Rosewood an opportunity to correct those [Page 11] deficiencies. ⁽⁹⁾ Given these circumstances, the dispositive issue is not whether Rosewood came back into substantial compliance by September 4, but whether Rosewood was not in substantial compliance as of July 31, the day that the extended survey was completed. See Carmel Convalescent Hospital at 12 ("when the facility's participation is terminated because of alleged non-compliance, the critical date for establishing compliance is the survey date, not the subsequent effective date of the termination"). The ALJ determined that Rosewood was not in substantial compliance as of July 31 because of deficiencies alleged under tags K130, F323, F314, and F318. Rosewood does not contest that determination in this appeal. For that reason, we are compelled to conclude that CMS had adequate grounds under section 488.456(b)(1)(i) to terminate Rosewood's provider agreement effective September 4, 2003.

The ALJ's analytical framework understandably prompted Rosewood to make submission of its plan of correction the focus of most of its arguments on appeal. Rosewood contends, for example, that the termination decision is invalid because CMS never exercised its discretion to accept or reject its plan of correction. Rosewood Br. at 23-25. Rosewood asserts that BHS was intent on keeping the facility closed, "affirmatively refused to consider" the plan's merits, and thwarted CMS from doing so. Id.; Rosewood Reply Br. at 11-12. Rosewood asserts that while the regulations do not require CMS to accept a SNF's plan of correction, they require CMS "to discern whether the POC is acceptable or not" before proceeding to terminate the facility. Rosewood Br. at 24. Because CMS never exercised this discretion, says Rosewood, CMS could not legally terminate its provider agreement based on the failure to submit an acceptable plan of correction. Id. Rosewood also contends that it was arbitrary and contrary to the enforcement regulations for CMS to offer the opportunity to file a plan of correction but then allow only 10 days to submit the plan and otherwise demonstrate substantial compliance. ⁽¹⁰⁾ Id. at [Page 12] 26.

These and other contentions are premised on one or both of the following propositions: first, that CMS terminated Rosewood because it failed to submit an acceptable plan of correction; and second, that Rosewood was entitled to -- and CMS provided -- an opportunity to correct the deficiencies before termination was imposed. Neither proposition is true or correct, however. Under section 488.456(b), CMS may terminate a SNF's provider agreement for either of two reasons: the facility's failure to be in substantial compliance, or its failure to submit an "acceptable" plan of correction within timeframes established by the state or CMS. 42 C.F.R. § 488.456(b)(1)(i) and (ii). As its August 14 letter indicates, CMS terminated Rosewood because of its failure to be in substantial compliance, not because it failed to submit an acceptable plan of correction. Furthermore, as discussed earlier, CMS did not give Rosewood an opportunity to correct its deficiencies, and nothing in the statute or regulations required it to do so. Beverly Health and Rehabilitation -- Spring Hill at 19 (rejecting a suggestion that "acceptance" of a plan of correction operates to postpone or alter the timetable for termination). Because CMS acted properly in terminating Rosewood based on its noncompliance as of July 31, it is irrelevant whether Rosewood had inadequate time to submit an acceptable plan correction, or whether CMS acted on the plan that Rosewood submitted.

Rosewood's contention that it corrected its deficiencies and came back into substantial compliance by September 4 are unavailing for the same reason. CMS was authorized to terminate, and did in fact terminate, Rosewood's Medicare participation based on the noncompliance found during the July surveys. Because CMS had adequate legal grounds to terminate Rosewood based on the July surveys, it is immaterial whether Rosewood took steps after these surveys to bring itself back into substantial compliance.

The ALJ's findings with regard to whether Rosewood came back into compliance by September 4 were unnecessary in light of the correct legal standard which we explained above. In any event, we find that there was substantial evidence in the record to support the ALJ's finding that Rosewood did not come back into [Page 13] substantial compliance by September 4. That evidence, and Rosewood's contentions regarding its compliance on the effective date of the termination, were adequately discussed in the ALJ Decision.

2. There is no merit to Rosewood's estoppel argument.

In its response brief, CMS indicates in a footnote that "estoppel" is the "essence" of Rosewood's argument that the August 14 termination decision was contingent on BHS's actions with respect to the plan of correction. Response Br. at 18, n.9. Rosewood responded by arguing, in its reply brief, that all the required elements for equitable estoppel were present. Reply Br. at 12-16.

Assuming that the government may be estopped at all in these circumstances, the party seeking relief must, at minimum, show that the traditional requirements for estoppel are present (i.e., a factual misrepresentation by the government, reasonable reliance on the misrepresentation by the party seeking estoppel, and harm or detriment to that party as a result of the reliance) and that the government's employees or agents engaged in "affirmative misconduct." See Schweiker v. Hansen, 450 U.S. 785, 788 (1981); Heckler v. Community Health Servs., 467 U.S. 51, 59 (1984); Estate of James v. U.S. Dept. of Agriculture, 404 F.3d 989, 995 (6^th Cir. 2005); Tennessee Dept. of Health and Environment, DAB No. 1082 (1989).

As best we can tell, Rosewood is complaining that the state survey agency's solicitation and ongoing consideration of its proposed plan of correction misled it into believing that CMS would not terminate its provider agreement effective September 4, 2003. However Rosewood labels its assertions, it has not come close to establishing the elements of estoppel against the government.

CMS's August 14 letter plainly stated, without qualification, that termination would take effect on September 4 and was based on the state's letter proposing that CMS immediately terminate. CMS's decision was legally proper under the applicable regulations and in no way misleading. Moreover, CMS was under no obligation to reconsider or amend its decision.

3. Rosewood's other contentions are meritless.

Rosewood asserts that CMS's "designation of September 4, 2003 as the Date of Termination was arbitrary, unnecessary and in no way related to the deficiencies cited." Rosewood Br. at 25-26. [Page 14] Rosewood asserts that by August 14, 2003, its deficiencies posed no actual threat of harm because all residents had been transferred out of the facility by that date. Id. at 27. Rosewood also notes that under 42 C.F.R. § 488.412(d), CMS could have allowed it up to six months from the date of the survey to come back into substantial compliance before terminating its provider agreement. Id. at 26. Under these circumstances, says Rosewood, CMS's decision to terminate its provider agreement served no remedial purpose and merely punished it for past acts of noncompliance. Id. at 25-28.

Given that CMS had adequate grounds to take enforcement action based on the July survey findings, these assertions express little more than disagreement with CMS's choice of remedy. That choice is a discretionary one, and the regulations expressly preclude the Board from reviewing it. 42 C.F.R. § 488.408(g)(2); Beverly Health and Rehabilitation Center -- Spring Hill at 26 ("termination is discretionary with [CMS] whenever a facility is not in substantial compliance"). Rosewood "is entitled to administrative review of whether CMS had the authority to impose a remedy but not to a review of whether the remedy selected, if authorized, was too harsh or otherwise inadvisable." Beechwood Sanitarium at 33.

Finally, Rosewood contends that when it ceased operating on August 14, 2003, it "voluntarily" terminated its provider agreement pursuant to 42 C.F.R. § 489.52(b)(2), and therefore any attempt by CMS to "involuntarily" terminate the agreement was "moot." Rosewood Br. at 27-28. The ALJ properly rejected this contention as well (see ALJ Decision at 22).

There is no evidence that Rosewood intended its closure on August 14, 2003 to effect a voluntary termination of its provider agreement. Indeed, the closure was precipitated by the revocation of its operating license and the failure of its emergency generator on August 14. Although "cessation of business is deemed to be a termination by the provider" under section 489.52, that regulation also requires a provider to give both CMS and the public advance written notice of its intent to terminate the agreement. 42 C.F.R. § 489.52(a), (b)(3), (c). Rosewood gave no such notice.

In addition, Rosewood's contention conflicts with our holding in Crescent Healthcare, DAB No. 1888 (2003). That case concerned enforcement action against a home health agency (HHA). After a survey of the HHA found noncompliance with various conditions of participation, the HHA surrendered its state license, discharged its patients, and ceased providing home health services. CMS [Page 15] then proceeded to terminate the HHA's provider agreement pursuant to 42 C.F.R. § 489.53. The HHA argued to the Board that CMS's termination action was improper because it had already surrendered its license to operate and had ceased operations, thereby effecting a voluntary termination of its provider agreement. The Board rejected this argument, finding nothing in the statute or regulations (including 42 C.F.R. § 489.52) indicating an "intention by Congress or CMS to make the termination process a race between CMS and a provider alleged to be out of substantial compliance." DAB No. 1888, at 12.

We see no material difference between Rosewood's predicament and that of the HHA in Crescent Healthcare. In both instances, the providers claimed to have effectively terminated their participation voluntarily after a compliance survey and shortly (within a few weeks) before initiation of the federal enforcement action. In addition, we see nothing in the relevant regulations, 42 C.F.R. Part 488, suggesting that Crescent Healthcare's holding is inapplicable to SNFs. Those regulations authorize CMS to terminate a SNF's provider agreement without regard to any post-survey effort by the SNF to effect a voluntary termination under section 489.52. 42 C.F.R. §§ 488.402, 488.406, 488.456.

Conclusion

For the reasons discussed above, we affirm the ALJ Decision upholding all the remedies imposed on Rosewood.

Judith A. Ballard

Donald F. Garrett

Cecilia Sparks Ford
Presiding Board Member

1. Immediate jeopardy is defined as a "situation in which the provider's noncompliance with one or more requirements of participation has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident." 42 C.F.R. § 488.301.

2. We set out here a more comprehensive statement of the undisputed background facts than the ALJ Decision to establish the proper context for our analysis, which differs from the ALJ's in some respects.

3. By the terms of the emergency order, the revocation of Rosewood's license became effective on the day the last resident was transferred out of the facility. CMS Ex. 2, at 3.

4. BHS indicated that it was recommending termination "[b]ased on findings of immediate jeopardy, the serious nature of the deficiencies cited, the facility's history of substantiated complaints, and extended periods of noncompliance." CMS Ex. 2, at 11.

5. The CMPs were imposed as follows: (1) $4,000 for the violation of 42 C.F.R. § 483.25(h)(1); (2) $3,000 for the violation of 42 C.F.R. § 483.70(a); (3) $1,500 for the violation of 42 C.F.R. § 483.25(c); and (4) $1,500 for the violation of 42 C.F.R. § 483.25(e)(2).

6. Rosewood states that the CMPs are "not an issue in this appeal." Rosewood Br. at 10, n.6.

7. The regulations permit CMS to allow a SNF without immediate jeopardy-level citations to continue its participation for up to six months after the last day of the survey finding noncompliance. This remedial option is available only when the state survey agency finds "that it is more appropriate to impose alternative remedies than to terminate the facility's provider agreement." 42 C.F.R. § 488.412(a)(1). The state survey agency here did not make such a finding, instead recommending immediate termination of Rosewood's provider agreement based on noncompliance found during the July surveys and Rosewood's history of noncompliance.

8. In Beverly Health and Rehabilitation - Spring Hill, DAB No. 1696, at 20 (1999), aff'd Beverly Health & Rehabilitation Servs. V. Thompson, 223 F.Supp.2d 73 (D.D.C. 2002), we rejected the "proposition that the mere submission of a required plan of correction could itself convert an immediate imposition of a remedy into a 'date certain' remedy," meaning a remedy imposed to take effect by a date certain unless compliance is achieved before that date. We said that this proposition "would place in the hands of providers rather than the enforcement agencies the choice of how and within what time frame to respond to deficiency findings, which is clearly inconsistent with the congressional purpose in enacting nursing home enforcement legislation." Id.

9. CMS made the termination effective on September 4 (after faxing the notice on August 14), which satisfied 15-day notice requirement in section 488.456(c).

10. The ALJ did not, as Rosewood suggests (Br. at 21), find that it failed to submit an acceptable plan of correction within the prescribed timeframe. The ALJ merely found that the regulations gave CMS discretion to accept or reject a plan of correction, and that he had no authority to review CMS's exercise of that discretion. ALJ Decision at 29. That is a correct statement of the law. See Hermina Traeye Memorial Nursing Home at 13 (noting that the ALJ "properly concluded that he lacked authority to adjudicate the question of whether [CMS] abused its discretion in deciding to reject the POC").