Health Law Daily Wrap Up, QUALITY OF CARE—Ind. App.: Deficiency under Indiana law not arbitrary or capricious where staff failed to report pulse oximeter was not reading, (Mar 5, 2026)

By Jeffrey H. Brochin, J.D.

Facility’s failure to meet a participation requirement for providing proper respiratory care was a breach of a rule constituting a deficiency that qualified for a state-level citation under Indiana Code § 16-28-5-1(2).

The Court of Appeals of Indiana has affirmed the decision of the Trial Court that denied judicial review to an Indiana long-term care facility after determining that the ruling was neither arbitrary, capricious nor an abuse of discretion. The record before the court established that the facility failed to address a Resident’s irregular pulse oximeter reading when a Certified Nursing Assistant (CNA) saw an irregular reading yet did not immediately report it to the Respiratory Therapist, and the Resident died shortly thereafter. This constituted a breach of an adopted administrative rule concerning the obligation to provide a patient (Resident) with proper respiratory care, and therefore the state-level citation finding was upheld (Especially Kidz Health and Rehab v. Indiana Department of Health, No. 25A-MI-784 (Ind. App. Feb. 26, 2026)).

Respiratory care requirements. Among the federal regulations for a facility to qualify for participation in the Medicare and Medicaid programs is the requirement that a facility ‘must ensure that a resident who needs respiratory care, including tracheostomy care and tracheal suctioning, is provided such care, consistent with professional standards of practice, the comprehensive person-centered care plan, the residents’ goals and preferences.’ In addition, a provision in the Indiana Administrative Code, 410 IAC 16.2-3.1-47(a)(6)), provides that a facility must provide a resident with proper ‘respiratory care.’

Dependence on pulse oximeter. Especially Kidz Health and Rehab (Especially Kidz or Facility) is a licensed health care facility in Indiana. The facility provides long-term medical care to children who suffer from chronic diseases. In September 2020, three-year-old ‘Resident B’ was a patient (Resident) at the Facility. He was diagnosed with several chronic and serious diseases which required among other things, ventilator dependence. His physician noted that Resident B’s condition put him at high risk for “sudden clinically significant or life-threatening deterioration,” and therefore, the Facility continuously monitored him using a pulse oximeter (a machine that measures a person’s arterial oxygen levels.) The pulse oximeter is connected to a patient using a probe with a cable, and the device has an alarm that will go off if the probe is disconnected, not attached right, or if the pulse oximeter detects that the oxygen level is not high enough.

Failure to report display problem. During the morning and afternoon of October 16, 2021, a Respiratory Therapist saw that Resident B’s pulse oximeter was working as intended. She checked on Resident B again around 6:00 p.m. and saw that his pulse oximeter was still connected and showed Resident B’s oxygen saturation at ninety-five percent. At 8:52 p.m., a License Practical Nurse (LPN Gebhart) entered Resident B’s room, administered medications to him, ‘observed and touched’ him, and did not notice any signs of distress or anything unusual about Resident B’s condition.

However, between 9:20 p.m. and 9:30 p.m. while looking for towels, CNA Barnes noticed that the pulse oximeter was displaying dashes instead of numbers and that the alarm was not sounding. She then went to Respiratory Therapist Holman but only talked to him about bath schedules. Approximately ten minutes later, CNA Barnes returned to Resident B’s room, noticed that he was not breathing, and screamed for help. LPN Gebhart returned to Resident B’s room, touched Resident B and noticed that he ‘was unresponsive and without a pulse.’ She also noticed that the power to the pulse oximeter was turned on, but that the pulse oximeter was not displaying any numerical value for oxygen saturation level, nor was the device’s alarm sounding. Resident B was then taken to a local hospital, where he died.

State survey findings. On October 21, 2021, a survey team from the Indiana Department of Health (IDOH) conducted an investigation into Resident B’s death, and their preliminary findings were sent to the IDOH’s immediate jeopardy committee. That committee found that Especially Kidz had a ‘deficiency’ pursuant to 42 C.F.R. § 483.25(i) when it had failed to provide appropriate respiratory care to Resident B. In November 2021, the IDOH sent a formal letter detailing the immediate jeopardy determination. In its letter, the IDOH stated that the facility’s noncompliance with 42 C.F.R. 483.25(i) had ‘been determined to constitute substandard quality of care.’ The letter also stated that the state must offer a facility an informal opportunity, at the facility’s request, ‘to dispute survey findings’, and that cited deficiencies could be discussed through an Informal Dispute Resolution (IDR) process. However, Especially Kidz did not request to participate in the IDR process with the IDOH.

‘State-level citation.’ In January, 2022, the IDOH issued a notice of ‘state-level citation’ to after determining that their violation of a provision regarding proper ‘respiratory care,’ was a “breach” of the rule that constituted a “deficiency” under the Indiana Code. The IDOH assessed a $10,000 fine against Especially Kidz due to this breach.

In February 2022, Especially Kidz filed an appeal with an ALJ challenging the state-level citation and the immediate jeopardy determination. In July 2024, the ALJ issued a non-final administrative decision noting that Especially Kidz had the option to participate in the IDR process to challenge the immediate jeopardy determination, but failed to do so and the ALJ therefore concluded that it did not have the authority to review the immediate jeopardy determination. (The parties had agreed that the appropriate amount of fine should be $5,000 and not $10,000.)

Judicial review declined. Following the Office of Administrative Law Proceedings’ issuance of a final order affirming the decision of the ALJ in September 2024, Especially Kidz filed a petition for judicial review with the trial court, which denied the petition for judicial review. The instant appeal then ensued. Especially Kidz argued on appeal that the IDOH’s state-level citation for a deficiency under Indiana law was arbitrary, capricious, an abuse of discretion, or not in accordance with law and not supported by a preponderance of the evidence.

Finding of breach upheld. The appeals court disagreed with Especially Kidz, noting that the Indiana Code provides that ‘on a determination by the commissioner that a breach of this article or a rule adopted under this article has occurred, the director shall issue a citation to the administrator of the health facility in which the breach occurred.’ Among the categories of breaches that can apply to a health facility, is a “deficiency” which presents an immediate or a direct, serious adverse effect on the health, safety, security, rights, or welfare of a patient.

Here, the Appeals Court found that the IDOH’s citation for Especially Kidz’s deficiency was supported by ample evidence: the record was clear that CNA Barnes saw dashes instead of numbers on Resident B’s pulse oximeter display, and did not further investigate Resident B’s condition nor alert other staff members about Resident B’s pulse oximeter display.

Based on the foregoing, the Appeals Court found that the Trial Court did not err when it denied Especially Kidz’s petition for judicial review on the state-level citation for the deficiency.

The case is No. 25A-MI-784.

Judge: Pyle, R.

Attorneys: Richard B. Kaufman (Richard B. Kaufman, Attorney at Law) for Especially Kidz Health and Rehab. Theodore E. Rokita, Office of the Indiana Attorney General, for Indiana Department of Health.

Companies: Especially Kidz Health and Rehab; Indiana Department of Health

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