## Facts

- Fairfax Nursing Home, Inc. operated a skilled nursing facility participating in Medicare and Medicaid and was subject to periodic, unannounced compliance surveys.
- The Illinois state survey agency identified multiple deficiencies in Fairfax’s respiratory care for ventilator-dependent residents during a period from December 20, 1996 through April 3, 1997.
- The deficiencies included at least five documented incidents involving failures in respiratory care practices for ventilated residents.
- Survey findings included incidents in which deficient care allegedly contributed to a resident’s death and other incidents that placed residents’ health and safety at serious risk.
- CMS classified the deficiencies as “immediate jeopardy” and imposed a civil monetary penalty (CMP) of $3,050 per day for 105 days, a rate at the bottom of the immediate-jeopardy range.

## Issues

1. Whether the ALJ and the Departmental Appeals Board improperly shifted the burden of proof to Fairfax in the CMP appeal.
2. Whether the ALJ applied the correct regulatory standard for “immediate jeopardy” to justify the higher CMP range.

## Decision

- The Seventh Circuit affirmed the Departmental Appeals Board’s decision sustaining the noncompliance findings and the CMP.
- The court held that the agency used a permissible burden framework: CMS must first establish noncompliance by a preponderance of the evidence, after which the facility must rebut CMS’s prima facie case.
- The court held that the ALJ applied the correct “immediate jeopardy” standard and that substantial evidence supported the determination that Fairfax’s deficiencies caused, or were likely to cause, serious injury, harm, impairment, or death.
- The court upheld the 105-day duration and the $3,050 per-day amount as supported by the record and within the agency’s discretion.

## Legal Principles

- In CMP enforcement for skilled nursing facilities, CMS bears the initial burden to present a prima facie case of noncompliance; the facility then bears the burden to rebut with contrary evidence.
- “Immediate jeopardy” exists when noncompliance has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident. (42 C.F.R. § 488.301)
- Appellate review sustains the Secretary’s CMP determination if supported by substantial evidence and not arbitrary or an abuse of discretion.
- The per-day CMP amount within the applicable regulatory range may be sustained when the record supports seriousness and duration of noncompliance and the agency considers the regulatory penalty factors.

## Conclusion

The court upheld CMS’s immediate-jeopardy classification and CMP against Fairfax because the agency met its initial evidentiary burden, Fairfax failed to rebut the prima facie showing, and substantial evidence supported that deficiencies in ventilator-resident respiratory care caused or threatened serious harm, including death, warranting the higher penalty range.


Fairfax Nursing Home, Inc. v. U.S. Dep't of Health & Hum. Servs., 300 F.3d 835 (7th Cir. 2002)