603 F. App'x 265
5th Cir.2015Background
- Perry County Nursing Center (Perry), a Medicare-participating skilled nursing facility in Mississippi, was surveyed after a 2010 employee theft of Lortabs and again in August 2011 following ongoing concerns.
- The August 2011 survey cited five tags (F281, F425, F520, F514, F225); F281, F425, and F520 were classified as creating Immediate Jeopardy for a period and CMPs were imposed totaling $467,500.
- Perry appealed to an ALJ challenging the survey’s legality and several tags; the ALJ reviewed only Tags F281 and F425 and upheld noncompliance and the penalties.
- The Departmental Appeals Board (DAB) affirmed the ALJ; Perry sought judicial review in the Fifth Circuit.
- Central legal disputes: whether outcome‑oriented med error regulation §483.25(m) limits interpretation of the general professional‑standards regulation §483.20(k)(3)(i); whether process‑oriented pharmaceutical rules §483.60 supersede or are governed by §483.25(m); whether the August 2011 survey unlawfully reopened the April 2010 substantial‑compliance determination; and whether the ALJ/DAB properly declined to review a non‑outcome‑determinative tag (F520).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of §483.20(k)(3)(i) re: medication (Tag F281) | Perry: when medication at issue, §483.25(m) (medication‑error rates/outcomes) exclusively defines "professional standards of quality." | CMS: §483.20(k)(3)(i) sets an independent standard; §483.25(m) is an outcome floor, not a ceiling. | Court: Affirmed DAB; CMS interpretation reasonable and not plainly erroneous; Tag F281 upheld. |
| Applicability of §483.25(m) to §483.60 violations (Tag F425) | Perry: §483.60 pharmaceutical/process rules should be governed by §483.25(m). | CMS: §483.60 is process‑oriented and distinct from the outcome‑oriented §483.25(m); both can coexist. | Court: Affirmed DAB; Tag F425 valid as process/documentation failures supported by substantial evidence. |
| Right to review all cited tags (Tag F520) | Perry: ALJ must adjudicate every cited deficiency because unresolved tags remain public. | DHHS: ALJs may limit review to findings material to outcome; omitting non‑material tags is permissible. | Court: DAB’s approach permissible; refusal to review F520 not arbitrary; declined to reach substantive challenge. |
| Legality of August 2011 survey (reopening April 2010 determination) | Perry: August 2011 survey unlawfully reopened April 2010 substantial‑compliance determination in violation of §498.30. | CMS: §498.30 limits reopening initial determinations, not the agency’s authority to conduct surveys; the August 2011 survey was a valid (partially extended/complaint) survey. | Court: Agreed with CMS; survey lawful, tags concerned new/ongoing deficiencies (including failure to report narcotics loss), not an improper reopening. |
Key Cases Cited
- Cedar Lake Nursing Home v. U.S. Dep’t of Health & Human Servs., 619 F.3d 453 (5th Cir.) (APA/Medicare review standard discussed)
- Tex. Clinical Labs, Inc. v. Sebelius, 612 F.3d 771 (5th Cir.) (presumption of agency decision validity; burden on challenger)
- Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (Supreme Court) (deference to agency interpretation of its regulations)
- Auer v. Robbins, 519 U.S. 452 (Supreme Court) (deference to agency’s interpretation of its own regulations)
- United States v. Mackay, 757 F.3d 195 (5th Cir.) (canon that specific statute/regulation controls over general when irreconcilable)