## Facts

- Wanda Papciak, an 81-year-old Medicare Advantage beneficiary, underwent hip replacement surgery and later developed complications, including a urinary tract infection.
- She was admitted on June 3, 2008, to a skilled nursing facility for skilled nursing care and physical and occupational therapy.
- Medicare covered the stay from June 3 through July 9, 2008, but denied payment for July 10–19, 2008, concluding she no longer required skilled services and was receiving only custodial care.
- Facility records reflected slow progress, with some notations of minimal progress and regression in certain areas; she also had multiple comorbidities, including atrial fibrillation, hypertension, anemia, cellulitis, carpal tunnel syndrome affecting use of a walker, anxiety, and depression.
- After the disputed period, she was hospitalized and then transferred to another facility, where therapy records described good recovery potential and documented progress toward goals, including improved ambulation and improved mental status and therapy participation.
- A Quality Improvement Organization, an ALJ, and the Medicare Appeals Council upheld the denial, reasoning that she had reached her maximum potential and further care was custodial.
- The beneficiary’s daughter sought judicial review of the Secretary’s final decision under 42 U.S.C. § 405(g), and both sides moved for summary judgment.

## Issues

1. Whether the Secretary applied the correct legal standard for Medicare coverage of skilled nursing facility services, including coverage for maintenance-level skilled care.
2. Whether the denial of coverage for July 10–19, 2008 was supported by substantial evidence under 42 U.S.C. § 405(g).

## Decision

- The court held the Secretary’s final decision was not supported by substantial evidence and rested on an incorrect legal standard.
- The court denied the Secretary’s motion for summary judgment and granted the plaintiff’s motion for summary judgment.
- The case was remanded with instructions to award Medicare benefits for the July 10–19, 2008 period.

## Legal Principles

- Under 42 U.S.C. § 405(g), agency findings are conclusive only if supported by substantial evidence and reached under the correct legal standard.
- Medicare SNF coverage does not depend solely on whether the beneficiary is improving; skilled services may be covered when necessary to maintain function or prevent or slow deterioration, if the services require professional skill.
- Coverage determinations must consider the beneficiary’s overall condition, including comorbidities and mental health conditions that may affect progress and the need for skilled management.
- An agency conclusion that care is “custodial” must be supported by record evidence addressing whether ongoing therapy and clinical management required skilled assessment, planning, and supervision.

## Conclusion

The court reversed the Medicare coverage denial because the agency treated lack of material improvement as dispositive and failed to adequately evaluate maintenance-level skilled needs and the beneficiary’s overall medical and mental condition; it ordered benefits for the disputed SNF days.


Papciak v. Sebelius, 742 F. Supp. 2d 765 (W.D. Pa. 2010)