SUBJECT:

Regency Gardens Nursing Center,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

Petitioner's motion for summary judgment is granted. The Centers for Medicare & Medicaid Services (CMS) ⁽¹⁾ cannot, as a matter of law, establish that there was a basis for the remedies imposed or the reasonableness of those remedies for the period alleged by CMS. CMS's motion for summary judgment is denied.

PROCEDURAL HISTORY

Petitioner, Regency Gardens Nursing Center, is a long-term care facility authorized by the Secretary of the Department of Health and Human Services (Secretary) to participate in Medicare, Medicaid, and other federal health care programs pursuant to Title XVIII of the Social Security Act (the Act) (42 U.S.C. §§ 1396-1395ggg). On April 7, 1999, the New Jersey State Department of Health and Senior Services (NJSDHSS or State agency) conducted a complaint survey at Petitioner's facility. The NJSDHSS found the facility not in substantial compliance and declared that there was immediate jeopardy to resident health and safety. CMS accepted the NJSDHSS recommendations. CMS notified Petitioner by letter dated June 24, 1999 of the results of the April 7, 1999 survey and that an April 20, 1999 revisit survey found Petitioner in substantial compliance as of April 20, 1999. CMS further advised that it was imposing "a civil money penalty (CMP) in the amount of $7,500 per day from April 7, 1999 through April 19, 1999, a period 13 days [sic] of noncompliance which constituted immediate jeopardy." The total CMP is $97,500.

On August 24, 1999, Petitioner requested a hearing. ⁽²⁾ The request for hearing was received by the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB) on September 7, 1999. On September 30, 1999, the case was assigned to Administrative Law Judge (ALJ) Hillson for hearing and decision. On May 3, 2000, the case was reassigned to Chief ALJ Silva. On October 11, 2001, the case was reassigned to me for hearing and decision. In an order dated November 15, 2001, I gave the parties dates for filing final exchanges, and dispositive motions, and set a schedule leading to a hearing set to begin on January 14, 2002.

Petitioner and CMS filed cross-motions for summary judgment on December 3, 2001. A briefing schedule was set by my Order of December 7, 2001. On December 21, 2001, the parties jointly filed a stipulation of undisputed facts (Joint Stip.) and a joint statement of issues for hearing. The briefing schedule for the cross-motions for summary judgment was subsequently amended on December 28, 2001, and, at the parties' request, the hearing scheduled to begin on January 14, 2002 was postponed pending resolution of the cross-motions. On December 14, 2001, CMS filed its brief in support of its motion for summary judgment (CMS Brief) with the supporting declaration of Ellen Bennet dated December 14, 2001. Petitioner filed its response to CMS's motion for summary judgment on January 11, 2002 (P. Response). CMS filed a reply on January 25, 2002 (CMS Reply). ⁽³⁾ On December 14, 2001, Petitioner filed its brief in support of its motion for summary judgment with a copy of the statement of deficiencies for the survey of Petitioner completed on April 7, 1999 (P. Brief). CMS filed its response on January 11, 2002 (CMS Response). Petitioner filed its reply brief, which was received at CRD on January 28, 2002 (P. Reply). ⁽⁴⁾

FINDINGS OF FACT

These findings of fact are based upon the parties' joint stipulation of undisputed facts filed on December 21, 2001, except where indicated.

1. Petitioner, a long-term care facility, is authorized to participate in Medicare, Medicaid, and other federal health care programs pursuant to a participation agreement with the Secretary under the Act.

2. On March 27, 1999, at approximately 10:45 PM, a facility charge nurse found that Resident 1 had pulled out a recently placed percutaneous endoscopic gastronomy (PEG) tube (a feeding tube surgically passed through the abdominal wall and abdominal cavity to the stomach to permit feeding).

3. The charge nurse, having found the PEG tube removed, inserted a different tube and continued feeding Resident 1 despite some complaint of pain by the resident.

4. Early the next morning, March 28, 1999, leakage was noted around the feeding tube and Resident 1's condition was noted to have deteriorated so she was transported to a hospital.

5. Resident 1 died on March 28, 1999, at the hospital due to complications related to the feeding tube.

6. The charge nurse who inserted the feeding tube on March 27 violated Petitioner's policies and procedures by failing to obtain a physician's approval before inserting the tube.

7. Petitioner's policies regarding PEG tubes and other feeding tubes are consistent with standards of practice. Declaration of Ellen Bennet, at 7, ¶ 20.

8. The charge nurse who inserted the tube was counseled on March 29, 1999 and she continued to work at the facility until April 4, 1999, but resigned at Petitioner's request on April 6, 1999.

9. Petitioner provided in-service training for all nursing staff on March 29, 1999, related to "G tube placement and residual." Joint Stip., para. 17; Declaration of Ellen Bennet, at 14, ¶ 47.

10. Petitioner reported the incident to the New Jersey Board of Nursing (Joint Stip., para. 19) and the NJSDHSS on April 6, 1999 (Declaration of Ellen Bennet, at 2, ¶ 7).

11. On April 7, 1999, the NJSDHSS conducted a complaint survey of Petitioner as a result of Petitioner's April 6, 1999 report.

12. The NJSDHSS cited Petitioner for four regulatory violations in its official report of the April 7, 1999 complaint survey. Statement of Deficiencies (SOD), HCFA Form 2567, dated April 7, 1999, attached to P. Brief.

13. The SOD cited the following violations related to the treatment and death of Resident 1:

a. Violation of 42 C.F.R. § 483.13(c)(1)(ii) (F Tag 225) at Scope and Severity (SS) Level J or immediate jeopardy, ⁽⁵⁾ because Petitioner did not immediately fully investigate the incident of March 27, 1999; the nurse who inserted the tube continued to work until April 4, 1999, and she had been warned in 1997 for failure to report and investigate; and Petitioner did not report to NJSDHSS until April 6, 1999, which is not within the five-day period specified by the regulations.

b. Violation of 42 C.F.R. § 483.20(d)(3)(i) (F Tag 281) at SS Level J, because the charge nurse who inserted the tube on March 27, 1999, failed to notify the physician, a violation of facility policy.

c. Violation of 42 C.F.R. § 483.25 (F Tag 309) at SS Level J, because the nursing staff failed to address the needs of Resident 1 on March 27, 1999 and March 28, 1999, as indicated by an absence of written nursing assessments for Resident 1 for the events of March 27, 1999 and March 28, 1999.

d. Violation of 42 C.F.R. § 483.25(g)(2) (F Tag 322) at SS Level J, because the nurse who inserted the tube in Resident 1 on March 27, 1999, failed to provide the care and service necessary to prevent complications associated with tube-fed residents and the facility did not arrange emergency transport of Resident 1 on March 28, 1999.

14. The NJSDHSS conducted a revisit of Petitioner on April 20, 1999 and found the facility in substantial compliance as of that date.

15. CMS notified Petitioner in a letter dated June 24, 1999 that it was imposing a CMP in the amount of $7,500 per day for the 13-day period beginning April 7, 1999 and ending April 19, 1999, a total of $97,500.

CONCLUSIONS OF LAW

1. Summary judgment is appropriate because the material facts are not in dispute and this case can be decided as a matter of law.

2. Petitioner has the right to appeal the initial determination of CMS to impose a CMP in this case.

3. Petitioner timely filed a request for hearing.

4. CMS is required to give written notice to the facility of its intent to impose a CMP, and the notice must include, inter alia, the nature of the noncompliance, the statutory basis for the penalty, and the amount of the penalty per day of noncompliance or the amount of the penalty per instance of noncompliance.

ANALYSIS

A. Issues Presented

The general issues presented in nursing facility compliance enforcement cases are whether there is a basis for the imposition of the remedy and whether the remedy is reasonable. Of course, if there is no basis for imposing a remedy, it is not necessary to review the reasonableness of the remedy as the remedy is inherently unreasonable and a violation of the law. This case is disposed of on the issue of whether there is a basis for the imposition of a remedy. Because I find there is no basis for the imposition of a remedy, the remedy imposed is unreasonable and may not be sustained.

The Act sets forth requirements for long-term care facilities, both skilled nursing facilities and nursing facilities (nursing facility), participating in the Medicare and Medicaid programs, and authorizes the Secretary to promulgate regulations implementing the statutory provisions. Act, sections 1819 and 1919 (42 U.S.C. §§ 1395i-3; 1396r). The Secretary's regulations governing nursing facility participation in the Medicare program are found at 42 C.F.R. Part 483.

A nursing facility must maintain substantial compliance with program requirements to participate in the Medicare program. To be in substantial compliance, a nursing facility's deficiencies may pose no greater risk to resident health or safety than the "potential for causing minimal harm." 42 C.F.R. § 488.302. If a facility is not in substantial compliance with program requirements, CMS has the authority to impose one or more of the enforcement remedies listed in section 1819(h) of the Act (42 U.S.C. § 1395i-3(h)) and 42 C.F.R. § 488.406.

Congress has granted the Secretary authority to "impose a civil money penalty in an amount not to exceed $10,000 for each day of noncompliance." Act, section 1819(h)(2)(B)(ii). Congress also directed the Secretary to develop regulations implementing the authority to impose authorized remedies. Act, section 1819(h)(2). The Secretary's regulations implementing the authority to impose remedies for the enforcement of Medicare requirements are at 42 C.F.R. Part 488, subpart F. The Secretary has delegated enforcement authority to CMS.

The Secretary has authorized CMS to impose a CMP (42 C.F.R. § 488.406(a)(3)), including a CMP ranging from "$3,050 - $10,000 per day" of noncompliance in a case where one or more deficiencies constitute immediate jeopardy to resident health and safety. 42 C.F.R. §§ 488.438(a)(1)(i); 488.408(e)(iv). CMS is also authorized to impose a CMP of "$1,000 - $10,000 per instance" of noncompliance that constitutes immediate jeopardy. 42 C.F.R. §§ 488.438(a)(2); 488.408(e)(2)(ii). CMS may impose a CMP for either the number of days a facility is not in substantial compliance or for each instance of noncompliance. Further, CMS may impose a CMP for the number of days of past noncompliance since the last standard survey. 42 C.F.R. § 488.430.

If CMS elects to impose a remedy, "the remedies are applied on the basis of noncompliance found during surveys conducted by CMS or by the survey agency." 42 C.F.R. § 488.402. CMS is required to give written notice to the facility of its intent to impose a CMP. The notice must include, inter alia, "[t]he amount of penalty per day of noncompliance or the amount of the penalty per instance of noncompliance." 42 C.F.R. § 488.434(a)(2)(iii). The per day CMP may begin to accrue as early as the date that the facility was first out of compliance as found by CMS or the State survey agency. 42 C.F.R. § 488.440(a)(1). A per instance CMP is imposed in a specific amount "for that particular deficiency." 42 C.F.R. § 488.440(a)(2). Per day CMPs are generally imposed for the number of days of noncompliance until the date the facility achieves substantial compliance or the date that the facility's participation agreement is terminated. 42 C.F.R. § 488.440(b). Whether or not a facility has achieved substantial compliance is often determined by a revisit of the facility by CMS or the State agency. If, on revisit the provider supplies documentation acceptable to CMS or the State agency that shows that substantial compliance was achieved prior to the revisit, then "penalties imposed on a per day basis only accrue until that date of correction for which there is written credible evidence." 42 C.F.R. § 488.440(h)(1). If no revisit is necessary to determine that the facility has achieved substantial compliance, "penalties imposed on a per day basis only accrue until the date of correction for which CMS or the State receives and accepts written credible evidence." 42 C.F.R. § 488.440(h)(2).

A nursing facility may appeal CMS actions that are characterized as initial determinations by the regulations. 42 C.F.R. §§ 498.3 and 498.5. A finding of noncompliance that results in a CMP, as in this case, may be appealed and reviewed by an ALJ. However, the scope of review by an ALJ is limited by regulation. An ALJ may review the level of noncompliance found by CMS, but only if such review might affect the range of the CMP that CMS can collect. 42 C.F.R. § 498.3(b)(13) and (14). Further, if an ALJ finds that CMS had a basis for imposing a remedy, an ALJ may not review CMS's choice of remedy or reduce the amount of the CMP below the minimum amount for the appropriate range of CMPs. 42 C.F.R. § 488.438(e)(1), (2). An ALJ can only consider the factors specified at 42 C.F.R. §§ 488.438(f) and 488.404 when determining whether the amount of the CMP is reasonable.

A nursing facility is precluded from obtaining ALJ review of deficiencies that are not the basis for a remedy imposed by CMS. Arcadia Acres, Inc., DAB CR424 (1996); aff'd, DAB No. 1607 (1997). The DAB has also held that a petitioner loses its right to pursue a hearing even when CMS rescinds previously imposed remedies; and that no right to hearing survives to challenge findings of noncompliance. Lakewood Plaza Nursing Center, DAB No. 1767 (2001).

CMS bears the burden of producing evidence sufficient to establish a prima facie case. CMS must set forth the basis for its determination with sufficient specificity for a petitioner to respond and come forward with evidence related to the disputed findings. The evidence set forth by CMS must be sufficient to establish a prima facie case that CMS had a legally sufficient basis to impose a remedy, such as the per day CMP imposed in this case. In order for a petitioner to prevail, the petitioner must then prove by a preponderance of the evidence on the record as a whole that it was in substantial compliance with the relevant statutory and regulatory provisions. Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Center v. United States Dept. of Health and Human Services, Health Care Financing Administration, No. 98-3789 (GEV), slip op. at 25 (D.N.J. May 13, 1999).

Summary judgment is appropriate and no hearing is required where either: there are no disputed issues of material fact and the only questions that must be decided involve the application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary judgment must allege facts which, if true, would refute the facts relied upon by the moving party. See e.g., Fed. R. Civ. P. 56(c); Garden City Medical Clinic, DAB No. 1763 (2001), Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1977) (in-person hearing required where non-movant shows there are material facts in dispute that require testimony); see also, New Millennium CMHC, DAB CR672 (2000); New Life Plus Center, DAB CR700 (2000). On summary judgment, if CMS cannot establish its prima facie case, then the petitioner prevails as a matter of law.

C. Discussion

The facts in this case are not disputed except as to their legal impact. ⁽⁶⁾ The material facts necessary for disposition are not disputed at all and are included in a joint stipulation of undisputed facts submitted by the parties on December 21, 2001. It is clear that late on March 27, 1999, a nurse found that Resident 1 had pulled her feeding tube from the incision in her abdomen. The nurse inserted a different tube. Resident 1 died on March 28, 1999, at the hospital due to complications with the feeding tube. Food from the tube was released into the abdominal cavity and an infection developed. The nurse who inserted the tube violated Petitioner's policy which required that a physician be consulted under such circumstances. The nurse was counseled about her error on March 29, 1999. The entire nursing staff was trained related to tube feeding on March 29, 1999. ⁽⁷⁾ The offending nurse worked until April 4 but then resigned on April 6, 1999 at Petitioner's request. The incident was not reported to NJSDHSS until April 6, 1999. Although the report was late, the adequacy of the report and investigation are not questioned by the State agency in the SOD and CMS makes no allegations regarding the adequacy of the report and investigation once it was done.

The SOD cites violations with dates consistent with the undisputed events. F Tag 225 alleges that Petitioner did not notify NJSDHSS until April 6, 1999, of the tube replacement on March 27, 1999. According to the SOD, Petitioner did not "immediately fully investigate the incident of 3/27/99 and Resident #1's subsequent death nor take any corrective action to prevent further incident. The nurse who reinserted the peg tube without an order continued to work on the units until 4/4/99." SOD, at 2 -3. The undisputed facts show that there was no defect in Petitioner's policies in this regard. The offending nurse was counseled on March 29, 1999, which the survey team may have deemed inadequate, and she subsequently resigned on April 6, 1999. The entire staff received training in the area on March 29, 1999. The incident was reported on April 6, 1999 to the NJSDHSS, albeit not within five days of the incident as CMS asserts is required by the regulation. CMS and its declarant cite no other corrective action Petitioner could have or should have taken in regard to this incident. CMS presents no evidence that other corrective action was taken or required before Petitioner was declared to be in substantial compliance effective April 20, 1999. I conclude, therefore, that all the corrective action the State agency deemed necessary or appropriate was accomplished by Petitioner prior to April 7, 1999. There is no evidence of a continuing violation of F Tag 225 after April 7, 1999, and there is no allegation of such a violation after that date.

F Tag 281 alleges that the offending nurse failed to notify the physician of the dislodged PEG tube and violated Petitioner's policy regarding PEG tubes. There is also the allegation that the nurse failed to document her assessments of Resident 1. This violation obviously ended with Resident 1's transfer to the hospital and her death on March 28, 1999.

F Tag 309 alleges that Petitioner's nursing staff failed to address the needs of Resident 1 on March 27 and 28, 1999. This tag is clearly limited by its terms to an allegation of a deficiency which existed on March 27 and 28, 1999.

F Tag 322 alleges that the nurse who inserted the feeding tube "on 3/27/99 failed to provide care and service necessary to prevent complications of a gastrostomy (GT) fed resident." SOD, at 6. This citation is also specifically limited by its terms to the actions of the nurse on March 27, 1999.

My review of the cross-motions for summary judgment, the parties' supporting briefs and their supporting materials, and the parties' response and reply briefs, reveals no specific allegations of actions or inactions by Petitioner after April 6, 1999, which are alleged to be a violation of any condition of participation set forth in the regulations. Further, I find no concession or admission by Petitioner of any action or inaction after April 6, 1999 that CMS alleges violates a condition of participation. If CMS had alleged deficiencies existing on and after April 7, 1999, I would have construed those allegations in a light most favorable to CMS for purposes of its summary judgement motion, but CMS is mute as to any deficiencies existing after April 6, 1999, and there is nothing to construe in CMS's favor. ⁽⁸⁾

Petitioner argues in its motion for summary judgment that CMS cannot make a prima facie showing of any deficiency existing for the period April 7, 1999 through April 19, 1999, that provides a basis for the CMP. CMS never addresses Petitioner's contention in its responsive pleading. CMS never states in its pleadings which if any deficiencies continued after April 6, 1999. CMS's declarant never states which, if any, deficiencies existed during the period April 7, 1999 through April 19, 1999. The record indicates that this issue was brought to CMS's attention shortly after the filing of the request for hearing, but CMS has taken no action to reopen and revise or amend its imposition of the CMP.

My review of the regulations indicates that the Secretary has delegated authority to CMS to impose a CMP for each day that a violation existed or for each instance constituting a violation. It appears that the regulations contemplate that there be some nexus between the CMP and the violation, e.g. the CMP should be imposed for the day or days the violation occurred rather than some other dates picked by the State agency or CMS. ⁽⁹⁾ The regulations are clear that if CMS elects to impose a remedy, "the remedies are applied on the basis of noncompliance found during surveys . . . ." 42 C.F.R. § 488.402. Before it may impose a CMP, CMS is required to give written notice and the notice must specifically identify "[t]he amount of penalty per day of noncompliance or the amount of the penalty per instance of noncompliance." 42 C.F.R. § 488.434(a)(2)(iii). A per day CMP may begin to accrue as early as the date that the facility was first out of compliance as found by CMS or the State survey agency. 42 C.F.R. § 488.440(a)(1). A per instance CMP is imposed in a specific amount "for that particular deficiency." 42 C.F.R. § 488.440(a)(2). Per day CMPs are generally imposed for the number of days of noncompliance until the date the facility achieves substantial compliance or the date that the facility's participation agreement is terminated. 42 C.F.R. § 488.440(b). However, "penalties imposed on a per day basis only accrue until that date of correction for which there is written credible evidence." 42 C.F.R. § 488.440(h)(1). The regulations do not delegate authority to CMS to impose a CMP for a day when no violation existed.

CMS has the initial burden to make a prima facie showing that a deficiency existed that provides a "legally sufficient basis" for imposition of a CMP, including articulation of the legal standard to which Petitioner is to be held and the facts upon which CMS relies. Only when CMS makes a prima facie showing, must Petitioner come forward and show by a preponderance of the evidence that it was in substantial compliance. Hillman, DAB No. 1611 (1997). In this case CMS has cited the pertinent statutes and the regulations which establish the conditions of participation. However, CMS has not established the factual predicate by showing that any of the cited conditions of participation were violated on any day during the period for which CMS imposed the CMP. ⁽¹⁰⁾ Accordingly, I must find that CMS has failed to make a prima facie showing that there is a basis for the CMP imposed since no violations or deficiencies have been shown for the period April 7 through April 19, 1999. The CMP is therefore unreasonable and may not be sustained.

No CMP was imposed for the incidents that occurred on March 27 and 28, 1999 or for the period March 27, 1999 through April 6, 1999. Petitioner has no right to review of the allegations of deficiencies occurring on those dates in the absence of the imposition of remedies. See, e.g., Lakewood Plaza Nursing Center, DAB No. 1767 (2001).

D. Conclusion

For the foregoing reasons, summary judgment is granted for Petitioner. CMS's motion for summary judgment is denied.

Keith W. Sickendick

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Financing Administration (HCFA) was renamed the Centers for Medicare & Medicaid Services. 66 Fed. Reg. 35,437 (2001)

2. On April 13, 2000, Petitioner moved to amend its request for hearing to provide a more detailed basis for its contentions. No objection has been filed by CMS and good cause for the amendment has been shown. Accordingly the motion to amend is granted.

3. CMS submitted another document styled as a "Declaration of Ellen Bennet" dated January 25, 2002, with its reply brief filed on that date. The only difference I perceive between the Declaration of Ellen Bennet dated December 14, 2001, and the declaration dated January 25, 2002, is the latter contains cites to CMS exhibits and is unsigned. Because the January 25, 2002 declaration is unsigned, it will not be accepted and I will not rely upon it for any purpose. I also note that neither the declaration dated December 14, 2001 nor the document dated January 25, 2002, contains one of the alternate statements required by 28 U.S.C. § 1746; thus neither meets the legal requirement for use in lieu of an affidavit. However, I will consider the signed declaration for purposes of this motion only as I perceive no prejudice to Petitioner and Petitioner raised no objection.

4. Petitioner's Reply is dated December 14, 2001, which appears to be in error because that is also the date of Petitioner's opening brief in support of its motion.

5. According to CMS, SS Level J indicates an isolated event posing immediate jeopardy to resident health or safety. CMS Brief, at 16.

6. Petitioner specifically assumes all factual allegations in the SOD are true for purposes of its motion for summary judgment. P. Brief, at 3.

7. I am aware that CMS implies that the nurse's counseling and the in-service training were inadequate. However, I also note that the facility is not cited in the SOD for either being deficient. I further note that there are no allegations that any of Petitioner's policies are deficient and, in fact, CMS's declarant, Ellen Bennet, indicates that Petitioner's policies to which she refers meet community standards.

8. One might speculate (as CMS's counsel is reduced to do) that the survey team considered that counseling of the charge nurse who inserted the tube was inadequate or that the in service training was deficient, but such would be pure speculation and the law demands more. CMS cannot survive a motion for summary judgment with mere allegations but must present some evidence which can be construed in its favor. CMS has had more than adequate opportunity to interview the survey team to determine what deficiencies were considered. Yet, the SOD has never been amended or revised and CMS's declarant does not address what deficiencies were considered to exist after April 6, 1999, that might provide some basis for the remedy CMS imposed.

9. It is only sensible that CMS be required to demonstrate some nexus between the dates for which it imposes remedies and the alleged deficiencies; otherwise, the agency would constantly face challenges that its actions were arbitrary and capricious. In cases such as this, the absence of a nexus can give rise to allegations that the agency was attempting to maximize the CMP or avoid the cap of a per instance CMP.

10. I am at a complete loss to understand what CMS intended to do in this case. There is no explanation why CMS did not impose remedies for dates supported by the evidence. Even counsel for CMS seems to be at a loss when she states at page 37 of CMS's Reply: "What other conclusion would be logical given the fact that the facility was not placed back into substantial compliance until it developed an adequate plan of correction and completed a more comprehensive in-service training?" Counsel's comment highlights the fact that CMS has failed its regulatory obligation to specifically notify Petitioner of the violations for which the CMP is imposed, and has left all, including its own counsel, to speculate about the true basis for the CMP.