Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 1 of 27
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
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` Case No. 21-162
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` COMPLAINT FOR
` DECLARATORY AND
` INJUNCTIVE RELIEF
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`NATIONAL CONSUMER VOICE
`FOR QUALITY LONG-TERM CARE,
` 1001 Connecticut Avenue, N.W.
` Suite 632
` Washington, DC 20036;
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` —and—
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`CALIFORNIA ADVOCATES FOR
`NURSING HOME REFORM,
` 650 Harrison Street
` 2nd Floor
` San Francisco, CA 94107;
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` Plaintiffs,
` v.
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`ALEX M. AZAR II, in his official capacity
`as Secretary of the U.S. Department of
`Health and Human Services,
` 200 Independence Avenue, S.W.
` Washington, DC 20201;
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`CENTERS FOR MEDICARE AND
`MEDICAID SERVICES,
` 7500 Security Boulevard
` Baltimore, MD 21244;
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` —and—
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`UNITED STATES OF AMERICA,
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` Defendants.
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLUMBIA
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` Case No. 21-162
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` COMPLAINT FOR
` DECLARATORY AND
` INJUNCTIVE RELIEF
`
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`NATIONAL CONSUMER VOICE
`FOR QUALITY LONG-TERM CARE,
` 1001 Connecticut Avenue, N.W.
` Suite 632
` Washington, DC 20036;
`
` —and—
`
`CALIFORNIA ADVOCATES FOR
`NURSING HOME REFORM,
` 650 Harrison Street
` 2nd Floor
` San Francisco, CA 94107;
`
` Plaintiffs,
` v.
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`ALEX M. AZAR II, in his official capacity
`as Secretary of the U.S. Department of
`Health and Human Services,
` 200 Independence Avenue, S.W.
` Washington, DC 20201;
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`CENTERS FOR MEDICARE AND
`MEDICAID SERVICES,
` 7500 Security Boulevard
` Baltimore, MD 21244;
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` —and—
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`UNITED STATES OF AMERICA,
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` Defendants.
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`Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 2 of 27
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`INTRODUCTION
`Plaintiffs bring this action to seek judicial review of an irregular and
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`1.
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`unlawful policy change by the Centers for Medicare and Medicaid Services (“CMS”),
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`disseminated as sub-regulatory guidance, concerning the imposition of civil money
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`penalties (“CMPs”) for past noncompliance by long-term care facilities, including
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`nursing facilities, with required federal standards. This policy change, announced in
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`a July 7, 2017 memorandum from CMS to state survey agency directors, makes
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`clear that CMS regional offices—regardless of findings and recommendations from
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`state survey agencies—will impose a CMP for past noncompliance based only on
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`each instance of noncompliance that occurred but was corrected before the state
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`survey is conducted. With this policy change, if a facility has corrected that
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`noncompliance just before the survey team shows up at the facility—even if the
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`noncompliance had lasted for many months, then the facility will evade penalties
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`for each day of noncompliance that may be recommended and imposed under the
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`Nursing Home Reform Act of 1987 (NHRA) to deter and punish such gross
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`misconduct and dereliction.
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`2. With the passage of the NHRA, Congress created an enforcement
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`scheme for policing and rectifying nursing facility noncompliance with federal
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`quality and safety standards of resident care. Congress charged CMS and the States
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`with shared responsibility for implementing this scheme. Specifically, CMS
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`contracts with and oversees state survey agencies that evaluate whether facilities
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`are meeting the required federal standards, as established by Congress and
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`interpreted and articulated by CMS.
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`2
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`3.
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`Under Congress’s enforcement scheme, state survey agencies regularly
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`evaluate a nursing facility’s compliance with requirements by conducting periodic,
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`unannounced surveys. They report their findings of deficiencies to CMS regional
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`offices and recommend appropriate enforcement action, which can include the
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`imposition of CMPs for each day, over a previous period, that a facility was found
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`out of compliance with federal standards. Acting on that recommendation from
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`state survey agencies, CMS regional offices may impose per-day CMPs on a facility
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`for past noncompliance with federal standards.
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`4.
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`In announcing to state survey agency directors that its regional offices
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`will assess CMPs only for each instance of past noncompliance and not for each day
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`of past noncompliance, CMS’s policy change contravenes Congress’s express intent
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`to give the States the discretion to recommend, and CMS the discretion to impose, a
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`per-day CMP for past noncompliance. CMS’s regulations duly implementing this
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`effective and longstanding enforcement scheme are similarly contravened. This
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`policy change is arbitrary and capricious, an abuse of discretion, and otherwise not
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`accordance with law. At a minimum, it should be adjudged and declared null and
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`void because it purports to articulate a new substantive legal standard without the
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`required notice-and-comment rulemaking, a procedure required by law.
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`5.
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`By removing per-day CMPs as an available remedy for past
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`noncompliance, CMS’s policy change has severely weakened Congress’s enforcement
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`scheme by allowing nursing facilities to knowingly let deficiencies persist for days,
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`weeks, or even months while facing only a per-instance CMP. Because this penalty
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`amounts to a nothing more than the “cost of doing business” or a veritable “slap on
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`the wrist,” CMS has eliminated the incentives for facilities to self-police and take
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`remedial measures at the earliest point possible. Those harmed by this improper
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`and unlawful policy change include Plaintiffs: the National Consumer Voice for
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`Quality Long-Term Care (“Consumer Voice”), an organization whose members
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`include nursing facility residents and other consumers of long-term care services;
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`and California Advocates for Nursing Home Reform (“CANHR”), an organization
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`whose mission to improve the choices, care, and quality of life for consumers of long-
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`term care services in California has been made more difficult and ineffectual by the
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`weakened enforcement scheme.
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`6.
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`The coronavirus (COVID-19) pandemic that took hold of the country
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`beginning in early 2020 has only exacerbated the harms wrought by this policy
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`change. For example, a recent report from the U.S. Government Accountability
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`Office (“GAO”) identified the ways in which lax enforcement and oversight,
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`especially around critical issues like infection control, have contributed to the
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`dangerous conditions that resulted in the pandemic taking such a perilous toll on
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`nursing facility residents. U.S. Gov’t Accountability Off., Infection Control
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`Deficiencies Were Widespread and Persistent in Nursing Homes Prior to COVID-19
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`Pandemic, at 4 (Report No. GAO-20-576R, May 20, 2020) (“2020 GAO Report”).
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`PARTIES
`Plaintiff National Consumer Voice for Quality Long-Term Care,
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`7.
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`formerly known as the National Citizens’ Coalition for Nursing Home Reform, is a
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`4
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`District of Columbia non-profit membership organization founded in 1975 with the
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`goal of serving as the leading national voice for consumers of long-term care
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`services. Its members include nursing facility residents and other consumers of
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`long-term care services, who have been and will continue to be subjected to
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`prolonged and recurring periods of noncompliance under the now weakened
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`enforcement scheme. In addition to representing the collective interests of its long-
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`term care consumer members in receiving quality care, the Consumer Voice
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`empowers and educates consumers and their families so that they can advocate for
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`themselves, and trains and supports individuals (e.g., ombudsmen) and groups who
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`in turn empower and advocate on behalf of consumers. The effectiveness of the
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`Consumer Voice’s educational and training programs and services depends heavily
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`on a robust federal-state enforcement scheme that appropriately sanctions long-
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`term care facilities for their noncompliance, whether occurring in the past or
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`ongoing. Consumer Voice’s Executive Director Lori Smetanka sat on the
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`Coronavirus Commission on Safety and Quality in Nursing Homes and testified
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`before the Senate Committee on Finance in July 2019 on the imposition of CMPs
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`against facilities for failing to report abuse or suspicions of a crime. Consumer Voice
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`has formally requested that CMS vacate its guidance that makes per-instance
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`penalties the default for past noncompliance and, instead, return to the per-day
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`penalties provided in the NHRA.
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`8.
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`Plaintiff California Advocates for Nursing Home Reform is a California
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`non-profit advocacy organization founded in 1983 with the goal of improving the
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`5
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`choices, care, and quality of life for California’s long-term care consumers. CANHR’s
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`programs and services are not limited to advocacy, however. Among its programs
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`and services, the organization provides counseling to long-term care consumers
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`regarding their complaints with facilities and their rights to redress. The
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`effectiveness of CANHR’s counseling programs and services depends heavily on a
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`robust federal-state enforcement scheme that appropriately sanctions long-term
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`care facilities for their noncompliance, whether occurring in the past or ongoing.
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`9.
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`Defendant Alex M. Azar II, is the Secretary (“Secretary”) of the United
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`States Department of Health and Human Services (“HHS”). He is being sued in his
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`official capacity. The Secretary maintains the headquarters in Washington, D.C.
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`10. Defendant Centers for Medicare and Medicaid Services is a component
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`of HHS. Through CMS, the Secretary administers the Medicare and Medicaid
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`programs that reimburse nursing facilities and other long-term care facilities
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`around the country for the care and services they provide to their residents.
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`Through CMS, the Secretary interprets, articulates, and promulgates the federal
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`quality and safety standards of resident care that govern nursing facilities and
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`other long-term care facilities, and oversees their enforcement in partnership with
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`the States.
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`JURISDICTION AND VENUE
` This Court has federal question jurisdiction over this case under
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`11.
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`28 U.S.C. § 1331. Specifically, this case arises under Sections 1819 and 1919 of the
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`Social Security Act, 42 U.S.C. §§ 1395i-3 & 1395r, respectively; the Administrative
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`Procedure Act, 5 U.S.C. §§ 702 & 706; and the Declaratory Judgment Act, 28 U.S.C.
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`§§ 2201–02.
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`12. Venue is proper in this District under 28 U.S.C. § 1391(e).
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`FACTUAL ALLEGATIONS
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`The Nursing Home Reform Act
`In 1987 Congress passed the NHRA as part of the Omnibus Budget
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`13.
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`Reconciliation Act of 1987, Public Law No. 100–203. The NHRA introduced
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`sweeping legislative reforms aimed at improving the quality of care and safety at
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`nursing facilities through the establishment and enforcement of federal standards.
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`These federal standards, codified in Sections 1819(b–d) and 1919(b–d) of the Social
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`Security Act, broadly govern (1) the provision of care, services, and activities that
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`promote the maintenance or enhancement of quality of life; (2) the protection and
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`promotion of residents’ rights; and (3) the effective and efficient administration and
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`use of resources by facilities. 42 U.S.C. §§ 1395i-3(b–d) & 1396r(b–d). They apply to
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`both nursing facilities certified under and participating in Medicare, and those
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`dually certified under and participating in Medicare and Medicaid. Id.
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`14. For example, these federal standards require nursing facilities to
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`“provide services to attain or maintain the highest practicable physical, mental, and
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`psychosocial well-being of each resident, in accordance with a written plan of care
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`[that] describes the medical, nursing, and psychosocial needs of the resident and
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`how such needs will be met.” 42 U.S.C. §§ 1395i-3(b)(2) & 1395r(b)(2). They also
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`require facilities to protect and promote the right of each resident “to be free from
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`physical or mental abuse, corporal punishment, involuntary seclusion, and any
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`physical or chemical restraints imposed for purposes of discipline or convenience
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`and not required to treat the resident’s medical symptoms.” 42 U.S.C. §§ 1395i-
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`3(c)(1)(A)(ii) & 1395r(c)(1)(A)(ii). They further require facilities to “establish and
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`maintain an infection control program designed to provide a safe, sanitary, and
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`comfortable environment in which residents reside and to help prevent the
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`development and transmission of disease and infection.” 42 U.S.C. §§ 1395i-
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`3(d)(3)(A) & 1395r(d)(3)(A).
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`15. These federal standards help to hold nursing facilities accountable for
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`substandard care, abuse, and unsanitary and unsafe conditions that jeopardize the
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`physical, mental, and psychosocial well-being of their residents. According to GAO,
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`from 2013 to 2017, the most common infraction that nursing facilities are cited for
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`related to infection control. 2020 GAO Report at 4. In fact, 82% of all surveyed
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`nursing facilities had an infection control deficiency in at least one surveyed year.
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`Id. The second most common deficiency was “ensuring the environment was free
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`from accidents,” a deficiency found in 36% of all facilities. Id. at 4 n. 13.
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`16. As seen in Sections 1819(f)(1) and 1919(f)(1) of the Social Security Act,
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`Congress explicitly charged the Secretary with “the duty and responsibility … to
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`assure that requirements which govern the provision of care [in nursing facilities
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`participating in Medicare, or dually in Medicare and Medicaid], and the
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`enforcement of such requirements, are adequate to protect the health, safety,
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`welfare, and rights of residents and to promote the effective and efficient use of
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`public moneys.” 42 U.S.C. §§ 1395i-3(f)(1) & 1396r(f)(1).
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`17. To ensure that nursing facilities observe and adhere to federal quality
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`and safety standards of resident care, Congress tasked CMS and the States with the
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`shared responsibility of administering a survey and certification process. With the
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`exception of facilities that they themselves own and operate, the States have the
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`primary responsibility of conducting periodic standard surveys of facilities to
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`ascertain their compliance with federal standards, and certifying their compliance
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`to CMS (or not) based on those survey results. 42 U.S.C. §§ 1395i-3(g)(1) & (g)(2);
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`42 U.S.C. § 1396r(g)(1) & (g)(2). The States may delegate the survey and
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`certification process to designated agencies (referred to herein as state survey
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`agencies), which enter into agreements with the Secretary to discharge these
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`enforcement duties. 42 U.S.C. § 1395aa(a).
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`18.
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`In the event that the States, through their surveys, find instances of
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`noncompliance by nursing facilities with federal standards, Congress wisely
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`recognized the need for financial and other consequences (including termination
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`from program participation) severe enough to incentivize defaulting facilities to
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`remedy the identified deficiencies promptly and expeditiously, and to take
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`appropriate and effective measures to prevent them from recurring. Accordingly,
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`Congress conferred on the States the discretion to recommend that the Secretary
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`take certain enforcement action against defaulting facilities based on the nature,
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`scope, severity, and duration of the identified deficiencies. 42 U.S.C. §§ 1395i-3(h)(1)
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`& 1396r(h)(1).
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`19. At the same time, Congress introduced a new and more flexible
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`enforcement remedy for the Secretary and the States—a civil money penalty that
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`could be imposed as a targeted sanction for noncompliance with any federal
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`requirement, in lieu of the termination or nonrenewal of a defaulting facility’s
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`agreement as a participating provider, or the denial of payment for new admissions
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`to that facility.
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`20.
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`Importantly, for instances of past noncompliance, defined by statute as
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`a situation in which a State finds that a nursing facility meets all of the federal
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`requirements “but, as of a previous period, did not meet such requirements,”
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`Congress conferred on the States the discretion “to recommend a civil money
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`penalty … for the days in which it finds that the facility was not in compliance with
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`such requirements.” 42 U.S.C. §§ 1395i-3(h)(1), 2d para., & 1396r(h)(1), 2d para.
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`Plaintiffs hereinafter sometimes refer to this prescribed enforcement action under
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`Sections 1819(h)(1) and 1919(h)(1) of the Social Security Act as a “per-day CMP for
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`past noncompliance.”
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`21. Congress in turn conferred on the Secretary the discretion to impose a
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`per-day CMP for past noncompliance based on a State’s findings and
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`recommendation. 42 U.S.C. §§ 1395i-3(h)(2)(A) & 1396r(h)(2)(A). In practice, and
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`certainly prior to the July 2017 announcement of the policy change challenged
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`herein, “[s]pecific remedies recommended by the State are usually accepted and
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`imposed by CMS,” as HHS’s Office of Inspector General observed in an April 2005
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`report. U.S. Dep’t of Health & Human Servs., Off. of Insp. Gen., Nursing Home
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`Enforcement: The Use of Civil Money Penalties, at 1 (Report No. OEI-06-02-00720,
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`Apr. 2005).
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`22. That CMS would accept and impose a per-day CMP for past
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`noncompliance if such enforcement action were recommended by a State makes
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`abundant sense because Congress (1) tasked the States with the first-line
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`responsibility of surveying nursing facilities and certifying compliance with federal
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`requirements, 42 U.S.C. §§ 1395i-3(g)(1) & (g)(2); 42 U.S.C. § 1396r(g)(1) & (g)(2),
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`and (2) charged the Secretary with the ultimate duty and responsibility of assuring
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`that the enforcement of such requirements is “adequate to protect the health,
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`safety, welfare, and rights of residents and to promote the effective and efficient use
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`of public moneys,” 42 U.S.C. §§ 1395i-3(f)(1) & 1396r(f)(1). It stands to reason that
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`the Secretary could not properly discharge his duty and responsibility to assure
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`adequate enforcement if he were to ignore a State’s findings of noncompliance and
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`recommended remedial action.
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`CMS’s Implementing Regulations
`In November 1994, the Secretary promulgated final regulations
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`23.
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`implementing Congress’s enforcement scheme under the NHRA. Survey,
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`Certification and Enforcement of Skilled Nursing Facilities and Nursing Facilities,
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`59 Fed. Reg. 56,116 (Nov. 10, 1994) (to be codified at 42 C.F.R. pt. 488). In
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`background commentary, the Health Care Financing Administration (CMS’s
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`predecessor agency) (“HCFA”) stated that the goal of the regulations was “to
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`promote facility compliance by ensuring that all deficient providers are
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`appropriately sanctioned.” Id. at 56,116.
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`24. HCFA therefore sought to implement Congress’s mandate “to abandon
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`[the] traditional hierarchical requirement system and develop a system capable of
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`detecting and responding to noncompliance with any requirement.” Survey,
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`Certification and Enforcement of Skilled Nursing Facilities and Nursing Facilities,
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`59 Fed. Reg. at 56,117. The new enforcement system would be “built on the
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`assumption that all requirements must be met and enforced[.]” Id. The selection of
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`a particular enforcement remedy would be “based on the nature of the deficiencies
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`and the remedy (or remedies) that either HCFA or the Medicaid State agency
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`believes is most likely to achieve correction of the deficiencies.” Id. HCFA believed
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`“that remedies applied in the manner described within the proposed regulations
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`will deter violations as well as encourage immediate response and sustained
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`compliance.” Id.
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`25. Against this backdrop, HCFA implemented the use of per-day CMPs as
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`an enforcement remedy for both ongoing and past compliance in a regulation
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`codified at 42 C.F.R. § 488.430:
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`(a) HCFA or the State may impose a civil money penalty for the
`number of days a facility is not in substantial compliance with
`one or more participation requirements, regardless of whether or
`not the deficiencies constitute immediate jeopardy.
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`(b) HCFA or the State may impose a civil money penalty for the
`number of days of past noncompliance since the last standard
`survey, including the number of days of immediate jeopardy.
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`Survey, Certification and Enforcement of Skilled Nursing Facilities and Nursing
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`Facilities, 59 Fed. Reg. at 56,247 (to be codified at 42 C.F.R. § 488.430). Relevant
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`here, the per-day CMP for past noncompliance prescribed by Sections 1819(h)(1)
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`and 1919(h)(1) of the Social Security Act became subsection (b) of this regulation.
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`26. HCFA finalized the regulation regarding the use of per-day CMPs,
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`together with other regulations codified in 42 C.F.R. part 488, following notice-and-
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`comment rulemaking—a process that took over two years. See Survey, Certification
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`and Enforcement of Skilled Nursing Facilities and Nursing Facilities, 57 Fed.
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`Reg. 39,278 (proposed Aug. 28, 1992) (to be codified at 42 C.F.R. pt. 488). In
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`response to public comments about the imposition of per-day CMPs for past
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`noncompliance, HCFA explained that:
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`Although we may have discretion with respect to the selection of
`remedies to address noncompliance that is corrected by the time
`of a survey, it is likely that we would give serious consideration
`to civil money penalties in such cases. The Act, at
`sections 1819(h)(1) and 1919(h)(1) and (3), expressly authorizes
`the imposition of these sanctions even if, at the time of the
`survey, the facility is in substantial compliance.
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`Survey, Certification and Enforcement of Skilled Nursing Facilities and Nursing
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`Facilities, 59 Fed. Reg. at 56,199. In other words, HCFA acknowledged and
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`appreciated Congress’s express authorization of per-day CMPs for past
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`noncompliance as a directive that such an enforcement remedy is to be given serious
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`consideration, even though the Secretary retains discretion in selecting remedies to
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`address past noncompliance.
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`27.
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`In March 1999, HCFA proposed and finalized (subject to notice-and-
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`comment) an amendment to its regulation regarding the use of per-day CMPs to
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`provide for the alternative imposition of per-instance CMPs to address cases of
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`ongoing noncompliance:
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`(a) HCFA or the State may impose a civil money penalty for
`either the number of days a facility is not in substantial
`compliance with one or more participation requirements or for
`each instance that a facility is not in substantial compliance,
`regardless of whether or not the deficiencies constitute
`immediate jeopardy.
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`Civil Money Penalties for Nursing Homes (SNF/NF), 64 Fed. Reg. 13,354, 13,360
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`(proposed Mar. 18, 1999) (to be codified at 42 C.F.R. § 488.430(a)) (emphasis added).
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`Importantly here, HCFA did not amend subsection (b) to introduce the use of per-
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`instance CMPs for cases of past noncompliance.
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`28. HCFA’s stated rationale for expanding the enforcement remedies for
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`cases of ongoing noncompliance to include the imposition of per-instance CMPs was
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`as follows:
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`Specifically, we believe the statute permits the Secretary and
`the States to focus on individual instances of noncompliance
`without having to track the duration of time that the facility
`remains out of compliance with those requirements (or with
`other program requirements). Thus, where sections
`1819(h)(2)(B)(ii) and 1919(h)(2) of the Act provide that a civil
`money penalty may be imposed for up to $10,000 for each day of
`noncompliance, it is entirely consistent with the statute that
`HCFA or a State impose a penalty for the noncompliance it
`identifies without regard to additional days of noncompliance
`that might yet be identified. Indeed, there is nothing in the
`statute that compels either us or the States to await a
`determination of the total number of days of noncompliance
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`14
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`before having the authority to react to the noncompliance that
`has been identified….
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`Civil Money Penalties for Nursing Homes (SNF/NF), 64 Fed. Reg. at 13,356. This
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`rationale would not apply, of course, to cases of past noncompliance, for which the
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`total number of days of noncompliance can be identified and determined, and a per-
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`day CMP calculated and assessed against the facility.
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`29. With the exception of the substitution of “CMS” for “HCFA,”
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`subsection (b) of 42 C.F.R. § 488.430 regarding the imposition of per-day CMPs for
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`past noncompliance has remained unchanged since its promulgation in 1994. At
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`present, per-day CMPs range in amount, as adjusted for inflation, from $6,808
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`to $22,320 per day for deficiencies constituting immediate jeopardy to nursing
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`facility residents, and from $112 to $6,695 per day for deficiencies that do not
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`constitute immediate jeopardy but either caused actual harm or have the potential
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`to cause more than minimal harm (“non-immediate jeopardy harm”). 42 C.F.R.
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`§ 488.438(a)(1); 45 C.F.R. § 102.3.
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`30. By comparison, per-instance CMPs currently range in amount, as
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`adjusted for inflation, from $2,233 to $22,320 per instance. 42 C.F.R.
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`§ 488.438(a)(2); 45 C.F.R. § 102.3. Taking the example of a deficiency that causes
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`non-immediate jeopardy harm, the maximum per-day CMP begins to exceed the
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`maximum per-instance CMP whenever such a deficiency remains uncorrected for
`
`four or more days (4 x $6,695 = $26,780). Unlike a per-instance CMP, which is
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`capped at $22,320, a per-day CMP thus punishes a nursing facility more severely
`
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`15
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`Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 16 of 27
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`the longer it has allowed a deficiency to remain uncorrected prior to a visit by the
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`state survey team.
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`CMS’s Sub-Regulatory Guidance
`In March 2007, GAO issued a report finding that although the
`
`31.
`
`implementation rate for CMPs increased from 32 percent for the period from
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`July 1995 to October 1998 to 86 percent for the period from fiscal year 2003 through
`
`fiscal year 2005, “the deterrent effect of CMPs was diluted because CMS imposed
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`CMPs at the lower end of the allowable range for the homes [GAO] reviewed.” U.S.
`
`Gov’t Accountability Off., Nursing Homes: Efforts to Strengthen Federal
`
`Enforcement Have Not Deterred Some Homes from Repeatedly Harming Residents,
`
`at 5 (Report No. GAO-07-241, Mar. 2007) (“2007 GAO Report”). The report captured
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`the observations of one CMS official who “noted that the CMPs being imposed are
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`not enough to ‘make nursing homes take notice’ or to deter them from deficient
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`practices,” and another CMS official who “stated that some homes consider CMPs a
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`part of the ‘cost of doing business’ or as having no more effect than a ‘slap on the
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`wrist.’” Id. at 24.
`
`32.
`
`In May 2007, the Senate Committee on Aging held a hearing to assess
`
`what the NHRA had accomplished in the twenty years since its passage and what
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`challenges remained. Following that hearing and referencing CMS’s comments in
`
`the 2007 GAO Report about CMPs being viewed by facilities as the “cost of doing
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`business” and tantamount to a “slap on the wrist,” one Senator posed the following
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`
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`16
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`
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`Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 17 of 27
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`question for the record to Dr. Randy Farris, M.D., the regional administrator for
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`CMS’s Dallas office:
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`Sanction Effectiveness?
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`* * *
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`Question. In addition to improvements to the actual policy, what
`is CMS doing to assess the enforcement capability of this
`particular sanction in light of these comments?
`
`The Nursing Home Reform Act Turns Twenty: What Has Been Accomplished, and
`
`What Challenges Remain? – Hearing Before the S. Comm. on Aging, 110th Cong.
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`119 (2007) (App’x – question for the record from Sen. Gordon H. Smith to James
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`Randolph Farris, M.D., Regional Adm’r, CMS).
`
`33.
`
`In response, Dr. Farris provided the following answer:
`
`Answer. CMS’ examination of our enforcement effectiveness in
`the area of Civil Money Penalties (CMPs) has been primarily
`along 2 tracks:
`
`1) potential refinements to CMP maximum amounts, and
`
`2) refinements to the decisionmaking process on imposing the
`CMPs.
`
`Our recent pilot and evaluation of the CMP Analytic Tool
`addresses the latter track. The imposition of a CMP is an
`optional remedy under the Nursing Home Reform Legislation
`promulgated in 1987. We have issued the CMP Analytic Tool.
`The Tool includes a scope and severity framework for CMS
`Regional Offices to monitor enforcement actions, communicate
`with States, address outliers that significantly depart from the
`norm, and improve national consistency.
`
`To improve national consistency for this remedy, CMS’ guidance
`also includes a scope and severity framework for CMS to (a)
`monitor enforcement actions, (b) facilitate communication with
`17
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`
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`Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 18 of 27
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`States, and (c) address outliers that significantly depart from
`the norm.
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`We expect the guidance and the CMP Analytic Tool to mitigate
`the extent to which civil money penalties tend to cluster at the
`lower end of the allowable range, particularly for nursing homes
`with repeated, serious quality of care deficiencies….
`
`Id.
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`34. On June 22, 2007, following the Senate hearing, CMS issued a
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`memorandum to all state survey agency directors advising them of the issuance of a
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`“CMP Analytic Tool” that its regional offices would be using to choose, impose, and
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`calculate CMPs whenever they determine that a CMP is an appropriate
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`enforcement remedy. Memorandum from Director, Survey and Certification Group,
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`to State Survey Agency Directors, Civil Money Penalty (CMP) Analytic Tool (Admin
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`Info: 07-14, June 22, 2007) (06/22/07 Memo).
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`35. Although the CMP Analytic Tool apparently has been in use since the
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`issuance of the 06/22/07 Memo, it did not become publicly available agency guidance
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`until December 19, 2014, when CMS began posting its memoranda to all state
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`survey agency directors updating them on any changes to or decisions regarding the
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`CMP Analytic Tool. Memorandum from Director, Survey and Certification Group, to
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`State Survey Agency Directors, Civil Money Penalty (CMP) Analytic Tool and
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`Submission of CMP Tool Cases (Ref: S&C: 15-16-NH, Dec. 19, 2014)
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`(12/19/14 Memo). CMS attached to its 12/19/14 Memo a CMP Analytic Tool User’s
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`Guide (Version 1.0).
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`
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`18
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`
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`Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 19 of 27
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`36.
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`In the 12/19/14 Memo, CMS explained that the goal of the CMP
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`Analytic Tool was to promote more consistent application of enforcement remedies
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`for nursing facilities. 12/19/14 Memo at 1. Importantly, this memorandum did not
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`purport to dictate what enforcement remedies would or would not be appropriate for
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`particular cases of noncompliance. Id. at 2 (“CMS and States may use a variety of
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`remedies to encourage compliance.”). Rather, it merely presented a consistent
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`framework for regional offices to exercise their discretion when choosing, setting,
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`and imposing CMPs as an enforcement remedy for compliance. Id. at 3 (“This tool is
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`not intended to yield an automatic, immutable end result in the calculation of a CMP. It
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`does not replace professional judgment or the application of other pertinent information
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`in arriving at a final CMP amount.”). The only scenario under which the CMP
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`Analytic Tool prescribes the selection of a per-instance CMP for past noncompliance
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`is where the dates of noncompliance cannot be determined. CMP Analytic Tool,
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`User’s Guide § 3.2 (ver. 1.0, 2014).
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`37. On July 7, 2017, CMS issued another memorandum to all state survey
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`agency directors. Memorandum from Director, Survey and Certification Group, to
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`State Survey Agency Directors, Revision of Civil Money Penalty (CMP) Policies and
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`CMP Analytic Tool (Ref: S&C: 17-37-NH, July 7, 2017) (07/07/17 Memo). Unlike the
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`prior memoranda, this one purports to effectuate a policy change, as the subject line
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`suggests. Specifically, this memorandum purports to:
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`Past Noncompliance: ROs will impose a per-instance CMP for
`past noncompliance – something occurred before the current
`survey, but has been fully addressed and the facility is back in
`compliance with that area.
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`
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`19
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`
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`Case 1:21-cv-00162 Document 1 Filed 01/18/21 Page 20 of 27
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`Per Instance CMP is the Default for Noncompliance that
`Existed before the Survey: CMS ROs will generally impose a
`Per Instance CMP retroactively for non-compliance that still
`exists at the time of the survey, but began earlier….
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`Id. at 2 (emphases added).
`
`38. CMS apparently instituted this policy change in response to lo
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