Health Law Daily Wrap Up, ADMINISTRATION OF MEDICARE/MEDICAID PROGRAMS—DAB DECISIONS: Reasonableness of $15,000 per-instance CMP affirmed for COVID-19 infection control policy Level D deficiencies, (Oct 28, 2025)

By Justin Marcus Smith, J.D.

A skilled nursing facility had a COVID-19 infection control policy, but it lacked certain objective criteria, it failed to write the policy down, and it failed to follow the policy in isolated instances.

A skilled nursing facility petitioner could not credibly claim that it fashioned a policy that conformed to the CDC admonition to create a plan to manage intake of new residents during the COVID-19 pandemic, affirmed a Department of Health and Human Services Departmental Appeals Board Administrative Law Judge (ALJ) assigned to hear the matter. The ALJ held the petitioner failed to follow its own written and unwritten infection control policies and thus failed to substantially comply with its obligation to maintain an effective infection control program under 42 C.F.R. § 483.80(a)(1). The petitioner’s noncompliance exposed residents to the risk of infection with potential for more than minimal harm to resident health and safety. The ALJ also affirmed the reasonableness of the $15,000 per-instance CMP based on the petitioner’s high culpability for not memorializing its COVID-19 infection control policy in written form (River Oaks Health and Rehabilitation Center, DAB No. CR6509, Docket No. C-20-787 (Jul. 16, 2024)).

Background. In July 2020, a CMS contractor conducted a COVID-19 infection control survey at a Texas skilled nursing facility (petitioner). The surveyor cited isolated instances of noncompliance. According to CMS, the noncompliance posed no actual harm, but it had the non-immediate potential for more than minimal harm to resident health and safety (i.e., scope and severity level D).

CMS accordingly notified the petitioner it would impose a $15,000 per-instance civil money penalty (CMP). CMS also advised it would withdraw approval of a nurse training and competency evaluation program, deny payment for new admissions (DPNA), and terminate the petitioner’s Medicare provider agreement if the petitioner did not return to substantial compliance. Shortly thereafter, CMS determined the petitioner returned to substantial compliance, so it rescinded the DPNA and the termination of the provider agreement. However, it confirmed the $15,000 per-instance CMP.

The petitioner challenged:

1. whether it was in substantial compliance with 42 C.F.R. §§ 483.80(a)(1), (a)(2), (a)(4), (e), and (f) (Tag F880, infection control); and, if not,

2. (2) whether the $15,000 per-instance CMP was reasonable.

Once CMS makes a prima facie showing of noncompliance, the burden of persuasion shifts to the petitioner. The petitioner must prove by a preponderance of the evidence of record that it substantially complied with statutory and regulatory requirements. Federal district and circuit courts have so far declined to disturb this burden-shifting on due process or other grounds.

Evidentiary objections. The ALJ sustained the petitioner’s objection to a CMS exhibit indicating the CDC updated pertinent guidance before the survey. That exhibit gave no way to determine what aspects of the guidance were in effect at the time of the survey. CMS could not rely on that exhibit to establish a deficiency finding. The ALJ otherwise overruled the petitioner’s evidentiary objections.

Infection control. The infection control regulation does not mandate specific standards. It gives facilities the discretion to develop and implement infection control protocols consistent with “accepted national standards” for infection control. See 42 C.F.R. § 483.80(a)(1). Facilities must then follow the policies and protocols they adopt. A facility diverges from substantial compliance with Medicare participation requirements when it fails to follow its infection control policies and procedures.

CDC guidance. At the outset of the COVID-19 pandemic, CMS advised nursing homes to rely on Centers for Disease Control (CDC) information and guidance. The CDC issued guidelines on May 19, 2020 identifying “core practices” facilities should follow pertinent to, among other things, admission and readmission of residents with unknown COVID-19 status (e.g., placement in a single-person room or observation area, healthcare personnel should wear protective gear). The CDC issued guidelines on the use of personal protective equipment (PPE) in June 2020.

The petitioner had an infection control policy that acknowledged the CDC guidance. The policy identified additional precautionary measures, among others, keyed to transmission risk by air, contact, or droplet, and the use of color coded signs or stickers on resident doors, beds, and charts. The petitioner’s infection control policy set forth additional COVID-19 procedures as of March 9, 2020, and it updated the policy.

However, the surveyor found that the doors to the rooms of residents 2 and 6 were open despite isolation orders to avoid COVID-19 exposure. Resident 2 was in contact isolation, while resident 6 was purportedly subject to isolation for C. difficile. The surveyor also found a nurse did not wear eye protection when entering the room of resident 6. The director of nursing (DON) acknowledged signs on residents’ doors did not indicate the type of isolation or PPE needed for any given resident. The DON also acknowledged the petitioner did not write down its COVID-19 isolation policy for newly admitted or readmitted residents.

Noncompliance affirmed. The ALJ affirmed essentially two bases for a CMS finding of noncompliance as to the adequacy of a petitioner’s infection control policy: (1) the petitioner failed to establish a written policy; and (2) it did not follow its orally-communicated policy to ensure it would be effective.

The ALJ affirmed the petitioner did not substantially comply with its obligation to have a written infection control policy that followed CDC accepted national standards at the time of the survey. The ALJ said the petitioner’s argument that residents 2 and 6 were not suspected of having COVID-19 and their isolation was purely preventive was erroneous because the petitioner did not have a written policy. The petitioner’s March 20 policy was also facially inadequate because it did not specify objective criteria for determining when or how to isolate new or readmitted asymptomatic residents. It presented an option rather than a plan. The policy was otherwise inadequate because it failed to address intake of new residents, as the CDC guidance required. It also failed to specify the type of isolation necessary for readmitted asymptomatic residents beyond the simple statement they “could” be placed in a private room for 14 days if the facility could “accommodate.”

The petitioner also did not comply with its written or unwritten infection control policy. CMS alleged the facility failed to ensure its staff knew “full PPE” required the use of eye protection under both CDC guidelines and the facility’s own orally-communicated policy. CMS also claimed the petitioner failed to ensure its staff knew the level of isolation appropriate for each isolated resident, shown by the fact that facility staff, in the ALJ’s words, “erroneously” believed resident 6 to be under C. difficile infection contact isolation. CMS also asserted facility staff failed to comply with isolation requirements for residents 2 and 6 based on facility policy, CDC guidelines, and orders from these residents’ physicians, by leaving their room doors open and failing to wear eye protection PPE as appropriate to strict isolation.

The petitioner responded it adequately implemented its infection control policy as shown by staff training sessions and staff compliance which did not require use of eye protection unless a resident was known or suspected to have a COVID-19 infection. The petitioner asserted it had no obligation under CDC guidelines or its own policy to keep the resident 2 and 6 room doors closed, especially where resident 2 posed a high fall risk. The petitioner claimed there was no physician isolation order for resident 6.

The ALJ said the petitioner’s arguments here were without merit. The record made it plain that the petitioner had an unwritten policy of strict isolation for new or readmitted COVID-19 asymptomatic patients for 14 days. Both the DON and assistant DON understood the policy to require private room isolation for 14 days. There was no dispute that the resident 2 and 6 room doors should have been kept shut. Even if resident 2 required fall intervention, that did not call for negating the infection control policy. The DON also confirmed strict isolation included the use of eye protection.

The petitioner could not claim it had no obligation to follow the isolation policy it set for new or readmitted asymptomatic residents like residents 2 and 6. The record confirmed petitioner staff did not follow that policy. The petitioner also did not comply with its own pre- COVID-19 written infection control policy with respect to the color-coded sign alert system, so the ALJ opined it was perhaps unsurprising that staff did not understand the level of precaution necessary for residents 2 and 6.

CMP reasonableness. The ALJ held the $15,000 per-instance CMP was reasonable. Regulations authorized CMS to impose the remedy for substantial noncompliance with Medicare participation requirements. See 42 U.S.C. § 1395i-3(h)(2); 42 C.F.R. § 488.406. The ALJ analyzed the factors for reasonableness.

First, a limited history of noncompliance was consistent with the mid-range penalty amount CMS selected. Second, the petitioner’s claim that an isolated “D” level deficiency may not support a CMP within a few thousand dollars of the maximum penalty was “well taken”; however, the ALD said the characterization that it was near the maximum of $22,320 was “misleading.” The ALJ said it also had to consider the high level of petitioner culpability in failing to establish written infection control protocols for new and readmitted asymptomatic residents of unknown COVID-19 status. The petitioner failed to update its pre-existing written infection control policy even after the CDC issued particular COVID-19 guidance in May 2020. There was no dispute that senior staff and management understood the need to implement a policy, because they had a policy, and yet they left it unwritten. The noncompliance had the potential for more than minimal harm. The ALJ concluded petitioner culpability was high. The petitioner did not claim its financial condition affected its ability to pay the CMP. Based on these regulatory factors, the ALJ concluded the imposition of a $15,000 per-instance CMP was reasonable.

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