Health Law Daily Court vacates $600K fine imposed on nursing facility by CMS
Thursday, October 29, 2020

Court vacates $600K fine imposed on nursing facility by CMS

By David Yucht, J.D.

During a CMS inspection, it was discovered that falls by patients in the Alzheimer’s Care Unit had increased to over 40 falls during a period of four months, by five residents creating immediate jeopardy to resident safety.

The federal Sixth Circuit Court of Appeals vacated HHS’s Departmental Appeals Board’s determination that a civil fine of over $600,000 was appropriately imposed on a nursing facility based on an increase in falls by Alzheimer’s patients. The Court of Appeals remanded for further consideration of whether a surveyor’s findings of violations were sufficient by themselves to support CMS’s finding of immediate jeopardy upon which the fine was based. Judge Eric L. Clay issued a partial dissenting opinion (Golden Living Center- Mountain View v. HHS, October 27, 2020, Gibbons, J.).

Nursing facility fined by CMS. Mountain View is a nursing facility that participates in Medicare and Medicaid. As such, Mountain View is required to comply with federal requirements. A state agency, with CMS authorization, surveys facilities and records instances of noncompliance known as deficiencies. The most severe deficiencies are ones that cause "immediate jeopardy to resident health or safety." If CMS finds that a facility’s noncompliance has placed residents in immediate jeopardy, CMS can impose fines of up to $10,000 per day.

Following an inspection, surveyors learned of an increase in Mountain View patient falls in the Alzheimer’s Care Unit, specifically, over 40 falls during a period of four months, by five residents. Consequently, CMS determined that Mountain View was not in compliance with several regulatory requirements due to inadequate staffing which placed patients in "immediate jeopardy" and imposed a civil penalty of over $600,000. An ALJ and HHS’s Departmental Appeals Board both affirmed the administratively imposed penalties. Mountain View appealed to the Sixth Circuit.

Decision imposing fine was arbitrary and capricious. The Sixth Circuit vacated the Board’s ruling finding that it was arbitrary and capricious. Although likely that CMS gathered sufficient evidence to find that Mountain View was not in compliance with the regulations due to the increased falls that residents experienced without adequate intervention from the facility, the Board’s decision rested exclusively on Mountain View’s failure to consider increasing its staffing. Because the regulations that CMS cited did not provide notice to Mountain View that it must specifically consider increased staffing and review each patient’s care plan after every fall, the appellate court found that CMS’s decision was arbitrary and capricious.

Dissenting opinion. Judge Eric L. Clay would have affirmed the decision of the DAB as to three of Mountain View’s claims. He disagreed with his colleagues’ analysis of Mountain View’s claims pertaining to the supervision and devices necessary to prevent accidents; nursing staffing levels; and facility administration. He did not agree that the Board’s interpretation of these provisions was arbitrary and capricious and felt that Mountain View’s violation of these provisions led to the injuries of its residents in its Alzheimer’s Care Unit. After the falls, Mountain View was required to "take all reasonable steps to ensure" that residents received supervision adequate to meet their needs. Common sense dictates that "all reasonable steps" included considering increasing staffing levels. While increasing staff might not have been "reasonable," given the costs involved, considering increasing staffing would have imposed little cost and was clearly reasonable.

The case is No. 19-3755.

Attorneys: Napier, Office of the Attorney General, for Secretary of Health and Human Services and United States Department of Health and Human Services.

Companies: Golden Living Center-Mountain View; Secretary of Health and Human Services; United States Department of Health and Human Services

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