UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1093
UNIVERSAL HEALTHCARE/KING,
Petitioner,
v.
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Respondent.
On Petition for Review of a Decision of the United States
Department of Health and Human Services. (A-08-107)
Argued: October 28, 2009 Decided: January 29, 2010
Before MOTZ and GREGORY, Circuit Judges, and Benson E. LEGG,
United States District Judge for the District of Maryland,
sitting by designation.
Petition denied by unpublished per curiam opinion.
ARGUED: Joseph L. Bianculli, HEALTH CARE LAWYERS, PLC,
Arlington, Virginia, for Petitioner. Erica Cori Matos, UNITED
STATES DEPARTMENT OF HEALTH & HUMAN SERVICES, Atlanta, Georgia,
for Respondent. ON BRIEF: Peter D. Keisler, Assistant Attorney
General, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.;
David S. Cade, Acting General Counsel, Dana J. Petti, Chief
Counsel, Region IV, UNITED STATES DEPARTMENT OF HEALTH & HUMAN
SERVICES, Atlanta, Georgia, for Respondent.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Universal Healthcare (“Universal”) is a skilled nursing
facility that provides care to Medicare beneficiaries in North
Carolina. Universal appeals a final agency decision of the
Secretary of Health and Human Services (“Secretary”). The
Secretary, acting through the Centers for Medicare and Medicaid
Services (“CMS”), imposed civil monetary penalties on Universal
for non-compliance with several Medicare regulations related to
residents’ well-being and safety. Both an administrative law
judge (“ALJ”) and the Department Appeals Board (“Board”) upheld
CMS’s findings of non-compliance and its assessment of the
penalties.
Following the procedure in these cases, Universal has
appealed the Board’s decision directly to the circuit court.
There are two determinations for us to make. The first is
whether the Secretary’s findings of non-compliance are supported
by substantial evidence. The second is whether the monetary
penalties are proportionate to the degrees of non-compliance.
Because the Secretary’s findings are supported by substantial
evidence, and because Universal has failed to show that the
civil penalties are clearly erroneous, we affirm.
2
I.
To participate in Medicare and Medicaid programs, skilled
nursing facilities must comply with regulations set forth at 42
U.S.C. § 1395i-3 and 42 C.F.R. § 483. To determine whether a
facility is in compliance, the Secretary contracts with state
agencies, which conduct inspections known as surveys. 42 C.F.R.
§ 488.10 (2009). The surveys are conducted by multi-
disciplinary, formally trained teams, each of which is comprised
of at least one registered nurse. Id. § 488.31.
During the surveys, the state agency records any
deficiencies that it discovers, including their severity. Id. §
488.404(b). The severity categories range from “[n]o actual
harm with a potential for minimum harm” to those that pose
“immediate jeopardy to resident health or safety.” Id. §
488.404(b)(1). A facility is considered to be in substantial
compliance with the regulations if its deficiencies are ones
that pose no greater risk than the potential for minimal harm.
Id. § 488.301.
Once a deficiency has been identified, CMS selects a remedy
to address it. Id. § 488.408. One potential remedy is a civil
monetary penalty, which CMS may impose on a per-day or per-
instance of non-compliance basis. Id. § 488.430.
A skilled nursing facility has the right to appeal CMS’s
decisions. 42 U.S.C. § 1395cc(h) (2006). The first level of
3
appeal is to an ALJ in the Department of Health and Human
Services. 42 C.F.R. § 498.44. The ALJ is empowered to hold a
hearing and to take testimony. Id. § 498.60. The second level
of appeal is to the Department Appeals Board. Id. § 498.80.
Appeals to the Board are on the record. Id. § 498.86. An
appeal of the Board’s decision is taken directly to circuit
court. 42 U.S.C. § 1395cc(h).
The North Carolina State Survey Agency completed surveys at
Universal on November 22, 2005 and December 10, 2005. Both
surveys found violations of federal requirements. The November
violations centered on a patient, “G.J.,” whose treatment plan
called for him to receive a pain medication, Cafergot, each
morning after he awoke. 1 The survey team found that on the
morning of November 19, 2005, the on-duty nurse was unable to
give G.J. Cafergot because the facility’s pharmacy had run out
of the drug. The nursing staff substituted Darvocet and failed
to obtain a reorder of Cafergot until that afternoon.
Following the November survey, CMS notified Universal that
its treatment of G.J. violated two Medicare regulations. The
first regulation requires that a facility provide pharmaceutical
services adequate to meet the needs of each resident. 42 C.F.R.
1
This resident is referred to as Resident #1, or R1A, in
the record.
4
§ 483.60(a). The second regulation requires facilities to
provide each patient with high quality care in accordance with
the patient’s comprehensive assessment. Id. § 483.25. After
determining that these infractions reached the level of “actual
harm,” CMS assessed a civil monetary penalty of $250 per day
from November 22, 2005 until Universal brought itself into
compliance.
The December violations centered on A.W., a 69 year old
patient who died the evening of November 3, 2005. 2 The survey
team faulted Universal's staff for failing to monitor A.W.'s
vital signs throughout the day. Had they done so, the survey
concluded, the staff would have recognized that A.W. was
declining rather than merely sleeping.
The parties dispute exactly what transpired on November 3.
It is undisputed that A.W. awoke agitated and disoriented.
After Valium was administered, he was observed to be sleeping.
At 8:45 p.m., several nurses found A.W. to be non-responsive.
They contacted his attending physician and family members, and
they arranged for emergency medical services to transport A.W.
to the hospital. A.W. died several hours later.
2
Because CMS conducted two separate surveys, this resident
is referred to as Resident #1, or R1B, in the record.
5
Following the December survey, CMS notified Universal that
its treatment of A.W. violated three regulations. The first
regulation requires that, in the event of a “significant change
in the resident’s physical, mental or psychological status,” a
facility must immediately inform the resident, consult with the
resident’s physician, and if known, notify the resident’s legal
representative or an interested family member. 42 C.F.R. § 483.
The second regulation requires that a facility “develop and
implement written policies and procedures that prohibit
mistreatment and neglect.” Id. § 483.13(c). CMS also found
that Universal violated the quality of care regulation with
respect to A.W.
After determining that these violations reached the level
of “immediate jeopardy,” CMS assessed a civil monetary penalty
of $300 per day from December 10, 2005 until Universal brought
itself into compliance. CMS imposed an additional civil
monetary fine of $4,000 per day for the period November 3, 2005
through December 10, 2005.
Universal appealed CMS’s findings and the penalties that it
assessed. After a hearing, an ALJ affirmed the CMS’s findings
and penalties. Universal then took an appeal to the Department
Appeals Board, which affirmed the ALJ’s decision. The instant
appeal followed.
6
II.
The appeal concerns two issues. The first is whether
Universal violated the regulations as alleged with respect to
the care given to G.J. and A.W. The Secretary’s findings of
fact must be upheld if they are supported by substantial
evidence on the record as a whole. Woodstock Care Ctr. v.
Health Care Fin. Admin., DAB No. 1726, at 9, 38 (2000), aff’d
Woodstock Care Ctr. v. Thompson, 363 F.3d 583 (6th Cir. 2003).
The Supreme Court has described “substantial evidence” in other
contexts as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” Richardson v.
Perales, 402 U.S. 389, 401 (1971).
On the second issue, Universal bears the burden of proving
that CMS’s determination of the level of noncompliance was
clearly erroneous. See 42 C.F.R. § 498.60. We review for
reasonableness as to the appropriate dollar value of the fines.
See Woodstock Care Ctr., DAB No. 1726, at 43.
III.
The November 22, 2005 Survey focused on resident G.J., who,
at that time, had resided at Universal since 1998. G.J.
suffered from several ailments, including obsessive compulsive
disorder, obstructive sleep apnea, cervical stenosis, and
diabetes. G.J.’s sleep apnea required him to wear an airway
7
mask while sleeping. Frequently, G.J. would wake up with a
headache. To address these headaches, in 1999, G.J.’s physician
ordered that Cafergot pain tablets be administered to him every
morning. By 2005, therefore, Cafergot had been an integral part
of G.J.’s treatment plan for over five years.
On November 19, 2005, Nurse 1 was responsible for waking
G.J. and administering his Cafergot. 3 She discovered that,
because of a clerical error, the pharmacy had run out of the
medication. Instead, Nurse 1 gave G.J. Darvocet. When her
shift ended at 7 a.m., she advised her replacement, Nurse 2, to
immediately order Cafergot and administer it by mid-morning.
Nurse 2, however, did not place an order for Cafergot until
between 10 and 11 a.m.
Universal has an arrangement with a courier service that
allows it to rapidly obtain emergency refills of medications.
Had Nurse 2 taken appropriate action, the Cafergot would have
arrived in the morning. Because of the delay, however, the
Cafergot was not obtained or administered until 4:30 p.m.
Meanwhile, G.J. found the Darvocet to be inadequate because he
continued to complain of a headache, requiring Nurse 2 to give
him Ultram.
3
The nurses’ pseudonyms used here are taken from the
record.
8
Universal is at fault for running out of Cafergot. This
lapse, in and of itself, would not have triggered a penalty had
the nursing staff followed Universal’s policy and placed a rush
order for the medication. Accordingly, Universal’s defense
centered on three points. First, that Darvocet and Ultram are
adequate substitutes for Cafegot. Second, that upon discovering
the Cafergot shortage, Nurse 1 called a doctor and administered
Darvocet according to his instructions. Third, that Universal
acted with sufficient alacrity.
The ALJ addressed all of these issues in his opinion. He
concluded that Cafergot was required for G.J. because it was the
only pain medication that relieved his frequent headaches. He
rejected, as a finding of fact, Nurse 1’s statement that she
contacted a doctor who directed her to administer Darvocet. The
ALJ concluded that this never happened. In a twenty-seven page
written opinion, the Board affirmed all of the ALJ’s findings.
The instant appeal reprises the same three arguments that
the Secretary rejected. Universal’s appeal relies heavily on
the assertion that Nurse 1 called G.J.’s doctor promptly upon
discovering that the Cafergot supply had run out and that she
administered Darvocet according to the doctor’s instructions.
Universal argues that the ALJ and the Board simply ignored this
telling evidence. This is not the case, however.
9
The record demonstrates that the ALJ expressly considered
Universal’s version of the facts and rejected it as implausible.
In making this finding, he concluded that there was no evidence
in the record to support Universal’s assertion that a doctor had
ordered Nurse 1 to administer Darvocet. The ALJ observed that
G.J.’s attending physician testified at the hearing but said
nothing about instructing a nurse to order Darvocet. He also
noted that neither Nurse 1 nor any other witness with personal
knowledge of the events of November 19 testified at the hearing.
Finally, the ALJ observed that Nurse 1's note relating to the
receipt of Darvocet was illegible. The Board concluded that the
ALJ's decision to reject Universal’s version of the events was
reasonable and supported by substantial evidence.
On appeal, Universal repeats the three arguments that the
Secretary rejected. The centerpiece of Universal’s argument is
its contention that upon discovering the shortage of Cafergot,
Nurse 1 contacted a doctor. The ALJ’s finding on this point is
supported by substantial evidence. As the record demonstrates,
the doctor’s testimony did not corroborate Universal’s version
of the facts, the line on the nurse’s medication notes is
illegible, and Universal did not offer any testimony from the
nurse. Ultimately, the ALJ was in the best position to conclude
that the record as a whole does not support Universal’s version
of the facts.
10
The next issue is whether Darvocet was an adequate
substitute for Cafergot. Universal would not be at fault if the
two drugs were interchangeable. Here, both the ALJ and the
Board reasonably concluded that they were not. This finding is
fully supported by the record. For five years G.J. had received
Cafergot exclusively, and he was on record as saying that
Cafergot was the only drug that alleviated his headaches.
Moreover, there is no evidence in the record as to the dosage of
Darvocet given to G.J. Without evidence as to dosage, there is
no basis on which to evaluate the pain reducing ability of the
pill that G.J. took that morning. Moreover, the record shows
that G.J. found the Darvocet to be inadequate because his
headache continued and the staff administered Ultram later that
morning.
The final issue is whether Universal, having run out of
Cafergot, acted with sufficient alacrity to obtain a resupply.
The record supports the Secretary's determination that Universal
did not. Nurse 1 discovered the shortage at 5:00 a.m., but,
despite Universal's ability to obtain an immediate resupply by
courier, the Cafergot did not reach G.J. until 4:30 p.m. that
afternoon.
Finally, we agree that the “actual harm” finding was not
clearly erroneous because G.J. complained of pain all morning
until he received the Cafergot.
11
IV.
The December 2005 survey centered on A.W., a 69-year-old
patient who had been at the assisted living facility since July,
2004. A.W. suffered from many ailments, including a seizure
disorder, dementia, agitation, and depression. CMS cited
Universal for neglecting to assess and monitor significant
changes to A.W.’s condition in violation of 42 C.F.R. § 483.13.
CMS also cited Universal for failing to immediately notify
A.W.’s physician and family of those changes in violation of 42
C.F.R. § 483.10(b)(11). Although there is some dispute as to
what occurred during November 3, the survey and the ALJ agreed
on the following facts.
A.W.’s attending physician, Dr. Newsome, had visited A.W.
the previous night and observed that he was experiencing
agitation. The next morning, Nursing Assistant 4 found A.W.
confused, incontinent, and hungry. Nursing Assistant 4
retrieved A.W.’s breakfast and, upon returning, measured his
blood pressure as 190/120. Nurse C, A.W.’s attending nurse,
then called Dr. Newsome for instruction. 4
Based on his observations from the night before, as well as
the Nursing Assistant’s report, Dr. Newsome ordered that Nurse C
4
“Nurse C” is used in this opinion as a pseudonym for the
attending nurse.
12
administer Valium to A.W. Nurse C administered the Valium at
approximately 10:15 a.m.
Throughout the day, Universal’s staff checked on A.W. and
observed that he was sleeping, which is what one would expect of
a patient sedated with Valium. At 8:45 p.m., ten and a half
hours after A.W. received the Valium, several nurses found A.W.
unresponsive. They promptly called Dr. Newsome and A.W.’s
family, and they arranged for emergency medical services to
transport A.W. to the hospital. A.W. died several hours later.
The cause of death was determined to be a hypersmolar coma with
cerebal edema swelling and cerebal hernia.
Given this chronology, Universal contends that a finding of
neglect is unsupported by the record. Universal claims that
during these visits its staff observed A.W. sleeping, which
would have been a normal reaction to Valium’s sedative effects.
The Secretary, concluded, however, that merely checking on A.W.
was inadequate. Rather, the Secretary found that the change in
A.W.’s condition on the morning of November 3 was sufficiently
serious that Universal should have taken his vital signs
throughout the day.
Despite Universal's protestations, this finding of neglect
is fully supported by the record. The Secretary reasoned that
A.W.’s agitation and disorientation placed the staff on notice
that his condition was deteriorating. Because A.W. was sedated
13
with Valium, a casual inspection would reveal only that he was
sleeping. Accordingly, the Secretary found that the staff
should have monitored A.W.’s condition by regularly taking his
vital signs so that they could respond to any untoward findings.
The Secretary reasonably concluded that merely looking in on
A.W. was insufficient. Moreover, the Secretary found that
Universal had overstated the frequency with which its staff
checked A.W. In an interview, Nurse C stated that she checked
A.W. at least eight times during a twelve hour period. Because
staff made no record of these visits, the ALJ reasonably
discounted this recollection as an “after-the-fact
reconstruction.”
Because of Universal's failure to monitor A.W. adequately,
the staff was unaware that he was deteriorating until 8:45 p.m.
when he was found to be unresponsive. At that time, Universal
immediately notified Dr. Newsome and A.W.’s family. By that
late hour, however, Universal had already violated regulations
requiring it to spot and promptly communicate significant
changes in A.W.’s condition. 5
5
This is not a medical malpractice case. The Secretary is
not required to establish that A.W. would not have died had he
been monitored more closely. The issue is not whether A.W.'s
death was preventable but whether he received the care required
by the regulations.
14
Finally, we affirm the Board’s findings that the conditions
at the facility created immediate jeopardy to residents’ health
and safety. The regulations define immediate jeopardy as a
“situation in which the provider’s noncompliance with one or
more requirements of participation has caused, or is likely to
cause, serious injury, harm, impairment or death to the
resident.” 42 CFR § 488.404(b)(iv). The ALJ and the Board’s
findings were not clearly erroneous. To the contrary,
Universal’s failure to monitor and assess A.W.’s condition
prevented Dr. Newsome from caring for his patient.
V.
Finally, we review the civil monetary penalties (“CMPs”)
assessed. Universal does not dispute the period for which CMS
imposed penalties. Rather, Universal contends that the fines
were unreasonable.
CMS may impose a CMP in two ways. It may either impose a
per-instance CMP in the range of $1,000 to $10,000 or daily CMPs
between $3,050 and $10,000. 42 CFR §§ 488.430, 488.438. Daily
CMPs are appropriate for deficiencies that constitute immediate
jeopardy to a facility’s residents, and sometimes for repeated
deficiencies. Id. § 488.438. Based on the two violations
discussed herein, CMS imposed a CMP of $4,000 per day for the
15
period November 3, 2005 through December 9, 2005 and a CMP in
the amount of $300 per day effective December 10, 2005.
These monetary penalties are appropriate. As discussed
above, the finding of immediate jeopardy was not clearly
erroneous. Accordingly, a daily CMP of $4,000 is on the low end
of the range permitted by the applicable regulations.
VI.
In sum, we conclude that the Secretary’s determination that
Universal was not in compliance with Medicare participation
requirements was supported by substantial evidence. We also
conclude that CMS’s finding of immediate jeopardy was not
clearly erroneous, and that the civil monetary penalties imposed
were reasonable. Universal Healthcare’s petition is, therefore,
DENIED.
16