Liberty Commons Nursing v. Leavitt , 285 F. App'x 37 ( 2008 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1329
LIBERTY COMMONS NURSING AND REHAB CENTER - ALAMANCE,
Petitioner,
v.
MICHAEL LEAVITT, Secretary of the United States Department of
Health & Human Services; U.S. DEPARTMENT OF HEALTH & HUMAN
SERVICES,
Respondents.
On Petition for Review of an Order of the United States Department
of Health & Human Services. (A-06-80)
Argued: March 20, 2008 Decided: July 18, 2008
Before GREGORY and SHEDD, Circuit Judges, and William L. OSTEEN,
Jr., United States District Judge for the Middle District of North
Carolina, sitting by designation.
Affirmed by unpublished per curiam opinion. Judge Shedd wrote a
dissenting opinion.
ARGUED: Joseph L. Bianculli, HEALTH CARE LAWYERS, P.L.C.,
Arlington, Virginia, for Petitioner. Donald J. Calder, UNITED
STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, Office of the General
Counsel, Atlanta, Georgia, for Respondents. ON BRIEF: Daniel
Meron, General Counsel, Howard H. Lewis, Acting Regional Chief
Counsel, UNITED STATES DEPARTMENT OF HEALTH & HUMAN SERVICES,
Office of the General Counsel, Atlanta, Georgia, for Respondents.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Liberty Commons Nursing and Rehab Center (“Petitioner”), seeks
review of a final decision by the Departmental Appeals Board
(“DAB”) of the U.S. Department of Health and Human Services
(“DHHS”). The DAB affirmed the imposition of a civil monetary
penalty (“CMP”) upon Petitioner for failure to be in substantial
compliance with federal regulatory standards governing
certification as a skilled nursing facility. This court has
“jurisdiction over the appeal of a final DAB decision pursuant to
42 U.S.C. § 1320a-7a(e).” Crestview Parke Care Ctr. v. Thompson,
373 F.3d 743, 746 (6th Cir. 2004); see also 42 U.S.C. §
1320a-7a(e); 42 C.F.R. § 498.90(a)(1). For the reasons set forth
below, we affirm the decision of the DAB.
I
Petitioner is a Medicare-certified nursing facility located in
Burlington, North Carolina. The certification signifies that
Petitioner has met the Long Term Care Requirements of Participation
(“ROP”), allowing it to participate in the Medicare Program for
Medicare and Medicaid funding.1 Facilities that participate in
this program are subject to annual inspections by the Centers for
1
The substantive requirements of participation are listed in
42 U.S.C. § 1395i-3.
3
Medicare and Medicaid Services2 (“CMS”), for the purpose of
determining a facility’s continued compliance with the ROPs.3
On November 11, 2004, the North Carolina State Survey Agency
(“SSA”) inspected Petitioner’s facility.4 Following the
inspection, the SSA cited Petitioner for a violation of 42 C.F.R.
483.25(h)(2), which is regulatory noncompliance that posed
“immediate jeopardy” to a single resident (“Resident”).5
Specifically, the violation stated that Petitioner “failed to put
interventions in place to prevent elopement of 1 of 1 sampled
residents.” (J.A. 1.) As a result of the SSA’s finding, the
Secretary of the DHHS imposed upon Petitioner a CMP. Petitioner
applied to the DAB for a review of the imposition of the CMP.
During an oral administrative hearing, an administrative law judge
2
Centers for Medicare and Medicaid Services is an agency of
the federal Department of Health and Human Services that is in
charge of administering the Medicare program. See MacKenzie Med.
Supply, Inc. v. Leavitt, 506 F.3d 341, 343 (4th Cir. 2007). It
operates as an agent of the Secretary of DHHS.
3
All participating facilities are subject to annual state
surveys to determine if they comply with the Medicare and Medicaid
participation requirements. 42 U.S.C. § 1395i-3(g)(2)(A)(iii)(I).
4
The Secretary of the Department of Health and Human Services
is permitted by statute to enter into agreements with state
agencies; for example the North Carolina State Department of Health
and Human Services. Such agreements allow a state agency (the SSA)
to act as an agent of the Secretary. See 42 U.S.C. § 1395aa. In
this case, an agreement existed that enabled the SSA to conduct
surveys for the purpose of determining Petitioner’s compliance with
federal regulations.
5
Regulatory noncompliance with 42 C.F.R. 483.25(h)(2) is also
commonly referred to within the DHHS as a violation of F Tag 324.
4
(“ALJ”) made the following findings of fact, which we adopt in
their entirety as they are not disputed on appeal.
A. Administrative Law Judge’s Findings of Fact
Prior to May 2003, Petitioner operated a locked wing in its
facility, referred to as the Special Care Unit. Resident, an 87-
year-old woman with severe Alzheimer’s disease and osteoporosis,
was housed in Petitioner’s Special Care Unit from September 2000
until May 2003 due to her “high risk for elopement as the result of
her numerous medical and psychological ailments.” (J.A. 370.)
In May 2003, Petitioner converted the Special Care Unit to a
rehabilitation unit. The new unit did not provide the same level
of services and security as that of the Special Care Unit.
Accordingly, Petitioner advised Resident’s family about the need to
move Resident to another facility. The family urged Petitioner to
allow Resident to remain at her current location. Despite
Petitioner’s concerns, Petitioner reluctantly allowed Resident to
remain at the facility. During Resident’s stay in the
rehabilitation unit, she eloped on several occasions.6
Petitioner documented in writing each time Resident eloped.
The first time Resident eloped was June 2, 2003, when she simply
walked out of Petitioner’s facility. To prevent future elopements,
6
According to the record before the court, Resident began to
elope on June 2, 2003, less than a month after moving into the new
unit. Petitioner documented five additional elopements which
occurred on June 23, August 14, September 19, November 6, and
November 7, 2004.
5
Petitioner placed a Wander Guard transponder on Resident’s ankle
that would trigger an alarm if Resident eloped through the front
door. Other doors, however, were not equipped with a Wander Guard
alarm. Despite this precaution, Resident managed to elope
undetected through exit doors other than the front door.
On September 19, 2004, Petitioner became aware of the manner
in which Resident eloped without detection. Another resident
observed Resident flip a bypass switch that disabled an electronic
door lock and allowed Resident to exit through a back door.7
Petitioner located Resident on this date after she had wandered
through a fence, down a grassy slope, and into a parking lot. In
response to Resident’s actions, Petitioner placed pieces of paper
over the bypass switches in an attempt to confuse or distract her.8
On November 6, 2004, Resident, undeterred by the paper-covered
switches, again disabled the electronic lock and eloped through the
rear exit doors. The following day, Resident also attempted to
elope through the front door, but her Wander Guard triggered an
alarm and she was promptly retrieved by two visitors.
7
All of Petitioner’s doors were controlled by electronic
locks. No door, with the exception of the front door, was equipped
with an alarm system that would alert the staff in the event that
a resident exited the facility.
8
Petitioner has argued that “distraction” is a common method
of deterring conduct by residents with Alzheimer’s disease.
Although an untested technique in this context, Petitioner placed
paper over the bypass switches in order to distract her from
operating the bypass switches.
6
B. The Centers for Medicare and Medicaid Services Inspection
On November 11, 2004, the SSA conducted an annual inspection
of Petitioner’s facility and sent its findings to CMS. After the
inspection and review of Petitioner’s records and facility, termed
a “survey,” CMS found that Petitioner failed to comply with federal
regulations governing care facilities approved for Medicare and
Medicaid funding, and imposed a CMP. Specifically, CMS found that
Petitioner was not operating in substantial compliance with nursing
home regulations that require facilities to provide adequate
supervision of its residents to prevent accidents.
CMS found that Petitioner was not in compliance because
Petitioner had failed to take appropriate steps to prevent Resident
from repeatedly eloping from its facility. (J.A. 5.) As a result
of CMS’s inspection, Petitioner decided to install squeal boxes
(alarms) on the bypass switches to alert the staff when a bypass
switch was activated. The squeal boxes were installed on November
16-17 and were fully operational on November 19, 2004. CMS
conducted a follow-up survey on November 18, 2004, after which CMS
determined that Petitioner’s noncompliance constituted “immediate
jeopardy” from the date Petitioner was aware of Resident’s means of
elopement, September 19, 2004, until the squeal boxes were
installed on November 17, 2004. Additionally, CMS found that
Petitioner’s noncompliance continued at a level below immediate
jeopardy from the time the squeal boxes were installed until the
7
staff was trained on how to respond to the alarms on November 18,
2004. Accordingly, Petitioner was fined $3,050 per day from
September 19, 2004 through November 17, 2004, and $50 per day on
November 18, 2004, resulting in a total fine of $180,000.9
C. The DAB Proceeding
Following CMS’s imposition of fines, Petitioner requested an
administrative review of the CMP by the DAB. As provided by
statute, the DAB afforded Petitioner a hearing before an ALJ. The
ALJ conducted a hearing on December 15, 2005, and affirmed CMS’s
findings. Petitioner then appealed the ALJ’s decision to the
Appellate Division of the DAB.10 The DAB Appellate Division
reviewed and affirmed the ALJ’s decision. This case is now before
this court on appeal of the final decision of the DAB.
Standard of Review
In this case, the Secretary of DHHS (“Secretary”)11 made
findings of fact to support the conclusion that Petitioner was not
9
There is great discrepancy within the various documents
before the court as to the amount of the fine. The total amount
should be $180,000. This represents a fine of $3,050 each day from
September 19 - November 17 (59 days) and a fine of $50 on November
18 (1 day): 59 x $3,050 = $179,950 and 1 x $50 = $50. $50 +
$179,950 = $180,000.
10
Initially, Petitioner moved to reopen the case in order to
submit additional evidence, but the request was denied.
11
For the purposes of this opinion, the decision of CMS will
be treated as that of the Secretary.
8
in substantial compliance with 42 C.F.R. § 483.25(h)(2), and that
such noncompliance resulted in both immediate jeopardy and the
potential for minimum harm. We review the Secretary’s factual
findings to determine if they are supported by substantial
evidence. 42 U.S.C. § 1320a-7a(e) (“The findings of the Secretary
with respect to questions of fact, if supported by substantial
evidence on the record considered as a whole, shall be
conclusive.”). Substantial evidence is “such relevant evidence as
a reasonable mind might accept as adequate to support a
conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S. Ct.
1420, 1427 (1971) (citation and internal quotations omitted). This
level of evidence is further defined as “more than a mere scintilla
of evidence but may be somewhat less than a preponderance.” Laws
v. Celebrezze, 368 F.2d 640, 642 (4th Cir. 1966). The Secretary’s
legal conclusions are subject to a highly deferential standard of
review. By regulation, a determination of noncompliance must be
upheld unless that decision is clearly erroneous. See 42 C.F.R. §
498.60(c)(2).
Governing Regulations: Adequate Supervision and Assistance
This case is governed by regulations set forth in the Code of
Federal Regulations, which provides standards to which nursing
homes must conform in order to qualify for participation in
Medicare and Medicaid funding. The regulation at issue in this
9
case, 42 C.F.R. § 483.25(h)(2), states that a facility must ensure
that “[e]ach resident receives adequate supervision and assistance
devices to prevent accidents.” 42 C.F.R. § 483.25(h)(2). An
“‘accident’ is defined in the State Operations Manual (SOM) issued
by HCFA as ‘an unexpected, unintended event that can cause a
resident bodily injury.’” Woodstock Care Ctr. v. Health Care Fin.
Admin., DAB No. 1726 (May 30, 2000) (citation omitted).12 In order
for a facility to be in substantial compliance with this
regulation, “a provider must have no deficiencies that pose a risk
to resident health or safety greater than ‘the potential for
causing minimum harm.’” Id. (citing 42 C.F.R. § 488.301).
In this case, the Secretary found that Petitioner failed to
adequately supervise Resident in order to prevent her from eloping,
in violation of 42 C.F.R. § 483.25(h)(2). The Secretary found that
Petitioner failed to take all reasonable steps necessary to secure
its exit doors after discovering Resident’s ability to flip the
bypass switches and exit the building undetected. Petitioner
argues that its electronic door locks were state-of-the-art and
were installed within parameters dictated by state law.
As a participant in Medicare and Medicaid funding, Petitioner
is obligated to ensure that “[e]ach resident receives adequate
supervision and assistance devices to prevent accidents.” 42
12
The Health Care Financing Administration or HCFA has been
reorganized into the Centers for Medicare and Medicaid Services.
10
C.F.R. § 483.25(h)(2). The regulation directs a facility to take
all reasonable precautions to prevent situations that have the
potential for causing harm to a resident. See Woodstock Care Ctr.
v. Thompson, 363 F.3d 583, 589 (6th Cir. 2003). Petitioner, as of
September 19, 2004, knew that Resident could disable the electronic
door locks and exit the facility undetected. Accordingly,
Petitioner had no means of adequately supervising Resident or
preventing accidents once she exited the facility undetected.
Petitioner challenges the Secretary’s determination,
contending that Resident’s elopements were few and far between, and
resulted in no injury. Contrary to Petitioner’s assertion,
however, substantial evidence supports the Secretary’s finding of
a failure to adequately supervise and prevent accidents. It is
uncontested that Resident was able to elope from Petitioner’s
facility undetected despite the fact that Petitioner knew Resident
was eloping by flipping the bypass switch and exiting through the
back door. This knowledge placed Petitioner on notice and
obligated Petitioner to take steps necessary to adequately
supervise Resident. Additionally, the fact that Resident eloped
multiple times undetected after September 19, 2004, also provides
substantial evidence in support of the Secretary’s findings. See
Woodstock Care Ctr. V. Health Care Fin. Admin., DAB No. 1726 (May
30, 2000) (The ALJ held that “evidence which shows that residents
were able to escape Petitioner’s facility on multiple occasions, is
11
ample evidence of a lack of supervision of these residents.”).
Substantial evidence, therefore, supports a finding that Petitioner
was not in substantial compliance with 42 C.F.R. § 483.25(h)(2).
Petitioner further contends that Resident’s lack of an injury
during her elopements compels a conclusion that she was adequately
supervised. The fact that no injury occurred while Resident
eloped, however, is not factually dispositive on the issue of
adequate supervision. The absence of an injury does not indicate
whether Resident was adequately supervised or merely fortunate. In
this case, the Secretary analyzed the fact that Resident was an
elderly woman who ambulated using a walker and was at a high risk
for experiencing falls, and came to the conclusion that her
exposure to the outdoor terrain put her in immediate jeopardy of
sustaining an injury. Substantial evidence supported the
Secretary’s conclusion that Resident’s ability to avoid an injury
was completely fortuitous.
Immediate Jeopardy
Petitioner challenges the Secretary’s conclusion that
Petitioner’s noncompliance rose to the level of immediate jeopardy.
The federal regulations governing inspections of nursing facilities
classifies noncompliance violations based on the severity of risk
to a resident. Immediate jeopardy is defined as “a situation in
which the provider’s noncompliance with one or more requirements of
12
participation has caused, or is likely to cause, serious injury,
harm, impairment, or death to a resident.” 42 C.F.R. § 488.301.
The second level of noncompliance is defined as a situation where
there is “[n]o actual harm with a potential for more than minimal
harm, but not immediate jeopardy.” 42 C.F.R. § 488.404(b)(1)(ii).
The lowest level violation is found when there is “[n]o actual harm
with a potential for minimal harm.” 42 C.F.R. § 488.404(b)(1)(I).13
The Secretary determined that Resident’s ability to elope
undetected resulting in unsupervised exposure to areas beyond the
confines of the facility walls constituted immediate jeopardy. We
are required to uphold this determination unless we find it to be
clearly erroneous. See Liberty Commons Nursing & Rehab Ctr. -
Johnston v. Leavitt, 241 Fed. Appx. 76, 81 (4th Cir. 2007)
(unpublished) (citing 42 C.F.R. § 498.60). In reviewing the facts,
the ALJ determined that Resident’s advanced age, Alzheimer’s
disease, and debilitating physical condition put her at risk of,
inter alia, falling down, getting lost, or being hit by a car in
the parking lot. In evaluating these potential consequences, the
ALJ concluded that the elopements were likely to cause serious
13
The level of infraction determines the civil penalty. In
situations deemed to constitute immediate jeopardy, “[p]enalties in
the range of $3,050 - $10,000 per day are imposed.” 42 C.F.R. §
488.438(a)(1). Likewise, “[p]enalties in the range of $50 - $3,000
per day are imposed for deficiencies that do not constitute
immediate jeopardy, but either caused actual harm, or caused no
actual harm, but have the potential for more than minimal harm.”
Id. § 488.438(a)(2).
13
injury or harm to Resident. The Secretary’s conclusion is not
clearly erroneous because patients suffering from conditions
similar to Resident’s have wandered from their facility and been
involved in accidents. See Golden Villa Nursing Home, Inc. v.
Smith, 674 S.W.2d 343 (Tex. App. 1984) (resident who eloped was hit
by person on motorcycle); Lincoln Manor, Inc. v. Dep’t of Pub.
Health, 832 N.E.2d 956, 358 Ill. App. 3d 1116 (2005) (resident
eloped from facility and sustained a fractured hip as a result of
a fall); Ostrom v. Manorcare Health Servs., 2007 U.S. Dist. LEXIS
4106 (E.D. Mich. Jan. 22, 2007) (resident with Alzheimer’s disease
who eloped suffered severe head trauma after tripping over a light
post). Moreover, the fact Resident eloped on multiple occasions
lends more strength to the ALJ’s conclusion. See Woodstock Care
Ctr. v. Thompson, 363 F.3d 583, 590 (6th Cir. 2003) (The court, in
considering the frequency of the residents’ elopements as well as
“the vulnerable state of the residents, and the dangers of the
outside world to residents in such a state,” held the conclusion
that the residents’ “elopements would likely cause serious injury
was supported by substantial evidence.”).
Petitioner further claims that the Secretary’s conclusion is
unfounded for two reasons: (1) because Petitioner undertook
certain efforts to prevent Resident from eloping, and (2) because
Resident never sustained any injury while outside the facility.
These arguments are without merit, however, because the Secretary
14
can make a finding of immediate jeopardy notwithstanding a
facility’s attempt to take remedial measures or the lack of an
actual injury to a resident.
The purpose of the regulation, 42 C.F.R. § 483.25(h)(2), is to
prevent not only actual harm, but also likely harm to a resident.
Therefore, a facility is to take all reasonable precautions to
prevent unintended events that can cause a resident bodily injury.
Woodstock, 363 F.3d at 589. “The question whether [a facility]
took all reasonable precautions is highly fact-bound and can only
be answered on the basis of expertise in nursing home management.
As such, it is a question the resolution of which we defer to the
expert administrative agency.” Id.
Petitioner’s Responses to Resident’s Elopements
Petitioner claims that this court should reverse the
Secretary’s decision to impose a CMP because Petitioner attempted
to take remedial measures to prevent Resident from continuing to
elope. Specifically, Petitioner challenges the Secretary’s
determination that Petitioner’s attempts were not sufficient. In
evaluating a facility’s response to a risk of harm to a resident,
courts focus on whether a facility “had taken reasonable steps to
respond to the residents’ need for supervision.” Woodstock Care
Ctr. V. Health Care Fin. Admin., DAB No. 1726 (May 30, 2000). This
“regulatory standard does not amount to strict liability or require
15
absolute success,” as there is “an element of reasonableness [that]
is inherent in the regulation’s requirements.” Crestview Parke
Care Ctr. v. Thompson, 373 F.3d 743, 754 (6th Cir. 2004) (citation
and internal quotations omitted). The standard does require,
however, that a facility do more than simply respond to a problem,
because it imposes a burden of taking “all reasonable precautions.”
Woodstock, 363 F.3d at 589. DAB tribunals interpret this to mean
that “a facility is not required to do the impossible or be a
guarantor against unforeseeable occurrence, but is required to do
everything in its power to prevent accidents.” Koester Pavilion
Petitioner v. Health Care Financing Administration, DAB No. 1750
(Oct. 18, 2000).
In order to determine whether Petitioner’s responses were
reasonable, this court looks at two factors: whether a risk of an
“accident” was foreseeable and whether the facility’s response was
adequate under the circumstances. See Woodstock Care Ctr. V.
Health Care Fin. Admin., DAB No. 1726 (May 30, 2000). In this
case, Petitioner learned on September 19, 2004, that Resident was
flipping the bypass switches and walking out the exit doors.
Despite Resident’s unique ability to operate the switches, all of
Resident’s future elopements became foreseeable the moment
Petitioner realized Resident was capable of operating the bypass
switches.
16
Petitioner’s reaction to Resident’s behavior was not adequate
because it was not tailored to address her relatively high
functional capacity. In order to prevent Resident from eloping,
Petitioner placed paper covers over the switches that release the
locks on the exit doors. Petitioner claimed that this would
confuse and distract Resident, thus preventing her from locating
the switches. The Secretary did not consider this response to be
adequate under the circumstances and substantial. We agree.
When deciding to cover the bypass switches with paper,
Petitioner did not consider Resident’s “novel talent for operating
the bypass switches.” (P.B. at 43.) Though Petitioner’s tactics
might have worked on less functional Alzheimer’s patients,
Petitioner should have employed measures designed to prevent
someone with Resident’s level of cognitive ability from operating
the bypass switches. At the very least, Petitioner could have
initially combined the paper covers with a proven measure, such as
one-on-one supervision to analyze whether the paper covers were
effective.14 Assuming such measures were not feasible, Petitioner’s
actions still never addressed the ultimate problem, Resident’s
14
The applicable regulations require Petitioner to take all
reasonable precautions to prevent accidents. See, 42 C.F.R. §
483.25(h)(2). Petitioner contends that one-on-one supervision as
suggested by the ALJ and DAB Appellate Board compromises a
resident’s dignity, and is therefore not a preferred method of
supervision. Petitioner, however, provides no authority to support
a conclusion that safeguarding a resident’s dignity or independence
is preferred to protecting a resident against accidents.
Accordingly, we find no merit in Petitioner’s position.
17
ability to exit the facility without detection. Considering the
other possible responses available and known to Petitioner at that
time, including the use of the Wander Guard alarm or full-time,
one-on-one supervision, Petitioner cannot claim that covering the
switches with paper was reasonable.
This conclusion is further supported by the fact that Resident
was previously housed in a locked unit. In assessing the proper
level of care required for Resident, Petitioner acknowledged that
she was at a high risk for elopement. This risk did not decrease
when she moved to an unlocked unit; in fact, her risk of elopement
increased. Petitioner’s reply brief admits that its staff “knew
that they could not assure the Resident’s safety on an open,
unlocked unit.” (P.R. 15.) Furthermore, Petitioner states that it
was the staff’s professional judgment that Resident required
greater supervision in an unlocked unit. Id. Accordingly,
Petitioner cannot show that the Secretary’s findings were not
supported by substantial evidence or that his legal conclusions
were clearly erroneous.
Resident Suffered No Actual Harm
Petitioner’s argument that Resident never sustained any actual
injury during her elopements is not a proper basis to set aside the
Secretary’s finding of immediate jeopardy. In fact, the DAB has
“held that the regulations do not require any finding of actual
18
harm to justify a determination that immediate jeopardy to
residents exists.” Southridge Nursing and Rehab. Ctr. v. Health
Care Fin. Admin., DAB No. 1778 (July 30, 2001) (citation and
internal quotations omitted). According to the plain language of
the regulation, a finding of immediate jeopardy only requires that
a nursing facility’s noncompliance is likely to cause harm to a
resident. See 42 C.F.R. § 488.301. As mentioned above, Resident’s
condition made her likely to suffer harm if unsupervised outside of
Petitioner’s facility. This is not a case where a resident eloped
a single time, or where the resident was retrieved immediately upon
her decision to exit. Here, Resident continued to exit the
facility without the staff’s knowledge. Additionally, on at least
two occasions, the staff was unsure how long Resident had been
outside the facility. The fact that she eloped on numerous
occasions increased the possibility that she would suffer an
injury. See Woodstock Care Ctr. v. Thompson, 363 F.3d 583, 590
(2003) (“Even in the absence of ‘actual harm,’ a ‘widespread
potential for more than minimal harm’ is sufficient to sustain the
CMP.”) (citing 42 C.F.R. § 488.301). Therefore, Petitioner’s
argument that Resident always found her way back to the facility
unharmed is not persuasive. See Southridge, DAB No. 1778 (July 30,
2001) (“Just because the resident fortuitously did not suffer any
actual harm does not eliminate the likelihood that harm could have
19
befallen him in the course of his time outside.”). Accordingly, we
affirm the Secretary’s determination of immediate jeopardy.
Due Process
Petitioner claims it was deprived of procedural rights during
the hearing before the ALJ because the Secretary changed its reason
for imposing a CMP and the ALJ thereafter denied Petitioner an
opportunity to submit additional evidence through direct witness
testimony. Because we find Petitioner’s argument to lack merit, we
will not upset our decision to affirm the rulings below.
Petitioner notes that the DAB lacks uniform rules for
conducting a hearing to review the imposition of a CMP instead
allowing the ALJs to use their discretion setting the procedure for
a hearing. The Medicare Act at (42 U.S.C. § 1395i-3(h)(2)(B)(ii))
specifically grants discretion to the Secretary to conduct CMP-
related proceedings by incorporating by reference 42 U.S.C. §
1320a-7a(c)(4). Under 42 C.F.R. § 498.60, the discretion regarding
hearing procedures is passed along to the ALJ. In this case, the
presiding ALJ issued an initial order outlining the procedures to
be used for the hearing. The order requested that the parties
submit written direct testimonial evidence of all potential
witnesses to be used at the hearing, and to make these witnesses
available for cross-examination during the hearing. (J.A. 41-42.)
Once this prehearing exchange was complete, neither party could
20
supplement its evidence unless it made a motion to do so. (J.A.
40.)
In accordance with the ALJ’s directives, CMS submitted a brief
and direct testimony of its surveyor in May 2005. Approximately 30
days later, Petitioner responded by submitting direct witness
testimony and a prehearing brief. After Petitioner’s submission,
CMS moved to supplement its evidence with additional testimony of
the surveyor in rebuttal to certain claims made by Petitioner’s
employees. The ALJ granted this motion. Petitioner did not
supplement or amend its evidence.15
Petitioner claims it was prejudiced by the ALJ’s procedures
regarding witness testimony. Specifically, Petitioner claims that
it was denied the opportunity to supplement its case with
additional testimony regarding the efficacy of its electronic door-
locking system because the ALJ’s rules prevented witnesses from
testifying at the hearing unless they were cross-examined. The
record, however, shows that the only obstacle Petitioner faced in
submitting additional evidence was its own failure to organize and
submit such evidence. The record shows both that the ALJ granted
Petitioner’s motion to supplement (J.A. 134-35), and that
Petitioner failed to submit additional evidence. (J.A. 526). We
15
Petitioner did make a motion to submit supplemental evidence
in the form of direct testimony of Randy Warden, the installer of
Petitioner’s alarm system. The ALJ granted this motion, but
Petitioner never submitted any additional materials.
21
fail to see how the Petitioner’s procedural due process rights were
prejudiced by the ALJ’s procedures.
Even assuming that Petitioner proffered the direct witness
testimony it claims was wrongly omitted from the ALJ’s
consideration, this evidence would not have affected the ALJ’s
analysis. Petitioner sought to submit testimony of Randy Warden,
the installer of Petitioner’s door-locking system, in an attempt to
show that the system Petitioner installed was the one preferred by
the State of North Carolina and conformed to all the Life Safety
Code requirements. Such testimony, however, was irrelevant to the
determination of whether Petitioner was in substantial compliance
with the regulation requiring adequate supervision of its
residents. Though the electronic locking system may have been
state-of-the-art at the time, the system was still unable to alert
Petitioner’s staff of Resident’s elopements. This required
Petitioner to take additional steps to monitor Resident and prevent
her from eloping undetected. Accordingly, this evidence was
irrelevant to the determination that Petitioner was not in
substantial compliance with 42 C.F.R. § 483.25(h)(2).
The remainder of Petitioner’s procedural due process arguments
are also without merit. Petitioner’s attempt to analogize its case
to Crestview Parke Care Ctr. v. Thompson, 373 F.3d 743, 749 (6th
Cir. 2004), is unpersuasive because Petitioner was afforded an oral
hearing and was given an opportunity to present its case, and the
22
Secretary did not rely on any post hoc rationalizations to support
its contention that Petitioner failed to adequately supervise
Resident. Petitioner, therefore, suffered no prejudice nor injury
from the ALJ’s hearing procedures.
Conclusion
For the reasons set forth above, the final judgment of the DAB
is
AFFIRMED.
23
SHEDD, Circuit Judge, dissenting:
Liberty Commons must comply with 42 C.F.R. § 483.25(h), which
provides: “Accidents. The facility must ensure that . . . (2) each
resident receives adequate supervision and assistance devices to
prevent accidents.” In interpreting this regulation, the DAB has
held a facility is not subject to strict liability but a
reasonableness standard, requiring that a facility take all
“reasonable steps to respond to the residents’ need for
supervision.” Woodstock Care Ctr. v. Healthcare Fin. Admin., DAB
No. 1726 (May 30, 2000).*
Liberty Commons claims that it met the DAB’s reasonableness
standard by responding to Resident #2's (“the Resident”) continued
elopements by increasing remedial measures to prevent future
elopements. The last of these remedial measures involved the
covering of door lock override switches with paper, a step taken to
prevent the Resident from operating the switches to unlock exit
doors by diverting her attention. After Liberty Commons covered
the switches with paper, the Resident did not elope for a period of
approximately six weeks.
*
The DAB also interprets the regulation to mean that “a
facility is not required to do the impossible or be a guarantor
against unforeseeable occurrences, but is required to do everything
in its power to prevent accidents.” Koester Pavilion v. Healthcare
Fin. Admin., DAB No. 1750 (Oct. 18, 2000). Clearly, though, the
DAB does not apply this interpretation literally. Doing so would
result in a violation in every case because some further step to
prevent accidents is always available.
24
Under the DAB’s interpretation of § 483.25(h), Liberty
Commons’ actions should have been analyzed for reasonableness. The
agency, however, failed to do so. The state surveyor who inspected
Liberty Commons’ facility testified that she did not evaluate the
reasonableness of the paper covers because the resident “was still
getting out of the facility. It was a non-issue.” J.A. 259.
Likewise, the ALJ did not address this remedial measure. Only the
DAB did so, and its analysis failed to comply with its own
announced standards.
The DAB found that Liberty Commons’ response was not
“reasonable and effective” because it ultimately failed to keep the
Resident from eloping. However, the DAB never analyzed the
reasonableness of Liberty Commons’ remedial steps but focused its
discussion solely on their effectiveness. In other words, the DAB
failed to consider the possibility that a facility can take
appropriate, reasonable steps to prevent accidents which in the end
prove ineffective. Thus, the DAB engaged in no reasonableness
analysis at all but simply an effectiveness analysis. Such an
analysis for “effectiveness” is simply an application of strict
liability, in violation of the DAB’s standards.
Because there is some evidence in the record indicating that
Liberty Commons acted reasonably to prevent the Resident’s
elopements, I would vacate and remand for further consideration
using a proper reasonableness analysis.
25