Appendix — Fairfax Nursing Home, Inc. v. Department of Health & Human Services

No.02 76 TNO 13 2002

in 4

IN THE

Supreme Court of the United States

OCTOBER TERM, 2002

FAIRFAX NURSING HOME, INC.,

Petitioner

V.

UNITED STATES DEPARTMENT OF

HEALTH AND HUMAN SERVICES

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Seventh Circuit

APPENDIX TO

PETITION FOR WRIT OF CERTIORARI

CHARLES P. SHEETS

BRIAN E. NEUFFER

Counsel of Record

WINSTON & STRAWN

35 West Wacker

Chicago, Illinois 60601

(312) 558-5600

Counsel for Petitioner

FAIRFAX NURSING HOME, INC.

App. i

APPENDIX CONTENTS

App.

Page

Fairfax Nursing Home, Inc. v. United States,

HHS, 300 F.3d 835 (7th Cir. 2002) ........c.c.scccsescorecscceoee 1-13

Fairfax Nursing Home, Inc. v. Health Care Financing

Administration, DAB No. 1794 (2001)..........::sssseceeeees 14-43

Fairfax Nursing Home, Inc. v. Health Care Financing

Administration, DAB CR 1 (2001) .........ccceeceeeeeeeeee 44-80

Hillman Rehabilitation Center v. United States,

DAB No. 1611 (1997)

App. 1

UNITED STATES COURT OF APPEALS FOR THE

SEVENTH CIRCUIT

300 F.3d 835; 2002 U.S. App. LEXIS 16505

FAIRFAX NURSING HOME, INCORPORATED,

Petitioner,

V.

UNITED STATES DEPARTMENT OF HEALTH &

HUMAN SERVICES, Respondent.

No. 01-4088

May 29, 2002, Argued

August 15, 2002, Decided

PRIOR HISTORY: Petition for Review of a Final

Decision of the Department of Health and Human Services

Department Appeals Board, Appellate Division. DAB No.

1794.

DISPOSITION: AFFIRMED.

COUNSEL:

For FAIRFAX NURSING HOME, INCORPORATED,

Petitioner: Brian E. Neuffer, WINSTON & STRAWN,

Chicago, IL USA.

For UNITED STATES DEPARTMENT OF HEALTH

& HUMAN SERVICES, Respondent: Ted K.

Yasuda, DEPARTMENT OF HEALTH AND HUMAN

SERVICES, Office of the General Counsel, Region V,

Chicago, IL.

JUDGES: Before RIPPLE, DIANE P. WOOD and

EVANS, Circuit Judges.

App. 2

OPINION BY: RIPPLE, Circuit Judge.

Fairfax Nursing Home is a skilled nursing facility

participating in Medicare and Medicaid. Fairfax was

assessed a civil monetary penalty ("CMP") by the Center

for Medicare and Medicaid Services ("CMS") because of

its failure to comply substantially with Medicare

regulations governing the care of respirator-dependent

nursing home residents. Fairfax appealed to the Department

Appeals Board of the Department of Health and Human

Services ("HHS"); after a hearing before an Administrative

Law Judge, both the ALJ and the Appellate Division

affirmed the CMP. Pursuant to 42 U.S.C. §§ 1320a-7a(e)

and 1395i-3(h)(2)(B)(2), Fairfax appeals that decision to

this court. Fairfax argues that the Department Appeals

Board ("DAB") erroneously placed the burden of proof on

Fairfax and that the ALJ applied the incorrect legal

standard in determining that Fairfax had violated HHS

regulations. For the reasons set forth[**2] in the following

opinion, we affirm the decision of the Appeals Board.

I. BACKGROUND

A. Facts

Fairfax is a skilled nursing facility ("SNF"), see 42

U.S.C. § 1395i-3(a); 42 C.F.R. § 488.301, participating in

Medicare and Medicaid (collectively "Medicare") as a

provider. Regulation of SNFs is committed to the Center

for Medicare and Medicare Services, formerly known as

the Health Care Financing Administration ("HCFA"),' and

to state agencies with whom the Secretary of Health and

' We shall refer to this agency by its present name, CMS, because it

has been more than one year since the name change was implemented.

See 66 Fed. Reg. 35,437 (July 5, 2001). However, in some places,

when quoting from the record or the decisions of the ALJ and the

Appellate Division, the agency is referred to as HCFA.

App. 3

Human Services has contracted. See 42 U.S.C. § 1395aa(a).

The primary method of regulation is by unannounced

surveys of SNFs, conducted in this case by surveyors of the

Illinois Department of Public Health ("IDPH"). See 42

U.S.C. § 1395i-3(g). These surveys are conducted at least

once every 15 months. See Jd. § 1395i-3(g)(2)(A)(3). If the

State survey finds violations of Medicare regulations, the

State may recommend penalties to CMS. The civil

monetary penalty imposed here was based on an IDPH

recommendation.

CMS imposed the penalty because of series of

failures in Fairfax's care of ventilator-dependent residents.

On December 20, 1996, R10, a ventilator-dependent

resident at Fairfax, suffered respiratory distress and

required emergency care.” Respiratory therapists

administered oxygen directly to R10, and one therapist

turned off R10's ventilator because the alarm was sounding.

Once R10 was stabilized, the therapists left, but neglected

to turn the ventilator back on. As a result, R10 died.

Prompted by this incident, Fairfax began to develop a

policy for the care of ventilator-dependent residents. That

policy was completed in February 1997 and was

implemented in early March of that year. The policy

provided that once the resident was stabilized following an

episode of respiratory distress: the nurse will check the

resident & chart Q 15 minutes X 4 (for a total of 1 hr.)

encompassing the following: vital signs/respiratory status

oxygen stats [saturation] /lung sounds/vent settings /level

of consciousness/ odor color and consistency of secretions

& comfort level of the resident. Admin. R., App. A at 517.

On March 2, 1997, R126 was observed to have a

low oxygen saturation level, an elevated pulse and

temperature, and to be breathing rapidly. These signs

7 All residents are denoted by number to respect their privacy.

App. 4

indicated that the resident was having respiratory

difficulties. R126's physician was called; he ordered a

chest x-ray and gave several other instructions. However,

contrary to Fairfax's policy, R126's medical chart did not

reflect whether these orders were carried out. R126 died

shortly thereafter.

On March 5, 1997, R127 was found with low

oxygen saturation and mottled extremities. Fairfax staff

failed to make a complete assessment, took no vital signs,

made no follow-up assessments and did not notify a

physician. On March 7, R127 was found cyanotic and

required five minutes of ambu-bagging. Nurses charted

four follow-up notes, but only observed R127's color and

oxygen saturation and took no other vital signs. Also on

March 7, during the 7 a.m. to 3 p.m. shift, three episodes of

respiratory distress were noted, each of which required

ambu-bagging. No physician was called. On March 10,

R127's skin was observed turning blue, but there was no

record of treatment for respiratory distress and no vital

signs or assessments were charted. On March 21, R127

had another episode, this time with mottled legs, shaking

and a dangerously low oxygen saturation. The physician

was present; R127 was ambu-bagged and administered

Valium. There was no complete assessment and no follow-

up. On March 25, R127 was found to have a severe

infection and died on March 27.

On March 23, 1997, R83 was found non-responsive

with low oxygen saturation, low blood pressure, an

elevated pulse rate and a low respiratory rate. R83 was

ambu-bagged, and the treating physician was called. The

first noted follow-up was an hour later and 2-1/2 hours

passed before R83 was monitored again.

On April 2,._1997, a state surveyor observed a

Fairfax employee fail to use sterile procedures while

App. 5

performing tracheostomy care on R6 and R11. The same

employee also neglected to hyper-oxygenate the residents

before or after suctioning the tracheostomy.’

On April 3, 1997, R68 became cyanotic, with low

oxygen saturation, which required ambu-bagging and an

increase in the amount of oxygen given through the

ventilator. The records for R68 failed to note R68's vital

signs, and the record did not reflect whether R68 oxygen

saturation level ever returned to a normal level. On April

4, R68 was not sufficiently stable to permit a routine

tracheostomy change.

After a survey on April 8, 1997, IDPH surveyors

determined that Fairfax's actions and omissions posed

"immediate jeopardy" to the health and safety of its

residents. Specifically, Fairfax had violated 42 C.F.R. §

483.25(k), which pertains in part to the special care of

ventilator-dependent residents. CMS concurred and notified

Fairfax by a letter dated May 7, 1997, that CMS was

imposing a CMP of $3,050 per day for a 105-day period,

from December 20, 1996, through April 3, 1997, during

which Fairfax was not in substantial compliance with HHS

regulations governing the care of ventilator-dependent

residents. CMS also assessed a penalty for a period of

noncompliance running from April 4, 1997, through May

14, 1997. The total penalty for this latter period was

$2,050, and Fairfax did not challenge it.

* Hyper-oxygenation refers to "giving the patient or resident more air

prior to suctioning, because when you introduce the suction catheter

that's attached to the suction machine and you're actually drawing out

both secretions and air, and when you hyper-oxygenate a patient or

resident you're giving them air to . . . help them through the process."

Admin. R., App. A at 294. This procedure should be followed both

before and after suctioning. See /d. at 295.

App. 6

B. Administrative Law Judge's Decision

Fairfax appealed the CMP to the HHS Department

Appeals Board ("DAB"), which reviews the imposition of

CMPs pursuant to a provider's right of review under 42

C.F.R. § 498.5. The DAB assigned the case to an

administrative law judge who held a hearing in late May

and early June 2000. Applying an earlier DAB Appellate

Division decision, Hillman Rehabilitation Center v. United

States, DAB No. 1611 (1997), the ALJ required that CMS

make out a prima facie case for the imposition of the CMP,

but assigned the ultimate burden of proof to Fairfax. Thus,

Fairfax had to prove, by a preponderance of the evidence,

that it was substantially compliant with the applicable

regulations. The ALJ affirmed CMS' initial determination

to impose a CMP of approximately $320,000 on Fairfax.

In doing so, the ALJ found that a state of immediate

jeopardy prevailed at Fairfax from December 20, 1996,

until April 3, 1997, due to Fairfax's violations of 42 C.F.R.

§ 483.25(k).

The ALJ discussed each of the violations found by

the state surveyors, beginning with the death of R10. R10

died, in part, the ALJ concluded, because Fairfax did not

have in place a policy for the monitoring of ventilator-

dependent residents following an episode of respiratory

distress. This lack of a policy and later failures to comply

with the new policy posed severe risk to the health and

well-being of the patients. The ALJ found that all but one

of the surveyors' reported violations constituted a risk to

patients at the immediate jeopardy level. The ALJ

emphasized the repeated monitoring failures and the threat

those failures posed to the residents. The ALJ found that

"there is not only a prima facie case of noncompliance here,

but the preponderance of the evidence is that Petitioner was

not complying substantially" with the regulations

governing the proper care of vent-dependent residents.

App. 7

Admin. R. at 24. Finally, the ALJ found that the amount of

the CMP was reasonable.

C. Department Appeals Board, Appellate Division

Decision

Fairfax appealed the ALJ's decision to the DAB

Appellate Division. Fairfax argued that the ALJ erred

following the Appellate Division's earlier ruling in Hillman

and assigning the ultimate burden of proof to Fairfax. It

further contended that the ALJ. applied the wrong legal

standard, linked together unrelated incidents and that the

amount of the CMP was punitive, rather than remedial.

With respect to the burden of proof, CMS submitted

that Fairfax had waived the issue by not raising it before

the ALJ. The Appellate Division took note of this

objection, but decided the issue on the merits. The

Appellate Division first concluded that the burden of proof

was irrelevant because the evidence was not in equipoise.

The Appellate Division nevertheless reaffirmed Hillman

and rejected Fairfax's argument. The Appellate Division

also rejected Fairfax's other arguments, determining that

the ALJ applied the proper legal standard, that the ALJ's

decision was supported by substantial evidence and that the

amount of the CMP was reasonable. Fairfax appeals. We

have jurisdiction under 42 U.S.C. § 1395i-3(h)(2)(B)(2)

and 42 U.S.C. § 1320a-7a(e).

Ii DISCUSSION

We must now determine whether substantial

evidence supports CMS' conclusion that a state of

immediate jeopardy prevailed at Fairfax from December

20, 1996, until April 4, 1997.4

* In Hillman Rehabilitation Center v. United States, DAB No. 1611

(1997), available at 1997 WL 123708, the Appellate Division of the

HHS Department Appeals Board held that in termination hearings

before an ALJ, the sanctioned facility bears the burden of persuasion

once HHS has made a prima facie showing to justify the CMP. See

Hillman, at 1; Appellant's App. 1. This rule was extended to civil

monetary penalty cases by Cross Creek Health Care Center v. HCFA,

DAB No. 1665 (1998), available at 1998 WL 479291. Fairfax argues

that the Hillman rule violates the Administrative Procedure Act in two

ways.

HHS argues that Fairfax waived its objection to HHS' assignment of

the burden of proof to Fairfax by failing to raise the issue before the

ALJ. Fairfax did raise the issue on appeal to the DAB Appellate

Division. Under the statute governing our review, a party must raise an

issue before "the Secretary" in order to preserve the issue. See 42

U.S.C. § 1320a-7a(e). Nevertheless, we think raising the issue on

appeal within the DAB is sufficient to preserve it for our review.

Further, the Appellate Division itself did not rely on waiver and

resolved the merits of Fairfax's appeal.

Fairfax submits that the Secretary was required to promulgate this

rule by notice-and-comment rulemaking and that such a rule could not

be adopted by adjudication. Second, Fairfax argues that Hillman

violates APA § 7(c), which places the burden of proof on the

"proponent of a rule or order." 5 U.S.C. § 556 (d).

We believe that several reasons militate against our addressing this

issue at this time. First, the issue does not affect the outcome in this

case. By its own terms, the rule in Hillman is operative only when the

evidence is in equipoise, and, as our discussion in the text indicates, the

evidence in this case certainly cannot be characterized as in equipoise.

Secondly, we believe that this issue ought to be addressed with great

prudence and caution. The Appellate Division has not addressed the

application of this rule to civil monetary penalties in any

comprehensive manner. Premature adjudication on our part will not be

helpful in achieving accuracy or clarity in this important area of

administrative practice. Definitive adjudication on our part is best

reached after that administrative body has had the opportunity to set

forth in more plenary fashion than it has in this case the justification

for this rule.

App. 9

A. We first address Fairfax's argument that the ALJ

employed the incorrect legal standard. The regulations set

up two basic categories of conduct for which CMPs may be

imposed. See 42 C.F.R. §§ 488.408, 488.438. The upper

range, permitting CMPs of $3,050 per day to $10,000 per

day, is reserved for deficiencies that constitute immediate

jeopardy to a resident or, under some circumstances,

repeated deficiencies. See Id. § 488.438(a)(1)(i). By

contrast, the lower range of CMPs, which begin at $50 per

day and run to $3,000 per day, is reserved for "deficiencies

that do not constitute immediate jeopardy, but either caused

actual harm or have the potential for causing more than

minimal harm." See Id. § 488.438(a)(2)(ii). "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." /d. §

488.301.

Fairfax emphasizes the ALJ's use of the term

"potential" to describe the probability of harm in several of

the ALJ's findings. It submits that the ALJ's use of this

terminology establishes that the deficiencies in question

were deserving of "lower range" penalties. We take each in

turn.

Finding 1(b): Petitioner failed to carry out the

treating physician's orders and failed to properly document

R126's medical charts. This had the potential for serious

injury, harm, impairment, or death to the resident and

constitutes immediate jeopardy. Admin. R. at 8. Fairfax

contends that potential for serious harm is insufficient to

constitute immediate jeopardy, which requires that the

provider's omission be likely to cause serious harm or

death. However, in the discussion below this finding, the

ALJ found that "Petitioner was woefully inadequate in the

treatment and care of R126. . . . Such conduct caused or

App. 10

was likely to cause serious injury, harm, impairment or

death to the resident." Jd. at 9. The ALJ found that "the

record presents a picture of a lackadaisical staff, rather than

a staff aggressively treating a pneumonia that was further

aggravating the resident's already compromised health." Jd.

at 10. The ALJ clearly was aware of the proper standard

for immediate jeopardy and applied it correctly.

Finding 1(c) addressed Fairfax's failure to monitor

R127 after R127's episodes of respiratory distress. The

ALJ found that this monitoring failure "had the potential

for serious injury, harm, impairment, or death to the

resident and constitutes immediate jeopardy." Admin. R. at

11. Fairfax argues that this is an indication of the ALJ's

application of a lower standard than immediate jeopardy as

defined in the regulations. Again, the ALJ's discussion of

this finding demonstrates that he was well aware of the

proper standard and applied it correctly. The ALJ devoted

four pages of his opinion to discussing the treatment of

R127, and addressed the specific risks posed to the resident

by Fairfax's failure to monitor R127 after several

respiratory episodes in close succession. He closes his

analysis with a finding that the failures of the staff to assess

properly and monitor the patient, as well as the failure to

call the treating physician, “exposed the resident to risk of

serious injury, harm, impairment, or death." Jd. at 16.

The other findings of the ALJ that are questioned by

Fairfax, when read in context, likewise make clear that the

lapses were of a severe nature.

Finding 1(d) discussed Fairfax's failure to monitor

R83 and R68, which “had the potential for serious injury,

harm, impairment, or death to the resident and constitutes

immediate jeopardy." Admin. R. at 16.

App. 11

In Finding 1(e), which addressed Fairfax's failure to

ensure that R6 and R11 received proper tracheostomy care,

the ALJ concluded that "this had the potential for serious

injury, harm, impairment, or death to the residents and

constitutes immediate jeopardy." Jd. at 18. Fairfax again

cites the ALJ's failure to use the precise terminology of 42

C.F.R. § 488.301 as evidence that he applied the wrong

standard. Close attention to the body of the opinion, once

again, reveals that the ALJ both understood the term's

meaning and applied it correctly. In finding l(c), the ALJ

had already discussed the risks posed by Fairfax's failure to

monitor residents following an episode of respiratory

distress, so there was no need to repeat that discussion in

finding 1(d), which dealt with the same issue. The ALJ's

conclusion with respect to R83 makes manifestly clear that

there was no misunderstanding of the applicable standard:

"That R83 survived Petitioner's incompetent care and

treatment does not excuse the fact that he was placed at risk

of serious injury, harm, impairment, or death." Admin. R.

at 17.

With respect to R68, the ALJ remarked in a similar

vein: "Ms. Daniels testified that it was ‘pretty lucky’ that

nothing serious happened to R68, because, in a matter of

minutes, brain damage could be sustained from lack of

oxygen. Petitioner's duty to provide appropriate respiratory

care to its ventilator-dependent residents cannot be a matter

of chance." Jd. at 17-18 (citation omitted). Under finding

1(d), the ALJ did point out Fairfax's violation of its

guidelines and its monitoring errors. The conclusion is

inescapable that the monitoring failures described in

finding 1(d) could lead to the same dire consequences the

ALJ chronicled in finding 1(c). The same is true with

respect to finding 1(e). In similar language, the ALJ

concluded that patients R6 and R11 were "placed at serious

App. 12

risk of injury, harm, impairment or death" from the

"deficient tracheostomy" care that they received. Jd. at 20.

As the members of the Appellate Division noted, a

fair reading of the ALJ's opinion also makes clear that he

focused not simply on the situation of each individual

patient, but also on the entire state of readiness in the

facility during the time in question. Fairly read, his

"bottom line" is that a respiratory patient in Fairfax during

the time in question was in continuous jeopardy of serious

injury or death because of the systemic incapacity of the

facility to render the necessary care to sustain life and avoid

serious injury. The record is replete with references to the

danger of infection to vent-dependent residents living in

nursing homes. The death of R10 was the beginning of a

series of events that document all too graphically the

finding of the ALJ.

Finally, we note that the ALJ carefully and correctly

delineated the entire regulatory scheme before he embarked

on his analysis of the individual situations of the patients.

This manifestation of his understanding of the distinctions

that he is now accused of misunderstanding and

misapplying supports further the Appellate Division's

estimation - and ours - that he both understood the law and

properly applied it.

B. We also believe that the HHS' decision is

supported by substantial evidence. The state surveyors

documented numerous instances of Fairfax's failure to care

adequately for its respirator-dependent residents. The

common thread running through most of these omissions is

Fairfax's repeated lack of follow-up and monitoring after a

resident experienced respiratory distress. Beginning with

the death of R10, and continuing throughout the period in

question, Fairfax did not ensure that, once a resident had an

episode, that resident was examined at regular intervals in

App. 13

the time immediately following the incident. The record

firmly supports HHS' determination that a state of

immediate jeopardy to resident health existed at Fairfax

from December 20, 1996, until April 3, 1997.

Conclusion

The Board's decision was supported by substantial

evidence and, therefore, it is affirmed.

AFFIRMED

App. 14

DEPARTMENT OF HEALTH AND HUMAN SERVICES

DEPARTMENTAL APPEALS BOARD

APPELLATE DIVISION

No. A-2001-75

FAIRFAX NURSING HOME INC., PETITIONER

v. :

HEALTH CARE FINANCING ADMINISTRATION, RESPONDENT

DAB No. 1794

2001 HHSDAB LEXIS 112

October 30, 2001

PANEL: Donald F. Garrett, Marc R. Hillson, Judith A.

Ballard, Presiding Board Member

OPINION:

DECISION ON REVIEW OF ADMINISTRATIVE

LAW JUDGE DECISION

Fairfax Nursing Home, Inc. (Fairfax) appealed a

March 22, 2001 decision by Administrative Law Judge

(ALJ) Jose A. Anglada affirming a determination by the

Health Care Financing Administration (HCFA)° to impose

a civil money penalty against Fairfax. Fairfax Nursing

Home, Inc., DAB CR753 (2001) (ALJ Decision). For the

reasons stated below, we uphold the ALJ Decision. We

affirm and adopt his findings of fact and conclusions of

law.

' Although HCFA has been renamed the Centers for Medicare &

Medicaid Services (CMS), we continue to use "HCFA" below since

that acronym was used to refer to the agency at the time that the actions

at issue here were taken and that the testimony discussed was given.

See 66 Fed. Reg. 35,437 (July 5, 2001).

App. 15

Legal Background

Requirements for long-term care facilities that seek

to participate in the Medicare program as a skilled nursing

facility under section 1819 of the Social Security Act (Act),

or in the Medicaid program as a nursing facility under

section 1919 of the Act, are set out at 42 C.F.R. Part 483.

The general "quality of care" requirement at section 483.25

provides that— Each resident must receive and the facility

must provide the necessary care and services to attain or

maintain the highest practicable physical, mental, and

psychosocial well-being, in accordance with the

comprehensive assessment and plan of care. More

specifically, subsection 483.25(k) provides that the facility

“must ensure" that residents receive proper treatment and

care for "special services," including ‘tracheostomy care,

tracheal suctioning, and respiratory care.

Compliance with these requirements is determined

through the survey and certification process, set out at 42

C.F.R. Part 488, Subpart E. Surveys are generally

conducted by a state survey agency under an agreement

with HCFA (although HCFA may itself conduct surveys

and revisits). Subpart F of Part 488 specifies the remedies

that may be imposed by HCFA (or a state where

appropriate) based on a finding that a facility is not in

substantial compliance with the requirements. Factors that

must be considered in selecting what remedy to impose

include the seriousness of the deficiencies, including

whether the deficiencies constitute immediate jeopardy,

and whether the deficiencies are isolated, constitute a

pattern, or are widespread. 42 C.F.R. 488.404. Other

factors that may be considered include the relationship of

one deficiency to other deficiencies. One of the available

remedies is a civil money penalty (CMP). Section 488.430

provides that- HCFA... may impose a civil money

penalty for the number of days of past noncompliance since

App. 16

the last standard survey, including the number of days of

immediate jeopardy. "Immediate jeopardy" is defined to

mean - 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.

An upper range CMP, $3,050 to $10,000 per day,

must be imposed for deficiencies constituting immediate

jeopardy to the facility's residents. 42 C.F.R. §§ 488.408;

488.438(a)(1)(i). A per day penalty "may start accruing as

early as the date that the facility was first out of

compliance" and be computed for the "number of days of

noncompliance until the facility achieves substantial

compliance" or is terminated from the program. 42 C.F.R.

§§ 488.440; 488.454.

A facility may appeal a_ certification of

noncompliance leading to an enforcement remedy, but may

not appeal the choice of remedy or the finding that

deficiencies pose immediate jeopardy. 42 C.F.R.

488.408(g); 498.3(b)(12); 498.3(d)(10). A determination

with respect to the level of noncompliance may be appealed

only if a successful challenge on this issue would affect the

range of CMP amounts that HCFA could collect. 42 C.F.R.

§§ 498.3(b)(13); 498.3(d)(10); 488.438(e). | HCFA's

determination as to the level of noncompliance "must be

upheld unless it is clearly erroneous." 42 C:F.R. 498.60(c).

This includes HCFA's finding of immediate jeopardy.

Woodstock Care Center, DAB No. 1726, at 9, 38 (2000).

Under 42 C.F.R. Part 498 procedures, there is a

right to request a hearing by an ALJ assigned to the

Departmental Appeals Board and a right to request review

of an ALJ decision by the Board itself. A request for

review of an ALJ decision must specify the issues, the

findings of fact or conclusions of law with the party

App. 17

disagrees, and the basis for contending that the findings and

conclusions are incorrect. 42 C.F.R. 498.82(b).

HCFA's findings in this case were based on a

survey performed by the Illinois Department of Public

Health (IDPH), from April 1 through 8, 1997. HCFA

determined to impose a penalty of $3050 per day for the

105-day period from December 20, 1996 through April 3,

1997, and a penalty of $50 per day for the period April 1

through May 14, 1997. Fairfax appealed the $3050 per day

penalty (totaling $320,250), including the level of

noncompliance, but did not appeal the remaining penalty

(totaling $2,050). ALJ Decision at 2. HCFA's findings for

the higher level penalty were based on alleged deficiencies

in meeting the requirements of 42 C.F.R. 483.25(k) at the

immediate jeopardy level, based on findings with respect to

facility residents identified as R10, R126, R127, R83, R68,

R6, R11, and R130.

The ALJ Decision

In his decision, the ALJ made the following

numbered findings of fact and conclusions of law:

1. Petitioner was not in substantial compliance

with federal participation requirements from December 20,

1996 through April 3, 1997.

a. Petitioner failed to implement a_ policy

concerning ventilator dependent residents, and,

through its carelessness, brought about the

premature demise of R10. This constitutes

immediate jeopardy.

b. Petitioner failed to carry out the treating

physician's orders and failed to properly

document R126's medical charts. This had the

potential for serious injury, harm, impairment or

App. 18

death to the resident and constitutes immediate

jeopardy.

c. Petitioner failed to adhere to the guidelines it

had developed in February 1997, and

implemented at the beginning of March 1997

for ventilator dependent residents in respiratory

distress by not monitoring or providing proper

follow-up -assessments to R127. This had the

potential for serious injury, harm, impairment,

or death to the resident and _ constitutes

immediate jeopardy.

d. Petitioner failed to adhere to the guidelines it

had adopted in March 1997 for ventilator

dependent residents in respiratory distress by

not monitoring or providing proper follow-up

assessments to R83 & R68. This had the

potential for serious injury, harm, impairment,

or death to the resident and constitutes

immediate jeopardy.

e._ Petitioner failed to ensure that R6 and Ril

received proper tracheostomy care. This had the

potential for serious injury, harm, impairment,

or- death to the residents and constitutes

immediate jeopardy.

f. The conduct of Petitioner with respect to R130

does not constitute a deficiency.

2. Beginning December 20, 1996 ard continuing

through April 3, 1997, Petitioner failed i» comply with

requirements of 42 C.F.R. 483.25 at tie immediate

jeopardy level.

3. The amount of the penalty imyyesed by HCFA is

reasonable. Under each of his major findings and

conclusions, the ALJ set out the survey findings, and then

ee

App. 19

discussed his findings based on the evidence presented,

stating which witnesses he found credible and why he

rejected Fairfax's arguments. We do not here repeat the

detailed findings from the ALJ Decision, except to the

extent necessary to address Fairfax's arguments on appeal.

tandard for Review

Under the guidelines for Board review under 42

C.F.R. Part 498, the standard of review on a disputed

factual issue is whether the ALJ decision is supported by

substantial evidence in the record as a whole. The standard

of review on a disputed issue of law is whether the ALJ

decision is erroneous. See e.g., Woodstock Care Center,

DAB No. 1726, at 8-9 (2000).

Issues on Appeal

On appeal, Fairfax raised a threshold issue .

regarding whether the ALJ applied the appropriate burden

of proof. Fairfax also alleged generally that the ALJ erred

by - using the wrong legal standard for deciding

whether a deficiency existed at all, substituting the facility's

new respiratory care protocol (adopted after the death of

R10) for the applicable standard of care; 1 concluding

that the mere "potential" or "risk" of harm is sufficient to

warrant a finding of immediate jeopardy; 1 linking

unrelated incidents (alleged deficiencies occurring during

the last 30 days of the 105-day period) to the deficiency

that resulted in R10's accidental death on December 20,

1996, and assuming an unbroken period of immediate

jeopardy during the intervening time; and 1 affirming a

total penalty that is improperly punitive, rather than

remedial.

While not alleging that any of the ALJ's specific

findings of fact were not supported by substantial evidence

in the record, Fairfax set out its version of the facts with

App. 20

respect to each of the residents for which findings were

made. Fairfax asserted, based on its version of the facts,

that the "alleged deficiencies re R126, R127, R83, R68, R6,

& Ril do not rise to the level of immediate jeopardy."

Fairfax Appeal Brief (App. Br.) at 19-24.°

Below, we first discuss the threshold issue

regarding burden of proof. We then address each of the

general allegations of error, discussing as necessary the

more detailed arguments made related to each of the

allegations. Finally, we state why we conclude that the

ALJ's factual findings are supported by substantial

evidence in the record and reject Fairfax's characterization

of the incidents in question.

1. The ALJ applied the appropriate burden of

proof.

In Hillman Rehabilitation Center, DAB No. 1611

(1997), this Board reversed an ALJ decision that had placed

the ultimate burden of persuasion on HCFA to establish

that a rehabilitation agency that had previously entered into

a Medicare provider agreement no longer met the

conditions for participation, and therefore could be

terminated from the program. Based on the relevant

? Fairfax also objected to the change of administrative law judges that

occurred prior to the hearing in this case. Fairfax provided an affidavit

attesting that the first judge had told counsel that if IDPH “had

conducted an investigation on January 2, 1997 to investigate the

incident of December 20, 1996, he would rule that Immediate Jeopardy

could not be imposed on Fairfax from December 20, 1996 through

April 3, 1997." Exhibit (Ex.) C. Fairfax asserted that the “unilateral

reassignment of judges by HCFA" was a violation of due process. Id.

at 28. We agree with HCFA that Fairfax did not timely raise this

procedural issue. We note, however, that HCFA has no control over

assignment of Departmental Appeals Board (DAB) judges. The DAB

is independent of HCFA and assigns or reassigns cases to judges based

on their availability to hear and decide cases.

App. 21

statutory and regulatory language, prior administrative and

court decisions, and the underlying purpose of protecting

Medicare beneficiaries, this Board rejected the ALJ's

rationale for placing the burden on HCFA. The Board

concluded that the procedural concerns expressed by the

ALJ could be addressed in a manner more consistent with

the relevant provisions and underlying purpose. The Board

held the following:

FFCL 1A. HCFA must set forth the basis for its

determination terminating a provider with sufficient

specificity for the provider to respond, including

the basis for any finding that a condition-level

deficiency exists. The provider must then identify

which of the findings material to the determination

the provider disputes, and must also identify any

additional facts the provider is asserting.

FFCL 1B. At the hearing, HCFA has the burden of

coming forward with evidence related to disputed

findings that is sufficient (together with any

undisputed findings and relevant legal authority) to

establish a prima facie case that HCFA had a legally

sufficient basis for termination.

FFCL 1C. At the hearing, the provider has the

burden of coming forward with evidence sufficient

to establish the elements of any affirmative

argument or defense which it offers.

FFCL 1D. The provider bears the ultimate burden

of persuasion. To prevail, the provider must prove

by a preponderance of the evidence on the record

asa whole that it is in substantial compliance with

the relevant statutory and regulatory provisions.

Hillman at 8; see also Hillman at 9-10.

———————————————————————eooeee

App. 22

The Board decision was upheld in Hillman

Rehabilitation Center v. United States, No. 98-3789 (GEB)

(D.N.J. May 13, 1999). Subsequently, this Board

determined in Cross Creek Health Care Center, DAB No.

1665, at 13, n.10 (1998),that the rationale in Hillman

applies in the context of CMPs imposed on long-term care

facilities.

Fairfax did not raise the issue of burden of proof

before the ALJ. On appeal, however, Fairfax argued that

placing the burden of proof on Fairfax was unconstitutional

because it denied Fairfax due process. Fairfax also argued

that the decision in Hillman constituted a substantive

change in policy that the federal Administrative Procedure

Act (APA) required to be promulgated through notice and

comment rulemaking. In response to HCFA's argument

that Fairfax had waived this issue by not raising it before

the ALJ, Fairfax argued that its failure to raise the issue

below should not be considered a waiver since an ALJ does

not have the authority to invalidate a statute or regulation

on constitutional grounds.

We first note that Fairfax misconstrues the nature of

the Hillman decision. The applicable procedural

regulations in 42.C.F.R. Part 498 are silent on burden of

proof. 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.

Moreover, the Board's decision in Hillman was consistent

with prior decisions on burden of proof issued by the Social

Security Administration Appeals Council, the Board's

predecessor for reviewing ALJ decisions in these cases.

Thus, it did not represent any change in policy. If the

Board were persuaded that our determination on the burden

of proof was unconstitutional, nothing in the applicable

statutes or regulations would preclude us from reaching a _

different conclusion in this case. In any event, however,

there is no merit to Fairfax's challenge to the ALJ Decision

here based on its assertions about the burden of proof, for

the following reasons:

As we explained in Hillman, which party has the

ultimate burden of persuasion becomes significant only if

the weight of the evidence is in equipoise. That is not the

Situation here. Fairfax's constitutional argument lacks

merit. Fairfax presented no citations to relevant case law to

support the proposition that a Medicare provider has a due

process right to have the ultimate burden of persuasion

placed on HCFA. For the reasons explained in Hillman, at

pages 20-22, and affirmed on appeal, we conclude that

there is no such right.

2. The did not improperly substitute Fairfax's

protocol for the applicable standard of care.

After the death of R10, Fairfax developed a new

protocol for care of ventilator dependent residents in

respiratory distress. Fairfax alleged that the ALJ erred by

applying this protocol as a substitute for the applicable

standard of care. According to Fairfax, use of the new

protocol against Fairfax is contrary to public policy, as

evidenced in Federal Rule of Evidence No. 407. That rule

provides:

When, after an event, measures are taken which, if

taken previously, would have made the event less

likely to occur, evidence of the subsequent measure

is not admissible to prove negligence or culpable

conduct in connection with the event. This rule

does not require the exclusion of evidence of

subsequent measures when offered for another

purpose, such as proving ownership, control, or

feasibility of precautionary measures, if

controverted, or impeachment.

App. 24

Underlying this rule is the notion that use of corrective

actions as evidence of negligence or culpable conduct could

act as a disincentive to such measures and therefore

jeopardize public health and safety. Fairfax also pointed to

this Board's decision in Lake City Extended Care Center,

DAB No. 1658 (1998) for the proposition that failure to

follow an internal protocol is not necessarily evidence of a

failure to adhere to the standard of care. Fairfax App. Br. at

18-19.

We first note that this is not a question about the

admissibility of evidence. Fairfax did not timely object to

the ALJ admitting its protocol into the record. Indeed,

Fairfax submitted the protocol as its Exhibit 10. Moreover,

evidence that is inadmissible under the Federal Rules of

Evidence may be received in a Part 498 proceeding. 42

C.F.R. 498.61. The public policy underlying Rule 407 is

inapplicable as well. The survey and certification

regulations require corrective action for all deficiencies

except isolated deficiencies with a potential for only

minimal harm and no actual harm. 42 C.F.R. 488.408(f).

Thus, admitting evidence of what corrective actions

facilities took would not have the unintended consequence

of discouraging them from taking such actions. HCFA

pointed out, and Fairfax did not deny, that an exception to

Rule 407 is recognized where remedial action is mandated

by superior governmental authority. HCFA App. Br. at 56,

citing 2 Weinstein's Federal Evidence 407.05[3], p. 407-27

(2nd Ed. 2001).

-Fairfax's substantive argument that the ALJ

erroneously substituted Fairfax's policy for the applicable

standard of care also lacks merit. Fairfax's assertions about

the policy ignore not only statements in the ALJ Decision,

but also testimony from Fairfax's own witnesses with

nursing credentials confirming the testimony of HCFA's

witnesses with like credentials. The ALJ Decision noted

App. 25

that the purpose of the protocol, called "Nursing Guidelines

for Ventilator Dependent Residents in Respiratory

Distress," was to ensure not only proper care and treatment

of such residents, but also to provide monitoring of such

patients. He further noted that Fairfax's own Director of

Nursing (DON) had testified that the protocol "embodied

good nursing practices," that R10 should have been

monitored after apparently having been stabilized, and that

such monitoring is good nursing practice that "should be

done on every resident that goes into any type of distress."

ALJ Decision at 7, quoting Tr. at 502. The DON also

testified about the development of the policy and the

accompanying charting form, based on textbooks and

respiratory certification for nurses; she indicated that it was

good nursing practice before being put into writing and that

the form "was developed to make everyone more in tune

with what needed to be embodied in the charting." Tr. at

505-507. The surveyor, who was an experienced nurse,

also testified that the monitoring required by the protocol is

standard-nursing practice in the area. Tr. at 141 (Daniels);

see also Tr. at 152-154 (Daniels); 394 (Lawrence); 420-21

(Casares).

Fairfax presented no convincing evidence that its

policy did not represent the applicable standard of care.

Fairfax presented some testimony to the effect that the

requirement in the protocol to monitor the patient by

charting the vital signs and other observations might not

always apply if the nurse did "little things" that stabilized

the resident or if the initial intervention worked because the

problem was a mechanical one such as a kink in the

ventilator tubing. See, e.g., Tr. at 349 (Lawrence); Tr. at

492, 509 (Benda). The ALJ could, however, properly

discount this testimony in light of the facts that no

qualification appears on the face of the written policy

(which Fairfax's witnesses in effect admitted represented

App. 26

the standard of care) and that the policy applied to "any

resident in distress." P. Ex. 10; Tr. at 502 (Benda).

Moreover, even if the ALJ had credited this testimony, it

would not be sufficient by itself to undercut the ALJ's

findings with respect to the particular residents at issue

here. Substantial evidence in the medical records of the

residents to whom the ALJ applied this protocol as the

standard of care, as well as in the testimony as a whole,

supports his findings that the residents were in respiratory

distress that required monitoring to ensure that they had in

fact been stabilized.

In light of the testimony establishing the protocol as

the standard of nursing care, the ALJ did not err by

disregarding the opinion of a physician witness (Dr. Saltiel)

that suggested, contrary to the protocol, that physician

contact was not necessarily required in circumstances of

repeated episodes of respiratory distress. Moreover, the

ALJ found Dr. Saltiel's testimony not credible regarding the

protocol because he was confused about it and his

testimony was contradicted. ALJ Decision at 13-14.

Fairfax's reliance on Lake City is misplaced. - In that

case, the ALJ had concluded that the fact that Lake City's

protocol directed staff to call a physician if a resident's

temperature exceeded 101 degrees gave rise to a

presumption that this was the standard of care, but that the

facility had rebutted the presumption - by presenting

persuasive evidence that this was not required. In this

context, the Board adopted the ALJ's conclusion that

"failure by a facility to comply with a protocol is not a

failure to comply with a participation requirement where

the protocol does not comport with a professionally

recognized standard of care and where the participation

requirement does not direct a facility to follow each of its

internal protocols." Lake City at 18. Fairfax, however,

presented no evidence here to rebut the presumption that

App. 27

the protocol it adopted reflected the professionally

recognized standard of care. Moreover, as discussed

below, the deficiency found by HCFA (and the ALJ) here

was Fairfax's failure to have a guideline/procedure/protocol

on respiratory care (whether written or otherwise) that was

effectively communicated to staff and applied by them in

the care of the residents. Fairfax did not deny that it

needed to do this in order to ensure that residents receive

the special services they need, as required by 42 C.F.R.

483.25(k).’ Thus, we conclude that the ALJ did not err as

alleged by Fairfax. The ALJ found that the policy merely

articulated the applicable standard of care, and ample

evidence in the record supports this finding.

3. The ALJ applied the correct legal standard and

did_not misapply the definition of "immediate

jeopardy”.

As mentioned above, "immediate jeopardy" means -

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. Fairfax argued that the

ALJ departed from this definition, by concluding that mere

* We do not here adopt HCFA's position that the State Operations

Manual (SOM) interprets section 483.25(k) as incorporating a facility's

internal policies by reference into the regulation. HCFA relied on a

SOM section that merely directs surveyors to determine whether

facility staff is following the facility's own protocol and/or written

procedures for ventilators. HCFA Br. at 52, quoting SOM Appendix P

at PP-112. HCFA cannot reasonably rely on this as a basis for applying

an internal policy as though it had been incorporated by reference into

the regulation, especially in light of the outcome-oriented approach in

the long-term care requirements and Federal Register requirements for

incorporation by reference. We also note that the decisions on which

HCFA relied for the proposition that we must uphold any HCFA

interpretation are inapposite to Part 498 cases, in which the Board

renders the final decision on behalf of the Department.

App. 28

"potential" or "risk" of harm was sufficient for immediate

jeopardy, and therefore employed the wrong legal standard.

Fairfax pointed to language in the ALJ's numbered

findings, stating that deficiencies had the "potential" for

harm (FFCLs 1.b., 1.c., 1.d., and 1.e.), and to statements in

his discussion referring to "risk" of harm. In response,

HCFA pointed to language in the ALJ Decision which

HCFA said showed that the ALJ clearly understood the

definition of "immediate jeopardy" and was applying it.

HCFA cited certain court cases to support its position that

the substance of the decision, rather than the wording,

should control. Fairfax replied that "the ALJ failed to

specifically find that the deficiencies related to FFCLs 1(b)-

(e) were ‘likely to cause’ serious injury, harm, impairment

or death" and that "the immediate jeopardy ruling for those

findings, therefore, should be overturned." Fairfax Reply

Br. at 2. Fairfax sought to distinguish the cases relied on

by HCFA, arguing that, in this case, the problem is not

merely a passing remark of the ALJ's or the sketchiness of

the written opinion. Instead, Fairfax asserted, “Almost all

of the ALJ's actual findings misstate the governing legal

standard. The opinion is unambiguous on this point." Jd. at

3 (emphasis in original).

' We first note that the initial situation leading to

HCFA's finding that Fairfax failed to comply with the

requirement at 42 C.F.R. 483.25(k) to ensure that residents

receive special services such as respiratory care was with

respect to R10. With respect to this resident, the ALJ

found the following in FFCL l.a.: Petitioner failed to

implement a policy concerning ventilator dependent

residents, and, through its carelessness, brought about the

premature demise of R10. This constitutes immediate

jeopardy. ALJ Decision at 6. As Fairfax's argument seems

to recognize, this finding is consistent with the definition of

immediate jeopardy. In discussing this resident, the ALJ

App. 29

first stated that, in essence, the state surveyors had found

that the staff caring for R10 "did not follow

_ guidelines/procedures/protocols in the provision of

respiratory care, and that lack of adherence directly caused

the death of R10." Id. He then went on to discuss the

evidence, concluding: It is unequivocal, from the facts of

this case, that Petitioner's carelessness was the direct cause

of R10's death. Tr. at 489. The lack of due care is first

evident from the act of turning the resident's ventilator off,

and then from not monitoring the resident after she

apparently had been stabilized. ... Furthermore, Petitioner

did not have a written policy for the protection of ventilator

dependent residents in respiratory distress. It is evident that

whatever non-written guidelines existed were either

improperly communicated to the attending staff or were not

diligently applied. ALJ Decision at 8.

Second, the ALJ's FFCLs 1.b. to 1.e., to which

Fairfax objected, not only refer to "potential" for harm, but

also specifically state that each deficiency "constitutes

immediate jeopardy." This at the very least undercuts

Fairfax's contention that the specific findings are

"unambiguous" and makes reference to the decision as a

whole perfectly appropriate, as HCFA contended. An

examination of the ALJ Decision as a whole indicates that

the ALJ was aware of the definition of "immediate

jeopardy" and intended to find that these situations were

deficiencies with a likelihood of causing serious harm.

Moreover, while Fairfax is correct that mere potential or

risk is insufficient to meet the definition of immediate

jeopardy, the terms "potential" and "risk" are not inherently

inconsistent with the concept of "likelihood" in that

definition. See Woodstock Care Center, DAB No. 1726, at

38 (2000). The issue is whether the "potential" or "risk"

are sufficiently great to constitute:a "likelihood." The

ALJ's statements that the deficiencies constituted

App. 30

immediate jeopardy imply that he thought the potential/risk

did rise to a likelihood.

Moreover, a finding of immediate jeopardy is not

contingent on a finding that each individual incident placed

a resident at such a degree of potential or risk of serious

harm that there was a likelihood of harm to that specific

resident at that particular time. The more incidents with a

potential for serious harm, the more likelihood there is that

such harm will occur to some similarly situated resident,

particularly when, as in this case, the incidents evidence a

failure to have and consistently follow protocols to avoid

the potential harm. Findings about incidents related to

individual residents are not themselves the deficiencies that

must be corrected - the deficiency is the underlying failure

to meet a participation requirement evidenced by the

incident. 42 C.F.R. 488.301.

Fairfax's other general arguments related to the

immediate jeopardy determination similarly lack merit, for

the following reasons: [1] Contrary to what Fairfax

implied in describing the incidents here, the mere fact that

actual harm did not occur to each of the residents is

irrelevant. Immediate jeopardy encompasses situations

where there is a likelihood of serious harm. [2]Fairfax's

reliance on a decision by a state ALJ reaching a somewhat

different result is misplaced. The state ALJ did not have

the same evidence before her, nor was she applying the

same standards. See Fairfax Ex. B. Fairfax's arguments,

however, raise the issue of what is the "legal standard" that

a federal ALJ must apply in order to uphold a CMP at the

immediate jeopardy level. As noted above, the regulations

specifically state that HCFA's finding that a deficiency is at

the immediate jeopardy level must be upheld unless

"clearly erroneous." 42 C.F.R. 498.60(c).° The ALJ

* This standard was explained in the preamble to this regulation as

follows: "Survey team members and their supervisors ought to have

App. 31

recognized this as the standard, concluding that --

Petitioner failed to show that HCFA's determination of

immediate jeopardy was clearly erroneous. In fact, the

preponderance of the evidence establishes the Petitioner's

deficiency was at the immediate jeopardy level. . . .

Petitioner did not prove by the preponderance of the

evidence that it had eliminated the immediate jeopardy to

its residents on any date prior to April 4, 1997. ALJ

Decision at 24. He based this on 1) the evidence discussed

under his second major conclusion, including testimony by

the surveyor that "after R10's demise, the lack of the

facility's immediacy in initiating a protocol to prevent any

further problems placed residents at severe risk for harm, if

not death," 2) the evidence supporting his findings related

to other residents, and 3) his finding that "it was not until

April 4, 1997, that Petitioner initiated a comprehensive plan

to address and abate the immediate jeopardy." ALJ

Decision at 23-24.

4. The ALJ did not err in determining the duration

of the penalty.

Fairfax argued: "Even if the record could sustain an

immediate jeopardy finding for one or more deficiencies, it

does not support a finding of 105 days of continuous

immediate jeopardy." Fairfax App. Br. at 22. Fairfax

referred to the incident with R10 as "an isolated tragedy"

and likened it to the situation in Hermina Traeye Memorial

Nursing Home, CR756 (2001). In that case, the ALJ

concluded that "a single isolated episode of staff error in

the remote past" was not "persuasive evidence of an

ongoing failure to comply . . . at a survey that takes place

six months after the occurrence of the episode." Fairfax

some degree of flexibility and deference in applying their expertise in

working with these less than perfectly precise concepts." 59 Fed. Reg.

56,116; 56,179 (Nov. 10, 1994).

App. 32

App. Br. at 23, quoting Hermina Traeye, CR756, at 18-19.

According to Fairfax, the evidence regarding the event of

December 20, 1996 related to R10 "does not support an

inference that a general state of immediate jeopardy existed

over the next 70 days," and, instead, the IDPH surveyor

who visited Fairfax on January 2, 1997 "found no

deficiencies." Fairfax App. Br. at 23. If immediate

jeopardy had existed at that time, Fairfax asserted, the

surveyor was required under HCFA policy to take

immediate steps to protect the residents. Fairfax App. Br. at

23-24, citing State Operations Manual, §§ 7307, 7308, and

7309. According to Fairfax, HCFA failed to make a prima

facie case that Fairfax's residents were in a continuous state

of immediate jeopardy for 105 days." Jd. at 22.

These arguments have no merit. First, Fairfax's

attempt to characterize the events regarding R10 as an

"isolated event" simply is not supported by the record

before us. HCFA's finding of a deficiency constituting

immediate jeopardy was based on Fairfax's failure to have

policies/guidelines/protocols that were communicated

effectively to staff. Fairfax did assert that it had a protocol

that prohibited unplugging a ventilator during an episode of

respiratory distress such as that experienced by R10, but

did not assert that it had any written or oral

policy/guideline/protocol at the time of the incident

regarding monitoring a ventilator dependent resident

following respiratory distress. HCFA's further finding that

the immediate jeopardy was not abated until April 4 was

based on Fairfax's admitted failure to put such a protocol in

place prior to March 1997, and its failure thereafter to

_ effectively communicate to staff the need to follow

protocols on special services such as respiratory care,

tracheostomy, and tracheal suctioning. This failure was

evidenced by numerous incidents (up to and including the

time of the survey) for which records showed a failure to

App. 33

follow protocols, particularly the protocol for residents

suffering respiratory distress. The incidents were related in

this respect. Contrary to what Fairfax asserted, the survey

did not start on April 8, 1997. Rather, the record shows it

started on April 1 and was completed on April 8. HCFA

Exs. 1-6. The comprehensive steps that Fairfax took were

after the surveyors had informed Fairfax that the state of

immediate jeopardy might be found. HCFA Ex. 1, at 24.

Thus, this case is distinguishable from the facts found by

the ALJ in Hermina Traeye, where he found that HCFA

was basing its finding that the immediate jeopardy

continued solely on an inference from one episode.

Second, Fairfax also misrepresents what the record

shows about the IDPH surveyor who visited the facility

after R10's death. There is no evidence in the record that

this surveyor ever found or informed Fairfax that it had "no

deficiencies." Fairfax's DON testified that the surveyor

said she made "no findings," but this is not the same as a

finding of "no deficiencies." Tr. at 490 (Benda). Moreover

Fairfax's administrator, whose testimony was more

internally consistent, testified that, while the surveyor made

a remark that turning off the ventilater for R10 appeared to

be a "terrible mistake," she further indicated that her

investigation of the incident was not yet completed. Tr. at

621-623 (Considine); compare Tr. at 503-504 (Benda).

Indeed, there is evidence that the surveyor was still seeking

information from the facility as late as March 24, 1997. Tr.

at 680; P. Ex. 6. Moreover, it appears that her visit was

merely an investigation, rather than a survey. There is no

evidence in the record about when or whether this surveyor

actually completed her investigation. Since it is not clear

that she would have ever been obliged under the regulation

to take the steps required when immediate jeopardy is

found during a survey, it is not reasonable to infer from her

failure to take those steps that she found no immediate

App. 34

jeopardy. Moreover, even if her investigation had been a

survey resulting in a surveyor's finding that Fairfax was in

substantial compliance, Fairfax could not rely on that

finding. Under the regulations, surveyors make only

recommendations with respect to compliance of Medicare

facilities -- HCFA is not bound by those recommendations.

42 C.F.R. §§ 488.12, 488.330.

Fairfax is also mistaken in implying that it was

entitled to prospective notice of a finding of noncompliance

before a CMP may be imposed. The regulation at 42 C.F.R.

488.454 makes clear that HCFA may impose a CMP based

on a finding of a noncompliance occurring between surveys

and that the duration of such a CMP is until the facility

“achieves substantial compliance." Generally, this point is

determined by a revisit or by submission by the facility of

written, credible evidence that HCFA finds acceptable to

verify that corrections have been made. HCFA here

reduced the amount of the CMP at the point where it

determined Fairfax had abated the immediate jeopardy,

while the surveyors were on site performing the survey.

The fact that HCFA did not make findings about the

care provided to specific residents during the first 70 days

after R10's death is irrelevant. Fairfax witnesses admitted

that in that period Fairfax had not taken even the minimal

corrective step of putting in place its new protocol. Fairfax,

moreover, did not present any credible evidence that it had

taken other corrective action sufficient to ensure that it was

meeting the applicable standard of care during this 70-day

period. See ALJ Decision at 22-23. While Fairfax

presented evidence that it did do some in-service training,

other evidence indicates that the training focused on

matters other than monitoring residents following an

episode of respiratory distress and was not effective. See,

e.g., P. Exs. 8, 10; Tr. at 488, 544-545. Thus, HCFA could

reasonably conclude that the immediate jeopardy situation

Tce imaaai alii

App. 35

persisted throughout this period, particularly in light of

what later records showed about Fairfax's failure to in fact

provide the appropriate care to residents suffering from

respiratory distress, despite adoption in March of a protocol

based on the standard of care. In sum, HCFA was not

clearly erroneous in concluding that steps taken prior to

April 4 were insufficient to abate the immediate jeopardy.

5. The ALJ did not impose a CMP that is punitive.

Fairfax argued that the CMPs recommended by

HCFA and adopted by the ALJ are fatally flawed because

they are punitive in nature, rather than remedial. Fairfax

asserted that this rendered the CMPs contrary to the

Constitution, the Medicare Act, and this Board's prior

decisions. In support, Fairfax cited this Board's decision in

CarePlex of Silver Spring, DAB No. 1627 (1997) and the

ALJ decision on remand in CarePlex of Silver Spring,

CR536 (1998). Fairfax App. Br. at 25. According to

Fairfax, HCFA "admitted that the immediate jeopardy had

ceased to exist a few days before the April 8 survey" and

both parties “agreed that the alleged immediate jeopardy

was abated because Fairfax had drafted and implemented

its protocol for respiratory care prior to the date of the

survey" prior to “any finding or hint from HCFA that a

deficiency existed or that CMPs were accruing." Fairfax

App. Br. at 27. Therefore, Fairfax asserted, "HCFA may

not feasiblely argue that its recommended CMP served the

necessary remedial purpose of ‘induc{ing] the deficient

facility to correct outstanding deficiencies promptly and

effectively’," as required by the Board's decision in

CarePlex.

Again, Fairfax's argument is predicated upon a

misstatement of the facts. HCFA did not in fact admit that

the immediate jeopardy was abated prior to the survey, nor

agree that Fairfax had implemented its new protocol

App. 36

satisfactorily prior to the survey. The record shows that the

survey in fact started on April 1 and that it was only after

the surveyors had informed Fairfax that they considered

immediate jeopardy to exist that Fairfax developed the

comprehensive plan (outlined in the ALJ Decision) that

HCFA found satisfactory to abate the immediate jeopardy.

HCFA Ex 1. HCFA and the ALJ specifically found that the

steps taken previously were inadequate. Substantial

evidence in the record supports this finding, including the

medical records for residents R126, R127, R83, R68, R6,

and Rll. The medical records show that the facility staff

was not consistently following protocols Fairfax had

developed, based on applicable standards of care, for

providing special services such as respiratory care to

residents.

As noted above, the regulations specifically permit

imposition of CMPs for periods of past noncompliance

since the last standard survey. This does not render the

CMP punitive in nature. The threat of imposing the CMP

led Fairfax to comply in this instance and the CMP will be

an incentive in the future for Fairfax to maintain

compliance. While some remedies may provide an

incentive to correct existing deficiencies, the purpose is not

so limited. As explained in the preamble to the 1994

regulations implementing sections 1819 and 1919 of the

Act, Congress wanted to "discourage facility

noncompliance that the Congress believed to be widely

evident between surveys and thereby, to encourage lasting

compliance." 59 Fed. Reg. 56,116; 56,175 (Nov. 10,

1994). The preamble further explained that Congress

authorized imposing a CMP for past noncompliance, even

if subsequently corrected, to create a “financial incentive

for facilities to maintain compliance." 59 Fed. Reg. at

56,206, quoting H.R. Rep. No. 391, 100th Cong., Ist Sess.

473-6 (1987).

The suggestion by Fairfax that only if it knows in

advance that a penalty will be imposed does it have

sufficient notice that it should take steps to correct a

deficiency is disingenuous. Even if HCFA had not yet

made a noncompliance finding, the record shows that

Fairfax clearly knew after the death of R10 that at the very

least it needed to improve its care of residents experiencing

respiratory distress by developing and implementing a

protocol. Fairfax should have known, moreover, that

adopting the protocol, but not taking sufficient steps to

ensure it would be followed, would be inadequate to meet

the regulatory requirement that it ensure that residents

attain and maintain the highest practicable physical well-

being, including by ensuring that residents receive special

services, in accordance with their plans of care. In

proposing this requirement, HCFA explained that it

deliberately chose the word "ensure" with respect to

treatment and care that the facility is responsible for

providing "since this is the reason for the residents stay in

the facility, as well as for program payment." 56 Fed. Reg.

48,826; 48,850 (Sept. 26, 1991). We also note that the

amount of the penalty imposed is the lowest amount under

the regulations that could be imposed on a per day basis for

an immediate jeopardy level of noncompliance. Thus,

having concluded that HCFA was not clearly erroneous in

determining that immediate jeopardy existed during the

period from December 20, 1996 through April 3, 1997, we

do not have the authority to reduce the amount of the

penalty. ‘

As noted above, Fairfax did uot take specific

exception to the ALJ's factual findings made in his

discussion of individual residents (as opposed to his general

App. 38

numbered conclusions). Instead, Fairfax argued generally

that the incidents related to individual residents did not

show immediate jeopardy and presented its version of the

incidents, which differs in some respects from the ALJ's

findings or which emphasizes different facts. We have

addressed Fairfax's general arguments about immediate

jeopardy above. We have reviewed the entire record and

also conclude generally that the ALJ's findings are

supported by substantial evidence. Below, we address the

more specific arguments based on or implicit in Fairfax's

version of the facts.

a. Substantial evidence in the record supports the

ALJ's findings with respect to R10, and the

facts emphasized by Fairfax are irrelevant.

Throughout its briefing, Fairfax characterized the

death of R10 as an "accident" or an "isolated event” due to

the failure of a respiratory therapist to follow Fairfax policy

that a ventilator never be unplugged. Fairfax ignored the

findings regarding its failure to have and to communicate to

staff a protocol for monitoring ventilator dependent

residents after an episode of respiratory distress to ensure

that the resident is in fact stabilized and to evaluate the

underlying cause of the distress. The ALJ found that this

failure was a cause of R10's death since monitoring every

15 minutes for the first hour after the episode, per the

protocol later adopted, would have revealed that R10's

ventilator had been unplugged. Instead of directly

challenging this finding, Fairfax presented a version of the

events emphasizing that one of the respiratory therapists

was with R10 until approximately 15 minutes before a

nurse entered the room and found R10 dead at 1:15. The

flaw in this approach is that the protocol (based on the

standard of care) required nursing care to monitor the

resident, so the presence of the respiratory therapist in the

room is irrelevant. Indeed, the protocol is titled "Nursing

App. 39

Guidelines . . . ." P. Ex. 10. The record shows that the last

nurse who was present left the room at approximately

12:50, about 25 minutes before any nurse returned. HCFA

Ex. 12, at 8.2 The record also shows that, when the nurse

did return at about 1:15, the purpose was to change R10's

gastric feeding tube, rather than to monitor R10 to ensure

that she had stabilized. Jd. By then it was too late to revive

R10. The fact that the police who investigated R10's death

determined it was an “accident" is also irrelevant. As

HCFA pointed out, a conclusion that there was no criminal

intent in the unplugging of R10's ventilator is not

tantamount to a finding that Fairfax was not deficient in its

care of R10. Similarly, while the fact that the respiratory

therapist who unplugged the ventilator had 20 years’

experience may be relevant to show that Fairfax could have

expected that he would know to never unplug a ventilator,

it does not excuse Fairfax's deficiency in providing nursing

care to R10.

b. Substantial evidence in the record supports

the ALJ's findings about R126.

The ALJ thoroughly discussed the evidence and

arguments regarding R126, finding that Fairfax failed to

carry out the treating physician's orders, given after an

episode of respiratory distress, and that R126's medical

records fail to show that Fairfax took steps to increase his

oxygen level, which was dangerously low. ALJ Decision

at 8-11. The ALJ concluded that Fairfax was "woefully

inadequate in its treatment and care of R126, in violation of

42 C.F.R. 483.25(k)" and that such conduct "caused or was

* During the approximately 45 minutes between the onset of the

respiratory distress at 12:30 and the time the nurse returned, no vital

signs were charted. HCFA Ex. 1, at 20; P. Ex. 7. The surveyor

testified that such monitoring was even more critical for R10 because

she had been given Ativan, which would make her appear calm, even if

she had not been stabilized. Tr. at 146.

App. 40

likely to cause serious [*41] injury, harm, impairment or

death to the resident." Id. at 9.

On appeal, Fairfax argued as it had before the ALJ

that the record shows that R126 died within hours after the

orders were given and that in fact the doctor's orders were

being carried out. Fairfax App. Br. at 6.

The testimony relied on by Fairfax to show that the

orders were being carried out was found by the ALJ to be

vague, replete with generalities, and not credible in light of

the complete failure of Fairfax to produce the results of the

tests and x-ray the physician ordered, or a record entry

showing the dispensing of the antibiotic he ordered. We

agree and see no reason to disturb that credibility finding

here. Moreover, as the ALJ recognized, the deficiency was

not only in failing to carry out the orders, but in failing to

chart what was done, "inasmuch as responsible and

meaningful follow-up treatment would have been at peril,

absent such vital information." ALJ Decision at 11; see Tr.

at 157.

Fairfax's citations to R126's medical record to show

that he was in extremely poor condition, died shortly after

the orders were given, and was in a "do not resuscitate"

status are also unavailing, even if true. Fairfax provided

nothing to indicate that any of these factors affected the

duty of care that Fairfax owed to R126, nor that anything

that the ALJ found was expected of Fairfax under the

circumstances was inconsistent with the plan -of care for

this resident. Thus, we agree with the ALJ that it is

irrelevant that R126 would have expired in spite of

treatment.

c. Substantial evidence in the record supports

the ALJ's findings about R127, R83, and

R68.

App. 41

The ALJ found that Fairfax "failed to adhere to the

guidelines it had adopted in March 1997 for ventilator

dependent residents in respiratory distress by not

monitoring or providing proper follow-up assessments to"

R127, R83, and R68. ALJ Decision at 11-18.

Fairfax cited the record to show that R127 was also

extremely ill and that the family's instructions were to

provide only "comfort care." Fairfax App. Br. at 7-8.

According to Fairfax, it was cited for deficiencies "where

treatment and care were given with good results, but where

documentation regarding subsequent monitoring was

allegedly deficient according to Fairfax's new guidelines."

Id. at 8. Similarly, with respect to R83, Fairfax asserted

that "it is undisputed that Fairfax successfully treated this

resident, but Fairfax was cited because it should have

charted more frequently." Jd. at 9.

As noted above, however, failure to document

monitoring is a failure to meet the standard of care

embodied in Fairfax's protocol and can have negative

outcomes for the resident. The mere fact that the residents

did not have negative outcomes in these particular instances

is irrelevant. The records related to R127, R83, and R68

support the ALJ's conclusion that HCFA was not clearly

erroneous in determining that the immediate jeopardy

caused by Fairfax's failures had not been abated. The

evidence shows (and indeed Fairfax does not dispute) that

Fairfax was not consistently following its new protocol

(based on the standard of care) for ventilator dependent

residents suffering from respiratory distress.

Moreover, while emphasizing that only comfort

care was to be provided for R127, Fairfax pointed to no

evidence that comfort care would not include providing the

care described in the protocol. The protocol on its face

applies to any respiratory distress and indicates that one of

App. 42

the purposes of monitoring is to determine whether the

resident is comfortable. P. Ex. 10.

d. Substantial evidence in the record supports the

ALJ's findings about R6 and R11.

The ALJ found that Fairfax failed to ensure that R6

and R11 received proper tracheostomy care. ALJ Decision

at 19-20. Fairfax made the point with respect to these

residents that there is no evidence that they were ventilator

dependent. This fact is relevant in determining whether the

new protocol for ventilator dependent residents in

respiratory distress applied to these residents. It does not,

however, undercut the finding that, by failing to follow its

own protocols (based on the standard of care) for residents

needing special services, Fairfax was deficient in meeting

the requirement at 42 C.F.R. 488.425(k). The particular

special services at issue for these residents were

tracheostomy care and tracheal suctioning. Part of one of

Fairfax's protocols for such care may have been more

important for ventilator dependent residents, specifically,

oxygenating a patient before removing and cleaning a trach

tube. However, the deficiencies found in Fairfax's care to

these residents also related to other parts of its protocols,

such as the need to use sterile technique.

Fairfax disputed the surveyor's testimony that its

policy required use of hydrogen peroxide, rather than

distilled water, as part of the sterile technique required.

Fairfax App. Br. at 10, citing Tr. at 295. In support, Fairfax

cited to HCFA Exhibit 21, which refers to sterile water, not

hydrogen peroxide. The surveyor's finding, however, was

based on a different Fairfax protocol, identified in the

survey findings as "Procedure for Trach Care with Inner

Cannula" and described as instructing the staff person to

"clean outside of trach tube and surrounding skin area with

hydrogen peroxide and normal saline using cotton tipped

App. 43

applicators." HCFA Ex. 1, at 27; see also Ex. 1 to HCFA

App. Br. HCFA Exhibit 21 is titled "Sterile Suctioning of a

Tracheostomy Tube." Fairfax did not dispute that it also

had the policy on tracheostomy care described in the survey

findings. Nor did Fairfax present any evidence to

contradict the surveyor's testimony that the standard of care

for cleaning the tracheostomy site is to use hydrogen

peroxide. Tr. at 292-302. Also, contrary to what Fairfax

implied, it is irrelevant that the surveyor admitted that she

never determined whether R6 and R11 contracted any

disease or infection as a result of the care given. As the

definition of "immediate jeopardy" indicates, a showing of

actual harm is not required.

We also note that the findings regarding these

residents, while supportive, are not needed in order to

uphold the conclusion in the ALJ Decision that Fairfax did

not take adequate steps to abate the immediate jeopardy

until April 3. As late as April 3, 1997, Fairfax was failing

to meet the standard of care for monitoring R68, a

ventilator dependent resident, after an episode of

respiratory distress. See ALJ Decision at 17-18, and

evidence discussed therein.

Conclusion

For the reasons explained above, we uphold the

ALJ Decision. We affirm and adopt the ALJ's FFCLs.

Donald F. Garrett

Marc R. Hillson

Judith A. Ballard

Presiding Board Member

App. 44

DEPARTMENT OF HEALTH AND HUMAN SERVICES

DEPARTMENTAL APPEALS BOARD

CIVIL REMEDIES DIVISION

No. C-97-406

FAIRFAX NURSING HOME, PETITIONER

Y.

HEALTH CARE FINANCING ADMINISTRATION

Decision No. CR753

HHSDAB LEXIS 42

March 22, 2001

PANEL: Jose A. Anglada, Administrative Law Judge

OPINION:

DECISION

Fairfax Nursing Home (Petitioner) requested a

hearing in this case on May 8, 1997, pursuant to section

1128A(c)(2) of the Social Security Act (Act) and 42 C.F.R.

§§ 488.408(g), 498.3(b)(12),(13)."° Petitioner is a skilled

' This matter was originally assigned to Administrative Law Judge

Stephen H. Ahigren. At the parties' request, the case was stayed for an

indefinite period so that they could pursue settlement negotiations. On

August 11, 1999, after months of inactivity, Judge Ahlgren ordered

Petitioner to show cause why this case should not be dismissed for

abandonment. In its response, Petitioner stated that it had not

abandoned its request for hearing and that it had made several attempts

to arrange settlement negotiations. On September 8, 1999, the case was

reassigned to me. In the absence of objection, I allowed the case to go

forward to hearing.

App. 45

nursing facility participating in Medicare and Medicaid.

On April 8, 1997, the Illinois Department of Public Health

(IDPH) completed standard, extended, and Life Safety

Code surveys at Petitioner to determine if it was in

compliance with the federal requirements for nursing

homes participating in Medicare and Medicaid. That visit

resulted in a finding that Petitioner was not in substantial

compliance with participation requirements, and that the

conditions in Petitioner's facility constituted immediate

jeopardy to resident health and safety. As a result, IDPH

notified Petitioner that it would recommend to the Health

Care Financing Administration (HCFA) that it impose

specific remedies. HCFA concurred with the

recommendation and, on May 7, 1997, it imposed the

following remedies:

A civil money penalty (CMP) of $3,050 per day for

each day of immediate jeopardy, effective

December 20, 1996 and continuing through April 3,

1997; and a CMP of $50 per day, effective April 4,

1997 and continuing until attainment of substantial

compliance or termination of the provider

agreement.

Directed Inservice Training, effective May 22, 1997

for all licensed nursing and certified respiratory

therapy staff caring for the ventilator and

tracheostomy residents.

Denial of Payment for New Admissions, effective

May 22, 1997.

HCFA subsequently determined that Petitioner was

back in substantial compliance on May 15, 1997. HCFA

imposed a CMP totaling $322,300, calculated as follows: a

daily fine of $3,050 from December 20, 1996 through April

3, 1997 (a total of $320,250); and a daily fine of $50 from

April 4, 1997 through May 14, 1997 (a total of $2,050).

App. 46

Petitioner does not contest any of the deficiencies which

were the basis of the $2,050 CMP from April 4, 1997

through May 14, 1997. Petitioner's Readiness Report at 1.

At issue is HCFA's finding of immediate jeopardy, which is

the basis of the CMP imposed from December 20, 1996

through April 3, 1997.

A hearing was held before me in Chicago, Illinois,

from May 31 through June 2, 2000. At the hearing HCFA

offered 21 exhibits identified as HCFA Ex. 1-21. Petitioner

did not object to HCFA Ex. 1-20, and I admitted them into

evidence. Petitioner objected to HCFA Ex. 21. I overruled

Petitioner's objection, and admitted HCFA Ex. 21 into

evidence. Petitioner offered 20 exhibits identified as P. Ex.

1-20. HCFA did not object to P. Ex. 1-20, and I admitted

them into evidence. HCFA subsequently submitted a post-

hearing brief (HCFA Brief). Petitioner submitted a

response brief (P. Response). Attached to Petitioner's

response brief is a May 26, 1998 final order and decision

~ issued by IDPH. I identify this document as P. Attachment

1. Petitioner argues that the IDPH decision is instructive

because it shows that the facts of this case "did not rise to

the state equivalent of an immediate jeopardy." P.

Response at 20. HCFA submitted a reply brief (HCFA

Reply). Attached to HCFA's reply brief is a November 7,

2000 ruling issued by an Administrative Law Judge of this

office. I identify this document as HCFA Attachment 1.

HCFA argues that reliance on the IDPH decision

would be misplaced, and it cites the attached ruling as

support for the proposition that I should refuse to defer to

State administrative findings made in State proceedings

where HCFA was not a party. The IDPH decision is not

binding on me, and I accord it little weight. As HCFA

points out, HCFA was never a party to the State

proceedings and the State decision is the product of a

different evidentiary record as well as different legal

App. 47

standards.

Based on the testimony offered at the hearing, the

documentary evidence, the arguments of the parties, and

the applicable law and regulations, I find that from

December 20, 1996 through April 3, 1997, Petitioner was

not in substantial compliance at the immediate jeopardy

level. Thereafter, and continuing through May 14, 1997,

Petitioner admits that it was not in substantial compliance

at less than the immediate jeopardy level of severity. I find

further that HCFA is authorized to impose CMPs against

Petitioner at the rate of $3,050 per day from December 20,

1996 through April 3, 1997, and at $50 per day from April

4, 1997 through May 14, 1997.

le Law atio

Petitioner is considered to be a long-term care

facility under the Act and regulations promulgated by the

Secretary of the United States Department of Health and

Human Services (Secretary). The statutory requirements

for participation by a long-term care facility are found at

sections 1819 and 1919 of the Act. The regulatory

requirements are found at 42 C.F.R. Part 483. Sections

1819 and 1919 of the Act invest the Secretary with the

authority to impose CMPs against a long-term care facility

for failure by the facility to comply substantially with

participation requirements. Pursuant to the Act, the

Secretary has delegated to HCFA and the States the

authority to impose remedies against a long-term care

facility that is not complying substantially with federal

participation requirements. 42 C.F.R. Part 488 provides

that facilities which participate in Medicare may be

surveyed on behalf of HCFA by State survey agencies in

order to ascertain whether the facilities are complying with

participation requirements. 42 C.F.R. §§ 488.10 - 488.28.

The regulations contain special survey provisions for long-

App. 48

term care facilities. 42 C.F.R. §§ 488.300 - 488.325.

Under Part 488, a State or HCFA may impose a CMP

against a long-term care facility where a State survey

agency ascertains that the facility is not complying

substantially with participation requirements. 42 C.F.R. §§

488.406, 488.408, 488.430. The penalty may start accruing

as early as the date that the facility was first out of

compliance and continue until the date substantial

compliance is achieved or the provider agreement is

terminated.

The regulations specify that a CMP that is imposed

against a facility will fall into one of two broad ranges of

penalties. 42 C.F.R. §§ 488.408, 488.438. The upper range

of CMPs, of from $3,050 per day to $10,000 per day, is

reserved for deficiencies that constitute immediate jeopardy

to a facility's residents, and, in some circumstances, for

repeated deficiencies. 42 C.F.R. §§ 488.438(a)(1), (d)(2).

The lower range of CMPs, of from $50 per day to $3,000

per day, is reserved for deficiencies that do not constitute

immediate jeopardy, but either cause actual harm to

residents, or cause no actual harm, but have the potential

for causing more than minimal harm. 42 C.F.R.

488.438(a)(2). The terms “substantial compliance" and

"immediate jeopardy” are defined terms in the regulations

which govern participation of long-term care facilities in

Medicare. "Substantial compliance" is defined to mean: "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. "Immediate

jeopardy" is defined to mean: "a situation in which the

provider's non-compliance with one or more requirements

of participation has caused, or is likely to cause, serious

injury, harm, impairment, or death to a resident." Id.

App. 49

There are additional factors which the State and

HCFA consider in determining where within a range of

penalties, once the range is established, the amount of a

CMP should be. These include the facility's: 1. history of

noncompliance, including repeated deficiencies; 2.

financial condition; and 3. culpability for the deficiencies.

42 C.F.R. 488.438(f). Additionally, the State and HCFA

may consider factors specified in 42 C.F.R. 488.404.

These include the relationship that a deficiency may have

to other deficiencies and a facility's prior history of

deficiencies. The applicable burden of proof in a CMP

case requires HCFA to prove a prima facie case that the

facility has failed to comply substantially with one or more

participation requirements. To prevail, a facility must

overcome HCFA's showing by a preponderance of the

evidence. Hillman Rehabilitation Center, DAB No. 1611

(1997); affd Hillman Rehabilitation Center v. United

States, No. 98-3789 (GEB) (D.N.J. May 13, 1999).

HCFA's determination that a deficiency constituted

immediate jeopardy must be upheld unless the facility

proves that the determination was clearly erroneous. 42

C.F.R. 498.60(c)(2); Woodstock Care Center, DAB No.

1726, at 9 (2000).

The Act and regulations make a hearing before an

Administrative Law Judge available to a long-term care

facility against whom HCFA has determined to impose a

CMP. Act, section 1128A(c); 42 C.F.R. §§ 488.408(g),

498.3(b)(12), (13). The hearing before an Administrative

Law Judge is a de novo proceeding. Anesthesiologists

Affiliated, et al., 941 F.2d 678 (8th Cir. 1991).

Issues

1. Whether Petitioner was complying substantially

with federal participation requirements on the

dates HCFA determined to impose a CMP.

2. If it is established that Petitioner was not

complying substantially with federal

participation requirements, what was the level

of non-compliance.

3. If non-compliance is established, whether the

amount of the penalty imposed by HCFA is

reasonable.

Findings and Discussion

Findings of fact and conclusions of law are stated

below in italics. They are followed by a discussion of each

finding.

1. Petitioner was not in substantial compliance

with federal participation requirements from

December 20, 1996 through April 3, 1997.

The applicable regulation at 42 C.F.R. 483.25,

entitled "Quality of care," provides: "Each resident must

receive and the facility must provide the necessary care and

services to attain or maintain the highest practicable

physical, mental, and psychosocial well-being, in

accordance with the comprehensive assessment and plan or

care." As a corollary to this overarching requirement, 42

C.F.R. 483.25(k) provides that the facility "must ensure"

that residents receive proper treatment and_care for "special

services," including: (1) tracheostomy care; (2) tracheal

suctioning; and (3) respiratory care. Below, I will discuss

examples of failures by Petitioner to comply with the

pertinent regulatory requirements mentioned above.

Resident number 10 (R10

a. Petitioner failed to implement a_ policy

concerning ventilator dependent residents, and, through its

carelessness, brought about the premature demise of R10.

App. 51

This constitutes immediate jeopardy.

State surveyor findings

The findings of the State surveyors are set forth in a

HCFA Form 2567. HCFA Ex. 1. In essence, the State

surveyors found that the staff caring for R10 "did not

follow guidelines/procedures/protocols in the provision of

respiratory care, and that lack of adherence directly caused

the death of R10." HCFA Ex. 1 at 21.

Discussion

The record shows that on December 20, 1996, R10

experienced an episode of respiratory distress and required

care. Transcript (Tr.) at 135. She was completely

dependent on a ventilator for breathing, as she could not do

so on her own. Tr. at 138. Respiratory therapists

administered oxygen to the resident using a device known

as an ambu-bag. This device allows an operator to

manually force air into the lungs in order to promptly raise

the oxygen saturation level of a resident to normal. During

the process of "ambu-bagging," a respiratory technician

disconnected the resident from the ventilator, and turned

the machine off.''! After manually elevating the resident's

oxygen saturation level, the therapist reconnected R10 to

the ventilator, but did not turn the machine back on. This

left the resident without any oxygen supply. She died as a

direct result. Tr. at 135 - 138; HCFA Ex. 12.

Ms. Patricia Benda, the Director of Nursing (DON),

was notified at home that R10 had died under questionable

circumstances. Tr. at 479 - 480. She went to the facility

. Disconnecting the resident from the ventilator is necessary for the

manual administration of oxygen, but as will be discussed later, it is not

necessary or desirable to turn the ventilator off.

App. 52

and inquired as to the facts surrounding the death of R10,

and learned that the ventilator had been turned off when

R10 was being administered respiratory therapy. Ms.

Benda was unable to obtain information as to who turned

the ventilator off from the two attending respiratory

therapists, Brenda Harris and Michael Anderson. The

latter, who was the last person in the room with the

resident, initially denied turning off the ventilator. Tr. at

480 - 482. The police were alerted and they came and took

Mr. Anderson into custody. Under police interrogation, he

stated that he "unconsciously" turned the ventilator off to

silence its alarm while Ms. Harris was in the process of

giving the resident manual respiratory therapy with an

ambu-bag. The resident was returned to stable condition

and everyone left the room. He was the last one out, and

forgot to turn the ventilator back on. HCFA Ex. 12 at 7.’

Ms. Benda testified that Petitioner had a policy to :

the effect that the ventilator was never to be turned off

unless the resident had been pronounced dead by a

physician, or two registered nurses, or transferred to a

hospital. Tr. at 484. If such a policy did exist, it appears to

be an unwritten policy because no document containing

that policy was produced at the hearing. It was not until

February 1997 that Petitioner developed a written policy

for the care and treatment of ventilator dependent residents

in respiratory distress; and it was not until the beginning of

March 1997 that, after much deliberation, the policy was

implemented. That policy, entitled "Nursing Guidelines for

> Mr. Anderson submitted his resignation shortly after this unfortunate

incident, and before Petitioner took any action against him. Ms. Harris

was terminated when it was discovered, several weeks later, that she

had falsified her respiratory therapist certificate and credentials. Tr. at

607, 302 - 304. -

App. 53

Ventilator Dependent Residents in Respiratory Distress,"

was developed in the aftermath of the tragic events of

December 20, 1996, involving R10. P. Ex. 10; Tr. at 491 -

492. The main purpose of those new guidelines was not

only to ensure proper care and treatment for ventilator

dependent residents who experienced respiratory distress,

but also to provide monitoring for those whose respiratory

distress symptoms had been relieved. Tr. at 5 10; P. Ex. 10.

Siabilized ventilator dependent residents were to be

observed by a nurse and charted every fifteen minutes for

up to an hour. The documentation would include vital

Signs, respiratory status, oxygen saturation levels, lung

sounds, ventilator settings, level of consciousness, odor,

color, and consistency of secretions, and comfort level of

the resident. Any further respiratory distress noted during

the monitoring period would warrant an immediate call to

the attending physician, and continued observation and

documentation throughout the shift, or until the resident

stabilized or was transferred to a hospital. P. Ex. 10. Ms.

Benda, the DON, agreed that the policy adopted by the

facility after the incident of December 20, 1996 embodied

good nursing practices, and that R10 should have been

monitored after apparently having been stabilized. Tr. at

502.

It is unequivocal, from the facts of this case, that

Petitioner's carelessness was the direct cause of R10's

death. Tr. at 489. The lack of due care is first evident from

the act of turning the resident's ventilator off, and then from

not monitoring the resident after she apparently had been

stabilized. As stated by Ms. Benda in her testimony, such

monitoring is good nursing practice. She testified that it

"should be done on every resident that goes into any type of

distress." Tr. at 502. Furthermore, Petitioner did not have a

written policy for the protection of ventilator dependent

residents in respiratory distress. It is evident that whatever

App. 54

non-written guidelines existed were either improperly

communicated to the attending staff or were not diligently

applied.

Resident number 126 (R126)

b. Petitioner failed to carry out the treating

physician's orders and failed to properly document R126's

medical charts. This had the potential for serious injury,

harm, impairment, or death to the resident and constitutes

immediate jeopardy.

State surveyor findings

On March 2, 1997, R126 was noted with an oxygen

saturation level (SAQ2)"? of 80%, a temperature of 100.9, a

pulse of 100, and respirations of 40. The treating physician

was called, and treatment was prescribed for immediate

administration. HCFA Ex. 1 at 22. The doctor ordered a

chest x-ray,'* start IV and antibiotics, instill blue dye into

the tube feeding,’ and elevate the head of the bed 45

degrees. There is no indication in the medical chart that

these orders were carried out, nor is there a complete

assessment of R126 as per facility guidelines. HCFA Ex. 1

at 22 - 23.

* According to the treating physician, an SAO2 ranging from 92% -

100% is considered normal, and an SAO2 of 80% is dangerously low.

Tr. at 40.

* The x-ray was aimed at determining if there were findings consistent

with pneumonia, congestive heart failure, pneumothorax, or other

abnormal lung conditions. Tr. at 32 - 33.

© A dye called methylene blue is placed into tube feedings to determine

whether food is entering the lungs. Tr. at 35.

App. 55

Discussion

Petitioner argues that R126 was admitted to the

facility in a vegetative state, and that it is reasonable to

conclude that his death was attributable to his very

precarious condition. Tr. at 760. Specifically, it asserts

that when the charge nurse noticed changes in the resident's

condition she proceeded to take proper action. She began

to monitor the resident and called the treating physician,

who prescribed a course of treatment over the phone.

Petitioner alleges that all of the doctor's orders were

complied with, even though they were not citarted. Finally,

Petitioner contends that the issue of whether the antibiotic,

Timentin,'° was administered is specious, inasmuch as Dr.

John Hardek, the treating physician, testified that it takes

24 hours for that medication to take effect. Tr. at 761 -

762.

Contrary to Petitioner's assertions, Dr. Hardek

testified that in his opinion the resident died of pneumonia

(Tr. at 47) and that, with treatment, the resident may have

recovered from the pulmonary condition. Tr. at 35. It is

Dr. Hardek's testimony that it would take time for the

antibiotic to start working. Tr. at 47. However, this fact,

rather than justifying a failure to administer it, serves to

underscore the need for its prompt administration so that its

therapeutic effects could be felt as soon as possible.

For the reasons set forth below, I find that Petitioner

was woefully inadequate in the treatment and care of R126,

in violation of 42 C.F.R. 483.25(k). Such conduct caused

or was likely to cause serious injury, harm, impairment or

death to the resident.

” Timentin is a broad spectrum antibiotic. Tr. at 33.

App. 56

The treatment and care charts for R126 do not

reflect that any of Dr. Hardek's orders, telephonically

relayed on March 2, 1997, were carried out. P. Ex. 9. It is

unknown how much time transpired from when Dr. Hardek

gave his instructions over the phone to when the resident

passed away. From the totality of the record, it is

reasonable to conclude that several hours passed. There is

an indication in the record that the treating physician gave

his orders during the morning portion of the nurse's 7:00

a.m. to 3:00 p.m. shift. Tr. at 335, 337. The progress notes

have a "12 noon" insertion as to when the resident was

found dead, but that entry is unreliable. P. Ex. 9 at 5. That

insertion appears to have been made after the fact at some

unknown date and time by the charge nurse, Ms. Tamilyn

Lawrence, whose testimony, as will be seen below, was

vague and replete with generalities.

As charge nurse, it was Ms. Lawrence's duty to

follow through with Dr. Hardek's orders. She testified that

she carried these out in the following way: "I believe we

would have gotten the Timentin started. Otherwise, I

would have called the doctor." Tr. at 342. She allegedly

asked her Assistant Director of Nursing (ADON) to help

her with the IV antibiotic, because: "I was busy doing

other things. I had asked my ADON to at least -- to help

me, and I guess we had discussed what would be better.

She went to the emergency kit or she went to get the

Timentin, and I was trying possibly to do other things,

either go and call for the chest x-ray, and I think I sent an

aide down to the kitchen to get blue dye for the tube

feeding." Tr. at 342 - 343. Additionally, she "probably"

asked the respiratory therapist to take samples for a sputum

culture. Tr. at 364."7

* While the HCFA Form 2567 does not specifically mention the

sputum culture, the medical chart shows that Dr. Hardek ordered a

sputum culture and stain. P. Ex. 9 at 7. The stain allows for immediate

App. 57

Of all the orders given by Dr. Hardek, the only one

Ms. Lawrence claimed that she did herself was the insertion

of the blue dye in the feeding tube. Surprisingly, she could

not say what the results were, nor did she make a record of

it. Tr. at 343 - 344. She claimed that she was too busy to

be able to provide for the needs of R126, but she made no

specific mention of any particular task that took precedence

over the care and treatment he required at that critical

moment. Although Ms. Lawrence allegedly asked others

for help, she could not say for certain whether the sputum

samples were taken or whether the antibiotic was given.

If Ms. Lawrence had carried out all of the treating

physician's orders herself, and had stayed by the resident's

bedside monitoring him throughout his crisis, I might be

more persuaded that there was an excuse for not

documenting the medical charts. However, the only entry

required of her was that of the administration of the blue

dye test. The ADON, who allegedly administered the

antibiotic, also failed to make an entry to that effect.

Likewise, the respiratory therapist, who supposedly took

the sputum sample, also failed to record the event. It would

have been very easy for Petitioner to produce the results of

the sputum tests and x-rays, the findings of the blue dye

test, or an entry showing the dispensing of the antibiotic.

Because it did not do any of these things, too many factors

converge to detract from Petitioner's credibility regarding

compliance with Dr. Hardek's orders.

Petitioner's argument that, even if it had fully

complied with the treating physician's orders immediately

the resident would still have died, is unavailing. A finding

detection of bacteria, and the culture is grown in a microbiology

laboratory. Tr. at 33.

App. 58

of immediate jeopardy does not hinge on a showing of a

direct causal relationship between the facility's failure to

carry out the treating physician's orders and the death of the

resident. Petitioner cannot argue that it did not immediately

carry out the treatment and care prescribed for R126

because it knew that he would soon die. It is true that

Petitioner was aware that R126 was extremely fragile and

vulnerable, but that knowledge should have served as a

catalyst for prompt and urgent action. The record presents

a picture of a lackadaisical staff, rather than a staff

aggressively treating a pneumonia that was further

aggravating the resident's already compromised health.

Even if the physician's orders had been carried out and not

charted, that alone would have placed the resident at great

risk, inasmuch as responsible and meaningful follow-up

treatment would have been at peril, absent such vital

information.

Matters are much worse here, however, in that there

is not a shred of credible evidence that R126 was

administered the treatment prescribed by his physician.

That treatment was intended to treat a pneumonia, and as

stated earlier, his treating physician identified that

condition as the cause of death. It is irrelevant, as

Petitioner argues, that R126 would have expired in spite of

treatment. Petitioner had a duty with respect to R126 to

administer the necessary care and treatment that would

further R126's well being. Far from satisfying this

requirement, Petitioner's actions, or lack thereof, had the

potential to cause serious injury, harm, impairment, or

death to the resident.

I also note that although R126 had a dangerously

low SAOQ2 level at 80%, there is no documentation that he

was suctioned or received respiratory therapy to increase

his oxygen level. Ms. Lawrence testified that she recalled

that R126 was suctioned, but had no recollection that

App. 59

ambu-bagging occurred or whether the oxygen levels on

the ventilator were increased. Treatment or monitoring

would be reflected in the progress notes or respiratory flow

sheets, she said. Yet, she admits that the records fail to

show that efforts were directed at increasing R126's SA®*

level. Tr. at 382 - 386.

Resident number 127 (R127)

c. Petitioner failed to adhere to the guidelines it

had developed in February 1997, and implemented at the

beginning of March 1997 for ventilator dependent residents

in respiratory distress by not monitoring or providing

proper follow-up assessments to R127. This had the

potential for serious injury, harm, impairment, or death to

the resident and constitutes immediate Jeopardy.

State surveyor findings

The State surveyors determined that on March 5,

1997, at 10:00 p.m., R127 was found pale, with mottled

extremities, and an SAO2 of only 75%. There was no

complete assessment of the resident, no vital signs were

taken, no follow-up assessments every 15 minutes were

done, and no physician was notified. HCFA Ex. 1 at 23.

On March 7, 1997, at an unknown time during the

7:00 a.m. to 3:00 p.m. shift, R127 was found cyanotic,

requiring emergency ambu-bagging for five minutes.

Nursing charted four follow-up notes, but only assessed

R127's color and SAQ2 levels. No vital signs or complete

assessment were noted in the resident's record, as required

by the guidelines. HCFA Ex. | at 23.

Respiratory Care made a note on March 7, 1997,

during the 7:00 a.m. to 3:00 p.m. shift, that R127 had a

total of three episodes in which the resident required

emergency bagging for 10-15 minutes and experienced

twitching and turning of her head back and forth. Her

App. 60

SAO2 dropped to 82%. There is no indication that the

treating physician was notified of the multiple episodes of

respiratory distress. HCFA Ex. 1 at 23 - 24.

Again on March 10, 1997, there is a note by

Respiratory Care, during the 7:00 a.m. to 3:00 p.m. shift,

that R127 had another episode of turning blue, yet there is

no nursing entry addressing respiratory distress and no vital

signs or assessments were charted. HCFA Ex. 1 at 24.

On March 21, 1997, at an unknown time during the

7:00 a.m. - 3:00 p.m. shift, R127 was found with mottled

legs, shaking, and SAO2 of 74%. The physician was there

and she was ambu-bagged and given Valium. No complete

assessments were done and follow-up [*25] was not

carried out as per the guidelines. HCFA Ex. | at 24.

On March 25, 1997, R127 was found to have

MRSA (methicillin-resistant staph aureus) in the sputum.

R127 was found dead at approximately 7:45 p.m. on March

27, 1997. HCFA Ex. 1 at 24.

Discussion

Dr. Alberto Saltiel, R127's treating physician and

Petitioner's medical director at the relevant time (Tr. at 62,

79), diagnosed R127 with pneumonia, and noted that she

had been experiencing episodes of respiratory distress and

convulsions. During the period preceding her death, he

gave orders aimed at making the resident comfortable.

This, he said, entailed raising the oxygen saturation level

and stopping the seizures. Specifically, Dr. Saltiel stated

that he directed that she be given respiratory therapy,

Valium, and Dilantin. Nothing was prescribed for her

pneumonia in view of her do not resuscitate (DNR) status.'*

® Dr. Saltiel lay great emphasis on R127's DNR status. I would hope

that such status is not at the root of the improper care and treatment

given to this resident.

App. 61

Tr. at 65 - 73.

Doctor Saltiel testified that R127 was admitted to

Petitioner after surgical removal of an esophageal

diverticulum. Allegedly, she was also suffering from

chronic obstructive pulmonary disease (COPD) which, in

the treating physician's opinion, was terminal.'? Doctor

Saltiel further stated that the resident's family placed her in

the nursing home for the purpose of receiving comfort care,

and that nothing was to be done to prolong her life. In spite

of that, it was Doctor Saltiel's opinion that R127 had lived

beyond expectation.”” Tr. at 64, 66.

Petitioner has presented no evidence to rebut

HCFA's assertions that it failed to follow its own policy

regarding the care and treatment of ventilator dependent

residents in respiratory distress. In this respect, Dr. Saltiel's

testimony not only confirmed the wisdom of the policy,”"

but also highlighted its ineffectual application. For

example, on March 5, 1997, R127 was noted to have a pale

color, mottled extremities, and an SAO2 of 75%.” The

'° I note, however, that COPD is not an admitting diagnosis for R127.

P. Ex. 11 at 1.

= Regarding R127's clinical picture, I rely mostly on Dr. Saltiel's

testimony inasmuch as the medical charts contain minimal charting by

Dr. Saltiel. P. Ex. 11 at 9; Tr. at 63.

'? Dr. Saltiel perceived that the policy for handling respiratory distress

residents was good. To a certain extent, however, he deferred to the

expertise of Dr. Sabbagh, whose knowledge as a specialist in

pulmonary diseases he respected. Dr. Sabbagh was Petitioner's

pulmonary specialist and he was instrumental in developing the policy

for the care and treatment of respiratory distress residents. Tr. at 121,

491.

'? It should be remembered that Dr. Hardek testified that an SAO2 of

80% was dangerously low. Tr. at 40.

App. 62

progress notes show that she was ambu-bagged for five

minutes and her SAQ2 increased to 97%. The attending

nurse noted that monitoring would continue. The record

does not indicate how the monitoring would be done, nor is

there documentation evidencing that monitoring was

performed. P. Ex. 11 at 2.

Dr. Saltiel conceded that a resident who has

experienced respiratory distress should be stabilized and

monitored to ensure that return to normal functioning has in

fact occurred. He also agreed that the guidelines for care

and treatment of respiratory distress residents adopted by

Petitioner called for monitoring every 15 minutes for a total

of one hour. Tr. at 114-115. Such monitoring, as per the

policy, encompasses vital signs, respiratory status, oxygen

saturation level, lung sounds, ventilator settings, level of

consciousness, odor, color, and consistency of secretions,

and comfort level of the resident. P. Ex. 10. Such charting

is absent from the progress notes of R127 during the

various respiratory distress events mentioned by the

surveyors in the findings noted above.

Although Dr. Saltiel appeared to recognize the

virtues of the respiratory distress guidelines, he seemed

confused regarding its application. Pertinent to this is his

distorted understanding of the requirement to monitor a

resident at 15-minute intervals for up to an hour after a —

respiratory distress event. When asked by counsel for

HCFA whether or not the facility should have monitored

R127 every 15 minutes on March 5, 1997, Dr. Saltiel

responded that the resident was monitored more often than

every 15 minutes. He added that just because the guidelines

say that monitoring should be done every 15 minutes, it

does not mean that it can't be done more often. In support

of this statement, he referred to the entry at page 2 of P. Ex.

11, where it says that the resident was ambu-bagged for

five minutes when she was found with an SAQ2 of 75%.

App. 63

Tr. at 115-116. Clearly, the intent of the guidelines is that,

after being properly stabilized, a resident should then be

monitored every 15 minutes for up to an hour. The number

of minutes during which the resident is initially oxygenated

bears no connection to the 15-minute interval monitoring

after stabilization. The logic behind the conclusion that

ambu-bagging for five minutes constitutes monitoring at

less than the 15 minute interval called for in the policy

escapes me.

Elsewhere, Dr. Saltiel testified that multiple crises

of respiratory distress do not warrant notification of the

treating physician as per the guidelines. On a personal

level, he thought it would be a matter that he would like to

be informed about. Tr. at 119. In saying this, he

overlooked the language of the Nursing Guidelines for

Ventilator Dependent Residents in Respiratory Distress.

The last paragraph of page 1 of that document states as

follows: "Any further respiratory distress will warrant an

immediate call to the attending physician and continued

observation and documentation throughout the shift, or

until the resident stabilizes or is transferred to a hospital."

P. Ex. 10 at 1.

Dr. Saltiel, as well as Ms. Carolyn Nealy, the

respiratory therapist, acknowledged that R127 experienced

multiple episodes of respiratory distress on March 7, 1997.

Tr. at 117, 455-456. Notwithstanding the unequivocal

requirement of the guidelines, Dr. Saltiel seemed unfazed

by the fact that R127, his patient, had experienced a series

of respiratory distress events on March 7, 1997, and he was

not notified. P. Ex. 11 at 3. It is not clear whether R127

experienced respiratory distress on March 10, but she did

have such an event on March 21, 1997. P. Ex. 11 at 3-4.

As with respect to the earlier dates of March 5 and 7, no

proper charting or monitoring, as required by the guidelines

for respiratory distress residents, was performed. It is

App. 64

noteworthy that the progress notes show that on March 21,

when R127 went into respiratory distress with an SAQ2 of

74%, she was ambu-bagged by the therapist. P. Ex. 11 at 4.

However, the therapist, Ms. Carolyn Nealy, testified that

when she began to ambu-bag R127, Dr. Saltiel ordered her

to stop because the resident was twitching and Dr. Saltiel

said that the ambu-bagging would not relieve the twitching.

Tr. at 462. That reasoning leaves me aghast since the

therapist was not providing relief for the twitching, but for

the respiratory distress. The incident is particularly

disturbing in light of Dr. Saltiel's testimony that the

respiratory distress caused oxygen decrease in the brain,

and that, in turn, produced the convulsive reaction. Tr. at

68. It would appear logical, then, that the convulsions or

twitching could be relieved by restoring oxygen to the brain

through ambu-bagging.

At one point in his testimony, Dr. Saltiel stated that

on March 21, 1997, R127 was treated according to the

guidelines by improving her oxygen level. That, he said,

would provide comfort for the resident. Tr. at 73. Ms.

Nealy's testimony, which I believe to be true, establishes

that what Dr. Saltiel did was make R127 suffer from lack of

oxygen. I find Dr. Saltiel's testimony at pages 68 and 69 of

the transcript, to the effect that his orders were directed at

stopping the seizures with Valium and Dilantin, consistent

with Ms. Nealy's testimony that the physician did not allow

her to provide emergency oxygen to the resident. If the

medical director had a flawed understanding of the

application of the guidelines for handling respiratory

distress residents, I am not surprised that the nurses and

respiratory therapists displayed the kind of ignorance as to

those same matters that permeate the record of this case.

I find the testimony of Ms. Joella Daniel, a

surveyor, persuasive that Petitioner failed to monitor R127

during and after episodes of respiratory distress. This is

App. 65

particularly true on March 5, 7, and 21, 1997. From Ms.

Daniels' testimony, I conclude that monitoring after ambu-

bagging at successive intervals is crucial because an

elevated SAO2 level immediately after oxygenation does

not tell the true story of oxygen levels in the blood. The

pulse, respiration, blood pressure, and temperature readings

are some of the indicators of true stabilization. A resident's

elevated SAOQ2 level immediately after ambu-bagging

could be misleading. Thus, there is a need to continue

close observation and scrutiny at successive intervals.

Accurate recording in the progress notes of indicators such

as those mentioned above will provide medical personnel

vital information for the proper care and treatment of a

respiratory distressed resident. On the other hand, the

absence of such monitoring and charting of critical data

regarding a respiratory distressed resident places that

individual at risk for serious harm or death. Tr. at 171 -

175.

Also damaging to a resident could be the failure to

notify the treating physician of such abnormalities as

repeated episodes of respiratory distress. That is precisely

what occurred on March 7, 1997. Petitioner's own policy

states that more than one episode of respiratory distress

warrants an "immediate call" to the treating physician. P.

Ex. 10. In view of this, I do not give credence to Dr.

Saltiel's testimony that repeated episodes of respiratory

distress are not unusual, and therefore, impliedly of no

serious concern. Tr. at 118-119. Ms. Daniels, on the

contrary, considered that three episodes in one shift was

Significant and should have triggered notification of the

treating physician. Tr. at 182-183. Likewise, Ms. Tamilyn

Lawrence, one of Petitioner's nurses who had worked at

Petitioner's facility since 1989, was of the opinion that

three episodes in one shift requiring emergency respiratory

care is not a common occurrence. She went on to agree

App. 66

that such a serious situation mandated adherence to the

facility's respiratory distress protocol. Tr. at 392.

On cross-examination of Ms. Daniels, counsel for

Petitioner tried to highlight that the record reflected that on

those occasions in March 1997 when R127 went into

respiratory distress, the treatment given brought about

improvement in her condition. Tr. at 244-247. However,

those references in the record indicating a positive response

to treatment are not evidence that Petitioner carried out the

assessments and monitoring at 15-minute intervals required

by the guidelines. By failing to address the issue squarely,

and pointing to irrelevant matters, Petitioner implicitly

concedes that it ignored the application of its own policy.

As stated earlier, its witnesses extolled the virtues of the

policy, but few, if any, would live by it. Lip service falls

far too short of the requirements. I find that Petitioner's

failure to properly assess and monitor R127 during and

after episodes of respiratory distress, as well as the failure

to notify the treating physician regarding repeated episodes

of respiratory distress, exposed the resident to risk of

serious injury, harm, impairment, or death.

Residents 83 and 68 (R83 & R68)

d. Petitioner failed to adhere to the guidelines it

had adopted in March 1997 for ventilator dependent

residents in respiratory distress by not monitoring or

providing proper follow-up assessments to R83 & R68.

This had the potential for serious injury, harm, impairment,

or death to the resident and constitutes immediate

jeopardy.

State surveyor findin 83

On March 23, 1997, at 8:30 a.m., R83 was found

non-responsive. SAO2 was only 75% and vital signs were

as follows: blood pressure 60/- (systolic only shown); pulse

App. 67

100; respirations 12; and temperature 98.6. R83 was ambu-

bagged and suctioned, with a large amount of thick, green-

yellow sputum received, and the treating physician was

called. The next entry was at 9:30 a.m., an hour later,

noting that R83 was responding. This entry noted blood

pressure, pulse, SAOQ2 level, and that an IV was started.

The next and final follow-up entry was not made until

12:00 p.m., and it only noted blood pressure, pulse, and

SAOZ2 level. HCFA Ex. 1 at 25-26.

Discussion

Ms. Daniels testified that on March 23, 1997, at

8:30 a.m., R83 was non-responsive to any verbal stimuli.

The blood pressure reading only registered a systolic of 60,

and the diastolic was so low that it was unobtainable. That

would be indicative, she said, of a semi-shock state, where

oxygen may not profuse throughout the body. She added

that the pulse rate was 100 and the respirations were 12.

The increased heart rate was the body's response to the lack

of oxygen. She explained that, by pumping harder and

faster, the heart tries to bring oxygen to the tissues. Tr. at

193 - 196.

The progress notes show that R83 had an SAOQ2 of

75%. From earlier references, it is known that this level of

oxygen placed the resident at great risk. He was ambu-

bagged and suctioned. The suctioning was productive of a

large amount of green-yellow sputum. HCFA Ex. 16 at 2.

The treating physician was called and orders were received.

However, the charge nurse failed to specify what those

orders were. The clinical picture presented by R83 is

obviously that of a resident in respiratory distress. The

situation should have triggered the application of the

guidelines for respiratory distressed residents. Those

guidelines had been adopted in early March 1997, and it is

evident that, on March 23, the charge nurse continued to

me Se

App. 68

ignore its application. After R83 was ambu-bagged and

suctioned at 8:30 a.m., no further clinical observations were

recorded until 9:30 a.m. There was no monitoring at 15-

minute intervals, as required by the guidelines for ventilator

dependent residents in respiratory distress.

Again, Petitioner does not address its failure to

apply the guidelines for ventilator dependent residents in

respiratory distress. Those guidelines were intended to

secure the best possible treatment for residents such as R83.

Although his condition--was extremely critical, and every

minute counted, he remained unattended for an hour. It

was not until 9:30 a.m. that he was treated with an IV. At

that time his SAO2 had increased to normal or near normal

range, and his blood pressure increased to 110/60. HCFA

Ex. 16 at 2. The fact that he showed improvement does not

excuse Petitioner's failure to follow the guidelities. That

R83 survived Petitioner's incompetent care and treatment

does not excuse the fact that he was placed at risk of

serious injury, harm, impairment, or death.

State surveyor findings (R68)

On April 3, 1997 at 8:15 p.m., R68 became cyanotic

with an SAQ2 of 75%, requiring emergency ambu-bagging

and increasing the FIO2 (fraction of inspired oxygen) on

the ventilator to 40%. Nursing failed to make complete

assessments and vital signs as indicated in the new

guidelines. On April 4, 1997, Respiratory Care made a note

- that R68 was too unstable to perform routine tracheostomy

change. HCFA Ex. 1 at 25.

Discussion

Petitioner's ventilator flow sheet for R68 reflects

that on April 3, 1997, at 7:15 p.m., the resident was

cyanotic and had an SAO2 of 71%. P. Ex. 12 at 8. The

therapist ambu-bagged R68 with oxygen, but there is no

App. 69

indication that R68 was monitored thereafter in accordance

with Petitioner's respiratory guidelines. Tr. at 229.

Petitioner's records do not indicate whether R68's SAO2

level returned to normal after ambu-bagging or whether

R68 was stabilized. The next record reference to R68 was

not made until 8:15 p.m., an hour later. At that time, a

nurse noted that R68 was again cyanotic with an SAQ2 of

75%. Ambu-bagging was again performed. P. Ex. 12 at 3.

While R68 was monitored at 15-minute intervals beginning

at 8:15 p.m., the assessments omitted some vital sign

information and other required evaluation data.

The record shows that, notwithstanding R68's

extreme fragility, he did not have the benefit of care and

treatment required for ventilator dependent residents in

respiratory distress. Ms. Daniels testified that it was "pretty

lucky" that nothing serious happened to R68, because, in a

matter of minutes, brain damage could be sustained from

lack of oxygen. Tr. at 230. Petitioner's duty to provide

appropriate respiratory care to its ventilator dependent

residents cannot be a matter of chance. It has to assure a

resident the necessary care and services to attain or

maintain the highest practicable physical, mental, and

psychosocial well-being in accordance with _ the

comprehensive assessment and pian of care. 42 CFR. ~

483.25. I note, however, that the inability to perform

routine tracheostomy care on R68 on April 4, 1997, is not

indicative of a deficiency on the part of Petitioner.

Residents 6 and 11 (R6 & R11)

e. Petitioner failed to ensure that R6 and R11

received proper tracheostomy care. This had the potential

for serious injury, harm, impairment, or death to the

residents and constitutes immediate jeopardy.

App. 70

State surveyor findings

On April 2, 1997, the surveyor observed an

employee at Petitioner's facility perform tracheostomy care

on R6 And R11 without using sterile procedures and

without hyper-oxygenating” the residents prior to or after

suctioning. HCFA Ex. | at 26 - 27.

Discussion

HCFA contends that the failure to apply sterile

suctioning procedures runs counter to Petitioner's own

policy. HCFA Ex. 21; Tr. at 734. Specifically, Ms.

Benton-Babatunde, a surveyor, testified that the employee

providing tracheostomy care to R6 and R11 used an

improper solution to clean the trachea prior to initiating

suctioning procedure. The employee used the same

solution to clear the catheter after suctioning as well as

during the process. By using the same solution io clear the

suctioning tubing as well as to clean the area around the

tracheostomy site, the affected resident is put at great 1isk

of having bacteria introduced into the trachea and lungs.

The result, stated Ms. Babatunde, could be pneumonia or

sepsis, where the bacteria traveling through the circulatory

system causes generalized body infection. Tr. at 297 - 298.

Proper hygiene is especially critical in the case of nursing

home residents, due to their high level of susceptibility to

pneumonia and other infections. More significantly, they

are more vulnerable to the more virulent types of

pneumonia. Tr. at 55, 298.

'* Hyper-oxygenation is a procedure whereby the ventilator dependent

resident is manually given added oxygen prior to and after suctioning.

This makes up for the oxygen deprivation during the suctioning

process. Tr. at 294 - 295.

App. 71

The surveyor's findings also indicated that the

employee providing tracheostomy care to R6 and R11

failed to hyper-oxygenate the residents prior to or after

suctioning. Petitioner addressed this with the testimony of

Ms. Joyce Casares, a nurse. She testified that hyper-

oxygenation of the resident is not necessary because the

facility has a "closed system" of respiratory therapy. With

that system it is not required to remove the resident from

the ventilator during suctioning. Tr. at 415-416. At a later

point in her testimony, however, she conceded that during

suctioning no air would be able to enter the lungs. In that

case, even in the presence of a "closed system," the oxygen

deprivation would appear to justify hyper-oxygenation. Tr.

at 428-429. This testimony was contradicted by another of

Petitioner's witnesses, Ms. Benda. Ms. Benda indicated

that in a "closed system" the ventilator dependent resident

is not deprived of oxygen at any time during suctioning.

Tr. at 497 - 498.

In addition to the above, there is another

inconsistency noted between the testimonies of Ms. Benda

and Ms. Casares. Whereas Ms. Casares (who worked at

Petitioner's facility for 27 years), stated that the so called

"closed vent system" had been in place at the facility since

"almost the very beginning" (Tr. at 415), Ms. Benda stated

that at the time of the incidents leading up to this case, the

"closed system" was fairly new to the field of respiratory

therapy. Tr. at 496.

In rebuttal, HCFA recalled Ms. Benton-Babatunde

to the stand. She stated that during the survey of the

facility, Petitioner presented her with a policy titled "Sterile

Suctioning of a Tracheostomy Tube." HCFA Ex. 21; Tr. at

734. That policy addressed the kind of suctioning

procedure performed with the equipment observed by Ms.

Benton-Babatunde on April 2, 1997. That policy did not

refer at all to the "closed system" suctioning method

App. 72

mentioned by Ms. Casares and Ms. Benda. More

importantly, the guidelines made available to the surveyor

went to great lengths to explain the proper way to perform

sterile suctioning and how to properly hyper-oxygenate a

resident. If, as Ms. Benda testified, the closed system was

new, it could not have been in place since "almost the very

beginning," as alleged by Ms. Casares. On the other hand,

if it was new, it was not yet in use at the time of the survey

in question. At best, it could have been in the process of

being phased in, but on the day of the survey, Ms. Benton-

Babatunde did not see that "new" system. She only saw the

method that requires hyper-oxygenation, and Petitioner

gave her the policy that applied to that type of suctioning

procedure. Moreover, Mr. Jesus Rodriguez, the director of

respiratory care, testified that staff would hyper-oxygenate

a resident if it were deemed to be needed. It was a clinical

judgment, he said. Tr. at 556. He appeared to recognize

the existence of a suctioning method that could call for

hyper-oxygenation, even though his testimony was a

departure from the suctioning protocol adopted by the

facility that mandated hyper-oxygenation. This evinces

Petitioner's poor dissemination of its policies to the staff. It

is particularly disconcerting that those in supervisory

positions were so ill-informed.

In view of the foregoing, I find Ms. Benda's and

Ms. Casares' testimony regarding the suctioning method

employed at Petitioner on April 2, 1997, not credible. Ms.

Benton-Babatunde's testimony is more consistent with the

evidence of record and deserving of probative value. In

reaching this conclusion, I must also say that Petitioner

presented no reliable evidence to discredit the surveyor's

testimony that in the tracheostomy care of R6 and R11, it

failed to apply proper sterile suctioning technique and it did

not ventilate the residents with enriched oxygen, as

required by its own policy guidelines. HCFA Ex. 21. The

App. 73

deficient tracheostomy care provided to R6 and R11 placed

them at risk of serious injury, harm, impairment, or death.

Resident Number 130 (R130)

f. The conduct of Petitioner with respect to R130

doés not constitute a deficiency.

State surveyor findings

On March 17, 1997, at 1:00 a.m., R130 complained

of a swollen neck and difficulty breathing. The respiratory

therapist attempted suctioning, but the results were

unproductive. Respiratory treatment was then given, along

with Ativan, as needed. No complete assessment was done,

nor were vital signs taken. HCFA Ex. 1 at 25.

Discussion

I note from the record that R130 had an SAO2 of

96% at 1:00 am. on March 17, 1997, and was not in

respiratory distress. P. Ex. 14 at 5; Tr. at 75, 412. Thus, no

lack of compliance may be attributed to Petitioner

regarding the treatment and care of a respiratory distressed

resident arising from its handling of R130.

2. Beginning December 20, 1996 and continuing

through April 3, 1997, Petitioner failed to comply with the

requirements of 42 C.F.R. 483.25 at the immediate

jeopardy level.

During the period beginning December 20, 1996

and ending April 3, 1997, Petitioner failed to comply with

the regulatory requirements of 42 C.F.R. 483.25 by

exposing its residents to risk of serious injury, harm,

impairment, or death. This regulation provides that a long-

term care facility must ensure that residents receive proper

treatment and care for special services, including

tracheostomy care, tracheal suctioning, and respiratory

care. The evidence in this case establishes that Petitioner

App. 74

failed to provide its residents with the necessary care and

services to attain or maintain the highest practicable

physical, mental, and psychosocial well-being. HCFA

proved that on December 20, 1996, Petitioner did not have

a written policy to protect its ventilator dependent residents

who went into respiratory distress. Moreover,

notwithstanding the absence of written guidelines,

Petitioner's supervisory staff expressed awareness of the

proper procedures for tracheostomy and respiratory care,

but did not communicate these to the nursing staff or to

respiratory therapists. Tr. at 397, 484, 522, 523, 556-558.

Petitioner claims that the incident that resulted in

the death of R10 was an isolated accident. Tr. at 324.

That, Petitione: reasons, diminishes its level of culpability.

I disagree. As stated earlier, the respiratory therapist

attending to R10 did not accidentally turn off her breathing

machine. He deliberately turned it off so as not to be

inconvenienced by the sound of the machine's alarm while

another therapist was in the process of manually elevating

the resident's SAO2 level. True, he may have accidentally

left the machine turned off, but such oversight is not to be

taken lightly or ignored. It resulted in the death of a human

being. That is not to say that Mr. Anderson's conduct was

criminal in nature, as Petitioner also claims. P. Response at

17. There is no evidence in the record that he was held

criminally liable for the death of R10. He was, however,

clearly negligent in turning the respirator off so as not to be

bothered by the alarm. By turning it off, he placed himself

at nsk of forgetting to turn it back on after manually

elevating the resident's oxygen level. Mr. Anderson's

action is more connected with Petitioner's failure to have

clear and written guidelines that were effectively

communicated to its employees than with criminal intent.

Petitioner argues also that I should give weight to a

visit made by IDPH surveyor Margaret White shortly after

App. 75

R10's death. Petitioner argues that Ms. White's failure to

find an immediate jeopardy at that time creates an inference

that no immediate jeopardy existed. The record shows that

Ms. White visited Petitioner on January 2, 1997. She was

at Petitioner for about two hours and looked only into the

facts concerning R10. Tr. at 621 - 622. Ms. White left that

day without issuing a written statement of deficiencies.

Instead, she indicated that she was still gathering facts. She

stated that she had to wait for the police report and she

needed to consult with more people. Tr. at 622-623, 679.

Moreover, at the time of Ms. White's visit, a more thorough

annual survey was expected to be conducted. Tr. at 521.

That survey was completed on April 8, 1997. By that time,

all of the evidence concerning R10 was available. In view

of the foregoing, I do not accept Petitioner's claim that Ms.

White's failure to make findings in January 1997

invalidates the later finding of immediate jeopardy based

on the more complete information gathered by April 8,

1997.

Furthermore, the evidence establishes that Petitioner

failed to protect other residents from similar acts until April

4, 1997. It was not until April 4, 1997, that Petitioner had

taken adequate steps to train its staff regarding the

treatment and care of ventilator dependent residents. The

record shows that by April 4, 1997, Petitioner had taken the

following the actions:

1) A new protocol was initiated for assessment,

care, and follow-up of ventilator dependent

residents in respiratory distress.

2) Immediate one-to-one training regarding the

newly developed guidelines for all respiratory

care and nursing staff.

3) 24-hour management supervision of staff was

initiated.

App. 76

4) A new policy was initiated concerning the

hiring of respiratory therapists, and their

qualifications and training.

5) A new skills/procedural checklist for ventilator

dependent residents was developed to assess

each licensed and respiratory care staff member.

Checklist assessment was initiated on April 4,

1997, for all working personnel, to be

completed each shift. The assessment would

continue until all staff was assessed.

See HCFA Ex. 1 at 31.

From December 20, 1996, until the above

abatement actions were initiated, Petitioner took minor

steps to comply with its duty to care for and protect

ventilator dependent residents, but fell short to the point of

continuing to place them at risk of serious injury, harm,

impairment, or death. For example, I note that on

December 23, 1996, three days after the incident involving

R10, Petitioner conducted a 20 minute in-service

concerming matters of notification of death in such cases.

On January 8, 1997, Petitioner conducted another in-

service regarding the operation of the respiratory ventilator.

P. Ex. 8. These training sessions fell far too short of

satisfying what was required to abate the immediate

jeopardy.

Petitioner's additional claim that it took immediate

corrective action on December 20, 1996, by hiring Mr.

Jesus Rodriguez, a certified respiratory therapist, to consult

with Petitioner about the care provided to ventilator

dependent residents, is without merit. Basically, all that

action accomplished was to replace the lost services of the

former director of the respiratory care unit, who had left

due to medical problems. Tr. at 676. Besides, Mr.

Rodriguez's testimony accentuates the facility's failure to

App. 77

properly communicate its policies to the staff. As I stated

earlier, the testimony of Mr. Rodriguez regarding sterile

suctioning of a tracheostomy tube highlighted his ignorance

in this important area of resident care. I specifically stated

how disturbing it was that those in supervisory positions

were so ill-informed. Thus, no corrective measures were,

in reality, advanced by bringing in a new respiratory care

director or consultant who carried on the facility's history

of ignorance concerning respiratory care.

This ignorance is further evidenced by Petitioner's

argument at page 19 of its brief. Its fragmented view of the

requirements for proper care and treatment of residents in

respiratory distress leads to the following faulty reasoning:

Although R10 was being given care by staff, she was found

unresponsive within 15 minutes of the last time she was

with staff. HCFA's claim that monitoring R10 every 15

minutes would have resulted in her still being alive does

not stand up to the facts in this case. Despite being given

care by a respiratory therapist as late as 1:00 a.m., R10 was

unresponsive by 1:15 am. P. Brief at 19. This logic

overlooks factors such as mentioned by Ms. Daniels, one of

the surveyors, in her testimony. She stated that once you

raise a resident's oxygen level, you cannot rest assured that

stability has been achieved. It is essential to note indicators

required by Petitioner's written policy, such as vital signs

and lung sounds. Tr. at 171-175. If the staff had taken

R10's respirations, pulse reading, blood pressure, lung

sounds, and other required indicators, they would have

surely noted she was not breathing. This reasoning also

ignores the testimony of Ms. Benda, Petitioner's DON. She

agreed that the policy adopted by Petitioner in early March

1997 for the care and treatment of ventilator dependent

residents in respiratory distress, embodied good nursing

practices, and that R10 should have been monitored after

having been apparently stabilized. Tr. at 502.

App. 78

Those guidelines were developed to ensure that a

ventilator dependent resident who experienced any form of

respiratory distress would be "observed" by the nursing

staff and respiratory therapy department and properly

treated and "relieved of her/his respiratory distress and

documented on." P. Ex. 10 at 1. The documentation

includes indicators such as blood pressure, pulse,

respiration, temperature, lung sounds, and breath sounds.

These indicators would serve as verification that a resident

in respiratory distress, whose oxygen level has been

increased, has achieved true relief. Once that is

accomplished, follow-up assessment and documentation is

mandated every 15 minutes. P. Ex. 10. If this procedure

had been followed with respect to R10, the tragedy that

unfolded would have been prevented.

In Petitioner's attempts to immediately address the

circumstances that gave rise to the tragedy of December 20,

1996, involving R10, other weighty factors, including the

adoption of written guidelines for the treatment and care of

ventilator dependent residents in respiratory distress, were

not considered. In this regard, Ms. Daniels testified that,

after R10's demise, the lack of the facility's immediacy in

initiating a protocol to prevent any further problems placed

other residents who had episodes of respiratory distress at

severe risk for harm, if not death. This, in her estimation,

constituted immediate jeopardy. Tr. at 232.

Petitioner began to take more serious steps to

address its duty to properly treat and care for ventilator

dependent residents in respiratory distress in early March

1997, when it adopted guidelines for treatment of such

residents. | Unfortunately, however, no training was

conducted in earnest, and residents continued to be placed

at risk of serious injury, harm, impairment, or death, even

App. 79

after those guidelines were adopted. This is evident from

the previous discussion regarding the improper treatment

and care given to R126, R127, R83 and R68. The

treatment and care given to these residents was contrary to

the policy adopted by Petitioner in early March 1997, for

the treatment and care of ventilator dependent residents in

respiratory distress. Thus, they continued to be placed at

risk throughout the month of March and through April 3,

1997. As already stated, it was not until April 4, 1997, that

Petitioner initiated a comprehensive plan to address and

abate the immediate jeopardy.

In view of the foregoing, I conclude that there is a

basis to impose a CMP against Petitioner in the immediate

jeopardy range for the period which begins on December

20, 1996, and which runs through April 3, 1997. HCFA

satisfied all of the prerequisites for imposing such a

penalty. First, HCFA established a prima facie case, which

Petitioner did not rebut, that as of December 20, 1996,

Petitioner was not complying substantially with the

participation requirement at 42 C.F.R. 483.25. Indeed,

there is not only a prima facie case of noncompliance here,

but the preponderance of the evidence is that Petitioner was

not complying substantially with this requirement. Second,

Petitioner failed to show that HCFA's determination that

Petitioner's noncompliance with this requirement was at the

immediate jeopardy level was clearly erroneous. In fact,

the preponderance of the evidence establishes that

Petitioner's deficiency was at the immediate jeopardy level.

Third, Petitioner did not prove by the preponderance of the

evidence that it had eliminated the immediate jeopardy to

its residents on any date prior to April 4, 1997.

3. The amount of the penalty imposed by HCFA is

reasonable. HCFA imposed a $3,050 per day CMP for the

period beginning December 20, 1996 and ending April 3,

1997. There is no issue as to the reasonableness of the

App. 80

=

daily amount of the penalty inasmuch as $3,050 is the

minimum that may be imposed by HCFA where it is

established that the participating facility has incurred a

deficiency that reaches the level of immediate jeopardy. 42

C.F.R. 488.438(a)(i). HCFA also imposed a $50 per day

CMP for the period beginning April 4, 1997 and ending

May 14, 1997. There is no issue in this case as to whether a

CMP of $50 per day for the period from April 4, 1997

through May 14, 1997 is reasonable. Petitioner has not

contested the presence at its facility of deficiencies at less

than the immediate jeopardy level during that period. A

CMP of $50 per day for deficiencies that posed a potential

for more than minimal harm to residents, but not at the

immediate jeopardy level, is the minimum for such

deficiencies. 42 C.F.R. 488.438(a)(ii).

Conclusion

I conclude that HCFA correctly determined that

beginning December 20, 1996 through April 3, 1997,

Petitioner was not complying with federal participation

requirements in the Medicare program at the immediate

jeopardy level, and the imposition of a CMP of $3,050 per

day is reasonable. I also conclude that from April 4, 1997

through May 14, 1997, HCFA properly assessed a $50 per

day CMP for deficiencies that posed a potential for more

than minimal harm, but not at the immediate jeopardy

level.

Jose A. Anglada

Administrative Law Judge

App. 81

DEPARTMENT OF HEALTH AND HUMAN SERVICES

DEPARTMENTAL APPEALS BOARD

APPELLATE DIVISION

Nos. A-96-157, C-95-159

HILLMAN REHABILITATION CENTER, PETITIONER,

V.

HEALTH CARE FINANCING ADMINISTRATION, RESPONDENT.

DAB No. 1611

1997 HHSDAB LEXIS 547

February 28, 1997

CORE TERMS: provider, clinical, patient, signature,

surveyor, regulation, billing, certification, burden of proof,

termination, burden of persuasion, therapist, opt,

accessible, prima facie case, monthly, involvement,

noncompliance, preponderance, beneficiary, coming,

patient record, substantial compliance, physical therapy,

central office, incomplete, faxed, contemporaneous,

progress, rehabilitation

PANEL: Cecilia Sparks Ford, M. Terry Johnson, Judith A.

Ballard, Presiding Board Member

OPINION:

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

The Health Care Financing Administration (HCFA)

appealed a May 22, 1996 decision by Administrative Law

App. 82

Judge (ALJ) Steven T. Kessel. Hillman Rehabilitation

Center, DAB CR419 (1996) (ALJ Decision). Hillman

Rehabilitation Center (Hillman) had sought a hearing

before the ALJ challenging HCFA's termination of

Hillman's participation in the Medicare program for

substantial noncompliance with federal requirements for

outpatient physica! therapy and rehabilitation agencies.

The ALJ concluded that HCFA had failed to establish a

basis for terminating Hillman's participation.

As discussed below, we conclude that the ALJ erred

in determining that HCFA had the ultimate burden of

persuasion. While we reject some of HCFA's arguments,

we conclude that HCFA established a prima facie case that

Hillman was not complying substantially with the two

conditions of participation at issue. We further conclude

that, on the record before us, Hillman did not meet its

burden of proving by a preponderance of the evidence that

it was in substantial compliance with the conditions. We

have determined, however, that Hillman may have been

prejudiced by ALJ errors in assigning the burden of proof,

in analyzing the evidence, and in ruling on evidentiary

issues, and that Hillman should have an opportunity to

proffer additional evidence to meet its burden. Therefore,

we remand the case for further proceedings consistent with

this decision and our instructions below.

I. BACKGROUND a

A. Factual summary

Hillman Rehabilitation Center has provided

outpatient physical therapy (OPT) in New Jersey with

Medicare certification since about 1985. Its business

' Here we provide a brief statement of the facts which are not

contested, except as indicated. Matters which were the subject of

factual dispute are discussed where relevant in the analysis sections.

App. 83

office is in Lakewood but the vast majority of treatments to

patients are provided by therapists working for Hillman

who operate out of rented offices in eight long-term care

facilities (LTCs) around the state. The original treatment

records for these patients are maintained in the LTCs.

HCFA contracts with the New Jersey Department of

Health to perform periodic compliance surveys of

participating providers. On January 13, 1995, a State

surveyor visited Hillman's central office to perform a

periodic survey of Hillman's compliance with Medicare

conditions of participation (COPs). This and the

subsequent surveys were conducted only at the central

office in Lakewood, and did not include visits to any of the

LTCs. Hillman's administrator was not present during the

January 1995 survey, but the surveyor met with the office

manager. Hillman was found out of compliance with a

number of conditions of participation at that survey,

including the COP for maintaining clinical records. HCFA

Exs. 3, 4, 5. Hillman submitted a plan of correction.

Uncontradicted testimony indicated that a revised plan of

correction was ultimately accepted (although the accepted

plan was not submitted for the record).

. On February 22, 1995, the surveyor returned for a

follow-up survey. After that survey, the State survey

agency prepared a report showing that the violations had

been corrected. HCFA Exs. 8, 9. The parties disputed

whether the certification of Hillman after the February

revisit constituted an indication that Hillman's record-

keeping system was then acceptable or reflected reliance on

Hillman's written promise in correspondence after the

revisit that it would update its central office records

monthly in the future. See HCFA Ex. 10.

On April 5, 1995, the surveyor returned to

Hillman's office in Lakewood, along with a representative

a

App. 84

of the Medicare fiscal intermediary, Aetna. At that visit,

some records were reviewed and photocopied. As a result

of this visit, Hillman was found deficient and given until

May 5, 1995 to submit an acceptable plan of correction.”°

Since no acceptable plan was received as of that date, |

Hillman was terminated effective July 5, 1995. HCFA Ex.

15. HCFA terminated Hillman because it determined, |

based on the State survey results, that Hillman could not be |

certified due to substantial noncompliance with two COPs

for rehabilitation agencies.”° The two relevant COPs relate |

? Hillman did not dispute that it had not provided a plan of correction

as of the required date, but argued that it had requested an extension

(evidenced by a letter dated May 5, 1995, the same day the correction

plan was due). P. Ex. 5. Hillman received no reply to this request and |

submitted a proposed plan dated May 19, 1995, two weeks late. P. Ex. |

o. The State surveyor's supervisor testified that the extension was not |

given because such requests are not traditionally granted and because |

Hillman's track record did not justify it. Hearing Tr. 172; see also |

|

|

|

Hearing Tr. 75. Both the surveyor and his supervisor testified that the

plan as submitted was unacceptable, as well as untimely. Hearing Tr.

75-76, 173; HCFA Ex. 12 (Hillman's proposed plan with annotations

by the supervisor dated May 23, showing unacceptable points).

> The regulations provide that state surveyors are "professionals who

use their judgment, in concert with Federal forms and procedures, to

determine compliance." 42 C.F.R. 488.26(b)(3). A state survey agency |

is required to certify that a provider is not in compliance with the COPs |

"where the deficiencies are of such character as to substantially limit |

the provider's . . . capacity to render adequate care or which adversely

affect the health and safety of patients." 42 C.F.R. 488.24(a). In

determining compliance, the state agency is to consider "the manner |

and degree" to which a provider satisfies each standard in a COP and to |

document “the nature and extent of deficiencies, if any." C.F.R.

488.26(a). A provider found deficient in one or more standards under

the COPs may participate in Medicare only if it "has submitted an

acceptable plan of correction for achieving compliance within a

reasonable period of time" and if its deficiencies do not "jeopardize"

patient health and safety or "seriously limit" its capacity to render

adequate care. 42 C.F.R. 488.28(a). [***Lengthy material in footnote

omitted. For complete text, see 1997 HHSDAB LEXIS 547 (1997).]

App. 85

to (1) physician involvement in planning and delivering

care [42 C.F.R. 405.1717] and (2) maintenance of

complete and accurate clinical records [42 C.F.R.

405.1722]. P. Ex. 7 (HCFA Termination Letter, June 13,

1995).

Hillman sought review of HCFA's determination to

terminate its participation as provided by 42 C.F.R.

488.24(a) and received a hearing before an ALJ as provided -

by 42 C.F.R. 498.40 et seq. The hearing regulations

require the provider to specify in its hearing request "the

specific issues, and the findings of fact and conclusions of

law" with which it disagrees and the "basis for contending"

that they are wrong. 42 C.F.R. 498.40(b). A party

dissatisfied with an ALJ's decision after the hearing may

seek review before the Departmental Appeals Board

(DAB), as HCFA has done in this case. 42 C.F.R. 498.80

et seq.

B. The ALJ Decision

The ALJ Decision contained six numbered findings

of fact and conclusions of law (FFCLs) as follows:

1. HCFA has the burden of proving that Petitioner

failed to comply with a condition of

participation in Medicare.

2. The Act and regulations require Petitioner to

maintain clinical records that are completely and

accurately documented, readily accessible, and

systematically organized to facilitate retrieving

and compiling information.

3. Petitioner is not obligated to maintain at its

Lakewood, New Jersey, business office

complete and contemporaneous copies of

records of treatments that it provides at eight

long-term care centers.

App. 86

4. The account by the New Jersey State Agency

surveyor of his April 5, 1995 visit to Petitioner

is not credible.

5. HCFA did not prove that Petitioner failed to

comply with the condition of participation

governing plans of care and _ physician

involvement in the planning and delivery of care

contained in 42 C.F.R. 405.1717.

6. HCFA did not prove that Petitioner failed to

comply with the condition of participation

governing clinical records contained in 42

C.F.R. 405.1722.

ALJ Decision at 3-4.

C. HCFA's Exceptions

HCFA appealed five of the six FFCLs in the ALJ

Decision. HCFA Br. at 5-6. Since neither party excepted to

FFCL 2, it is summarily affirmed. HCFA contended that

the ultimate burden of proof remained on the provider to

demonstrate by a preponderance of the evidence that it was

in substantial compliance with federal requirements.

HCFA argued that the ALJ erred in interpreting the clinical

records requirements not to require copies of off-site

records to be maintained at the central office, but further

argued that this interpretation was irrelevant here, since the

ALJ found that the provider was obligated to produce

records at the central office when requested by a surveyor

regardless of the location of the records (for example, by

facsimile transmission). Hence, HCFA argued that

Hillman should have been found out of compliance,

without regard to where its records were filed, based on the

survey finding that complete records were not available

when requested. Jd. at 6-7.

HCFA argued that the entire case "hinges" on the

ALJ's erroneous conclusion that the State agency surveyor

did not request patient clinical records during the April 5th

survey, since the ALJ stated that Hillman's versions of the

patient clinical records would otherwise be "self- serving

exhibits" with "little or no probative value." Jd. at9. HCFA

argued that the ALJ's conclusion about the survey events

was founded on factual findings not supported by the

record and disregarded other evidence tending to undercut

the credibility of Hillman's version of events. Jd. at 7-8.

HCFA argued that the ALJ, having accepted Hillman's

version of events at the April survey, then erred further by

relying uncritically on Hillman's patient record exhibits

rather than HCFA's exhibits to evaluate Hillman's

compliance with the COPs as of the survey date. Jd. at 9-

10. HCFA also contended that the ALJ erred in accepting

the existence of a distinction between the billing file’ and

the clinical file' drawn by Hillman's lone witness. Jd. at 7.

Further, HCFA claimed that it was prejudiced by

errors in the ALJ's rulings on certain’ evidence.

Specifically, HCFA argued that the ALJ precluded

evidence from HCFA relating to what the Aetna

representative was seeking at the April 5th survey, while

allowing Hillman to present evidence on that issue. Jd. at

8.

D. Standard of review on appeal

Our standard for review of an ALJ decision on a

disputed issue of law is whether the ALJ decision is

erroneous. Our standard for review on a disputed issue of

fact is whether the ALJ decision as to that fact is supported

by substantial evidence on the record as a whole. We must

thus uphold the ALJ's findings of fact "if a reasonable mind

reviewing the evidence in the record as a whole could

App. 88

accept it as adequate to support his_ conclusion."

Consolidated Edison v. NLRB, 305 U.S. 197, 229 (1938);

Richardson yv. Perales, 402 U.S. 389, 401 (1971).

However, the substantiality of the evidence must be

weighed in light of whatever in the record detracts from as

well as whatever supports each finding. See Universal

Camera Corp. v. NLRB, 340 U.S. 474 (1951); see also

Walker v. Mathews, 546 F.2d 814, 818 (9th Cir. 1976).

E. Guide to our decision

The analysis in our decision is divided into two

major components. First, we discuss the correct allocation

of the burden of proof. Second, we address the disputed

issues on the merits of this case. The main sections of our

discussion can be found on the following pages.

ANALYSIS OF THE BURDEN OF PROOF

A. Summary of major conclusions

B. The ALJ failed to clearly distinguish the burden

of going forward and the ultimate burden of

persuasion.

C. The structure and purpose of the Medicare

program and the role of certification and of

provider agreements support our analysis.

D. The ALJ's allocation of the burden of proof is

inconsistent with relevant case precedent and

relies on analogies to types of cases that are

inapposite.

E. Hillman's due process attack is without merit.

F. The underlying concerns reflected in the ALJ

analysis can be met without placing the ultimate

burden of persuasion on HCFA.

App. 89

ANALYSIS OF THE MERITS OF THE CASE

A. Summary of major conclusions

B.The ALJ's conclusion that Hillman's patient

record exhibits were the best evidence of its

compliance on April 5, 1995 is not supported by

substantial evidence or reasonable inferences

therefrom.

C.The factors cited by the ALJ in accepting

Hillman's version of survey events are neither

supported by substantial evidence nor based on

reasonable inferences, and other relevant factors

were disregarded without adequate explanation.

D.Noncompliance with the physician involvement

condition of participation

E. Noncompliance with the clinical records

condition of participation

Finally, we set out our conclusions and disposition

of the exceptions to the FFCLs an

This text is long and has been trimmed here. Open the source document for the complete record.