## Facts

- Sunshine Haven Nursing Operations (Sunshine) operated a nursing facility participating in Medicare and subject to federal participation requirements enforced through facility surveys.
- Surveys found multiple deficiencies tied to resident care and building safety.
- First, surveyors found Sunshine was not providing residents the required number of baths.
- A surveyor testified that the bathing deficiency posed more than a risk of minimal harm to residents.
- Sunshine submitted a plan of correction for the bathing problem and addressed the deficiency weeks later.
- Second, a later survey found a Sunshine staff member used improper body-transfer techniques, and a resident suffered bruising during the transfer.
- Sunshine argued the bruising resulted from an unavoidable accident rather than improper care.
- Sunshine directed the staff member involved to attend training, but Sunshine did not produce documentation showing the staff member completed that training.
- Third, another survey found life-safety problems, including insufficient smoke detectors, sprinklers, and fire-rated walls and ceilings.
- Sunshine made improvements related to fire safety, but another survey months later still found Sunshine was not in substantial compliance.
- A surveyor told Sunshine that having contracts in place for corrections would constitute substantial compliance; Sunshine entered into contracts for corrective work.
- Based on the deficiencies, the Centers for Medicare & Medicaid Services (CMS) assessed enforcement remedies, and Sunshine’s provider agreement was terminated.
- The Department of Health and Human Services’ administrative board upheld the penalties and termination, and Sunshine sought review in the United States District Court for the District of New Mexico.

## Issues

1. Whether the agency’s determination that Sunshine was not in substantial compliance with federal participation requirements, supporting penalties and termination, was supported by the administrative record under the applicable deferential standard of review.
2. Whether Sunshine could avoid or reverse enforcement remedies by relying on a surveyor’s statement that contracts for corrective work would constitute substantial compliance, despite continued survey findings of noncompliance.

## Decision

- The district court upheld the agency decision sustaining CMS’s enforcement actions, including termination of Sunshine’s provider agreement.
- The court accepted the administrative findings that Sunshine violated federal requirements involving resident bathing, safe transfer practices, and life-safety protections.
- The court rejected Sunshine’s argument that contracting for corrective work (based on a surveyor’s statement) established substantial compliance when survey results continued to show unresolved deficiencies.
- The court left the assessed penalties and termination in place.

## Legal Principles

- A federal court reviewing HHS administrative action in this setting applies a deferential standard and will not overturn the agency’s decision if supported by substantial evidence and consistent with law.
- “Substantial compliance” requires that deficiencies not create more than the potential for minimal harm; deficiencies posing greater risk support a noncompliance finding and remedies.
- A facility’s plan of correction or steps toward repair do not, by themselves, establish substantial compliance; the question is whether conditions and practices actually meet regulatory requirements.
- A facility generally cannot defeat enforcement remedies by pointing to informal surveyor statements if the record shows continuing noncompliance with governing regulations.
- When surveys document continuing violations of participation requirements, CMS may impose authorized remedies, including termination of the Medicare provider agreement.

## Conclusion

The district court upheld CMS’s penalties and termination of Sunshine’s provider agreement because the administrative record supported findings that Sunshine failed to meet federal requirements on resident bathing, safe transfer techniques, and fire-safety protections, and Sunshine’s reliance on a surveyor’s comment about having corrective contracts did not establish that the facility had in fact returned to substantial compliance.


Sunshine Haven Nursing Operations v. U.S. Department of Health & Human Services, 2016 WL 9777239 (2016)