Shiloh First Health Care, Inc., DAB No. 3123 (2023)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

This case concerning a civil money penalty (CMP) imposed on Petitioner Shiloh First Health Care, Inc. (Shiloh), a home health agency (HHA), returns to the Departmental Appeals Board (Board) for decision after a remand by the Board.  On March 20, 2018, an Administrative Law Judge (ALJ) entered summary judgment (First ALJ Decision) against Shiloh and in favor of the Centers for Medicare & Medicaid Services (CMS).   Shiloh First Health Care, Inc., DAB CR5052 (2018).  On October 24, 2019, the Board vacated the First ALJ Decision and remanded the case for further proceedings.  Shiloh First Health Care, Inc., DAB No. 2974 (2019).  On December 23, 2019, in a Decision on Remand (Second ALJ Decision), DAB CR5499 (2019), the ALJ again issued summary judgment for CMS, and Shiloh now appeals from that decision.

For the reasons discussed below, we reverse the Second ALJ Decision and remand the case to the ALJ for further proceedings consistent with this decision.

Legal Background

The Medicare program, established under Title XVIII of the Social Security Act (Act), reimburses health care providers and suppliers for covered medical care and services furnished to Medicare beneficiaries.  Act §§ 1811, 1812, 1831, 1832.  One type of “provider of services” is a HHA, meaning an organization “primarily engaged in providing skilled nursing services and other therapeutic services” under professionally established policies, professional supervision, and applicable licensing standards.  Id. §§ 1861(o)(1)-(2), (4), 1861(u).

To be a Medicare-participating provider, a HHA must meet certain “conditions of

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participation.”  Id. §§ 1861(o)(6), 1891(a); see generally 42 C.F.R. Part 484.¹  At issue in this case is the condition of participation that “[t]he HHA furnishes skilled nursing services by or under the supervision of a registered nurse and in accordance with the plan of care.” 42 C.F.R. § 484.30 (Oct. 1, 2015); see also id. (Oct. 1, 2016).²

CMS determines compliance with participation requirements through surveys by state agencies under agreements with CMS.  Act § 1891(c); 42 C.F.R. §§ 488.10-488.12; 488.18-488.26; 488.700-488.740.  A “condition-level deficiency” exists when a HHA’s deficiencies in compliance “are of such character as to substantially limit [its] capacity to furnish adequate care or which adversely affect the health and safety of patients.”  Id. §§ 488.24, 488.705.  Immediate jeopardy exists when the HHA’s noncompliance “has caused, or is likely to cause serious injury, harm, impairment, or death to a patient(s).”  42 C.F.R. § 488.805.  CMS may impose on a noncompliant HHA various sanctions including a CMP and termination of participation, and when selecting sanctions considers regulation-specified factors including whether immediate jeopardy exists.  Act §§ 1866, 1891(e)-(f); 42 C.F.R. §§ 488.815(a)-(f), 488.820, 488.845(b)(1); see generally 42 C.F.R. Part 488, Subpart J.  CMS may impose either a daily CMP for the number of days the HHA is not in compliance, or a “per instance” CMP for a single survey-identified event of noncompliance.  42 C.F.R. § 488.845(a); see id. § 488.805 (defining “per instance”).

A HHA found noncompliant and sanctioned with a CMP may request a hearing before an ALJ, pursuant to the procedures in 42 C.F.R. Part 498.  42 C.F.R. § 488.845(c)(2)(i) (citing 42 C.F.R. § 498.40).  “The right to a hearing in these matters is a statutory one,” so the Part 498 regulations “generally contemplate that the ALJ will hold an oral hearing at which witnesses will testify and may be cross-examined (unless the parties have waived their right to a hearing in writing).”  Vandalia Park, DAB No. 1939, at 5 (2004); see also Act § 1128A(c)(2) (made applicable by Act § 1891(f)).  However, the Board and federal courts have permitted ALJs to decide cases without a hearing, using summary judgment procedures, when there are no genuine disputes of material fact.  Vandalia Park, DAB No. 1939, at 5-6. Federal Rule of Civil Procedure 56 (Rule 56), which governs use of summary judgment in the federal courts, “does not apply by its own terms to administrative proceedings under 42 C.F.R. Part 498, and Part 498 does not specify summary judgment procedures.”  Cedar Lake Nursing Home, DAB No. 2344, at 2 (2010).  Nevertheless, ALJs may and do “generally look to the principles of FRCP Rule 56 for guidance when deciding cases on summary judgment.”  Id.

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If dissatisfied with an ALJ’s decision, an HHA may request review by the Board, subject to certain limitations.  42 C.F.R. § 498.5(c); see id. §§ 488.845(h) (limiting scope of review); 498.3(b)(13), (b)(14)(i) (same).

Factual Background

A.     The 2016 surveys and resulting CMP

The Texas Department of Aging and Disability Services (State Agency) surveyed Shiloh from August 8 through August 25, 2016.  C-17-87 CMS Ex. 3³; C-17-87 CMS Ex. 14, at 57.  Shiloh’s Administrator/Supervising Nurse was RN M.  C-17-87 CMS Ex. 6, at 1.  The State Agency determined, “[b]ased on observation, interview and record review,” that Shiloh “failed to ensure” that RN M “initiated appropriate preventative nursing procedures in compliance with accepted professional standards and principles” for two clients “requiring finger stick blood glucose sampling.”  C-17-87 CMS Ex. 3, at 2.  The Statement of Deficiencies cited RN M’s use of “a lancing device meant for use with a single client on more than one client” (the Lancing Device Deficiency) as a condition-level deficiency under 42 C.F.R. § 484.30 that posed immediate jeopardy.  Id. at 2-3, 16.  The survey also identified other less severe deficiencies.  Id. at 4-24; C-17-87 CMS Ex. 22, at 4-6.  On August 23, 2016, Shiloh submitted a Plan of Removal of the immediate jeopardy, which was accepted the next day.   CMS Ex. 3, at 3, 22-23.

By letter dated September 9, 2016, the State Agency notified Shiloh that it was “not in substantial compliance with the federal participation requirements” and conditions presented immediate jeopardy during a period “beginning on August 12, 2016 and ending on August 25, 2016.”  C-17-87 CMS Ex. 11, at 1.  The State Agency recommended a per-instance CMP of $10,000, and termination of Shiloh’s provider agreement if Shiloh did not achieve substantial compliance by February 25, 2017.  Id. at 2.  The State Agency also required training on infection control for all nurses Shiloh employed.  Id.

After an October 5, 2016 follow-up survey, CMS notified Shiloh by letters dated October 13, 2016, and November 22, 2016, that CMS considered substantial compliance achieved on September 30, 2016, but that CMS was imposing a per-instance CMP of $10,000.  C-17-87 CMS Ex. 1, at 1; C-17-87 CMS Ex. 2, at 1; C-17-87 CMS Ex. 4.

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B.     The initial ALJ proceedings and First ALJ Decision

Shiloh requested an ALJ hearing concerning the CMP.  C-17-187 Req. for Hr’g (Dec. 12, 2016) (RFH 1); C-17-187 Req. for Hr’g (Jan. 30, 2017) (RFH 2).  The originally assigned ALJ issued a pre-hearing order that gave instructions on submitting written testimony and requesting cross-examination, and permitted summary disposition motions that the ALJ would decide “according to the principles of Rule 56.”  C-17-87 Acknowledgment & Pre-Hr’g Order (Pre-Hearing Order) at 4-6.

CMS moved for summary judgment, alleging undisputed material facts, asserting arguments solely concerning the Lancing Device Deficiency, and submitting 21 exhibits, including an affidavit from the State Agency surveyor.  C-17-187 CMS’ Pre-Hr’g Br. & Mot. for Summ. J. with Incorporated Mem. of Law in Support of Summ. J.; C-17-187 CMS Exs. 1-19, 21-22.⁴

Shiloh opposed summary judgment, relying on two staff members’ resumes and an exhibit described as “Supervising Nurse Statement” (“RN M’s Statement”).  C-17-187 P. Pre-Hr’g Br. & Mot. to Deny CMS Mot. for Summ. J. (P. ALJ Br.) at 3, 4; C-17-187 Shiloh Prehr’g Exchange.  In its brief, Shiloh asserted that RN M and Shiloh’s other nurses “did not, at any time, use the same lancing device on multiple patients.”  C-17-187 P. ALJ Br. at 1.  Shiloh also contended that RN M used “new equipment” during the patient interaction on which the surveyor relied, and “emphatically denies that the only cleaning she does” between uses of the device “is wiping it with disinfecting wipe, as alleged by [the surveyor].”  Id. at 5, 6.

Subsequently, the case was reassigned to a different ALJ, who notified the parties that RN M’s Statement, though referenced in Shiloh’s exhibit list and brief, was not in the case file.   C-17-87 letter from Director of Civil Remedies Division (CRD) to parties’ counsel (Feb. 5, 2018); C-17-187 email from CRD to parties’ counsel (Feb. 12, 2018).  Shiloh then filed RN M’s Statement, which stated, in part, “I adopt the contents of my Pre-hearing brief submitted by my Attorney.”  C-17-187 P. Ex. 2, at 1; see also C-17-187 P. Mot. to Accept Supervising Nurse Statement.  RN M’s statement also asserted that “the Lansing [sic] incident was never conclusive, yet [the surveyor] concluded as she did, leading to the immediate Jeopardy,” and “I look forward to the opportunity to testify personally if that becomes necessary.”  C-17-187 P. Ex. 2, at 1, 2.  RN M signed the statement as “Owner, Administrator and Director of Nursing” for Shiloh, but did not sign under oath or penalty of perjury.  Id. at 2.

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A week after Shiloh filed RN M’s Statement, CMS filed a request to cross-examine RN M, without objecting to the form or substance of RN M’s Statement or moving for its exclusion from evidence; on the same day, the ALJ issued the First ALJ Decision.⁵  C-17-187 CMS Req. to Cross Examine Witness; DAB CR5052.  The ALJ granted CMS summary judgment because CMS “adduced evidence that [Shiloh] was noncompliant with regulatory requirements,” and “[Shiloh] failed to offer any material facts or evidence that constitute a rebuttal.”  DAB CR5052, at 6.  The ALJ also upheld the $10,000 CMP amount as “entirely reasonable given the potentially dangerous consequences of [Shiloh]’s noncompliance.”  Id. at 5 (citing 42 C.F.R. § 488.815); see 42 C.F.R. § 488.845(b)(1) (listing four factors for consideration, including the six “factors set out at § 488.815”).

C.     Shiloh’s first appeal to the Board (DAB No. 2974)

On May 22, 2018, Shiloh requested review by the Board, alleging several errors in the First ALJ Decision.⁶  A-18-69 P. Req. for Reconsideration of ALJ Dec. (“A-18-69 RR”).  Shiloh primarily contended that summary judgment was inappropriate because several material facts were disputed, including whether the surveyor, “personally, witnessed [RN M] re-use a lancet for multiple patients” and “the content of [the surveyor’s] interview of [RN M] and both parties[’] understanding and take-away from the interview.”  A-18-69 RR at 1.  Shiloh maintained that “[t]he lancet was never used on somebody else” and sought to “supplement the record with letters from two (2) . . . patients who were interviewed during the survey,” by attaching the letters to Shiloh’s request for Board review.  Id. at 3, 4.  Shiloh also faulted the ALJ for “not clearly articulat[ing] the Standard of Review,” and for rendering a decision that was “arbitrary and not based on an objective evaluation of the evidence.”  Id. at 2.  Shiloh further faulted the ALJ for finding “that the imposition of a per-instance civil money penalty of $10,000.00 is reasonable without stating, and with particular reference to the facts and evidence in this cause, how it arrived at such conclusion.”  Id.

On October 24, 2019, the Board vacated the First ALJ Decision, explaining:

The single question on which this appeal turns is whether Shiloh produced evidence in support of its denial that RN M improperly used the same lancet devices on more than one patient and failed to clean them

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appropriately.

*        *        *

[CMS’s] evidence sufficed to set out a prima facie case that Shiloh’s nurse failed to employ infection prevention meeting professional standards set out in [42 C.F.R.] section 484.30.  Shiloh does not deny this and, in fact, states as much in its appellate filing.  The question before the ALJ, therefore, was whether Shiloh came forward with evidence which, taken as true, would, with all reasonable inferences drawn in Shiloh’s favor, raise one or more genuine disputes as to any material fact(s).

*        *        *

[Shiloh’s] assertions, accepted as true and supported by reasonable inferences, would suffice to defeat summary judgment and to require the ALJ to evaluate the competing evidence as to this core factual dispute. Indeed, the ALJ states as much:  “Petitioner asserts as a fact that none of its nurses ‘at any time, use the same lancing device on multiple patients.’  That is an assertion of fact, which, if supported by evidence, would be reason for me to deny CMS’s motion for summary judgment.”

*        *        *

A witness declaration is evidence.  To the extent that [RN M’s Statement] is read as including the assertion set out in the brief that RN M never reused a lancet device on a different patient, therefore, the record does contain evidence favorable to Shiloh directly bearing on the central fact in dispute. Moreover, on summary judgment, it is not appropriate to consider the credibility of the witnesses or the weight to be accorded to competing evidence.

DAB No. 2974, at 4-6  (citations omitted).

“Therefore,” the Board determined, “the matter must be remanded to the ALJ to consider the content, credibility and weight to be attributed to RN M’s [S]tatement along with the evidence put forward by CMS.”  Id. at 7.  The Board’s Decision conveyed specific directions for proceedings on remand, see id. at 7-9, which we discuss more fully below.  Generally, however, the Board directed the ALJ to determine the admissibility of all exhibits, hold an evidentiary hearing, consider and weigh both parties’ evidence, and (if noncompliance was found) review the reasonableness of the CMP amount based on the regulatory factors in 42 C.F.R. §§ 488.815 and 488.845(b)(1).  Id.

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D.     The ALJ proceedings on remand and Second ALJ Decision

On November 8, 2019, the ALJ issued an Order Following Remand.  The Order declared that “the only ‘evidence’ that the [Board] relied upon in determining that the record in this case ‘shows a genuine dispute of material fact,’ is [RN M’s Statement].”  C-20-75 Order Following Remand at 1.  “It appears,” the ALJ opined, “that the [Board] misconstrued [RN M’s Statement] as a statement made under oath or penalty of perjury, referring to it alternately as a ‘declaration’ or an ‘affidavit,’” when “[i]n reality, [RN M’s Statement] is neither.”  Id. at 1-2.  The ALJ reasoned, “it would seem to follow that, if her statement was not truly evidence sufficient to raise a genuine dispute of material fact, there would be no basis for finding a dispute as to a material fact in this case.”  Id. at 2.  “If the foregoing is correct,” the ALJ concluded, “then summary judgment in CMS’s favor, as I originally granted, would be appropriate.”  Id.  The Order gave each party 17 days “to file a responsive brief that addresses this issue.”  Id.  The Order did not state that Shiloh could submit an amended, sworn statement from RN M to correct the technical deficiencies the ALJ (and not CMS) newly had identified on remand, and also did not authorize submission of any other new evidence.  In response to requests by Shiloh, the ALJ ultimately gave the parties an additional 17 days to submit their briefing.  C-20-75 Order granting extension (Dec. 3, 2019).

Per the Order Following Remand, CMS submitted a brief arguing for the first time that RN M’s Statement “that was not made under penalty of perjury is insufficient to overcome CMS’ motion for summary judgment.”  C-20-75 CMS’ Suppl. Br. in Supp. of Summ. J., or in the Alternative, Mot. and Br. in Supp. of Decision on the Record, at 5.  Shiloh responded that it “adopts the position of the Appellate Board in the decision remanding the matter to the ALJ,” which “is supported by the prevailing standard of review of summary judgment.”  C-20-75 Am. Mot. to Compel Resp’t to Respond to Pet’r’s Offer of Settlement or in the Alternative Mot. and Br. in Supp. of Remand of Administrative Judge Decision, and Leave of Court to File this Late Mot. and Br., at 2-3.  Shiloh contended the record facts do “not necessitate that the statements made by Petitioner and such adopted from Petitioner’s Brief be made under oath or signed under the penalty of perjury and suffices as evidence on the record to raise an issue of material fact to overcome a summary judgment.”  Id. at 3-4.  Shiloh asked that the Board’s direction “in remanding this matter be adhered to.”  Id. at 4.

On December 23, 2019, the ALJ issued the three-page Second ALJ Decision, which “reaffirm[ed] and incorporate[d] by reference without modification” the First ALJ Decision “granting summary judgment in favor of [CMS].”  DAB CR5499, at 1.  The ALJ ruled that RN M’s Statement, “being unsworn, is neither a declaration nor an affidavit and is a document that I would exclude from evidence were this case to proceed to a hearing.”  Id.  The ALJ further declared that “Petitioner has not offered any other admissible evidence to establish a fact dispute in this case, and, for that reason, summary

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judgment remains the appropriate form for disposition.”  Id. at 2-3.

Shiloh timely requested Board review of the Second ALJ Decision.  Pet’r’s Second Req. for Recons. of Administrative Judge’s Second Decision (RR).  Shiloh “maintains its original position on its Appeal, and supports the [Board] decision remanding the matter to the ALJ of October 24, 2019.”  RR at 1.  “Summary judgment is not proper,” Shiloh asserts, and the ALJ “erred in sustaining the per-instance $10,000.00 CMP” without considering the elements of 42 C.F.R. § 488.845(b) as applied to Shiloh.  Id. at 3.

Standard of Review

Our standard of review on a disputed issue of law is whether the ALJ decision is erroneous, and our standard of review on a disputed factual issue is whether the ALJ decision is supported by substantial evidence in the record as a whole.  Guidelines – Appellate Review of Decisions of Administrative Law Judges Affecting a Provider’s or Supplier’s Enrollment in the Medicare Program (Guidelines), “Completion Of The Review Process,”  (c), https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/enrollment/index.html (last visited Nov. 17, 2023).

The issues of whether a genuine dispute of material fact exists, and thus whether summary judgment is appropriate, are questions of law that the Board reviews de novo.  Timothy Onyiuke, M.D., DAB No. 3092, at 13 (2023); Venetian Gardens, DAB No. 2286, at 3 (2009).  Summary judgment is appropriate when the record shows there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.  Rehabilitation Ctr. at Hollywood Hills, DAB No. 3052, at 11 (2021).  The party moving for summary judgment has the initial burden to show the absence of a genuine issue of material fact and that the movant is entitled to judgment as a matter of law.  Id.  To overcome an adequately supported motion for summary judgment, the non-moving party may not rely on denials in its pleadings or briefs, but must furnish evidence of a dispute concerning a material fact that, if proven, would affect the outcome of the case under governing law.  Medford Care Ctr., DAB No. 3040, at 11 (2021).  Evaluating a summary judgment motion requires viewing the entire record in the light most favorable to the nonmoving party, drawing all reasonable inferences from the evidence in that party’s favor.  Id.; Ramarao Kaza, M.D. & Ramarao Kaza, M.D., P.C., DAB No. 2924, at 8 (2019); Oak Ridge Ctr., DAB No. 2913, at 8 (2018).  A decision granting summary judgment must not rely upon credibility determinations or weighing of the evidence.  Rehabilitation Ctr. at 11; Medford Care at 11, 13.

“The bases for modifying, reversing or remanding an ALJ decision include the following: a finding of material fact necessary to the outcome of the decision is not supported by substantial evidence; a legal conclusion necessary to the outcome of the decision is erroneous; the decision is contrary to law or applicable regulations; a prejudicial error of

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procedure (including an abuse of discretion under the law or applicable regulations) was committed.”  Guidelines, “Completion Of The Review Process,” ¶ (c).  The Board may vacate a summary judgment and remand when the ALJ did not view the evidence in the light most favorable to the non-movant, did not draw all reasonable inferences in favor of the non-movant, and erroneously concluded that no material facts were in dispute.  42 C.F.R. § 498.88(a); Medford Care at 11.

Analysis

A.     The Second ALJ Decision is legally erroneous because it did not comply with the Board’s prior decision in DAB No. 2974.

When the Board reviews an ALJ’s decision, “the Board may . . . remand the case to an ALJ for a hearing,” 42 C.F.R. § 498.88(a), and when the Board does so, its directions are mandatory.  “In a remanded case, the ALJ initiates additional proceedings and takes other actions as directed by the Board in its order of remand, and may take other action not inconsistent with that order.”  Id. § 498.88(b) (emphasis added).  “Upon completion of all action called for by the remand order and any other consistent action, the ALJ promptly makes a decision. . . .”  Id. § 498.88(c) (emphasis added).

In other words, on remand, the ALJ must apply the Board’s analysis as the “law of the case.”  See Adel A. Kallini, MD, DAB No. 3021, at 6 n.4 (2020).  The phrase “law of the case” expresses the longstanding “practice of courts generally to refuse to reopen what has been decided” in previous orders in the same case.  Messenger v. Anderson, 225 U.S. 436, 444 (1912); see Louisiana Land & Exploration Co. v. Federal Energy Regul. Comm’n, 788 F.2d 1132, 1137 (5th Cir. 1986) (stating that appellate court’s decision of a legal issue establishes the law of the case that must be followed in all subsequent proceedings in the same case).  “The doctrine covers issues decided expressly and by necessary implication.”  United States v. Wills, 40 F.4th 330, 334 (5th Cir.), cert. denied, 143 S. Ct. 464 (2022).  We consider those aspects of “law of the case” doctrine to be applicable here.

The Second ALJ Decision took actions inconsistent with specific directions in DAB No. 2974, in which the Board remanded “for further proceedings consistent with this decision.”  DAB No. 2974, at 1, 9 (emphasis added).  The proceedings on remand that produced the Second ALJ Decision were not consistent with the Board’s directions to the ALJ to:

• “hold a hearing to permit cross-examination” because “CMS . . . requested to cross-examine Shiloh’s sole witness, RN M,” id. at 7;
• “consider the content, credibility and weight to be attributed to RN M’s

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  [S]tatement along with the evidence put forward by CMS,” id.;

• clarify “whether the ALJ treated CMS Exhibit 22 as the written direct testimony of the surveyor or considered it on some other basis because the ALJ did not rule on admission of any of the exhibits,” id.;
• “determine whether to strike the prior statement [of the surveyor] or to permit CMS to use it as written direct testimony,” and, “[i]f the ALJ permits CMS to use the surveyor’s prior statement in lieu of written direct testimony . . . inquire whether Shiloh wishes to cross-examine the surveyor,” id.;
• “determine the admissibility of all exhibits, including the patient letters Shiloh sought to add on appeal,” id. at 7 n.6;
• determine whether to “permit[] either party to identify further witnesses, for rebuttal or other purposes,” and, if so, give “the opposing party . . . an opportunity to cross-examine,” id. at 8;
• “determine whether other issues are properly before” the ALJ, id.; and finally,
• “[i]n reviewing the reasonableness of the amount of the CMP . . . consider at the close of proceedings whether, if noncompliance was present, Shiloh demonstrated that, based on the regulatory factors, the CMP amount should be reduced,” id. at 9.

The Second ALJ Decision thus did not comply with 42 C.F.R. § 498.88(a)-(c) or the law of the case in the form of the Board’s directions on remand, and stated no valid basis for noncompliance.  While courts have recognized exceptions to the “law of the case” doctrine, the ALJ’s rationale on remand fell within none of those few and narrow exceptions.  See Wills, 40 F.4th at 334 (“We recognize three exceptions to law of the case:  (1) The evidence at a subsequent trial is substantially different; (2) there has been an intervening change of law by a controlling authority; and (3) the earlier decision is clearly erroneous and would work a manifest injustice.”) (internal quotation marks and citations omitted).

The ALJ asserted no change in the evidence or controlling law on remand, and established no clear error in the Board’s decision that would work a manifest injustice.  The ALJ claimed the Board found a genuine dispute of material fact based “only” on RN M’s Statement, but that is incorrect.  See C-20-75 Order Following Remand at 1.  While the Board emphasized the focal role of RN M’s Statement in creating a factual dispute,

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the Board also referenced other evidence requiring consideration, including CMS’s evidence and documents Shiloh sought to add on appeal.  DAB No. 2974, at 7, 7 n.6.  The ALJ also opined that the Board “misconstrued” RN M’s Statement as an admissible sworn declaration or affidavit.  C-20-75 Order Following Remand at 1-3.  However, the Board made clear that this exhibit, regardless of its label, constituted “evidence” whose  “content, credibility and weight” the ALJ should consider on remand in a manner not appropriate on summary judgment.  DAB No. 2974, at 6-7, 7 n.6; see Laboratorio Concordia Lugaro, DAB No. 3029, at 10, 14 (2021) (“There is no requirement that a party opposing a summary judgment motion submit a written declaration under oath or sworn statement to establish a genuine dispute of material fact.”).  The Second ALJ Decision offered no justification at all for disregarding the Board’s direction to revisit “whether, if noncompliance was present,” as the ALJ again deemed it was, “the CMP amount should be reduced” as Shiloh contended.  DAB No. 2974, at 9.  The ALJ’s factual determinations concerning the Lancing Device Deficiency did not resolve that separate legal issue, which required analysis of the applicable regulatory factors in 42 C.F.R. §§ 488.815 and 488.845(b)(1).  See Cedar Lake at 12 (“The determination of whether a CMP amount is reasonable is a conclusion of law,” and requires resolution of challenges to “the ALJ’s findings of fact regarding the regulatory factors.”).

When the Board remands a case for further consideration and a new ruling by an ALJ, then determines on appeal from that new ruling that the ALJ has “erred, and disregarded the instructions of the Board on remand,” reversal of the ALJ’s ruling on remand is appropriate.  See Alden Nursing Ctr. - Morrow, DAB No. 1825, at 1-2 (2002).  Under such circumstances, the Board properly may remand the case again “and order a hearing to be conducted without further delay.”  Id. at 2.

Accordingly, reversal and remand of the Second ALJ Decision is appropriate.

B.     The Second ALJ Decision is legally erroneous because the ALJ committed a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations).

The Board may reverse and remand an ALJ Decision when “a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations) was committed,” and the ALJ committed such error in this case.  See Guidelines, “Completion Of The Review Process,”  (c); see also Glenburn Home, DAB No. 1806, at 6 (2002) (stating that bases for reversing or remanding an ALJ decision include “a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations)”).

“Evidence may be received at the [ALJ] hearing even though inadmissible under the rules of evidence applicable to court procedure,” and “the ALJ rules on the admissibility of evidence.”  42 C.F.R. § 498.61.  Thus, the Board does not treat unsworn written

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statements as per se inadmissible, but instead leaves evidentiary determinations of their admissibility to ALJs’ sound discretion based on the unique facts of each case.  See, e.g., MedStar Health, Inc., DAB No. 2684, at 7 n.6 (2016) (“We need not consider whether, as the ALJ Ruling seems to suggest, an unsworn statement is never acceptable, since the ALJ could reasonably have rejected the unsworn statement for the reason stated here.”).

Therefore, an ALJ may choose to treat unsworn statements by or for a petitioner, even when not submitted in compliance with pre-hearing orders, as evidence relevant to the summary judgment calculus.  See Onyiuke at 14 (upholding ALJ’s “conclusion that no disputes of material fact precluded entry of summary judgment” after ALJ admitted and considered evidence including “unsworn, non-testimonial statements on [p]etitioner’s behalf”); Experts Are Us, Inc., DAB No. 2452, at 19 (2012) (concluding that “there is no genuine dispute of material fact” and “therefore, that the ALJ properly granted summary judgment” after considering evidence including “unsworn statements” on petitioner’s behalf); cf. Avalon Place Trinity, DAB No. 2819, at 16 (2017) (confirming ALJ’s authority to consider physician’s unsworn statement as only “one of many pieces of medical evidence in the record” rather than as “direct testimony,” and upholding ALJ decision after evidentiary hearing), aff’d, 761 Fed. App’x 407 (5th Cir. 2019).

Thus, in the First ALJ Decision the ALJ permissibly considered RN M’s Statement, even though it was unsworn and not compliant with the Pre-Hearing Order’s requirements for written testimony; where the ALJ erred was in performing an about-face on remand.  That turnabout was an abuse of discretion for four primary reasons.  First, the ALJ’s recharacterization of RN M’s Statement as inadmissible spontaneously raised a dispositive issue that CMS had not previously raised.  Second, the ALJ did not give Shiloh an effective opportunity to respond to this new issue.  Third, the ALJ’s determination misapplied the terms of the Pre-Hearing Order.  Fourth, the ALJ’s ruling disregarded applicable precedent.

We emphasize that the ALJ’s treatment of RN M’s Statement on remand was directly contrary to the First ALJ Decision’s treatment of the same document.  The First ALJ Decision described RN M’s Statement six times, in the course of four pages, as an “affidavit,” and alternatively as a “declaration containing . . . testimony.”  DAB CR5052, at 1 n.1, 1-4.  The ALJ acknowledged having “reviewed” it, described and assessed its contents repeatedly and in detail, and ultimately decided that the “affidavit does not establish material facts in dispute.”  Id. at 2-4.  Yet the ALJ’s Order Following Remand asserted that the Board apparently “misconstrued” RN M’s Statement, having “referr[ed] to it alternately as a ‘declaration’ or an ‘affidavit,’” when “[i]n reality, [it] is neither.”  C-20-75 Order Following Remand at 1-2.  In the Second ALJ Decision, the ALJ reiterated that RN M’s Statement “is neither a declaration nor an affidavit,” noted that the Board “likely was misled by my mischaracterization at one point in my decision of [the] statement as an ‘affidavit,’” and expressed “regret” for “that erroneous characterization.”

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DAB CR5499, at 1, 2 n.1.  In sum, the ALJ reversed course unjustifiably – and very late in the day, procedurally – on a pivotal piece of evidence.

By recharacterizing RN M’s Statement as inadmissible and excluding it from evidence on that basis, the ALJ spontaneously raised a potentially dispositive issue that CMS had not raised previously, and impermissibly short-circuited Shiloh’s hearing right.  See Rehabilitation Ctr. at 13 (stating that ALJ, without due notice to petitioner, “based her decision in part on grounds not identified in CMS’s summary judgment motion,” so Board was “disinclined for that reason to uphold a grant of summary judgment reliant on those grounds”); Columbia Care & Rehab. Ctr., DAB No. 2348, at 13 (2010) (“An ALJ may not grant summary judgment on a ground not alleged by the moving party without providing adequate notice,” so “[w]e therefore remand the case to the ALJ for further proceedings”); Andrew J. Elliott, M.D., DAB No. 2334, at 5 (2010) (“We conclude that the ALJ erred in basing his determination to grant summary disposition in favor of CMS, in part, on a ground on which CMS did not rely in moving for summary judgment.”); Venetian Gardens at 2, 4-5 (stating that, in granting CMS summary judgment “on grounds independent of those on which CMS relied in its motion,” and instead “independently formulating his bases for summary judgment,” ALJ “failed to follow applicable summary judgment standards”); Vandalia Park, DAB No. 1939, at 20 (invoking “the fundamental principle that short-circuiting the right to a hearing is disfavored,” a principle that “is the common thread” in summary judgment law).

The ALJ indisputably was the first to deny the admissibility of RN M’s Statement, for as the Board noted in its remand decision, “[n]either party asserted that any of the proffered exhibits were inadmissible.”  DAB No. 2974 at 7 n.6.  Shiloh had not yet submitted RN M’s Statement when CMS initially moved for summary judgment, so CMS obviously could not have contested the statement’s admissibility at that time.  However, when Shiloh later filed RN M’s Statement, CMS did not move to exclude it or seek leave to file a reply challenging its admissibility.  Instead, CMS filed only a “Request to Cross Examine Witness,” which referenced RN M’s Statement as an “affidavit” containing “testimony,” and asked for “the opportunity to cross-examine this witness at hearing.” C‑17-187 CMS Req. to Cross Examine Witness at 1.  During Shiloh’s first appeal to the Board, CMS maintained that RN M “provided her testimony to the ALJ via affidavit,” and raised no argument that it was inadmissible as evidence.  A-18-69 CMS Resp. to Pet’r’s RR at 2.  Yet on remand, unprompted by any request from CMS, the ALJ issued an Order declaring that the Board “incorrectly assumed that [RN M’s Statement] was evidence that could raise a genuine dispute of material fact,” when it “appear[ed]” that the statement “is not in fact admissible evidence.”  C-20-75 Order Following Remand at 2.

The ALJ further erred by not affording Shiloh sufficient opportunity to address this new issue by submitting an affidavit or declaration that remedied the asserted technical

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deficiencies of RN M’s Statement.  “[A] party opposing summary judgment need not submit its evidence in a form that would be admissible at trial provided that the proffered evidence could be presented in an admissible form.”  Laboratorio Concordia, DAB No. 3029, at 10 (emphasis added); see Lilia Gorovits, M.D., P.C., DAB No. 2985, at 3 n.4 (2020) (noting that exhibits submitted and reviewed for summary judgment purposes “are properly treated as an offer of proof”), aff’d, No. 2:20-CV-01850 (E.D. Pa. May 17, 2021); accord Medford Care at 18.  Evidence that generates a genuine dispute of material fact “cannot be disregarded simply because it was not presented in the form of a sworn statement.”  Laboratorio Concordia, DAB No. 3029, at 13.  When a party submits “unsworn statements that did not comply with the instructions in the ALJ’s initial pre-hearing order,” the ALJ may order that party “to submit identical statements of those witnesses signed under oath or penalty of perjury, to be substituted for the unsworn statements.”  See Highland Pines Nursing Home, Ltd., DAB No. 2361, at 3 n.3 (2011).  The ALJ issued no such instruction, but instead directed the parties to submit further briefing only.  See C-20-75 Order Following Remand at 2 (opining it was “questionable” whether RN M’s Statement “constitutes a legitimate assertion of fact in opposition to a motion for summary judgment” and permitting parties “to file a responsive brief that addresses this issue”).  Nor was the burden on Shiloh to ask leave to amend RN M’s Statement in order to secure the evidentiary hearing that CMS already had triggered by requesting cross-examination of RN M and that the Board already had ordered.  See C-17-187 CMS Req. to Cross Examine Witness; DAB No. 2974, at 7.  The ALJ’s handling of this matter was “contrary to fundamental fairness because it denie[d] the nonmoving party opportunity to respond to the ALJ’s new basis for deciding the dispute in favor of the moving party.”  See Elliott at 6; see also Venetian Gardens at 8 (ruling ALJ’s grant of summary judgment was “contrary to fundamental fairness” because non-movant had insufficient opportunity to respond to the basis for summary judgment).

Having taken the initiative to raise a new dispositive argument without authorizing Shiloh to submit new responsive evidence, the ALJ further erred by misapplying the Pre-Hearing Order’s terms to decide the issue in CMS’s favor.  In deeming RN M’s Statement inadmissible and thus concluding that no dispute of material fact existed, the Second ALJ Decision relied on the Pre-Hearing Order’s provisions concerning motions for summary disposition and written direct testimony.  DAB CR5499, at 2-3 (citing Pre-Hearing Order at 4 (§ 5.a), 5 (§ 8)).  Yet the Pre-Hearing Order required Shiloh to “come forward with evidence,” not necessarily affidavits, “showing a dispute exists.”  Pre-Hearing Order at 4 (emphasis added).  The Board concluded Shiloh did present such evidence (when construed in Shiloh’s favor as required for summary judgment purposes), in the form of RN M’s Statement and also possibly the patient letters Shiloh sought to add to the record on appeal.  See DAB No. 2974 at 1, 6, 7 & n.6.  It is true that the Pre-Hearing Order required a hearing for cross-examination only “if a party files admissible, written direct testimony.”  Pre-Hearing Order at 6 (§ 10).  However, as discussed above, on remand the ALJ should have given Shiloh a chance to correct any technical

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deficiencies in RN M’s Statement that would disqualify it as written direct testimony, as a matter of fundamental fairness to Shiloh that does not unfairly prejudice CMS.  “While these proceedings are unquestionably adversarial processes, the government’s interest ultimately lies in the factual and legal accuracy of its determinations affecting providers of services to vulnerable beneficiaries, not merely in victory in litigation by any means permissible.”  Alden Nursing, DAB No. 1825, at 12.

The ALJ also disregarded the Board’s directive in DAB No. 2974, as well as other Board precedent, requiring the ALJ to assess the admissibility of all the record evidence, not merely RN M’s Statement, on remand.  The Board ordered the ALJ to “determine the admissibility of all exhibits,” including those “put forward by CMS.”  See DAB No. 2974, at 7 & n.6.  The ALJ was not free to circumvent that order by recharacterizing one exhibit, namely RN M’s Statement, in a way that rendered it inadmissible, then effectively closing the case on that basis.  The ALJ’s actions were contrary to the governing standard that, “[i]n deciding a summary disposition motion, a tribunal must view the entire record in the light most favorable to the nonmoving party, drawing all reasonable inferences from the evidence in that party’s favor.”  See Elliott at 4 (emphasis added); accord Medford Care at 19.  We recently have explained the Board’s inability to uphold summary judgment where, as here, the ALJ made “no determination about the scope of the record evidence” in total, did not determine the admissibility of CMS’s exhibits, “and did not ‘receive’ any exhibits into the record.”  Medford Care at 18-19.  Furthermore, Shiloh disputes “the content of” and “take-away from” the surveyor’s interview of RN M, claiming “substantial conflicts in material facts” involving “misunderstanding” and “mischaracterization” – in other words, Shiloh disputes the credibility of the surveyor’s factual account.  A-18-69 RR at 1, 4; see CMS Exs. 14 (surveyor notes), 22 (surveyor declaration).  “[O]n summary judgment, it is not appropriate to consider the credibility of the witnesses or the weight to be accorded to competing evidence.”  DAB No. 2974, at 6.

“In general, the Board does not disturb the ALJ’s evidentiary determinations unless there is compelling reason to do so,” HeartFlow, Inc., DAB No. 2781, at 19 (2017), but the unique facts of this case present compelling reasons to do so.  We recognize that in Part 498 proceedings, including this case, the ALJ has broad discretionary authority over evidentiary matters, Laboratorio Concordia Lugaro, DAB No. 3067, at 11, 14 (2022), but that authority has limits.  We acknowledge that excluding an unsworn statement ordinarily is within an ALJ’s sound discretion when, as here, all parties have due notice through a pre-hearing order that the ALJ is applying Rule 56 principles to summary judgment and only written testimony under oath or penalty of perjury is admissible.  We recognize that if Shiloh fails to resubmit RN M’s Statement in the form required for written testimony, after the ALJ gives Shiloh a reasonable opportunity to do so, the ALJ may take that failure of proof into account when assessing all the evidence.  We also emphasize that our decision in no way precludes a judgment for CMS on the merits after

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proceedings on remand consistent with this decision.  See Vandalia Park, DAB No. 1939,  at 13 (“It is important to reiterate that, while the existence of a dispute of material fact sufficient to go forward to hearing on an issue precludes summary judgment, it says nothing about the relative merits of the parties’[] evidence on that issue.”).  However, on this case’s unique facts, for the reasons explained above, we hold the ALJ committed prejudicial and reversible error by not giving Shiloh adequate opportunity to respond to the new dispositive issue that the ALJ (not CMS) first raised by recharacterizing RN M’s Statement as inadmissible.  Cf. Venetian Gardens at 9 (holding non-movant did not have adequate opportunity to address legal issues related to theory on which ALJ granted summary judgment, and “this procedural error by the ALJ was prejudicial”).

The Board’s prior decision in Atty’s Parti Expo, Inc., DAB No. 2871 (2018), is instructive.  Parti Expo decided a dispute between the Center for Tobacco Products (CTP) and a retailer that allegedly violated federal law.  The retailer filed a documentary exhibit, labeled as a “Statement,” which the CTP described as a “declaration” containing “written testimony,” and the ALJ repeatedly described as “written testimony under oath.”  Parti Expo at 4, 5.  However, after conducting a hearing, the ALJ issued a written Decision declaring that the statement was not sworn, “d[id] not constitute a written declaration that is signed by the witness under oath,” and therefore merited less weight than in-person testimony.  Id. at 7.  On appeal to the Board, the retailer argued “that the ALJ’s conclusion is inconsistent with her treatment of the same statement during the pre-hearing process,” when “the ALJ communicated to the parties that she regarded [the] statement as a sworn statement, and the parties proceeded to hearing with that understanding.”  Id. at 8.  Also, the retailer pointed out, “CTP’s counsel did not object to the statement and expressed a desire to cross-examine” the witness who made the statement.  Id.  The parallels between the procedural history of Parti Expo and of this case are self-evident.

The Board concluded in Parti Expo “that the ALJ’s treatment of the statement as unsworn in her decision is inconsistent with her treatment of the same statement as ‘written testimony under oath’ before the hearing,” and was “harmful error” because it affected the retailer’s substantial right to a fair hearing.  Id. at 9.  The Board further held that it would be unjust not to remedy this error.  Id.  Therefore, the Board remanded the case to the ALJ with instructions to afford the retailer “an opportunity to refile a statement . . . with the same text as the statement currently in the record,” but which “complies with . . . the ALJ’s [pre-hearing order].”  Id.  We recognize that Parti Expo applied regulations in 21 C.F.R. Part 17 that do not govern this proceeding, id., yet the Board also invoked principles of fundamental fairness that do apply equally here.  See id. at 9 n.8, 10 (noting Board’s authority to remand to assure that proceedings are consistent with “substantial justice” standard in 21 C.F.R. § 17.48, which is “consistent with principles of jurisprudence generally,” and concluding the ALJ’s error “adversely affected [the] fundamental right to a fair hearing”).  We also recognize that Parti Expo

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concerned a decision on the merits after a hearing, not a summary judgment; however, considerations of fundamental procedural fairness are equally (if not more) important when, as in this case, the complaining party has not yet received any evidentiary hearing at all.  See Elliott at 6, 9 (invoking principles of “fundamental fairness” when remanding to address ALJ’s erroneous entry of summary judgment); Venetian Gardens at 8, 23 (same).

Finally, the Board distinguishes such issues of procedural even-handedness from any challenges to the substantive equities of agency decisions (including CMS’s enforcement action in this case), which neither ALJs nor the Board may address.  Compare 1866ICPayday.com, L.L.C., DAB No. 2289, at 14 (2009) (“[A]n ALJ may, consistent with the applicable regulations and statutes, take steps to ensure procedural fairness.”), with Arriva Med., LLC, DAB No. 2934, at 16 (2019) (stating that “neither the Board nor the ALJs have authority to overturn a legally valid agency action on equitable grounds or otherwise grant equitable relief”).

For these additional reasons, reversal and remand of the Second ALJ Decision is appropriate.

Conclusion

We reverse and remand the Second ALJ Decision and direct the holding of an in-person hearing without further delay.  We also direct the ALJ to provide Shiloh an opportunity, within a reasonable time period, to file a sworn statement by RN M in a form that complies with the Pre-Hearing Order, but containing the same substantive text that RN M’s Statement currently contains.  We further incorporate into this Decision the Board’s remand instructions as stated in DAB No. 2974; specifically, we again direct the ALJ to:

(1)     hold a hearing to permit cross-examination, because CMS requested to cross-examine RN M;

(2)     consider the content, credibility and weight to be attributed to RN M’s Statement along with the evidence put forward by CMS;

(3)     clarify whether CMS Exhibit 22 is being treated as the written direct testimony of the surveyor or considered on some other basis;

(4)     determine whether to strike the prior statement of the surveyor or to permit CMS to use it as written direct testimony, and if CMS is permitted to use the surveyor’s prior statement in lieu of written direct testimony, then to inquire whether Shiloh wishes to cross-examine the surveyor;

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(5)     determine the admissibility of all exhibits, including the patient letters Shiloh sought to add on appeal;

(6)     determine whether to permit either party to identify further witnesses, for rebuttal or other purposes, and, if so, give the opposing party an opportunity to cross-examine;

(7)     determine whether other issues are properly before the ALJ; and,

(8)     in reviewing the reasonableness of the amount of the CMP, consider at the close of proceedings whether, if noncompliance was present, Shiloh demonstrated that, based on the regulatory factors, the CMP amount should be reduced.

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Endnotes

¹  We apply the regulations that were in effect during the relevant survey period in 2016.  See Mercy Home Care, Sioux City, DAB No. 3044, at 2 n.1 (2021).

²  In 2017, CMS “consolidated former provisions governing skilled nursing services at [42 C.F.R.] § 484.30, therapy services at § 484.32, and medical social services at § 484.34, under one new condition, § 484.75.”  Final Rule, Medicare and Medicaid Program: Conditions of Participation for Home Health Agencies, 82 Fed. Reg. 4,504, 4,566 (Jan. 13, 2017).  Section 484.30 therefore no longer appears in the current Code of Federal Regulations.

³  We reference filings in the initial proceedings before the ALJ by docket number C-17-87, filings in the initial appeal to the Board by docket number A-18-69, and filings in the proceedings before the ALJ on remand by docket number C-20-75.

⁴  CMS filed no Exhibit 20.  See CMS Prehr’g Exchange at 2.

⁵  The electronic docket for case C-17-187 shows that CMS filed its request to cross-examine RN M only two minutes before the CRD issued the First ALJ Decision and transmitted it to the parties.  Given that timing, the ALJ likely was not aware of RN M’s cross-examination request, and thus could not factor it into the summary judgment analysis, before completing and issuing the First ALJ Decision.

⁶  Shiloh filed its review request one day after the 60-day deadline for appealing the ALJ Decision, but provided an explanation that the Board deemed good cause to accept the untimely filing.