UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1817
UNIVERSAL HEALTHCARE/KING,
Petitioner,
v.
KATHLEEN SEBELIUS, Secretary of the United States Department
of Health and Human Services; UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Respondents.
On Petition for Review of an Order of the United States
Department of Health and Human Services. (A-11-38)
Argued: September 19, 2012 Decided: December 14, 2012
Before NIEMEYER and DIAZ, Circuit Judges, and Max O. COGBURN,
Jr., United States District Judge for the Western District of
North Carolina, sitting by designation.
Petition for review denied by unpublished opinion. Judge
Cogburn wrote the opinion, in which Judge Niemeyer and Judge
Diaz joined.
ARGUED: Joseph L. Bianculli, HEALTH CARE LAWYERS, PLC,
Arlington, Virginia, for Petitioner. Adam C. Jed, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Respondents. ON
BRIEF: William B. Schultz, Acting General Counsel, Dana J.
Petti, Chief Counsel, Region IV, Elizabeth C. Benton, Assistant
Regional Counsel, DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Atlanta, Georgia; Tony West, Assistant Attorney General, Michael
S. Raab, Helen L. Gilbert, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Respondents.
Unpublished opinions are not binding precedent in this circuit.
2
COGBURN, District Judge:
Universal Healthcare/King (“Universal”) challenges a civil
monetary penalty (“CMP”) imposed by the Centers for Medicare &
Medicaid Services (“CMS”) for violations of the Medicare and
Medicaid statutes and regulations. The challenged CMP was
sustained by an administrative law judge (“ALJ”) and affirmed by
the Departmental Appeals Board (“DAB”) of the U.S. Department of
Health and Human Services. Because we find no error in the
DAB’s decision, we deny Universal’s petition for review.
I.
Universal is a Medicare nursing facility located in King,
North Carolina. Nursing facilities participating in the
Medicare Program must comply with federal “Long Term Care
Requirements of Participation” as set forth in 42 C.F.R. Part
483, which implements provisions of 42 U.S.C. §§ 1395i-3(b)-(e).
Those regulations establish numerous clinical, operational, and
other responsibilities for participating nursing facilities as
well as provide a number of rights for facility residents. Id.
Compliance with these regulations is evaluated via periodic
inspections or “surveys,” which are usually conducted, as in
this matter, by a State Survey Agency (“SSA”) acting under
contract as the agent of Respondent Secretary of the U.S.
Department of Health and Human Services. In September 2009, an
3
SSA conducted a survey at Universal’s facility in King, which
revealed that Universal had violated several of the regulations.
Based on those findings, CMS imposed per diem CMPs on Universal
for the period of March 21 through September 27, 2009, in the
amount of $3050 per day, totaling $587,950.
The regulations are enforced by the Secretary as provided
by 42 U.S.C. § 1395i-3(h). That statute authorizes the
imposition of various sanctions tied to the “severity” and
“scope” of noncompliance, which are in turn measured by the
actual or potential impact of the noncompliance on nursing
facility residents. Id. Among the sanctions available to the
Secretary are two types of CMPs: a “per diem” CMP, which may be
imposed “for the number of days a facility is not in substantial
compliance” with the regulations; and a “per instance” CMP,
which may be imposed for “past noncompliance” corrected prior to
a survey. Significantly, per diem CMPs can accrue in an amount
of up to $10,000 per day, and may “continue until [t]he facility
has achieved substantial compliance[.]” 42 C.F.R.
§ 488.454(a)(1). On the other hand, per instance CMPs are
limited to a cap of $10,000 per survey. 42 C.F.R. §§ 488.430,
488.438.
Supporting its imposition of a per diem CMP, CMS found that
Universal committed violations of 42 C.F.R. § 483.25(l), which
requires proper monitoring of prescription drugs given to
4
residents, § 483.75(j)(1), which regulates provision of
laboratory services for residents, and § 483.20(d), which sets
patient recordkeeping requirements. These violations stemmed
largely from a series of serious errors committed by
petitioner’s staff in caring for “Resident #1,” a 78-year-old
woman who ultimately died in March 2009. It is undisputed that
it was the death of Resident #1 which spurred the survey.
Universal contends that the ALJ, the Board, and ultimately the
Secretary erred in upholding the duration of CMS’s per diem CMPs
by failing to consider its evidence that its self-implemented
corrective measures had returned the facility to “substantial
compliance” in April 2009, long before the September survey.
II.
A.
On February 10, 2009, Universal’s nurses noted swelling in
Resident #1’s right lower leg, and reported such condition to
the patient’s physician, who ordered a Doppler test, which
disclosed a blood clot. Based on the presence of the blood
clot, the physician ordered 10 mg of Coumadin daily and Lovenox
(both anti-coagulant drugs), as well as daily Prothrombin Time
and International Normalized Ratio tests (“PT/INR”). The tests
are used to monitor the effectiveness of anticoagulant therapy,
5
a highly risky treatment process that requires close monitoring
and a detailed care plan.
As the record establishes and petitioner concedes, the
facility badly mishandled Resident #1’s anticoagulant therapy
care plan. Initially, petitioner’s staff failed to perform the
daily PT/INR tests as ordered and, when such test was eventually
performed, the results indicated an elevated level of Coumadin.
The patient’s doctor was notified and over the next month he
made a series of adjustments to the patient’s medications.
After the patient’s March 10 PT/INR test showed a
“critical[ly] high” Coumadin level, her physician altered her
regimen of medication and then ordered another PT/INR test two
days later. That test, on March 12, again showed somewhat high
results, but the physician ordered the Coumadin to be resumed at
6 mg/day and that another PT/INR test be conducted on March 21.
Unfortunately, the nurse who took the March 21 order entered it
on the resident’s Medication Administration Record (“MAR”) in a
confusing manner, resulting in neither the lab’s technician nor
petitioner’s nurse conducting a PT/INR test on that day. On
March 23, such error was caught by a nurse and blood was drawn
for the lab work. 1
1
It is undisputed that a MAR is prepared each month for
each resident, listing on the left side of the form all
medications the resident is to receive, with a series of boxes
(Continued)
6
On March 24, the lab reported that the late sample was too
small to test, so a nurse attempted to draw blood again;
however, the patient refused to allow the draw. While a patient
has a right to refuse treatment, 42 C.F.R. § 483.10(d)(3), the
nurse did not immediately inform a supervisor or the resident’s
physician, as required. During the last attempt to obtain
consent, a nurse noted unusual bruising around the resident’s
breast and shoulder area, injuries which could be signs of
Coumadin overdose. This nurse did, however, report the bruising
and refusal to allow a blood draw to the patient’s physician,
who then ordered the resident to be sent to a hospital for
evaluation. In the late afternoon of March 24, a PT/INR test
indicated a very high Coumadin level. Later that evening, the
hospital administered a small dose of Vitamin K (the antidote
for Coumadin overdose), but the resident’s family thereafter
declined further treatment or medical intervention, and the
resident died on March 25, 2009.
B.
After Resident #1’s death, Universal’s staff reviewed her
record and its lab policies to determine what, if anything, its
corresponding to dates and times that a nurse initials when he
or she administers the medication. Nurses use the patient’s MAR
each day, and an order for a lab test on a particular day is
ordinarily noted in the box for that day.
7
nurses had done wrong. That review unearthed Resident #1’s
missed and delayed lab tests and the fact that she had refused
blood draws several times on March 24 before the nurses informed
the physician. In response, on March 26 and 27, Universal’s
Director of Nursing provided in-service training to all licensed
nurses regarding the necessity of immediately notifying a
supervisor or the Director of Nursing of any instance in which
any ordered lab tests--especially PT/INRs--could not be obtained
for any reason, including resident refusal. The Director of
Nursing also revised Universal’s protocol for posting physician
orders for future lab tests to assure that a certain date was
marked on each resident’s Medication Administration Record.
Based on the Director of Nursing’s findings, Universal’s
Administrator also contacted a nurse consultant to expand the
investigation. That nurse audited the facility’s lab
procedures, as well as the medical records of every resident
receiving anticoagulant therapy, and found no other errors.
Nevertheless, Universal’s managers decided to revise its
Laboratory Procedure Policy to clarify all lines of
communication, and to create a simplified reporting and tracking
form for anticoagulant lab tests. All of these reports and
findings, including the results of the investigations and the
revised protocols, were addressed at a Quality Assessment and
Assurance Committee Meeting on April 1, 2009, by Universal’s
8
managers, Director of Nursing, and Resident #1’s physician.
Petitioner’s clinical staff presented, and the QAA Committee
approved, the new protocols at that time.
On April 3, 2009, petitioner’s Director of Nursing began
training nurses on the new lab, documentation, and reporting
protocols, which was completed on April 7, 2009. No errors
involving any lab tests occurred thereafter and the SSA found
and cited none during the six-month interim until the September
2009 survey.
C.
The SSA’s September 2009 survey cited Universal for the
deficiencies relating to the care of Resident #1. Following the
survey and at the SSA’s direction, Universal developed a
comprehensive “Plan of Correction,” which it formally
implemented on September 28, 2009. Universal contends that at
no point during the survey did the team critique its internal
investigation into Resident #1’s death or its April 2009
corrective action. Further, Universal contends that the survey
team did not find any new errors since the implementation of the
April measures.
The survey team recommended to CMS that it only impose a
$10,000 per instance CMP for past noncompliance. CMS rejected
that recommendation, however, determining that petitioner was
noncompliant for the entire period from March 21 (the date of
9
the missed PT/INR) through September 27, 2009 (the day before
Universal implemented its comprehensive Plan of Correction).
Accordingly, it imposed a CMP in the amount of $3050 per day for
each day of noncompliance, totaling $587,950.
Universal requested review of this sanction by an ALJ, and
offered statements of several witnesses that Universal’s April
2009 lab protocol and its implementation was fully consistent
with all pertinent professional and regulatory standards, and
that Universal had resumed compliance with the cited regulations
by no later than April 7, 2009. Defending its penalties, CMS
argued before the ALJ that Universal’s April corrective actions
had failed to adequately address its deficiencies.
Agreeing with CMS, the ALJ determined that Universal’s
April 2009 corrective measures were too narrowly focused on
“only one element of petitioner’s noncompliance,” and failed to
“address the totality of the noncompliance.” J.A. 16, 14. The
ALJ explained that while the April measures did address the
problem of petitioner’s failure to perform physician-ordered
testing, they failed to address other problems, “such as the
failure of the staff to plan for the care of residents receiving
anticoagulants or the failure [to report abnormal test results
to physicians].” J.A. 16. “For that reason,” the ALJ
explained, “they are inadequate proof that Petitioner self-
corrected its deficiencies by April 7, 2009.” Id. at 14.
10
Ultimately finding that petitioner had not implemented
comprehensive corrective actions addressing the entire range of
deficiencies until it formalized the Plan of Correction on
September 28, 2009, the ALJ affirmed CMS’s determinations as to
the duration of petitioner’s noncompliance, and held that CMS’s
penalties were reasonable. J.A. 15, 17. The Board sustained
this determination, which became the final action of the
Secretary.
III.
Universal raises two challenges to the Secretary’s
imposition of the per diem CMP. First, Universal contends that
the Secretary failed to consider its proffered evidence of
resumed compliance with the Secretary’s regulations as of April
7, 2009. Second, Universal contends that the final decision of
the Secretary should be reversed and remanded because she failed
to apply the correct legal standard in allocating the burden of
proof, arguing that the ALJ’s determination as to the duration
of Universal’s noncompliance was based only on a “presumption,”
which is inconsistent with applicable law. We address each
contention.
A.
Under 42 U.S.C. § 1320a-7a(e), “[t]he findings of the
Secretary with respect to questions of fact, if supported by
11
substantial evidence on the record considered as a whole, shall
be conclusive.” Id. Substantial evidence means “such relevant
evidence as a reasonable mind might accept as adequate to
support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401
(1971). “When the question before the court is whether an
agency has properly interpreted and applied its own regulation,
the reviewing court must give the agency’s interpretation
‘substantial deference.’” Md. Gen. Hosp. v. Thompson, 308 F.3d
340, 343 (4th Cir. 2002).
1.
Despite Universal’s argument that the Secretary failed to
consider its evidence of resumed compliance, we cannot say that
the Secretary’s decision to uphold the imposition of a per diem
CMP is unsupported by substantial evidence.
As a condition of participation in the Medicare program,
certified nursing facilities must meet a variety of requirements
to ensure the safety of the residents under their care. Under
42 C.F.R. § 483.25(l)(1), a facility must ensure that “[e]ach
resident’s drug regimen” is free from drugs given “[i]n
excessive dose,” “[f]or excessive duration,” “[w]ithout adequate
monitoring,” “[i]n the presence of adverse consequences which
indicate the dose should be reduced or discontinued,” or “[a]ny
combinations” thereof. Under 42 C.F.R. § 483.75(j)(1), each
facility must provide or obtain laboratory services that are
12
timely and that meet quality requirements. Under the DAB’s
interpretation of the regulations, once a facility is determined
to be out of compliance, it need not be “affirmatively” shown
“that noncompliance exists on each day that a remedy is in
effect after the first day of noncompliance.” In re Texan
Nursing & Rehab. of Amarillo, LLC, DAB No. 2323, at 20 (July 2,
2010) (internal quotation marks omitted); 42 C.F.R. §§
488.440(a)(1), 488.454(a)(1).
While Universal presented some evidence to the contrary,
the Secretary had before her substantial evidence that
petitioner failed to satisfy these requirements until on or
about September 28, 2009. The regulations require that a
skilled nursing facility “have systems in place” to ensure
careful monitoring for, inter alia, “any unusual bleeding or
symptoms of bleeding”; to “anticipate and plan for [the] risk”
of bleeding; and to ensure “gentle handling,” for example “in
transfers to avoid bumps.” J.A. 31-32, 35. Review of the
administrative record reveals that the Secretary had before her
statements from an experienced pharmacist and surveyor, as well
as petitioner’s own pharmacist consultant, that, at the time of
the survey, Universal still lacked adequate systems to ensure
that residents taking Coumadin were monitored closely for
possible subtle signs of Coumadin toxicity. Further, the record
contains evidence that in September 2009 Universal had yet to
13
implement systems to protect patients from possible trauma, such
as bruising, which is dangerous to a person with impaired
clotting.
In addition, the regulations require that a nursing
facility have a system in place to ensure that labs are drawn
when ordered, drawn correctly, processed correctly, and that the
results are reported to doctors. Although Universal submitted
evidence to the Secretary in support of its argument that it
satisfied this requirement by April 7 by implementing a new lab
protocol, such argument assumes that PT/INR tests alone are
sufficient under the regulations to detect “adverse
consequences” or an “excessive dose” of Coumadin. See 42 C.F.R.
§ 483.25(l)(1). Universal did not, however, make such argument
in the course of the administrative proceeding and has not shown
any exceptional circumstance warranting its consideration for
the first time on appeal. 42 U.S.C. § 1320a-7a(c). Moreover,
substantial evidence supports the Secretary’s conclusion that
adequate systems for monitoring residents on anticoagulant
therapy require not only lab tests, but also protocols for
monitoring and observation of residents by direct caregivers.
The Secretary had ample evidence that petitioner did not return
to substantial compliance with these standards until September
28, 2009, when it implemented the Plan of Correction. By way of
example, the Secretary had evidence before her that before the
14
survey Universal did not have any system in place for ensuring
that special instructions for Coumadin were placed in care plans
or that subtle signs of injury were recorded.
Moreover, the Secretary had before her substantial evidence
that, despite the April measures, Universal continued to lack an
effective system for ensuring that labs were properly drawn and
results reported. Even during the September survey, Universal’s
own consulting pharmacist expressed concern that she was unable
to obtain or review information about labs and that she
periodically discovered labs had been missed. Likewise, the
Secretary’s conclusion that there was a systematic failure based
on petitioner’s failure to “anticipate and plan for [the] risk”
of bleeding, to “monitor[] for adverse drug reactions or
overdoses,” “to instruct staff” on touching and handling
residents on Coumadin, and “to detect the errors that rank and
file care givers were committing,” J.A. 31-32, 37 (internal
quotation marks omitted), is supported by substantial evidence.
All in all, the final decision of the Secretary is supported by
substantial evidence.
2.
Finally, Universal contends that the Secretary’s decision
should be reversed and remanded because she failed to apply the
correct legal standard in allocating the burden of proof.
Universal contends that the Secretary’s conclusion that
15
petitioner did not achieve compliance until September 2009 was
based only on a presumption, which is inconsistent with
applicable law.
We will not reach the merits of this contention inasmuch as
Universal failed to raise such argument before the Secretary
below. 2 As “[n]o objection that has not been urged before the
Secretary shall be considered by the court, unless the failure
or neglect to urge such objection shall be excused because of
extraordinary circumstances,” 42 U.S.C. § 1320a-7a(e), and no
exceptional circumstance has been suggested, we will not
consider the merits of this contention. Woelke & Romero
Framing, Inc. v. NLRB, 456 U.S. 645, 665 (1982); United States
v. L. A. Tucker Truck Lines, Inc., 344 U.S. 33, 36-37 (1952).
IV.
In sum, we conclude that the Secretary’s imposition of a
per diem CMP of $587,950 was supported by substantial evidence.
Universal’s petition for review is therefore
DENIED.
2
While Universal’s procedural default on this contention
prevents consideration of the merits of such argument on appeal,
we note that Universal explicitly acknowledged that once it had
been determined to be deficient in its care of Resident #1,
there was a “presumption of continuing noncompliance.” J.A. 85.
Indeed, Universal argued before the Secretary that the
applicable presumption was rebuttable. Id.; accord J.A. 46.
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