2006 SURVEY AND ENFORCEMENT UPDATE --

                                                     PROVIDER PERSPECTIVES

                                                                             

A.        Introduction

 

QUESTION: If a nursing facility appeals an enforcement sanction to the Departmental Appeals Board  (“DAB”), does the Board see its role as similar to “the oversight role of a federal appeals court reviewing agency decisions to determine if an adequate basis is articulated”? 

Or does the DAB believe that it is not governed by the Administrative Procedure Act’s “adjudication” provisions, and that its role simply is the final step in “the internal agency appeals process for formulating final agency action”?

If you chose the former proposition, then you – like many attorneys who have represented Petitioners in DAB proceedings (and who remember their Administrative Law course work from law school) – would be wrong.


 

2006 may be remembered as the year when CMS and the DAB finally made explicit in their decisions and pleadings what many provider counsel have suspected for the past several years – that neither CMS nor the DAB considers the nursing facility enforcement process to be subject to the Administrative Procedure Act, nor the usual notions of due process.  In fact, the quotations in the first two sentences above are taken verbatim from the DAB Appellate Division’s (“the Board”) recent decision in Cal Turner Extended Care Pavilion v. CMS, and, according to the Board, it is the latter proposition, not the former, that describes its role.  See DAB Dec. No. 2030 (2006), reported at CCH Medicare and Medicaid Guide ¶ 120,975.[1]

An appeal of a recent Board decision currently pending in the Fourth Circuit Court of Appeals squarely addresses this issue.  In that appeal, scheduled to be argued in March, 2007, CMS explicitly argues in its pleadings that neither its actions, nor the DAB process, is subject to the Administrative Procedure Act.[2]  Rather, CMS asserts that the goal of protecting nursing facility residents (presumably from their caregivers) is so important that CMS and the DAB may establish both the substantive requirements for nursing facilities, and the means – if any – by which facilities may contest enforcement actions, without any outside guidance or interference.[3] 


 

This extreme position may come as a surprise to the many courts that have reviewed various CMS actions and DAB decisions, including nursing facility enforcement appeals, under the familiar APA standards.[4]  But it is characteristic of how far both CMS and the DAB have moved in just one year away from the notion that enforcement actions should be based on clearly stated standards; that precedential decisions are useful to provide notice of such standards to regulated entities; and that specific enforcement decisions may be challenged by appropriate evidence, arranged according to traditional concepts of reasonably articulable “elements.”  Thus, in just this past year, the Board has rendered decisions in which it has held that --

•           “Immediate jeopardy” no longer is limited to cases where (as the pertinent regulation recites) an actual resident is “likely” to suffer serious harm or death.  Instead, the Board now will uphold such a finding (and the associated enhanced “remedy”) if the cited deficiency is of the “generic type” that could cause some hypothetical resident such harm, even if the evidence shows that no resident of the cited facility ever was exposed to such a “likelihood.”[5]


 

•           CMS not only has no burden to offer any evidence to establish the elements of “immediate jeopardy” as part of its “prima facie case,” but the Board now says that CMS may not do so, since that impermissibly would shift the burden of establishing compliance away from the facility (but the facility nevertheless retains the burden to disprove “immediate jeopardy,” even if CMS offers no evidence in that regard).[6]

•           The Board may reverse, sua sponte, an ALJ decision that the evidence in a particular case does not constitute a deficiency, even where that decision was based on the ALJ’s finding that CMS offered no evidence to support such a conclusion.[7] 

•           Any single deficiency can support any civil monetary penalty CMS imposes; thus, the Board may reverse an ALJ if he or she reduces a CMP, even where he or she finds that the evidence does not support all of the cited deficiencies.[8]

At the same time, enforcement actions continue apace, and the number and increasing size of civil monetary penalties assure that DAB appeals and decisions will continue.  In at least one CMS Regional Office, for example, recent personnel changes have resulted in much less flexibility to settle survey appeals.


 

During the past year, the DAB’s Appellate Division has decided about fourteen or so nursing facility cases, and ALJs have decided about 50 more (a little above the average for the past several years).  In past years, about a quarter of ALJ decisions completely set aside cited deficiencies and CMS remedies, and several more significantly reduced sanctions.  However, this year only one Board decision, and only six ALJ decisions, completely set aside all cited deficiencies, and one of these ALJ decisions already has been reversed by the Board.  In about another half dozen or so cases, ALJs sustained one or more deficiencies, but substantially reduced CMPs (either in amount, duration of “per diem” CMPs, or both).  As noted, at least one of these Decisions already has been reversed by the Board, and several more are pending appeal.

Last year, the premise of this paper was that since the DAB began processing nursing facility enforcement cases in the late 1990's, there had been about 200 or so ALJ and full Board decisions, and that certain analytical patterns and rules of law in the decisions were becoming clearer.  This year, add another sixty or so decisions – but the premise this year is that the Board seems to have regressed back to the “good old days” of result-oriented decisionmaking where precedent carries little weight, and the Board feels free to substitute its judgment “de novo” about a particular case without much regard to the evidence in the administrative record or flaws in CMS’ decisionmaking process.

This paper provides an update regarding the current state of the law regarding enforcement appeals, and supplements other sessions at this Program (and our papers from previous programs, available from AHLA) that address the nuts and bolts of survey regulations, procedures and appeals.  While there is a fair amount of criticism of the survey and enforcement per se in the provider community, the point of the paper is not simply to repeat such critiques, but to frame and focus such issues in the context counsel may need to address in a typical DAB appeal.  As noted every year, the reader is cautioned that neither ALJs nor the Board necessarily follow their own precedents, even on procedural matters, and so virtually all of the citations are illustrative only.


 

B.        DAB Basics

It is important for counsel advising a client regarding DAB matters to recognize that the Board has almost no useful procedural rules; that each ALJ has his or her own procedures and methods of reviewing evidence; and that the reported precedents are not particularly helpful in unraveling even basic procedural issues.  Thus, we outline certain basics.

When CMS imposes a remedy, the threshold issue counsel faces is whether to recommend that the client file an appeal to the DAB.[9]  There are several procedural issues that counsel and clients must consider. 


 

First, there are significant substantive limits on appeals.  According to 42 C.F.R. § 489.3, CMS must offer a facility the opportunity to appeal a finding of noncompliance that results in the imposition of any enforcement remedy.  This substantive limit continues to bedevil providers since the Board does not apply it literally.  Many DAB and ALJ decisions, including at least four during the past year, make clear that the Board interprets this regulation to mean that facilities may appeal only remedies, and not the findings of noncompliance or deficiencies themselves.  The effect of this narrowing of the regulation is that if CMS only proposes – or even imposes and then withdraws – a remedy, then there is no right to appeal even the most egregiously erroneous or inappropriate citation.[10]


 

Likewise, the Board consistently holds that its ALJs have very limited authority even within the cases they may accept.  In essence, they may find that there is or is not factual or legal support for a deficiency and remedy (or, conversely, that a facility actually was in substantial compliance at the time of a survey), and that is it.   They do not have the authority to enter stays or injunctions against the effectiveness of remedies[11]; to consider issues not specifically enumerated in 42 C.F.R. § 489.3; to review CMS’ choice of remedy (i.e., an ALJ cannot decide that a deficiency exists but warrants only a CMP and not termination)[12]; to review CMS’ interpretation of its regulations (even if obviously wrong); to review a SSA’s or CMS’ survey procedures (even egregious noncompliance with the SOM); or to review CMS’ failure to promulgate its survey and enforcement policies via the “notice and comment” provisions of the APA.[13]  Several recent cases have held that an ALJ may not review loss of a facility’s nurse aide training and competency evaluation program (“NATCEP”) unless the facility actually was operating such a program at the time of the survey and appeal (even though the regulation specifically makes loss of NATCEP reviewable).[14]

Second, the facility must file its Request for Hearing within 60 days after receipt of the CMS (or SSA) Notice imposing a remedy – not within 60 days after the effective date of the remedy.[15] 


 

Third, 42 C.F.R. § 498.40(b) provides that a Request for Hearing must “identify the specific issues, and the findings of fact and conclusions of law with which the [facility] disagrees, [and must] specify the basis for contending that the findings and conclusions are incorrect.”  CMS takes the very strong position that the Request for Hearing must set forth in considerable detail the precise basis for the facility’s case, i.e., its factual disagreement with each cited deficiency that supports the remedy.  The most recent DAB cases suggest that an ALJ should consider extenuating circumstances prior to dismissing an appeal, and whether “defects in the initial request for hearing were, in effect, subsequently remedied by submission of additional documents.”[16]  In general, ALJs are ruling that the Request for Hearing must, at a minimum, describe the specific survey or surveys the facility is disputing; the specific deficiencies and remedies being appealed; and at least an outline of the factual and/or legal reasons why the facility thinks the remedy is inappropriate.[17]  Thus, even though it may be many months before an appeal gets to a hearing, it usually is necessary to conduct an investigation and to prepare potential witnesses and documentary exhibits very early in a case -- perhaps even at the same time the facility continues to implement corrective action and to prepare for a follow-up survey -- in order to draft an effective Request for Hearing.


 

Fourth, CMS has considerable latitude to amend or add new factual allegations, revise a Statement of Deficiencies, and even modify (including increase) remedies during the pendency of an appeal, so long as the agency provides sufficient notice prior to the hearing so that the facility can prepare and offer a defense.[18]  Numerous cases disregard technical defenses relating to the purported inadequacy of notice of exactly what deficiency is being alleged.  Once an appeal is filed, CMS sends the file to an HHS attorney in one of the ten HHS regional offices for review and case preparation, and some of these attorneys are fairly experienced in nursing facility cases, and can spot and repair flaws in an SSA’s preparation of the Statement of Deficiencies, or CMS’ imposition of a remedy.

Fifth, numerous cases hold that CMS may be entitled to summary adjudication where the facility has not appealed all deficiencies within the “range” if the CMP at issue (i.e., all “non-jeopardy” deficiencies).[19]  CMS usually does not assign specific dollar amounts or portions of “per diem” CMPs to specific deficiencies, so unless the facility appeals each deficiency that could support the CMP, CMS will argue, and an ALJ will agree, that CMS is entitled to summary disposition of the appeal on the ground that any unappealed deficiency could support the entire CMP.[20] 


 

As noted, a recent Board Decision suggests that an ALJ may reduce any CMP, even if he or she sustains only some of the cited deficiencies, but only if he or she conducts and independent analysis of the factors set forth in 42 C.F.R. §§  488.404 and 488.438(f).[21]   Those regulations set forth a series of factors that CMS “must . . . take into account” in “determining the amount of the [civil monetary] penalty,” including the facility’s history of noncompliance; the facility’s financial condition; the seriousness of the deficiencies; and the facility’s “degree of culpability.”  However, the DAB consistently has ruled that CMS has no obligation to offer evidence that it considered such factors (even on cross-examination), and that the facility waives it right to raise the issue on appeal unless it offers evidence that CMS did not consider the criteria properly (even though CMS need not disclose how or even whether it considered the factors).[22] 

C.        Evaluating Survey And Enforcement Inconsistency – As Good As It Gets?

For many years, nursing facilities, their trade associations, and state survey agencies themselves have decried the apparent inconsistency of surveys and enforcement remedies from surveyor to surveyor, state to state, CMS Region to Region and even survey to survey.  It does beg credulity that a single nursing facility can go from “immediate jeopardy” to “substantial compliance” in a short period of time, or that one state can have tenfold the number of immediate jeopardy citations than a neighbor.  Yet, it remains the case – and is common knowledge – that many enforcement actions are based solely upon surveyors’ subjective critiques of facility staffs’ professional decisions; and many appeals are based on little more than the hope that some objective third party will listen to a facility’s defense of those decisions.


 

A survey system that inherently involves subjective evaluation of other peoples’ judgments obviously always will have some degree of inconsistency built in.  How many of us, for example, would have earned straight A’s through school if every test by every teacher involved only essay questions?  Likewise, the decentralized nature of the survey and enforcement process virtually assures inconsistency.  The typical survey is conducted by state employees who theoretically are subject to federal procedural requirements set forth in CMS’ “State Operations Manual.”  But it is common knowledge that state enforcement policies and priorities vary.  One state, for example, recently has cited a spate of “immediate jeopardy” deficiencies having to do with the equipment on facility vans, an issue not even noted in most other states.  Similarly, in most cases, the state survey agency (“SSA”) recommends enforcement action to the pertinent CMS Regional Office.  But again, SSA enforcement priorities vary; again, it is common knowledge that some SSAs disfavor civil monetary penalties (“CMPs”) as a matter of policy (or prefer to impose state CMPs), and so rarely recommend that remedy.  Some states routinely recommend “per instance” CMPs for “past noncompliance,” while others cite “continuing” noncompliance and “per diem” CMPs from the date of some past event through the date of the survey, even if the facility took what it considered to be appropriate corrective action. 

And enforcement policies vary widely even among the ten CMS Regional Offices.  Again, it is common knowledge that the regional decision makers take much different approaches to enforcement, whether they will terminate Medicare/Medicaid participation for relatively minor noncompliance, consideration of the impact of a large CMP on the financial viability of a facility (and its ability to render care), willingness to settle appeals, and the like.

The problems caused by such inconsistency are real, they are significant, and they are persistent.  In September, 2000 the General Accounting Office (“GAO,” which now is called the Government Accountability Office),  first reported that there existed widespread and substantial inconsistency among states in the citation of significant deficiencies.  Among other things, the GAO found that the rate of citation of serious care deficiencies varied by more than 500% among states.[23]


 

In 2000, CMS itself noted that the widespread variation in rates of citations among states “suggests that we need to be cautious when comparing results across states.”[24]

In July 2002, CMS proposed to address the persistent problem of surveyor inconsistency in a request for contractor proposals (“RFP”) for a project CMS called “Improving the Consistency of the Nursing Home Survey.”  In that RFP, CMS sought input from prospective contractors on four issues: 1) empirical assessment of the variability and consistency of the survey process; 2) identification of those aspects of inconsistency that are “most troublesome;” 3) empirical assessment of the most important causes of inconsistency; and 4) policy and programmatic options for improvement.  (So far as we can tell, CMS never completed this project.) 

And in March 2003, the DHHS Inspector General issued a detailed report entitled “Nursing Home Deficiency Trends and Survey and Certification Process Consistency” (Rep. No. OEI-02-01-00600), which also focused on the persistent problem of inconsistency from surveyor to surveyor, state to state, and the like.  Among other things, the OIG reported that the average number of deficiencies per facility varied nearly fourfold among states; that the number of deficiency-free facilities varied from zero in one state to 33.3% in another; and that numerous factors, including “unclear guidelines,” inconsistent interpretation of regulatory requirements, poor supervisory review, and high surveyor turnover, all contributed to inconsistency. 

Thus, the question is posed – is the current system, with all the flaws inherent in a system that depends in large degree on human subjectivity, as good as it gets – and, if so, what are the implications for the enforcement and appeal processes? 


 

The first question is largely rhetorical, as any system or process can be improved, and the OIG Report noted above makes obvious suggestions.  But whether improving the process is likely to reduce inconsistency may beg the question.  It may be possible that the survey system is as consistent as it is going to get, given the factors noted above.  The real problem for counsel is that the enforcement process is even more inconsistent than the survey process. 

Congress plainly intended the enforcement provisions of the 1987 Medicare Act amendments (commonly known as “OBRA ‘87”) to match “remedies” to deficiencies based on the actual (or potential) impact of noncompliance on a facility’s actual residents.[25]  But CMS’ current operation of the enforcement process has failed to implement this direction in at least three distinct respects.  First, CMS has never made clear exactly what, if anything, is the current connection between the “severity and scope” matrix that surveyors must use to classify deficiencies they cite, and the actual assignment of “remedies,” especially civil monetary penalties (“CMPs”), to those deficiencies.  While a detailed history of the enforcement process is beyond the scope of this paper, counsel should be aware that when CMS first promulgated the “severity and scope” matrix in 1992, CMS stated that its purpose ostensibly was to determine whether a certain set of findings was a deficiency at all.[26]  But when CMS published the same matrix as part of the final enforcement rule in 1994, its purpose had morphed into a tool for assigning specific remedies to each observed deficiency.[27] 


 

As a practical matter, CMS has never really clarified this inconsistency, which has resulted in CMS’ second failure, that is, its failure to provide any guidance whatsoever regarding how remedies, especially CMPs, will be consistently imposed.  As is discussed above, in general, state survey agencies recommend remedies, and CMS imposes them, but both state and federal policies in that regard vary widely.  Even cursory review of DAB decisions shows wild inconsistency in the sanctions imposed for apparently similar deficiencies – literally hundreds-fold in some cases.  If CMS ever has addressed this fundamental issue, it has not done so publicly.         

And third, as discussed above, CMS’ recent explicit collapse of the “immediate jeopardy” and “non-jeopardy” categories into one for the purpose of imposing sanctions (notwithstanding the clear statutory and regulatory distinction) has had the effect of giving state survey agencies and CMS Regional Offices even greater leeway to select any virtually any penalty they want for virtually any deficiency.  As discussed above, this issue is currently being addressed in court.

There are real implications of such inconsistency for the enforcement and appeal process – but the DAB itself exacerbates the problem.  As noted above, the Board currently perceives itself to be part of the enforcement process, and not an independent reviewer of CMS’ decisions, so it seems unlikely to intervene to enforce limits (even those clearly set forth in the Medicare Act and regulations) on CMS.  Moreover, the Board itself plainly contributes to inconsistency in two respects.  First, its vague notion that ALJs should decide cases “de novo” renders ALJs into, in effect, “super-surveyors,” albeit absent professional background, training, and first hand information.  CMS seems to tolerate this bizarre standard, which effectively minimizes the professional judgments of surveyors as well as facility staff, so long as it “wins” most appeals.  And second, by steadfastly refusing to accord precedential effect to its decisions, the Board thereby assures inconsistency as the same issues (and even fact patterns) are litigated over and over again.


 

These fundamental flaws in the enforcement process will have to be resolved via litigation should CMS fail to address them.  The “back-channel” suggestion has been that perhaps the Board is trying to dissuade appeals by being so result oriented (it is no secret that the number of nursing facility appeals is far greater than CMS promised the Board).  Ironically, however, the inconsistency of the process promotes even more appeals, as facilities appeal results that they believe are inappropriate or irrational, and as some facilities even hope to “win the lottery” by catching an ALJ on a good day.  Moreover, as discussed above, more cases are being appealed to court.  To date most focus on the facts of the specific case, but, as discussed above, some judicial appeals are starting to frame and pose significant administrative law issues.  As history teaches (see the myriad of appeals involving EPA rules), when an administrative agency overreaches, sooner or later the agency will lose complete control of its processes when some result so offends a reviewing court that it imposes stricter limits. 

The bottom line for counsel is clear – frame legal issues in appeals with this history in mind, and preserve all possible grounds for appeal, since the legal landscape is unsettled.

 

D.        What Are The Standards For Decision – The SOM As Academic Exercise?

 


 

As the discussion above indicates, the DAB does not consider any of its decisions, even on procedural matters, to be precedential.  Moreover, the DAB considers its reviews of CMS enforcement actions to be “de novo” – but not in the customary sense of a reviewing court taking a fresh look at the evidence or legal argument, but rather in the sense that an ALJ, or even the Board, may sustain a deficiency even on grounds not asserted by CMS.[28]  The result not only is endless relitigation of even the most basic issues, but also considerable murkiness regarding the application of basic concepts of notice and “prima facie case,” and no clear guidance regarding what evidence is material, or even likely to be influential, to a particular ALJ. 

We believe that the root of the problem is that in recent years, CMS has resisted (and the DAB largely has disregarded) the notion that enforcement “deficiencies” are legal claims that can be described in terms of factual and legal “elements,” as would be, for example, a breach of contract or assault claim.[29]  This resistance has at least two direct effects on the enforcement process, both of which are illustrated in DAB decisions.


 

First, the Board has held many times that CMS has at least some burden to establish a “prima facie case” of noncompliance in DAB proceedings.[30]  But the Board’s guidance regarding the content of such a prima facie case is extremely unclear.  For example, recent Board decisions suggest that CMS may meet this “burden” simply by entering into evidence the Statement of Deficiencies, no matter how poorly written that document – and even if CMS decides to modify its allegations or even add or substitute deficiencies before the hearing.  In fact, there is federal case law arising in other contexts that makes clear that, at least under the APA, even a descriptive charging document alone is not a sufficient basis to sustain an enforcement action.[31]  In effect, the Board confuses the APA notion that the agency proposing a certain result has the burden of persuasion on that issue with CMS’ burden of proceeding as a procedural matter within the scope of the proceeding.[32]


 

At least in theory, CMS’ showing that a nursing facility was noncompliant – regardless of whether expressed as “elements” or as “burden,” or whatever – ought to include evidence – not just a surveyor’s assertion – that some act or omission by the facility violated some specific regulatory requirement or prohibition.[33]  (We also would prefer that the evidence also demonstrate that the act or omission was within the control of the facility, and that there was at least some arguable causal connection to some actual or potential harm.)  Yet the Board has never clearly stated this fundamental premise.[34]

Second, the notion that a particular regulatory violation consists of more or less predictable “elements” should have the practical effect of “matching up” various fact patterns to specific regulatory “tags.”  But CMS and the Board reject this result, at least for enforcement purposes.  Thus, surveyors effectively are free to choose among “tags” to cite a particular set of facts (or, as happens frequently, to cite multiple tags for one incident or event).  Or, as also happens frequently, surveyors will cite a set of facts that seems to be described very specifically under one tag (say, a medication error) under a more general tag (say, failure to meet professional standards or quality of care), typically where the facts might not make out a violation of the more general tag (for example, because a particular medication error was not “significant” in regulatory terms).


 

CMS actually has compounded this problem by promulgating more and more “Interpretive Guidelines” to the Long Term Care Requirements of Participation, but without making clear exactly what weight these guidelines play in enforcement proceedings.  At least in theory, CMS’ “State Operations Manual” (“SOM”), which includes both CMS’ survey procedures, as well as its substantive Interpretive Guidelines, has no binding effect at all (at least as to facilities), since it has not been promulgated according to the notice and comment provisions of the APA.  As a practical matter, however, the DAB at least occasionally refers to its substantive provisions as authoritative interpretations of the regulations (some ALJs are more diligent in this regard than others).  But CMS frequently confuses matters by arguing that the SOM is not binding, or even pertinent, where, for example, a state survey agency fails to follow proper survey procedures, or a petitioner is arguing that a particular practice does not violate, or even is consistent with, an interpretive guideline.

CMS’ most recent revisions to the Interpretive Guidelines – which are being released on an ongoing basis – further confuse matters.  The Interpretive Guidelines now fill a thick binder, and recent releases on topics such as medications, pain, the role of the medical director and others, have the length, tone (and footnotes) of academic treatises.  Critique of the content of such exercises is beyond the scope of this paper; rather, the question for facility counsel is how, as a practical and legal matter, can such “standards” ever be applied in the enforcement context?  Even if the Interpretive Guidelines embody the most modern research, “best practices,” and the like, and even if every surveyor and every facility nurse could be trained adequately and uniformly in their content – an unrealistic task – surveys obviously are not round-table discussions.  Rather, surveys have become picky, investigatory and even adversarial in nature, and surveyors are trained that they are not “consultants.”  As a practical matter, there is no room in the current survey process for facility nurses to engage in academic discussions, much less debates, with surveyors about “best practices,” “evidence-based medicine,” and the like, which the Interpretive Guidelines purport to embody.  Thus, as a practical matter, many ALJs see or hear the contents of such Interpretive Guidelines only in the context of cross-examination of surveyors, which obviously is not the purpose for which such Guidelines were intended.


 

Likewise, how CMS counsel will use the newest “Interpretive Guidelines” to support deficiencies is not clear.  Surveyors rarely include in Statements of Deficiencies any analysis of potential deficiencies in terms of such Guidelines; rather, as is familiar, most citations include only lengthy narratives followed by a conclusion that either the entire scenario, some act or omission, or merely a poor outcome, constitutes a regulatory violation.  Indeed, CMS resists use of the “Interpretive Guidelines” specifically to support deficiencies, presumably in fear that they would become at least outlines for the “elements” CMS wants to avoid.  (In fact, at the same time CMS promulgates more and more detailed “Interpretive Guidelines,” it continues to instruct surveyors to  cited deficiencies based on their subjective judgment.)  At the same time, as discussed above, the Board is at best casual about the content of CMS’ “prima facie case,” and even now frequently sustains even serious deficiencies based on no more than such subjective opinions.  As discussed above, the result is wild inconsistency. 

In theory, detailed regulatory standards, whether characterized as “elements” or something else could reduce such subjectivity and inconsistency.  The Interpretive Guidelines could play this role, if CMS were to make clear what role they are to play during surveys – and if CMS were to enforce consistent interpretation and application by being more critical of sloppy surveyor decisionmaking.  However, unless and until CMS (and the DAB) is willing to step back from a result-oriented enforcement process, the question will remain whether the State Operations Manual is merely an academic exercise.

E.         The Ongoing Debate – Is There Any Relationship Among Surveys, Enforcement Actions and Quality?                                                                                                           

 


 

In 2003, the Department of Health and Human Services Office of Inspector General reported that in the most recent period studied, 89% of all nursing facilities were cited for at least one deficiency following their most recent annual surveys.  According to the OIG, the total number of deficiencies cited during annual surveys alone increased from 64,608 in 1998 to 94,131 in 2001.  The OIG also reported that it had polled a sample of surveyors, as well as the 51 state survey directors (50 states plus D.C.), and – this is truly remarkable – only 3% of surveyors, and 6% of survey directors reported that nursing homes in their area were “excellent.”[35]

Yet the OIG also reported that 34% of a sample of nursing facility administrators reported that facilities in their area were “excellent,” and another 56% reported that they were “good.”  In addition, in 2005 a national research company reported that the first comprehensive national survey of residents and families (involving more than 2200 nursing facilities located in all 50 states and D.C.) found that 31% of residents and families reported that their facilities were “excellent,” and another 52% reported that they were “good.”  Among the top 10% of facilities, the “excellent” or “good” response was 96.5%.  In seven of nine areas, including dignity, safety, privacy and autonomy, “excellent” or “good” satisfaction scores ranged from 81% to 88% (dining experience, alas, was rated lowest, garnering only 68% approval).[36]   

Thus, more than ten times as many administrators, family members and residents characterized nursing facilities with which they were familiar as “excellent” as did surveyors.  What accounts for this disconnect?  And, again, what are the implications for the enforcement process?


 

Many observers have noted that overlap among regulation, surveys, enforcement actions and “quality” is rough at best.  From time to time, CMS asserts that there is a correlation between the increase in the citation of deficiencies and perceived increases in quality, but it should be noted that the word “correlate” is ambiguous, and could be either a parallel or causal relationship.  It seems obvious that most nursing facilities have become much more sophisticated during the last twenty years, as interest and experience in gerontological nursing has grown, medical director training has advanced, best practices are disseminated, etc.  (No one seriously argues that nursing facilities of twenty or thirty years ago were “better” across the board than those today by any measure.)  Yet it also is the case that the same sorts of deficiencies continue to be cited, which would suggest that (1) human errors always will occur, and always will be “low hanging fruit,” relatively easy to find and cite, if that is the purpose of the enforcement system; and (2) there always will be some baseline level of “unacceptable” or “substandard” care, where ever that line is set, i.e., no matter how great the overall improvement in the profession, the “lowest quality” 10% by definition always will be about 1500 facilities, again, an easy target if the purpose of the regulatory process is to identify those facilities (which it currently is not). 

This is not a treatise on “quality,” which is addressed in other sessions of this conference, but from an enforcement perspective it is interesting to note that CMS has never published any data, presumably because there are none, that indicate that there is any correlation whatsoever between its “Quality Indicator” data (data on various characteristics of a facility’s resident population thought to illustrate good or bad outcomes), and facility-specific survey results.  This lack of correlation presumably does not relate to any flaw in data collection, but rather illustrates that surveys tend to be very narrowly focused on matters other than “quality.”


 

In fact, it is interesting to note that the legislative history of the 1987 Medicare Act enforcement provisions does not support CMS’ current effort to cite every caregiver mistake or omission as a deficiency.  According to the House Report on “OBRA ‘87” (the only pertinent legislative history), “[t]he purpose of the unannounced annual survey is not to determine whether every nursing facility is in compliance with every requirement of participation.  Instead, its purpose is to detect facilities where residents are not receiving quality care.”[37]            

The reality, of course, is that (spurred by Senator Grassley et al.), many CMS officials and surveyors do see the purpose of the survey process as to ferret out every caregiver error, whether material to any adverse resident outcome or not; and, conversely, to assign blame for adverse resident outcomes, regardless of whether any facility act or omission was material to that result.  And, as discussed above, recent  DAB cases recite that purported errors may be sanctioned – even at the “immediate jeopardy” level of “severity” – without respect to whether any actual resident even was at risk of “likely” harm.

David Tilson, principal author of the seminal 1985 Institute of Medicine Report “Improving the Quality of Care in Nursing Homes,” many of whose recommendations were incorporated nearly verbatim into “OBRA ‘87,” has noted that the expert panel that assembled that report never intended that their recommendations would become a bridge between “quality” and enforcement.  According to Mr. Tilson, using quality criteria to drive enforcement is like “pushing a string;” in other words, retrospective – and blame-free – root cause analysis may be a useful way to analyze and enhance quality, but sanctioning facilities for every nursing failure or bad outcome does not promote that goal.[38]


 

Before counsel completely tears out his or her hair, consider that there are ways to cut through this result-oriented morass.  Many states are moving toward independent or quasi-independent “informal dispute resolution” (“IDR”) systems.  While such systems are not perfect (in some states the survey agency routinely overturns or ignores recommendations to set aside deficiencies), many such independent fact-finders do not accept surveyor assertions or opinions at face value, and do insist upon clinical evidence to support a surveyor’s judgment, and some demonstration of a cause and effect relationship between some alleged act or omission and some specific adverse outcome.  For example, many surveyors take at face value (and cite as the basis for a deficiency) an emergency room admission note to the effect that a patient arrived from a nursing facility “dehydrated.”  But recent research makes clear that there are demonstrable differences (e.g., in certain lab results) between dehydration caused by neglect or poor care (e.g., inadequate hydration or monitoring) and volume depletion or electrolyte imbalance caused by disease process.  A surveyor may not know or even particularly care about the difference, but a well-reasoned explanation, presented by a physician or qualified nurse, can impress upon an IDR fact-finder that the first scenario may implicate (poor) quality care, but the second may not.  Similar discussions about skin breakdowns, aspiration, medication errors, advance directives, and many other topics now are customary at IDR.  


 

To date, many of the DAB judges, and the Board itself, generally are immune to such detailed clinical discussions.  To date, the Board has resisted the idea of special clinical training for ALJs, and there certainly are pros and cons to the idea.  The typical DAB hearing is very short – most ALJs schedule only a day or two – and many ALJs get impatient with presentation of the sort of detailed clinical evidence and cross-examination that is common in a personal injury case.  Moreover, the Federal Rules of Evidence do not directly apply in DAB proceedings, and every ALJ allows surveyors to opine on the matters they cite, whether they have any pertinent training or experience.  (In some states, survey agencies allow non-nurses (such as social workers) who have passed the nursing portion of the Surveyor Minimum Qualifications Test to survey nursing issues, and then to testify as “experts” on their citations.)  In addition, CMS tends to use “all purpose” academic experts at hearings who are paid simply to opine that the facility is wrong, the deficiency represents the worst thing he or she ever has seen, etc.[39]  Thus, the general standard of “fact-finding” before the DAB is far looser than would be acceptable in a court of law, and there are many, many reported ALJ and Board decisions where one would be hard pressed to tell from the report that the petitioner even had offered any clinical evidence at all.  There obviously is room for improvement in the quality of clinical evidence used in DAB appeals (and in ALJs’ consideration of such evidence). 


 

However, some petitioners are getting better about articulating the “standard of care” in terms of the “expected outcome” in a particular situation, and then defending the nursing staff’s professional judgments in that context.  While it may not be feasible to offer persuasive evidence to an ALJ regarding the amorphous notion of “quality” – and CMS likely would argue that such evidence is immaterial in an enforcement action anyway – it is possible to define what the right clinical intervention was in the circumstances faced by a particular nurse or care planning team charged with making a decision in real time how to address a specific resident’s specific problem.  Some recent ALJ decisions do respect such evidence.[40]

Conclusion

During the past year, it has become more difficult to tell whether pessimism about the efficacy and fairness of the DAB review process is merely cynical, or whether it is a necessary dose of realism.  To paraphrase our former Defense Secretary, we fight appeals with the system we have.  In the author’s view, the flaws of that system have become more glaring this year, and that observation enhances the necessity for counsel not only to prepare appeals with meticulous attention to detail, but also to select and structure such appeals with possible judicial appeals in mind.


 

[1]  Many DAB and ALJ Decisions are available on the DAB’s website, www.hhs.gov/dab, although typically there is a delay of several months.  As of January, 2007, the most recent posted decisions were from February, 2006.  The CCH Medicare and Medicaid Guide published some, but not all, decisions, usually soon after release.  In addition, some commercial services such as WestLaw publish DAB decisions.

[2]  Liberty Commons Nursing and Rehabilitation Center - Johnston v. Leavitt, No. 06-1868, appealing DAB Dec. No. 2031 (2006), CCH Medicare and Medicaid Guide ¶ 120,976.

[3]  In Batavia Nursing and Convalescent Center v. CMS, DAB Dec. No. 1911 (2004), CCH Medicare and Medicaid Guide ¶ 120,589, the Board held that the APA’s rulemaking requirements did not govern its promulgation of a “standard of review” that assigns the “burden of proof” to a petitioner challenging a CMS enforcement action.  The Board also stated in passing that such a standard was not in conflict with any other APA requirement.  In retrospect, reading that terse assertion together with the Board’s more recent decisions, and its arguments in the Liberty Commons appeal, it appears that the Board’s position that it is not bound by the APA’s adjudication requirements is not new.  In fact, in its Liberty Commons pleadings, the Board relied heavily on the unpublished magistrate’s decision that affirmed the seminal Hillman Rehabilitation Center v. HCFA decision, DAB Dec. No. 1611, aff’d, No. 98-3789 (D.N.J. 1999), in which the magistrate suggested – in a footnote – that “the APA would arguably not apply” to the question which party bore the burden of proof because “the Social Security Act and its implementing regulations implicitly provide” support for the Secretary’s argument that a provider seeking certification bears the burden to demonstrate compliance.  Whatever the merits of that dicta – in fact, courts have held many times that the APA cannot be disregarded by implication – CMS, and now the Board, have taken this passing suggestion as the basis for wholesale repudiation of all APA standards of review in enforcement cases.  (Recall that Hillman was a rehabilitation facility not subject to the nursing facility enforcement provisions of the Medicare Act.)  An obvious flaw in CMS’ ultimate position is that even if the APA did not apply to its adjudications, traditional due process considerations still would impose limitations on the agency’s decisionmaking process.  See Kapica v. INS, 944 F.2d 702, 705 (10th Cir. 1991).

[4]  See, e.g., Omni Manor Nursing Home v. Thompson, 151 Fed. Appx. 427 (6th Cir. 2005); Crestview Parke Care Center v. Thompson, 373 F.3d 743 (6th Cir. 2004).  See generally Maryland General Hospital, Inc. v. Thompson, 308 F. 3d 340 (4th Cir. 2002).

[5]  Liberty Commons Nursing and Rehabilitation Center v. CMS, DAB Dec. No. 2031 (2006), CCH Medicare and Medicaid Guide ¶ 120,976; this is the case on appeal to the Fourth Circuit mentioned in the text.

[6]  Id.

[7]  Alden Town Manor v. CMS, DAB Dec. No. 2054 (2006), CCH Medicare and Medicaid Guide ¶ 121,049, reversing ALJ Decision CR1398 (2006) CCH Medicare and Medicaid Guide ¶ 120,899.

[8]  Burton Health Care Center v. CMS, DAB Dec. No. 2051 (2006), CCH Medicare and Medicaid Guide ¶ 121,050, reversing ALJ Dec. No. CR1330 (2005), CCH Medicare and Medicaid Guide ¶ 120,828.  But see The Residence at Salem Woods v. CMS, DAB Dec. No. 2052 (2006), CCH Medicare and Medicaid Guide ¶ 120,051, sustaining the same ALJ’s reduction of a CMP where he set aside some, but not all, cited deficiencies. 

[9]  Under 42 C.F.R. § 498.3, a nursing facility may appeal a finding of noncompliance that results in imposition of a federal remedy.  CMS itself imposes the vast majority of such remedies, typically in a Notice that specifically sets forth this appeal right.  A state survey agency’s (“SSA”) recommendation that CMS impose a remedy does not trigger DAB appeal rights.  However, CMS has delegated to SSAs the right to impose the federal denial of payment for new admissions (“DPNA”) remedy, and so if the SSA does so, that remedy may be appealed to the DAB (and it is receipt of the SSA Notice that triggers the 60 day period to file the Request for Hearing, at least as to that remedy).  A SSA Notice imposing a federal DPNA will include a description of federal appeal rights.

[10]  There are several dozen reported cases, including four in 2006.  See Independence Home v. CMS, ALJ Dec. No. CR1523 (2006), CCH Medicare and Medicaid Guide ¶ 120,044; Lamun-Lusk-Sanchex Texas State Veterans Home v. CMS, ALJ Dec. No. CR1440 (2006), CCH Medicare and Medicaid Guide ¶ 120,967; Alexandria Place v. CMS, ALJ Dec. No. CR1391 (2006), CCH Medicare and Medicaid Guide ¶ 120,894; Harvest Manor v. CMS, ALJ Dec. No. CR1387 (2006), CCH Medicare and Medicaid Guide ¶ 120,893.  Typical fact patterns are illustrated cases such as Fountain Lake Health and Rehabilitation Center v, CMS, DAB Dec. 1985 (2005), CCH Medicare and Medicare Guide, ¶120,826 (no right to hearing where CMS withdraws CMP; there are many similar cases, even where CMS withdraws the remedy during the course of the appeal); Heritage Manor of Franklinton v. HCFA, ALJ Dec. No. CR666 (2000), CCH Medicare and Medicaid Guide ¶ 120,132; (no right to hearing where CMS withdraws termination action); Arcadia Acres, Inc. v. HCFA, DAB Dec. No. 1607 (1997), CCH Medicare and Medicaid Guide ¶ 45,140 (same; denial of payment for new admissions). 

[11]  See, e.g., Palm Grove Convalescent Center v. HCFA, ALJ Docket No. C-99-12 (1999) (unreported).

[12]  See, e.g., Beverly Health and Rehabilitation Center v. HCFA, DAB Dec. No. 1696 (1999), CCH Medicare and Medicaid Guide ¶ 120,065 (ALJ has no authority to decide whether termination of participation is an appropriate remedy); Aase Haugen Homes, Inc. v. CMS, ALJ Dec. No. CR1273 (2005), CCH Medicare and Medicaid Guide ¶ 120,746 (no authority to review choice of per instance remedy)..

[13]  See, e.g., Orchard Grove Extended Care Center v. HCFA, ALJ Dec. No. CR541 (1998), CCH Medicare and Medicaid Guide ¶120,006; Green Oaks Hospital v. CMS, ALJ Dec. No. CR861 (2002). 

[14]  See, e.g., The Oaks v. CMS, ALJ Dec. No. CR1274 (2005), CCH Medicare and Medicaid Guide ¶ 120,744; Briarcliff Manor Nursing and Rehabilitation Center v. CMS, ALJ Dec. No. CR1228 (2004), CCH Medicare and Medicaid Guide ¶ 120,711. 

[15]  See 42 C.F.R. § 498.40(a)(2).  ALJs routinely dismiss cases where the facility fails timely to request a hearing, and does not make a sufficient showing of good cause to extend the 60-day period.  See e.g., Brookside Rehabilitation and Care Center v, CMS, ALJ Dec. No. CR1541 (2006); Casa del Sol Senior Care Center v. CMS, ALJ Dec. No. 1418 (2006); Cary Health and Rehabilitation Center v. HCFA, ALJ Dec. No. CR685 (2000), CCH Medicare and Medicaid Guide ¶ 120,155; aff’d, DAB Dec. No. 1771 (2001), CCH Medicare and Medicaid Guide ¶ 120,222.

[16]  See Care Inn of Gladewater v. HCFA, DAB Dec. No. 1680 (1999), CCH Medicare and Medicaid Guide ¶ 120,041; see also Fairview Nursing Plaza, Inc. v. HCFA, DAB Dec. No. 1715 (2000) CCH Medicare and Medicaid Guide ¶ 120,121; Birchwood Manor Nursing Center v. HCFA, DAB Dec. No. 1669 (1998), CCH Medicare and Medicaid Guide ¶ 120,023.  Beware of reliance on older ALJ and DAB decisions predating Fairview Plaza.

[17] See, e.g., Signet Health and Rehab. Center v. CMS, ALJ Dec. No. CR 1096 (2003), CCH Medicare and Medicaid Guide ¶ 120,568 (summary disposition appropriate where facility did not dispute any of CMS’ fact allegations).

[18]  See, e.g., Britthaven of Goldsboro v. CMS, DAB Dec. No. 1960 (2005), CCH Medicare and Medicaid Guide ¶ 120,749; Liberty Commons Nursing and Rehab – Alamance v, CMS, ALJ Dec. No. CR1427 (2006), CCH Medicare and Medicaid Guide ¶ 120,914.

[19]  See, e.g., Tyson Health and Rehabilitation Center v. CMS, ALJ Dec. No. CR1193 (2004), CCH Medicare and Medicaid Guide ¶ 120,672.

[20]  CMS sometimes, but not always, assigns “per instance” CMPs to specific deficiencies; thus, at least in theory, if CMS breaks the per instance CMP into specific parts assigned to specific deficiencies, the facility should be able to appeal some, but not all of the CMPs. 

[21]  See Burton Health Care Center v. CMS, DAB Dec. No. 2051 (2006), CCH Medicare and Medicaid Guide ¶ 121,050.  Note that many older cases do illustrate reductions in CMPs without such detailed analysis. 

[22] See, e.g., Regency Gardens Nursing Center v. CMS, DAB Dec. No. 1848 (2002), CCH Medicare and Medicaid Guide ¶ 120,545; Emerald Oaks v. CMS, DAB Dec. No. 1800 (2001); Woodward Hills Nursing Center v. CMS, ALJ Dec. No. CR991 (2003), CCH Medicare and Medicaid Guide ¶ 120,483.

[23]  GAO, “Sustained Efforts are Essential to Realize the Potential of Quality Indicators,” GAO Report HEHS-00-197.

[24]  CMS, “Interim Report on Nursing Homes,” 2000.

[25]  See 42 U.S.C. § 1395i-3(h).

[26]  See 57 Fed. Reg. 39278, 39283 (Aug. 28, 1992).

[27]  See 59 Fed. Reg. 56116, 56131, 56173-74 (Nov. 10, 1994).

[28]  Any attorney who regularly practices before the Board can cite examples.  See, e.g., Liberty Commons Nursing and Rehab Center – Alamance v. CMS, ALJ Dec. No. CR1427 (2006), CCH Medicare and Medicaid Guide ¶ 120,914 (resident repeatedly attempted to elope, ALJ found facility’s door-locking system inadequate even though CMS never offered evidence on the topic); Life Care Center of Gwinnett v. CMS, ALJ Dec. No. CR1377 (2005), CCH Medicare and Medicaid Guide ¶ 120,889 (CMS cited staff failure to respond promptly to falling resident; ALJ held response appropriate but sustained deficiency because facility had discontinued wheelchair alarm several months before fall, and he decided it should have been retained.)

[29]  Again, this point illustrates the impact of the Board’s notion that the APA does not govern its proceedings.  Many federal cases hold that the APA specifically imposes an affirmative burden on the party with the initial burden of proceeding – which even CMS accepts it has under Hillman – to offer evidence on “each element of a claim,” and if the party with that burden fails to do so, then “the preponderance-of-the-evidence standard cannot be satisfied.”  See, e.g., U.S. Steel Mining Co. v. Director, Office of Workers’ Compensation, 187 F.3d 384, 389 (4th Cir. 1999).

[30]  See Hillman Rehabilitation Center v. HCFA, DAB Dec. 1611 (1999), aff’d, Hillman Rehabilitation Center v. HCFA, No. 98-3789 (D.N.J. May 13, 1999) (unpublished opinion); and Cross Creek Health Care Center v HCFA, DAB Dec. 1665 (1998).  At least one old DAB decision indicates that CMS has the burden to offer evidence regarding each deficiency it presses at the hearing.  See Western Care Management v. CMS, DAB Dec. 1921 (2004), CCH Medicare and Medicaid Guide ¶ 120,662.  Notwithstanding the recent DAB decisions discussed in the text, this is the traditional general standard under the Administrative Procedure Act.  See 5 U.S.C. § 556(d); Steadman v. Securities and Exchange Commission, 450 U.S. 91 (1981); Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951). 

[31] A typical case holding that the Statement of Deficiencies alone is sufficient to sustain CMS’ “prima facie case” is Barbourville Nursing Home v. CMS, DAB Dec. 1962 (2005), CCH Medicare and Medicaid Guide ¶ 120,750.  In contrast, federal courts hold that a “charging document” in an administrative enforcement action is not sufficient for the agency to meet its burden of supporting a decision (at least in a summary judgment context), since the charging document is not “evidence” in that context.  See United States v. Menendez, 48 F.3d 1401, 1004 (5th Cir. 1995).

[32]  See generally American Grain Trimmers, Inc. v. Office of Workers’ Compensation Programs, 181 F.3d 810, 813-19 (7th Cir. 1999) for a lengthy discussion of the application of the concepts of “shifting” burdens of proceeding and proof in federal administrative proceedings.

[33]  On the other hand, one ALJ did recently hold that CMS has at least some burden to establish, by appropriate evidence, the content of a “professional standard” where the language of the regulation does not make clear, in lay terms, what that content is.  See Davis East v, CMS, ALJ Dec. No. CR1319 (2005), CCH Medicare and Medicaid Guide ¶ 120,818.         

[34]  There are plenty of general treatises that review the nature and quantum of evidence necessary to support an administrative decision in an appeal.  See, e.g., 9 Wigmore, Evidence § 2494 (Chadbourne Ed. 1981); Stein, et. al, Administrative Law, §§ 24-28 (2003).

[35]  OIG, “Nursing Home Deficiency Trends and Survey and Certification Process Consistency,” OEI Report No. OEI-02-01-00600.  Unfortunately, the OIG did not report which three survey directors reported that their facilities were “excellent.” 

[36]  2005 “National Survey of Resident and Family Satisfaction in Nursing Facilities,” My InnerView research organization.  The research panel included several nationally known experts.

[37]  H.R. Report No. 391(I) to accompany H.R. 3545, 100th Cong. 1st Sess. (Oct. 26, 1987), p. 468, reprinted at 1987 USCCAN 2313-1. 

[38]  The author is acquainted with Mr. Tilson, and we have discussed the matter many times.

[39]  See, e.g., Mountain View Manor v. CMS, Dec. No. CR1076 (2003) (ALJ decision heavily based on academic expert’s critique of facility management of resident-to-resident altercations; however, based on the reported facts, it seems likely facility would have lost even in absence of adverse expert testimony.)  On the other hand, the Board once reversed an ALJ decision to the effect that a facility failed to notify a physician of a resident’s change of condition where the Board found that the ALJ had not given appropriate weight to an expert’s views regarding the applicable nursing standard of practice.  See Park Manor Nursing Home v. CMS, DAB Dec. 1926 (2004), CCH Medicare and Medicaid Guide ¶ 120,676.

[40]  See, e.g., Wesley Care and Rehabilitation v. CMS, ALJ Dec. No. CR1530 (2006), CCH Medicare and Medicaid Guide ¶ 121,048 (most of period of noncompliance and CMP set aside where ALJ accepted care planners’ testimony re: their consideration of appropriate interventions for agitated resident); Grace Living Center - Jenks v. CMS, DAB Dec. No. CR1197 (2004), CCH Medicare and Medicaid Guide ¶ 120,678 (ALJ accepted specific testimony by two physicians regarding their judgment process for ordering specific psychoactive medications).