Jewish Home of Eastern PA v. Centers for Medicare and Medic ( 2011 )

  •                                                               NOT PRECEDENTIAL
                         UNITED STATES COURT OF APPEALS
                              FOR THE THIRD CIRCUIT
                                        No. 09-3006
                            JEWISH HOME OF EASTERN PA,
                  On Petition for Review from on Order by the Secretary
                    of the Department of Health and Human Services
                                Submitted January 27, 2011
              Before: FUENTES, CHAGARES, and ROTH, Circuit Judges.
                           (Filed    February 11, 2011            )
    CHAGARES, Circuit Judge.
          Jewish Home of Eastern Pennsylvania petitions for review of the final
    decision of the Secretary of the Department of Health and Human Services
    affirming the imposition of civil money penalties for failure to be in substantial
    compliance with the Medicare and Medicaid Services participation requirements
    pursuant to 42 C.F.R. ' 483.25(h)(2). For the reasons that follow, we will deny
    the petition for review.
          We write for the parties= benefit and recite only the facts essential to our
    disposition. The Jewish Home of Eastern Pennsylvania (AJHEP@) provides
    nursing care to Medicare beneficiaries. JHEP is required to comply with the
    mandatory health and safety requirements for participation in the Medicare
    program.     To participate in the Medicare program, JHEP must submit to random
    surveys conducted by state departments of health to ensure that it is meeting all
    the program requirements. See 42 C.F.R. ' 488.305.
          On December 9, 2005, the Pennsylvania Department of Health, acting on
    behalf of the Center for Medicare and Medicaid Services (ACMS@), conducted a
    survey of JHEP. The survey concluded that JHEP had eight regulatory
    deficiencies, including violations of 42 C.F.R. ' 483.25(h)(2), which requires a
    facility to ensure that each resident receives adequate supervision and
    assistance with devices to prevent accidents. Based on these deficiencies, the
    CMS imposed a $350 per day fine from December 9, 2005 through January 26,
    2006, totaling $17,150. On October 16, 2006, the CMS performed another
    survey of JHEP and found twelve deficiencies. CMS imposed a $400 per day
    fine effective from October 16, 2006 through November 16, 2006, totaling
          On August 9, 2006 and October 20, 2006, JHEP appealed both civil
    monetary penalties to an Administrative Law Judge (AALJ@). JHEP argued that
    the allegations of noncompliance were based on the inadmissible disclosure of
    Aprivileged@ quality assurance records. Additionally, JHEP claimed that the
    survey violated equal protection because it was the product of discrimination
    based on race and religion. The ALJ denied JHEP=s motion to suppress the
    quality assurance records. Prior to the trial, JHEP stipulated that it failed to
    provide the necessary supervision or assistive devices to three of its residents,
    and subsequently presented no testimony as to these residents. In June 2008, a
    two-day trial took place and the ALJ upheld the fines against JHEP. The ALJ
    found that JHEP was not in substantial compliance with the participation
    requirements during the relevant time periods and declined to consider the equal
    protection claim because it lacked subject matter jurisdiction to hear substantive
    constitutional claims.
      Pursuant to 42 U.S.C. ' 1395i-3(h)(2)(B)(ii), the CMS may impose a civil money
    penalty in an amount not to exceed $10,000 per day. There are two categories
    of monetary penalties: (1) APenalties in the range of $3,050 - $10,000 per day
    are imposed for deficiencies constituting immediate jeopardy,@ 42 C.F.R. '
    488.438(a)(1); and (2) APenalties in the range of $50 - $3,000 per day are
    imposed for deficiencies that do not cause immediate jeopardy, but either have
    caused actual harm, or caused no actual harm, but have the potential for more
    than minimal harm,@ 42 C.F.R. ' 488.438(a)(ii).
            JHEP timely filed an appeal to the Board of Appeals. On June 18, 2009,
    the Board affirmed both of the civil monetary penalties. On July 10, 2009, JHEP
    filed the current petition for review.2
            On review by this Court, the Secretary=s findings Aif supported by
    substantial evidence on the record considered as a whole, shall be conclusive.@
    42 U.S.C. ' 1320a-7a(e). A[S]ubstantial evidence is more than a mere scintilla.
    It means such relevant evidence as a reasonable mind might accept as adequate
    to support a conclusion.@ Monsour Med. Ctr. v. Heckler, 
    806 F.2d 1185
    , 1190-91
    (3d Cir. 1986) (internal quotations omitted). In reviewing the Secretary=s
    interpretation of a Department of Health and Human Services regulation, we may
    only overturn the interpretation if it is arbitrary, capricious, an abuse of discretion,
    or otherwise not in accordance with the law. 5 U.S.C. ' 706(2); Thomas
    Jefferson Univ. v. Shalala, 
    512 U.S. 504
    , 512 (1994). We give substantial
    deference to an agency=s interpretation and application of its own regulations.
    Thomas Jefferson Univ., 512 U.S. at 512.
            Notably, JHEP does not contest the finding that it was not in substantial
    compliance with the Medicare program during the relevant survey periods.
    Instead, JHEP argues that CMS=s findings and penalties are invalid because they
        We have jurisdiction over this petition pursuant to 42 U.S.C. ' 1320a-7a(e).
    are (1) based on Aprivileged@ quality assurance documents, and (2) are a result of
    racial and religious discrimination. We conclude that both of JHEP=s grounds for
    review are unfounded.
           JHEP maintains that the incident reports in question were generated by its
    quality assurance committee, and as such, are subject to disclosure and use
    restrictions under 42 U.S.C. ' 1396r(b)(1)(B).3 The language of 42 U.S.C. '
    1396r(b)(1)(B), however, limits the scope of protection from discovery to the
    records of the committee. See, e.g., State ex rel. Boone Ret. Ctr. v. Hamilton,
    946 S.W.2d 740
    , 743 (Mo. 1997) (finding that 42 U.S.C. ' 1396r(b)(1)(B)
    Aprotects the committee=s own records -- its minutes or internal working papers or
    statements of conclusions -- from discovery. No honest reading of the statute,
    however, can extend the statute=s privilege to records and materials generated or
    created outside the committee and submitted to the committee for its review.@).
          After reviewing the record presented, we conclude that the documents in
    question were contemporaneous, routinely-generated incident reports and not the
    quality assurance team=s minutes, internal papers, or conclusions. As such,
    these incident reports are not subject to disclosure restrictions. Hence, these
      Section 1396r(b)(1)(B) provides: AA State or the Secretary may not require
    disclosure of the records of such committee except insofar as such disclosure is
    related to the compliance of such committee with the requirements of this
    subparagraph.@ This subparagraph mandates that the nursing facility have a
    quality assessment and assurance team which Ameets at least quarterly to
    identify issues with respect to which quality assessment and assurance activities
    are necessary@ and Adevelops and implements appropriate plans of action to
    incident reports along with JHEP=s prior stipulations provided the Secretary with
    ample evidence to determine that JHEP was not in substantial compliance with
    the Medicare program.
    correct identified quality deficiencies.@
          JHEP also alleges that the issuance of civil monetary fines violates equal
    protection because the fines are the result of selective enforcement based on
    race and religion.4 Selective discriminatory enforcement of a facially valid law is
    unconstitutional under the Equal Protection Clause. See Yick Wo v. Hopkins,
    118 U.S. 356
    , 373 (1886); Holder v. City of Allentown, 
    987 F.2d 188
    , 197 (3d Cir.
    1993). The Supreme Court has held that a law which is Afair on its face and
    impartial in appearance@ may nonetheless constitute illegal discrimination Aif it is
    applied and administered by public authority with an evil eye and an unequal
    hand.@ Yick Wo, 
    118 U.S. 356
    , 373-74 (1886) (finding that where Chinese
    nationals did not violate city ordinances but were still fined, the only reason for
    the fines was discrimination based on race and nationality in violation of equal
          To establish a selective-enforcement claim, JHEP must show (1) that it was
    treated differently from other similarly situated individuals, and (2) Athat this
    selective treatment was based on an unjustifiable standard, such as race, or
    religion, or some arbitrary factor, . . . or to prevent the exercise of a fundamental
    right.@ Dique v. N.J. State Police, 
    603 F.3d 181
    , 184 n.5 (3d Cir. 2010)
    (quotations omitted)). Hence, to maintain an equal protection claim of this sort,
    JHEP must provide evidence of intentional or purposeful discriminatory purpose,
    not mere unequal treatment or adverse effect. Snowden v. Hughes, 
    321 U.S. 1
     While JHEP is a non-denominational facility, JHEP argues that it may maintain
    an equal protection claim because of its association with a protected group --
    8 (1944). JHEP must show that the Adecisionmaker . . . selected or reaffirmed a
    particular course of action at least in part because of, not merely in spite of, its
    adverse effects . . . .@ Wayte v. United States, 
    470 U.S. 598
    , 610 (1985)
    (quotations omitted).
          JHEP relies upon three primary documents to show discriminatory effect
    and discriminatory purpose. First, JHEP submits side-by-side comparisons of
    citations issued to JHEP as compared to other local facilities. JHEP also
    provides a statistical report which concluded that the number of citations issued
    to JHEP was high in comparison to other facilities surveyed from the Scranton
    Field Office and that this finding was likely the result of bias and not likely the
    result of differences in the quality of care, error or chance. Additionally, JHEP
    presents the affidavit of an employee who claims that a CMS surveyor made a
    discriminatory statement in October 2004, over a year before the surveys in
    question. Specifically, in surveying whether JHEP provided activities on
    Saturdays for residents of all denominations, the surveyor was told that there was
    a KiddushCa ceremony involving a blessing and food that all individuals were
    invited to regardless of their religious affiliations. According to the employee, the
    surveyor responded that she was Christian and would feel uncomfortable
    attending such an activity.
          We hold that JHEP has failed to establish a claim for selective enforcement
    under the Equal Protection Clause. JHEP has not demonstrated that CMS
    persons of Jewish ancestry.
    issued fines with an intentionally discriminatory purpose. We find JHEP=s
    reliance on the surveyor=s alleged statement to be misplaced as it was clearly
    taken out-of-context, was not contemporaneous to the surveys in question, and
    was not relevant or facially discriminatory. Additionally, JHEP has failed to show
    that it was treated differently from other similarly situated facilities. Therefore,
    we conclude that JHEP=s equal protection claim has no merit.
              After considering all of JHEP=s arguments, we will deny the petition for