SUBJECT:

Palm Garden of Gainesville,

Petitioner,

Centers for Medicare & Medicaid

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to impose a denial of payment for new admissions (DPNA) for Medicare and Medicaid against Florida Convalescent Centers, Inc., d/b/a Palm Garden of Gainesville (Petitioner). I base this decision on my conclusion that Petitioner failed to comply substantially with Medicare participation requirements for three months.

I. Background

Petitioner is a skilled nursing facility that is located in Gainesville, Florida. It has participated in the Medicare program. The participation in Medicare of facilities like Petitioner is governed by regulations at 42 C.F.R. Parts 483, 488, and 498.

On February 18, 1999, surveyors employed by the Florida Agency for Health Care Administration (State agency) surveyed Petitioner (February 1999 survey) to determine whether Petitioner was complying with Medicare participation requirements. The surveyors concluded that Petitioner was not complying substantially with participation requirements. The State agency performed a revisit survey of Petitioner on April 8, 1999 (April 1999 survey), and determined that Petitioner was still not complying substantially with three participation requirements.

On April 26, 1999, CMS (at that time, referred to as the Health Care Financing Administration) advised Petitioner that CMS was imposing a mandatory DPNA effective May 18, 1999, and directed in-service training effective on that same date. CMS Exhibit (Ex.) 1. On June 24, 1999, Petitioner filed a request for hearing with respect to the findings of the April 1999 survey. CMS Ex. 12. This case was assigned to several administrative law judges (ALJs) before it was assigned to me for hearing and decision.

On July 28, 2000, Petitioner filed Petitioner's Initial Brief. In its brief, Petitioner argued a DPNA could not be imposed against it because two of the three cited deficiencies were deleted during informal dispute resolution proceedings (IDR) with the State. Petitioner also argued that it was in substantial compliance as of May 13, 1999 when Petitioner submitted its "written credible evidence" that it was back in compliance.

On March 20, 2002, I ruled that the decision of IDR at the state level to dismiss two deficiencies did not bind CMS. I further ruled that summary judgment in this case was inappropriate prior to CMS's presentation of evidence.

I conducted a hearing in Gainesville, Florida, on September 17, 2002. At the beginning of the hearing, Petitioner again raised the issue of the IDR that had taken place. Petitioner also indicated during opening argument that it would challenge one of the findings from the February 1999 survey. Petitioner cited 42 C.F.R § 488.331 for the proposition that no penalties can be imposed pursuant to deficiencies dropped during IDR. According to Petitioner, only one alleged deficiency remained from both the February 1999 and April 1999 surveys, and Petitioner planned to show it was an erroneous citation. CMS strenuously objected because Petitioner had not appealed any of the findings from the February 1999 survey. Petitioner responded that, because it was disputing a mandatory DPNA for three months of noncompliance, it impliedly disputed the basis for the earlier noncompliance.

With respect to CMS's objection, I ruled that Petitioner could present evidence with respect to one of the tags from the February 1999 survey. But, because Petitioner had not actually appealed any of the findings as required by 42 C.F.R. § 498.40, I found that, for purposes of the hearing, CMS's statement of deficiencies (SOD) would suffice as CMS's prima facie case.

During the hearing, I admitted into evidence CMS's proposed exhibits, CMS Exs. 1 - 15, and Petitioner's proposed exhibits (P. Exs.), numbered P. Exs. 1 (pp. 3-7 only), 3-9, 11, 12, and 13. After the parties' post-hearing briefing, I asked CMS to provide a full copy of the SOD from the February 1999 survey because Petitioner had submitted only selected pages from the document (P. Ex. 1). I have marked the SOD as CMS Ex. 16 and have admitted it into evidence on my own motion.

At the hearing, CMS presented three witnesses: Cindy Jones-McSons, Selena Danetta Beckett, and Janice Rebstock. Petitioner presented one witness: Dwight David O'Steen, the former Administrator of the facility. My decision is based on my consideration of the admitted exhibits, the testimony of the witnesses, and the parties' arguments.

II. Applicable law and regulations

Petitioner is considered a long-term care facility under the Social Security Act (Act) and regulations promulgated by the Secretary of Health and Human Services (Secretary). The statutory and regulatory requirements for participation by a long-term care facility are found at sections 1819 and 1919 of the Act and at 42 C.F.R. Part 483.

Sections 1819 and 1919 of the Act vest the Secretary with authority to impose penalties against a long-term care facility for failure to comply substantially with federal participation requirements.

Pursuant to the Act, the Secretary has delegated to CMS and the states the authority to impose remedies against a long-term care facility that is not complying substantially with federal participation requirements. Part 488 of 42 C.F.R. provides that facilities that participate in Medicare may be surveyed on behalf of CMS by state survey agencies in order to determine whether the facilities are complying with federal participation requirements. 42 C.F.R. §§ 488.10 - 488.28. The regulations contain special survey conditions for long-term care facilities. 42 C.F.R. §§ 488.300 - 488.335. A survey's findings are presented in a SOD, which identifies each violation of (or instance of noncompliance with) a participation requirement. See CMS State Operations Manual (SOM) Appendix (App.) P, Chapter (Ch.) IV. Deficiencies are identified by the survey agency using "tags" that correspond to the participation requirements in 42 C.F.R. Part 483. Id.

Under Part 488, a state or CMS may impose a DPNA against a long-term care facility when a state survey agency concludes that the facility is not complying substantially with federal participation requirements. 42 C.F.R. §§ 488.406, 488.408. The regulations require that CMS deny payment for all new admissions when a facility is not in substantial compliance as defined in 42 C.F.R. § 488.401[sic], three months after the last day of the survey identifying the noncompliance. 42 C.F.R. § 488.417(b)(1).

The regulations define the term "substantial compliance" 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.

If a survey reveals that a facility is not in "substantial compliance" with federal participation requirements, the facility must submit a plan of correction (POC) for approval by the survey agency. 42 C.F.R. §§ 488.402(d), 488.408(f). Even if the POC is approved, the facility may not be regarded as in substantial compliance until the survey agency determines, following an onsite revisit or other means of verification, that the deficiency no longer exists. 42 C.F.R. § 488.440(h); SOM App. P, Ch. IV § 7316.

The Act and regulations make a hearing before an ALJ available to a long-term care facility against whom CMS has determined to impose a DPNA. Act, section 1128A(c)(2); 42 C.F.R. §§ 488.408(g), 498.3(b)(13). The hearing before an ALJ is a de novo proceeding. Anesthesiologists Affiliated, et al, DAB CR65 (1990), aff'd, 941 F2d. 678 (8^th Cir. 1991).

An affected party entitled to a hearing under 42 C.F.R. § 498.5 may file a request for hearing. It must be in writing and filed ". . . within 60 days from receipt of the notice of initial, reconsidered, or revised determination. . . ." 42 C.F.R. § 498.40(a)(2). Additionally, the request for hearing must identify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees. 42 C.F.R. § 498.40(b).

When a penalty is imposed and appealed, CMS must make a prima facie case that the facility has failed to comply substantially with federal participation requirements. To prevail, a long-term care facility must overcome CMS's showing by a preponderance of the evidence. Hillman Rehabilitation Center, DAB No. 1611 (1997); aff'd, Hillman Rehabilitation Center v. U. S. Dep't of Health and Human Services, No. 98-3789 (D.N.J. May 13, 1999). Under Hillman, CMS bears the burden of coming forward with evidence sufficient to establish a prima facie case that Petitioner failed to comply with participation requirements. Once CMS has established a prima facie case of noncompliance, Petitioner has the burden of proving, by a preponderance of the evidence, that it complied substantially with participation requirements. Hillman, DAB No. 1611, at 3-8. ⁽¹⁾

III. Issues

The only basic issue in this case is whether there is a factual basis for CMS's finding that Petitioner was not in substantial compliance with federal requirements for three months, requiring the imposition of a DPNA.

IV. The Parties' Arguments

Petitioner's Contentions

I must concede some initial confusion as to Petitioner's argument in this case. ⁽²⁾ I would describe it as akin to a "house of cards" argument. It is made up of several subarguments that must all be accepted as true to sustain the argument as a whole. The subarguments are as follows:

•As part of the February 1999 survey, CMS incorrectly cited Petitioner for medication errors when CMS should have cited Petitioner under the infection control requirements.

•CMS cited Petitioner for three F Tag deficiencies during the April 1999 survey (F332, F353, and F432). F Tag 332 was for medication errors.

•Two of the tags, F353 and F432, were deleted during Petitioner's IDR with the State of Florida. These two tags should not be considered in this proceeding. Even had the tags not been deleted, however, CMS obviously relied on Petitioner's "written credible evidence" of compliance to determine Petitioner was back in compliance because CMS did not resurvey on these tags in June 1999. Therefore, Petitioner, at least with respect to these two tags, was back in compliance before the deadline for imposition of the DPNA.

•With respect to the remaining F Tag 332 for medication errors, Petitioner argues that it was not out of compliance for medications errors for three months in a row because CMS, during the February 1999 survey, incorrectly cited Petitioner for what was not a medication error but another type of error. Further, the surveyors were biased and rattled one of Petitioner's best nurses so that she committed the medication errors during the April 1999 survey. Also, with respect to F Tag 332, Petitioner argues that the State of Florida later eliminated this tag in a licensing proceeding.

•Finally, Petitioner argues that, even if it was out of compliance during the February and April 1999 surveys for medication errors, Petitioner submitted "written credible evidence" of compliance on May 13, 1999, prior to the end of the three-month period for mandatory DPNA.

CMS's contentions

CMS makes the following arguments in this case:

•Petitioner did not appeal the results of the February 1999 survey, and did not mention the February 1999 survey in its hearing request contesting the April 1999 survey. Therefore, none of the deficiency tags cited during the February 1999 survey can be revisited and any evidence regarding that survey is irrelevant.

•CMS is not bound by any decisions made by the State of Florida in IDR or otherwise, regarding the alleged deficiencies.

•CMS's submitted evidence proves that Petitioner was out of compliance at the April 1999 survey.

•CMS is not obligated to accept a facility's submitted written evidence of compliance and is likely to require a resurvey, as in this case, to determine a return to compliance.

V. Findings of Fact and Conclusions of Law

1. I do not make any findings as to whether Petitioner was noncompliant with 42 C.F.R. §§ 483.30(a)(1) & (2) and 483.60(e) as alleged in F Tags 353 and 432 respectively.

This decision is in the nature of a summary judgment decision. While it was not clear until the hearing, Petitioner relies on the evidence it submitted to the State agency during IDR with respect to F Tags 353 and 432, and the "written credible evidence" it submitted with respect to F Tag 332. Further, Petitioner, as noted above, submitted numerous arguments about the survey process itself. Petitioner provided little additional evidence at the hearing.

Relying on 42 C.F.R. § 488.331, Petitioner has continuously and strenuously contended that the cited deficiencies at F Tag 353 for inadequate staff and F Tag 432 for pharmacy services were dropped as a result of IDR and therefore should not be considered in this proceeding.

Section 488.331(a) of 42 C.F.R. provides that for non-Federal surveys, the state must offer IDR, and for Federal surveys, CMS offers IDR at the facility's request. Section 488.331(c) of 42 C.F.R. states the following with respect to a situation where the facility is successful during IDR at demonstrating that deficiencies should not have been cited: "the deficiencies are removed from the statement of deficiencies and any enforcement actions imposed solely as a result of those cited deficiencies are rescinded."

CMS has contended that when IDR is done with the state rather than CMS, CMS is not bound by the result. Further, CMS relies on 42 C.F.R. § 488.452 (a)(2) for the proposition that, if there is a disagreement between the state agency and CMS over whether a facility has met participation requirements, CMS's findings of noncompliance take precedence when CMS finds a facility has not achieved substantial compliance and the state agency finds the facility is in substantial compliance. For purposes of my ruling on Petitioner's prehearing motion for summary judgment, I agree with CMS, for I find 42 C.F.R. § 488.452(a)(2) to be far more instructive in its statement of clear precedence for CMS in this situation than is 42 C.F.R. § 488.331(c), which does not specify whether dropping deficiencies from the SOD applies to states for Federal surveys or to CMS for non-Federal surveys. Regardless, because this case can be decided without consideration of F Tags 353 and 432, and because the decision can be made in favor of CMS without finding Petitioner deficient under either of these tags, I will make no findings respecting them.

2. Petitioner was not in compliance with Federal participation requirements at the time of the February 18, 1999 survey.

Petitioner was cited for numerous deficiencies (20 separate tags) during the February 1999 survey. CMS Ex. 16. The most serious deficiencies were determined to be isolated deficiencies that constituted actual harm but were not immediate jeopardy. CMS Ex. 1.

One of the deficiencies cited during the February 1999 survey was under F Tag 332, for a failure to meet the regulatory requirement that the facility ensure it is free of medication error rates of five percent or greater. 42 C.F.R. § 483.25(m)(1). No remedies were imposed as a result of the February 1999 survey because CMS accepted Petitioner's POC and its statement that deficiencies would be corrected by April 5, 1999.

Petitioner did not appeal the February 1999 survey findings because, as correctly stated in CMS's post-hearing brief, an appeal of survey findings is only available to a facility if CMS has imposed a remedy as a result of the findings. 42 C.F.R. § 498.3(d)(1); Arcadia Acres, Inc., DAB CR 424 (1996), aff'd DAB No. 1607 (1997).

During the February 1999 survey, the surveyors, as part of the medication pass observations, saw Petitioner's staff administer eye drops to residents without washing their hands or wearing resident care gloves. P. Ex. 1, at 4. In calculating Petitioner's medication error rate, the surveyors designated the errors in eye drops administration as medication errors. Id. At the hearing, Petitioner argued that to not wash hands or wear gloves when administering eye drops should properly be cited as an infection control deficiency rather than a medication error. Therefore, Petitioner was not out of compliance with F Tag 332 for three months. I find Petitioner's argument is erroneous for several reasons and I discuss those reasons below.

At the hearing, CMS vehemently objected to Petitioner offering any evidence regarding the February 1999 survey because its findings had not been appealed. CMS argued that Petitioner's contentions regarding the February 1999 survey should have been raised in its request for hearing on the April 1999 survey findings as required by 42 C.F.R. § 498.40. Section 498.40 of 42 C.F.R. requires that the request for hearing must:

(1) identify the specific issues, and findings of fact and conclusions of law with which the affected party disagrees; and

(2) specify the basis for contending that the findings and conclusions are incorrect.

Because Petitioner had not mentioned the issue of the eye drops in its request for hearing, according to CMS, I have no jurisdiction to consider the issue. At the hearing, I looked through the various pleadings to determine whether Petitioner had ever mentioned the issue such that CMS was on notice of Petitioner's contentions. Petitioner's references to the eye drop incidents were present but scant. Transcript (Tr.) 26 - 28. To allow Petitioner an opportunity for a full hearing on the case, I ruled that CMS had made a prima facie case with respect to medication errors of greater than five percent having been found during the February 1999 survey of Petitioner. However, I allowed Petitioner the opportunity to rebut that particular allegation from the February 1999 survey. Petitioner made no argument and submitted no evidence with respect to the other deficiencies found during the February 1999 survey.

a. Petitioner submitted insufficient evidence to overcome CMS's prima facie case that Petitioner failed to comply with F Tag 332 during the February 1999 survey.

Petitioner provided the testimony of its prior Administrator, Dwight O'Steen. Mr. O'Steen testified that he interpreted the guidelines that "hand washing and failure to place gloves on a nurse's hands prior to administering eye drops is in fact not a tag under F332, but in fact is an infection control issue under F441." Tr. 92. Surveyor Jones-McSons, a registered nurse, had previously testified that she considered the failure to wash hands or wear gloves to be a technique error. Tr. 55. Petitioner elicited from Surveyor Jones-McSons on cross-examination that the interpretative guidelines for surveyors do not list the failure to wear rubber gloves during administration of eye drops as a technique error. Id. Petitioner did not call as a witness a nurse or other practitioner who could have discussed nursing practices relative to administering eye drops or explained how the administration of eye drops is different than giving other medications. On the contrary, Petitioner provided no evidence other than its Administrator's interpretation of CMS's guidelines to surveyors. ⁽³⁾

Problems at nursing facilities can often be interpreted and cited under different regulatory requirements. While this may be more problematic when dealing with medication errors because the standard is a mathematical calculation, I find that, absent any contrary evidence from Petitioner, to administer eye drops in an unsanitary fashion can be considered a technique error, i.e., a medication error, as affirmed by Surveyor Jones-McSons, whether or not the interpretative guidelines list such a failure as a technique error.

b. Whether CMS cited F Tag 332 incorrectly after the February 1999 survey is irrelevant.

Much of Petitioner's argument rests on its supposition that a facility must be out of compliance with a particular Federal regulatory requirement (F Tag) for three months in order for CMS to impose a DPNA. I read the regulations and prior cases quite differently. 42 C.F.R. § 488.417(b); Desert Hospital, DAB No. 1623 (1997).

Section 488.417 (b) of 42 C.F.R. concerning a required DPNA refers to a facility's substantial compliance as a whole, not compliance with particular cited deficiencies. Each survey stands on its own in determining a facility's substantial compliance. Because there were numerous deficiencies determined during the February 1999 survey, even if the deficiency cited as F Tag 332 were eliminated, Petitioner was out of substantial compliance on the starting date of February 18, 1999. Petitioner would have to be in substantial compliance three months later, regardless of the type of deficiencies later found, to avoid application of the mandatory DPNA.

3. A preponderance of the evidence shows that Petitioner was not in substantial compliance with Federal requirements at the April 1999 survey.

Section 483.25(m)(1) of 42 C.F.R. requires a nursing facility to ensure that it is free of medication error rates of five percent or greater. During surveys, State agency surveyors observe nurses as they pass out medications. Tr. 33.

During the April 1999 survey, Surveyor Jones-McSons made 44 observations of Petitioner's nurses passing out medications. CMS Ex. 6; Tr. 34. She observed Petitioner's Nurse Jourdan pass medications to Resident 6. Nurse Jourdan gave Glyburide, five milligrams, to the resident when the Glyburide had been discontinued and Glucotrol-XL was to be given in its place. Tr. 37. Moreover, the Glucotrol-XL had already been given to Resident 6 that morning. This resident received a double dose of diabetic medication. Tr. 38.

Surveyor Jones-McSons also saw Nurse Jourdan pour 500 milligrams of Tums for another resident. Nurse Jourdan did not give the Tums to the resident. That resident's physician had recently discontinued Tums and had prescribed Caltrate. Nurse Jourdan did not administer Caltrate either. Tr. 40 - 41; CMS Ex. 11, at 11 - 12.

Upon inquiry as to what happened to the Tums Nurse Jourdan had poured, Nurse Jourdan told Surveyor Jones-McSons she gave the Tums to another resident. Nurse Jourdan said she gave that particular resident Tums, 500 milligrams, twice. That resident, however, was supposed to be given Tums-Ex, 750 milligrams. Instead, Ms. Jourdan gave the resident 1000 milligrams of Tums. Tr. 41 - 42; CMS Ex. 11, at 14.

Surveyor Jones-McSons reviewed another of Petitioner's nurses and did not observe any medication errors. Tr. 43.

When Surveyor Jones-McSons reviewed the third nurse, she observed an error in that 200 I.U.s of Vitamin E were given to a resident when 400 I.U.s had been ordered. Tr. 43 - 44.

Later in the afternoon, Surveyor Jones-McSons did an expanded, random medication pass observation. She again observed Nurse Jourdan. Nurse Jourdan gave a resident Verasulfate, 325 milligrams, in crushed form. Surveyor Jones-McSons testified that, according to the manufacturer's recommendation, this particular medication should not be crushed or chewed. Tr. 45.

Surveyor Jones-McSons then reviewed Petitioner's Nurse Ritten. Nurse Ritten gave a resident Reglan, 10 milligrams, at 1:25 p.m. The physician's orders, however, stated that the Reglan was to be given to the resident at 7:30 a.m., 11:30 a.m., and 4:30 p.m. The nurse had given the resident the Reglan dose two hours after it was to be administered. As explained by Surveyor Jones-McSons, Reglan is used to decrease nausea and vomiting. The medication should have been given to the resident prior to the resident's noon meal. Instead, the resident ate between 12:30 and 1:00 p.m. and did not receive the medication until 1:25 p.m. Tr. 46 - 47.

Surveyor Jones-McSons also observed Nurse Ritten administer Prandin, 2 milligrams, at approximately 1:25 p.m. Surveyor Jones-McSons explained that Prandin is a medication used to decrease blood sugar levels. This medication was also administered late, after the resident had eaten the noon meal rather than before, as required. Tr. 47 - 48. Further, Surveyor Jones-McSons observed Nurse Ritten administer Oscal-D (calcium plus Vitamin D), 500 milligrams, to a resident when the resident's physician had prescribed Oscal-500. Tr. 48.

Surveyor Jones-McSons made 44 separate observations and observed eight medication errors. She calculated the Petitioner's medication error rate as 18 percent. Tr. 48.

While somewhat imprecise, Surveyor Jones-McSons' testimony was that the medication errors, such as administration of double the prescribed diabetic medication and failure to give anti-nausea and diabetic medication prior to meals, have the potential for causing more than minimal harm. Tr. 38, 46, 48. I find, based on Surveyor Jones-McSons' testimony, that Petitioner's failure to comply with 42 C.F.R. § 483.25(m)(1) had the potential to cause more than minimal harm. ⁽⁴⁾

With Surveyor Jones-McSons' testimony, CMS made a prima facie case that Petitioner was not in substantial compliance with 42 C.F.R. § 483.25(m)(1) to assure that residents are not subject to medication error rates greater than five percent.

I expected Petitioner to provide some factual evidence that the alleged errors did not occur or had no potential for causing more than minimal harm or were even trivial, such as administering 1000 milligrams of Tums rather than 750 milligrams of Tums-Ex or administering Oscal-D rather than Oscal-500. Petitioner provided no such evidence. ⁽⁵⁾ Rather, Petitioner posed the arguments as discussed immediately below.

a. A surveyor's alleged rudeness does not abrogate a Medicare participating facility's obligation to comply with Federal requirements.

Petitioner contends that Surveyor Jones-McSons was rude and rattled Nurse Jourdan, causing her to make medication pass errors she would not normally make. Petitioner did not call Nurse Jourdan to testify. Instead, Administrator O'Steen testified that both the facility's medical director, Dr. Alan Goldblatt, and Nurse Jourdan had approached him on the day of the medication pass review in April and told him that Surveyor Jones-McSons ". . . had basically rattled, or had intimidated Miss Jourdan." Tr. 99. He also testified that Nurse Jourdan was one of the facility's top nurses. Id.

Administrator O'Steen further testified that the facility staff had personality conflicts with Surveyors Jones-McSons and Rebstock from the February survey. Tr. 100. The facility had apparently communicated with someone at the State agency complaining about these surveyors. Administrator O'Steen said he was surprised that Surveyors Jones-McSons and Rebstock had been sent back to do the re-survey in April because of the prior complaints. Tr. 100. Administrator O'Steen provided few specifics in regard to his problems with the surveyors. Neither Administrator O'Steen nor apparently Nurse Jourdan denies she made the errors observed by Surveyor Jones-McSons.

Nurse Jourdan wrote a "To Whom it May Concern" letter on April 19, 1999, which states as follows:

Ms. [Jones-McSons] presented herself in a very curt and abrasive manner from the beginning of our encounter. Ms. [Jones-McSons] was assigned to shadow me during my regular daily routine. Ms. [Jones-McSons] presence made me feel as if I was being overly scrutinized. Her communication from the beginning was very abrupt and intimidating. She did not introduce herself to me as she explained she was conducting a medication pass review. . . . I could not help but feel her tone of questioning was demoralizing to my professional integrity. . . . During a conversation with a physician, I overheard Ms. [Jones-McSons] refer to me as 'Dr. Elizabeth'. This comment was very disruptive and upsetting.

P. Ex. 6.

This letter, which is not an affidavit, is the strongest evidence anywhere in the record concerning what Surveyor Jones-McSons allegedly did to cause Nurse Jourdan to make mistakes. I do not find anything in the accusations that would necessarily cause a professional nurse to make medication errors. Moreover, in other cases where petitioners have objected to the survey procedures, the Departmental Appeals Board (Board) has determined that the procedures used by surveyors do not eliminate the facility's obligation to meet Federal participation requirements. Hermina Traeye Nursing Home, DAB No. 1810 (2002); Beverly Health & Rehabilitation - Spring Hill, DAB No. 1696 (1999); Golden State Manor and Rehabilitation Center, DAB No. 1597 (1996).

b. What the State agency determined in a licensing proceeding has no effect on this case.

On April 14, 1999, the State agency filed an administrative complaint against Petitioner and changed its license to "conditional." P. Ex. 12. The State agency alleged the same medication pass problems as stated in CMS's F Tag 332 from the April 1999 survey. Id. Petitioner requested a formal administrative hearing with the State agency. P. Ex. 11. In a final order issued on December 13, 2000, the State agency rescinded Petitioner's conditional license. Id. Petitioner argues that the State's finding requires CMS to drop its allegations found in F Tag 332. For the following reasons, I find the State agency's decision in its licensing proceeding has no preclusive effects in this case.

The first reason Petitioner's State proceeding has no preclusive effect in this case is that the State proceeding did not involve the same issues, which is a requirement for the application of either collateral estoppel or res judicata. Petitioner's State proceeding involved mixed questions of law and fact relating to the standards required for a nursing home to be licensed in the state of Florida. While the F Tag deficiencies initially alleged by the State agency surveyors as the basis for the CMS-imposed DPNA were part of the facts considered by the State ALJ, one cannot determine the context under which the facts were reviewed because the State proceeding arose pursuant to state licensing standards. As stated by the Board in Fairfax Nursing Home, Inc., DAB No. 1794 (2001), at 14, "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."

Second, Petitioner's State proceeding did not involve the same parties as in this case, which is another requirement for application of collateral estoppel or res judicata. The state agencies who work in consort with CMS in enforcing Medicare participation requirements are not general agents or in "privity" with CMS in all situations. Preliminary Rulings dated November 7, 2000, Alden-Long Grove Rehab & Health Care Center, Docket C-99-778 (2000). The relationships between state agencies and CMS are set forth strictly in the Act and the implementing regulations. The state agencies simply are not CMS, nor are they CMS's agents for purposes of state litigation. To generally apply Petitioner's view would require CMS to appear and fully participate in all slightly related state proceedings to protect the Secretary's interest. This would be counter to judicial economy, the underlying reason for the doctrines of collateral estoppel and res judicata. See United States v. Mendoza, 464 U.S. 154 (1984).

Third, only the Secretary (or one of the Secretary's delegated decision-makers), not a state ALJ or state agency, has ultimate responsibility for interpreting Federal Medicare requirements. 42 U.S.C. § 1395i-3(f)(1) and § 1395i-3(g)(3)(A); Preliminary Rulings dated November 7, 2000, Alden-Long Grove Rehab & Health Care Center, Docket C-99-778 (2000). Moreover, the regulations contemplate there will be differences of opinion about compliance between a state agency and CMS, and the regulations prescribe whose view should prevail. For example, in order to fully protect nursing home residents, the regulations set forth that, in non-immediate jeopardy situations, the Federal or state agency that believes a facility is not in compliance prevails. 42 C.F.R. § 488.452.

c. Petitioner failed to prove it was back in substantial compliance on May 13, 1999, rather than June 1, 1999.

Petitioner argues that even if it had been out of compliance on April 8, 1999, it was back in compliance by May 13, 1999, when it submitted "written credible evidence" of its compliance. CMS, according to Petitioner, should have accepted Petitioner's "written credible evidence" of compliance. Therefore, Petitioner was not out of compliance for three months, obviating the need for a DPNA.

I find, based on the express language in the regulations, that CMS does not have to accept a facility's submission of "written credible evidence" and can require a re-survey. Section 488.417(d) of 42 C.F.R. provides that " . . . payments to the facility . . . resume prospectively on the date that the facility achieves substantial compliance, as indicated by a revisit or written credible evidence acceptable to CMS." (Emphasis added.) On the other hand, I agree that an ALJ has the authority to look at the facts and determine whether a facility has achieved compliance prior to the time CMS has determined. The facility, nonetheless, has the burden of proving compliance prior to the date determined by CMS. Ebenezer Luther Hall, DAB CR969 (2002).

With respect to F Tag 332, Petitioner submitted the following evidence regarding its return to compliance on May 13, 1999, prior to the re-survey of June 1, 1999.

Kevin Kapsky, a pharmacist from Pharmerica, submitted a handwritten statement (not an affidavit), dated April 19, 1999, reporting that he had observed Nurse Jourdan on April 1, 1999 (prior to the April 8, 1999 survey), on a medication pass. He states that "[t]here were no med errors observed on this med pass. Two techniques were not followed which were that the mar was left open when the nurse went into resident's rooms and charting was done before administration of the medication. No other deviation [cross out] from protocol was observed." P. Ex. 7.

Apparently Mr. Kapsky returned and observed Nurse Jourdan again on April 21, 1999. He determined Nurse Jourdan had no errors during that pass. P. Ex. 8, at 2. Mr. Kapsky also reviewed medication passes for a nurse named Wendy Medeiris. According to Mr. Kapsky, Nurse Medeiris also made no errors. P. Ex. 9, at 14. Someone apparently different than Mr. Kapsky reviewed Sherry Harvey on April 22, 1999, and found that she had no medication pass errors. P. Ex. 9, at 37. The other medication pass documents Petitioner submitted referred to medication pass reviews done on various dates between October 1998 and April 1999. P. Ex. 8, at 1, 3, 5, 7, 9; P. Ex. 9 at 12, 38, 40, 42. As much as can be determined from the exhibits themselves, each one of the separate exhibit pages cited refers to one medication pass review.

Additionally, Petitioner presented the testimony of Administrator O'Steen. He testified that the facility hired a consultant pharmacist (Kevin Kapsky) who reviewed facility nurses on medication passes on April 1, 1999, with six of six nurses within compliance and five of six committing no medication errors. Tr. 109. The consulting pharmacist did an additional medication pass review on April 21, 1999, with two of two nurses committing no medication errors. Tr. 110. The facility also conducted in-service training on April 28, 1999, to ensure the licensed staff were aware of medication pass procedures. Tr. 110. Administrator O'Steen also repeated or summarized some of the exhibits. Tr. 123.

Based on the evidence submitted by Petitioner, I find Petitioner did not show it had returned to substantial compliance with F Tag 332 prior to June 1, 1999, when Surveyor Frank May determined Petitioner was in compliance. CMS Ex. 13. Petitioner has the burden of proving that it came into compliance by a date prior to that determined by CMS. Iredell Memorial Hospital - SNF, DAB CR393 (2000).

I did not find Petitioner's submitted "written credible evidence" persuasive for the following reasons. First, Petitioner did not call as a witness the consultant pharmacist who reviewed the medication passes. Petitioner did not even submit an affidavit from Mr. Kapsky. Petitioner provided no evidence as to his background, his impartiality, his methods, or how he determined whether or not a nurse made a medication error. Therefore, neither CMS nor I could ask him questions to test either his credibility or the credibility of his findings. Second, Petitioner provided only documents about separate medication passes. Petitioner did not provide any data from which one could calculate that Petitioner had obtained an error rate of less than five percent. As noted above, from the documents alone, it looks as if Mr. Kapsky made only about 14 - 15 medication reviews -- of one nurse on each occasion -- over several months time. I can make no judgment from these limited documents that Petitioner had ensured a medication error rate of no more than five percent before June 1, 1999.

Even though it does not appear that Frank May did a particularly thorough medication pass investigation on the re-survey (CMS Ex. 13), CMS had no obligation in this proceeding to explain why Mr. May called an end to the noncompliance on June 1, 1999. I accept CMS's determination and find that Petitioner's noncompliance with 42 C.F.R. § 483.25(m)(1) ended on June 1, 1999.

d. The weight of the evidence is that Petitioner was not in compliance with Federal participation requirements from February 18, 1999, until June 1, 1999, a period of over three months.

Substantial noncompliance with only one participation requirement can support the imposition of a penalty such as a DPNA. Beechwood Sanitarium, DAB No. 1824 (2002). Petitioner was out of compliance with at least one participation requirement for over three months. CMS was authorized to impose a mandatory DPNA for the period of May 18, 1999 until June 1, 1999. No issue exists as to the reasonableness of the DPNA because this penalty is a regulatory mandate if a facility is out of compliance for three months. 42 C.F.R. § 488.417(b)(1).

VI. Conclusion

CMS was authorized to impose a DPNA on Petitioner for the period of May 18, 1999 until June 1, 1999.

Anne E. Blair

Administrative Law Judge

1. The burden of persuasion set forth in Hillman applies only where the evidence proffered by both sides is "in equipoise." In such cases, the burden of persuasion would be on Petitioner.

2. I do not believe Petitioner disputes the surveyors' observations, particularly with respect to F Tag 332.

3. Petitioner's assertion that CMS admitted there were no medication errors found at the February 1999 survey is incorrect. P. Brief (Br.) at 3. I interpret the surveyor's testimony that she did not find medication errors as a statement that while she did not personally observe medication errors, the survey team, including a surveyor named Frank May, did observe the errors. Tr. 53.

4. This particular regulatory requirement, 42 C.F.R. § 483.25(m)(1), seems to include a baseline for creating the potential minimal harm in that it sets the standard for "less than significant" medication errors at no more than five percent.

5. Alan A. Goldblatt, M.D., Petitioner's medical director, wrote a "To Whom it May Concern" letter on April 19, 1999. P. Ex. 5. In the letter, Dr. Goldblatt states, "[r]ecognizing the potential seriousness of any medication error, the issues listed under Tag F332 fail to approach a level of serious concern for me." Petitioner did not call Dr. Goldblatt as a witness nor did Petitioner submit an affidavit from him. Thus, I gave little weight to this letter for purposes of this issue.