Fal-Meridian, Inc. v. U.s. Department of Health and Human Services

In the
United States Court of Appeals
For the Seventh Circuit
No. 09-3485
FAL-MERIDIAN, INC.,
Petitioner,
v.
U.S. DEPARTMENT OF HEALTH AND
HUMAN SERVICES, et al.,
Respondents.
Petition for Review of an Order of the
Departmental Appeals Board of the
U.S. Department of Health and Human Services.
No. 2265
ARGUED APRIL 12, 2010—DECIDED MAY 6, 2010
Before CUDAHY, POSNER, and EVANS, Circuit Judges.
POSNER, Circuit Judge. The Meridian nursing home
asks us to set aside a final decision by the Department
of Health and Human Services that imposed a civil
penalty of $7,100 on the nursing home for having
violated a regulation under the Medicare and Medicaid
provisions of the Social Security Act. 42 U.S.C. §§ 1302,
1395hh. The regulation requires a skilled nursing facility

-- 1 of 13 --

2 No. 09-3485
to “ensure that—(1) the resident environment remains
as free of accident hazards as is possible; and (2) each
resident receives adequate supervision and assistance
devices to prevent accidents.” 42 C.F.R. § 483.25(h). The
size of the penalty was based on the Department’s
further determination that Meridian’s violation of the
regulation was “likely to cause . . . serious injury, harm,
impairment, or death to a resident.” 42 C.F.R. §§ 488.301,
488.438(a)(1)(i).
It may seem odd that the nursing home would be
seeking judicial review of such a tiny penalty, when its
lawyer told us that the Department’s determinations
would not jeopardize the nursing home’s license to serve
Medicare and Medicaid patients. But the episode (which
we’re about to narrate) giving rise to those determina-
tions has also incited a tort suit for wrongful death
against the nursing home, and the home does not want
the finding used to bolster a claim of negligence. Regula-
tory violations are not negligence per se but they are
evidence of negligence. Beta Steel v. Rust, 830 N.E.2d 62, 73-
74 (Ind. App. 2005); Zimmerman v. Moore, 441 N.E.2d 690,
696-97 (Ind. App. 1982). Meridian may also fear that the
imposition of a civil penalty for an accidental death may
make it harder to attract new residents.
A resident of the nursing home identified only as “B”
(the Medicare administration tries to maintain patient
anonymity in enforcement actions) was a 60-year-old
woman covered by Medicare despite her relative youth.
(The likeliest explanation for her coverage is that she
had been receiving social security disability benefits for

-- 2 of 13 --

No. 09-3485 3
at least two years, which would entitle her to Medicare
benefits. 42 U.S.C. § 426(b). In effect, a finding of total
disability accelerates one’s entitlement to federal old-
age benefits, including Medicare.) B suffered from schizo-
phrenia (perhaps other mental illness or impairments as
well) and dysphagia, which means difficulty in swal-
lowing. Her dysphagia was so serious that she could not
safely consume any food or liquid (including water)—her
attempt to do so might result in her inhaling it (“pulmo-
nary aspiration”—the breathing of foreign matter into the
trachea or lungs) and as a result strangling. And so a
feeding tube, called a “PEG” (percutaneous endoscopic
gastrostomy), had been inserted into her stomach through
the wall of her abdomen.
Readmitted to the nursing home on February 22, 2008,
after the implant of the feeding tube and with a “strict
NPO” (nil per os—“nothing by mouth”) order by the
hospital to the nursing home, B was placed in a room
with another resident. That resident was required to
take all her regular meals, plus snacks, in her bed in the
room she shared with B. This placement of B turned out
to be a serious error. For she had an irresistible, and
possibly insane, compulsion to consume food and drink
in the usual way. The conjunction of schizophrenia and
dysphagia is not uncommon, and is extremely dangerous.
See, e.g., J. Regan, R. Sowman, and I. Walsh, “Prevalence
of Dysphagia in Acute & Community Mental Health
Settings,” 21 Dysphagia 95 (2006); T.K.S. Tan, “Dysphagia
and Chronic Schizophrenia: A Case Report,” 34 Singapore
Med. J. 356 (1993). Had B been compos mentis, she could
have eaten and drunk to her heart’s content despite the

-- 3 of 13 --

4 No. 09-3485
danger; for a competent person has a right to refuse
treatment. Cruzan v. Director, Missouri Dep’t of Health, 497
U.S. 261, 278-79 (1990). But her mental illness made her
incompetent to make decisions about her health.
Between the date of B’s readmission and her death two
and a half weeks later, the nursing home’s staff re-
peatedly witnessed her trying to eat and drink, including
her roommate’s food and drink, and sometimes suc-
ceeding. In fact on 18 occasions before B’s death, she
was observed by the staff to be eating or drinking
(mainly the latter); and doubtless there were occasions,
maybe many occasions, on which her infractions went
unobserved or unrecorded. Yet apparently, as Meridian
emphasizes, she had no untoward effects from her epi-
sodes of eating and drinking.
At some point in B’s stay the staff revised her care plan
to require staff to check on her every 15 minutes. Some
of the occasions on which she was seen eating or drinking
occurred after the revision. On March 10 her roommate
told the staff that she was giving food to her. B was found
dead on the bathroom floor the next night. The cause of
her death has not been determined. A first death
certificate said she had died of “aspiration pneumonia,”
which is a form of pneumonia for which dysphagia
is a risk factor. But the doctor who signed the death
certificate later changed his mind and certified that her
death had been due to a combination of schizophrenia
and chronic obstructive lung disease. She also suffered
from bronchitis and congestive heart failure, and had
been virtually sleepless since being readmitted to the
nursing home. Her death could not have been a surprise.

-- 4 of 13 --

No. 09-3485 5
This is not a wrongful-death case, so uncertainty about
the cause of B’s death cannot get the nursing home off
the hook. The dispositive questions are, first, whether its
handling of her physical and mental infirmities was
consistent with its duty to keep the home as free as possi-
ble from hazards that might cause an accident to a
resident (that is subsection (1) of the regulation; subsec-
tion (2), though cited by HHS in finding a violation,
adds nothing to (1) in this case), and, second, if so, whether
the breach of that duty was “likely to cause . . . serious
injury, harm, impairment, or death to a resident.”
What does “as free of accident hazards as is possible”
mean? Taken literally, it would require a nursing home
to take precautions regardless of cost, as long as they
were at least minimally efficacious. It would have
been physically possible, as distinct from economically
responsible, for Meridian to have reduced to zero the
probability of B’s eating or drinking, by locking her in
the equivalent of a dry cell (even if Meridian would have
had to construct one) and not allowing her to leave it
without a staff escort. But no one suggests that “possible”
is to be taken literally. If it were, and cost were regarded
as no obstacle to requiring hazard precautions, this
would be unlikely to help the Bs of this world; nursing
homes would turn away applicants who can be pro-
tected against all hazards only at a cost that would far
exceed the willingness of the Medicare administration,
groaning under its huge deficit, to reimburse the
nursing home. (The regulation is not limited to Medicare
patients, but most residents of nursing homes are

-- 5 of 13 --

6 No. 09-3485
elderly and thus covered by Medicare.) Although once
a person is admitted to a nursing home licensed by
Medicare there are restrictions on the home’s transferring
or discharging the person, 42 U.S.C. § 1395i-3(c)(2)(A),
there is (with immaterial exceptions) no requirement
that it admit the person in the first place. See 42 U.S.C.
§ 1395i-3(c)(5); 42 C.F.R. § 483.12(d).
Neither the opinion issued by the Departmental
Appeals Board nor the briefs of either party articulates
the standard of care imposed by the “as is possible”
regulation. We can assume that it’s a high standard. The
Social Security Act provides that “a skilled nursing
facility must provide services to attain or maintain the
highest practicable physical, mental, and psychosocial well-
being of each resident, in accordance with a written
plan of care.” 42 U.S.C. § 1395i-3(b)(2); see also id.,
§ 1396r(b)(2) (emphasis added). The “as is possible”
language of the regulation is more or less consistent
with “highest practicable” (we hedge with “more or
less” because eliminating a particular hazard in a par-
ticular way might conflict with maintaining an attrac-
tive quality of life—“psychosocial well-being”—as
perhaps in our “dry cell” example); in any event
Meridian does not challenge the regulation’s validity.
The Supreme Court has distinguished “feasibility
analysis” from “cost-benefit analysis” in other regulatory
settings, e.g., American Textile Manufacturers Institute, Inc.
v. Donovan, 452 U.S. 490, 508-09 (1981), and the “as is
possible” regulation is suggestive of the former. Cf. 29
U.S.C. § 655(b)(5) (OSHA) (feasibility); 33 U.S.C.

-- 6 of 13 --

No. 09-3485 7
§ 1316(a)(1) (Clean Water Act) (achievability); 42 U.S.C.
§ 7412(d)(2) (Clean Air Act) (same). In “feasibility,” or
its equivalent “achievability,” analysis, the regulatory
agency is required to consider costs of compliance; but
only if they are in some sense prohibitive do they
provide a defense. See American Textile Manufacturers
Institute, Inc. v. Donovan, supra, 452 U.S. at 536. In an
OSHA case we said that the test was “whether the re-
strictions would materially reduce a significant
workplace risk to human health without imperiling the
existence of, or threatening massive dislocation to, the health
care industry.” American Dental Ass’n v. Martin, 984 F.2d
823, 825 (7th Cir. 1993) (emphasis added).
Yet there is a feature of the “as is possible” regulation
that makes us doubt that it creates a feasibility standard
as demanding as the one described in American Dental
Ass’n v. Martin. Medicare pays for the health care of
most nursing-home residents. Nursing homes receive a
flat per diem reimbursement from Medicare for each day
of care that they provide, adjusted for the location of the
nursing home and for the resources required to provide
adequate care for the different types of resident. See 42
U.S.C. § 1395yy; 42 C.F.R. § 413.335; Medicare Payment
Advisory Comm’n, “Medicare Payment Basics: Skilled
Nursing Facility Services Payment System” (Oct. 2009),
w w w .m e d p a c . g o v / d o c u m e n ts/M ed PA C _ P a y m e n t _
Basics_09_SNF.pdf (visited Apr. 20, 2010); David A. Bohm,
“Striving for Quality Care in America’s Nursing Homes:
Tracing the History of Nursing Homes and Noting the
Effect of Recent Federal Government Initiatives to Ensure
Quality Care in the Nursing Home Setting,” 4 DePaul J.

-- 7 of 13 --

8 No. 09-3485
Health Care L. 317, 357-60 (2001). The per diem limits the
precautions that the Medicare administration can realisti-
cally require a nursing home to take, for a home will stop
admitting residents who require precautions that cost more
than the reimbursement that the home can expect to
receive. And if we assume that the Medicare administra-
tion sets a reasonable per diem rate, then in practice the “as
is possible” standard will approximate the balancing of
magnitude and likelihood of harm against the burden of
precautions that is familiar in negligence cases and sum-
marized in the concept of due or reasonable care. E.g.,
Mesman v. Crane Pro Services, 512 F.3d 352, 354 (7th Cir.
2008); McCarty v. Pheasant Run, Inc., 826 F.2d 1554, 1556
(7th Cir. 1987); United States v. Carroll Towing Co., 159
F.2d 169, 173 (2d Cir. 1947) (L. Hand, J.). That may
explain why the only two cases that we have found
that discuss the standard of care imposed by the “as is
possible” regulation call it a “reasonableness” standard,
Crestview Parke Care Center v. Thompson, 373 F.3d 743,
754 (6th Cir. 2004); Woodstock Care Center v. Thompson,
363 F.3d 583, 589-90 (6th Cir. 2003), although the cases
do not mention the reimbursement angle.
One more preliminary question remains to be
addressed, and that is the standard of judicial review of
the Departmental Appeals Board’s “as is possible” and
“likely to cause . . . serious . . . harm” determinations.
Normally we would simply assume that the Board’s
judgments are entitled to the usual deference that courts
give administrative decisions. Woodstock Care Center v.
Thompson, supra, 363 F.3d at 589; see also Thomas

-- 8 of 13 --

No. 09-3485 9
Jefferson University v. Shalala, 512 U.S. 504, 512 (1994);
Clancy v. Office of Foreign Assets Control, 559 F.3d 595, 605-
06 (7th Cir. 2009); Singh v. Mukasey, 536 F.3d 149, 154
(2d Cir. 2008). But our opinion in Bettner v. Administrative
Review Board, 539 F.3d 613, 620-21 (7th Cir. 2008), treated
as an open question whether an administrative decision
should be reviewed without any deference paid the
administrator when the decision was based on a grant
of summary judgment; and this is the position urged
by Meridian. But we reject it (answering the question
left open in Bettner), consistent with decisions of other
circuits concerning judicial review of administrative
decisions made without an evidentiary hearing. Gibson v.
SEC, 561 F.3d 548, 552-53 (6th Cir. 2009); Martex Farms,
S.E. v. EPA, 559 F.3d 29, 32 (1st Cir. 2009); Hasan v. U.S.
Dep’t of Labor, 545 F.3d 248, 250-51 (3d Cir. 2008);
Cogeneration Ass’n v. FERC, 525 F.3d 1279, 1282-83
(D.C. Cir. 2008).
All it means for a decision to be based on a grant
of summary judgment is that there are no issues that
would benefit from being resolved in an evidentiary
hearing. That does not extinguish the role of judg-
ment, based on the knowledge and experience of the
administrative agency, based on uncontested facts,
and based on facts that do not require determination in
trial-type proceedings governed by rules of evidence
(“legislative” rather than “adjudicative” facts). The
absence of an evidentiary hearing does not alter the
standard of judicial review of administrative decisions,
set forth in the Administrative Procedure Act, which
permits courts to set aside such decisions only (so far

-- 9 of 13 --

10 No. 09-3485
as might bear on this case) if they are “arbitrary, capri-
cious, an abuse of discretion, or otherwise not in accor-
dance with law,” or “unsupported by substantial evi-
dence.” 5 U.S.C. § 706. It is true that our review of a
district court’s decision granting summary judgment is
plenary. But that is because the only question presented
by an appeal from a judgment based on such a grant is
whether the winning party was entitled to judgment as
a matter of law, and judicial review of pure legal rulings
is plenary—it has to be in order to maintain uniformity
of law throughout the appellate court’s jurisdiction.
Mucha v. King, 792 F.2d 602, 605-06 (7th Cir. 1986).
Agencies are given more decisional latitude by
legislatures than trial courts are—discretion for example
to interpret regulations and often the agency’s organic
statute as well.
We turn at last to the specifics of this case. The implanta-
tion of the PEG tube (the feeding tube), and the
hospital’s NPO (“nothing by mouth”) directive to the
nursing home, signaled that the risk to B of serious harm
from consuming food or drink was high. It’s true that
she turned out to be able to eat and drink intermittently
during the 18 days between her return to the nursing
home and the last day of her life, without incident. It’s
the nature of a risk, compared to a certainty, that one
can have a run of luck. Her luck may or may not have
run out on March 11—remember that we don’t know
the cause of her death. But risk there was, and it
could have been reduced in a number of ways.
B could have been placed in a double room (no single
rooms were available) with a roommate who did not eat

-- 10 of 13 --

No. 09-3485 11
in her room. The bathroom sink would still have been
a problem, but remember that the “as is possible” standard
does not require the adoption of every physically
possible precaution that can be imagined. The govern-
ment’s lawyer told us that just replacing B’s roommate
with a resident who did not eat in the room might
have satisfied the regulation (we do not treat that as a
concession, however). That precaution would have been
virtually costless, since of the nursing home’s 39 residents
20 were assigned to eat in the dining room rather than
in their own room; B’s roommate could have been
required to change places with one of those 20.
Alternatively, B could have been placed in a double
room without a roommate and with a lock on the sink,
requiring her to notify staff if she wanted to wash her
hands or face. This would have been a much more costly
measure and we do not say it is required. It might be
the kind of measure that would exceed the Medicare per
diem and so would not be reimbursed; and we are not
told whether any rooms became vacant during her
brief stay. But it is enough, to require us to uphold the
Department’s decision, that Meridian failed to take a
precaution (the change in roommates) that, though
perhaps not fully efficacious, would have had a
nontrival effect in reducing the risk of a harm other-
wise quite likely to occur; and it would have been very
cheap. It might have been completely effective, more-
over, if conjoined with another inexpensive precau-
tion—namely, effective supervision of B’s forays outside
her room. Many of her forbidden snatchings of food
and drink were from the plates of other residents in the

-- 11 of 13 --

12 No. 09-3485
dining room, where she could have been watched; and
then the only source of danger would have been the
bathroom sink. And that was a limited danger. Dysphagia
is especially serious when the sufferer is a rapid
swallower, as B was, and it is difficult to swallow
rapidly the water that flows from a tap in the sink. You
either have to put your face in the sink and turn your
head sideways, and often you’ll still just get a trickle, or
cup your hands in order to collect the water—and
then watch most of it trickle between your fingers.
When the staff did catch B trying to eat or drink, it told
her to desist (“reminded her of her dietary restrictions”
and “encouraged” her to abide by them). But these “verbal
cues” (such as “eating may cause death”), addressed to a
madwoman, attempting to “redirect her when she was
observed attempting to consume food and fluids,” were
ineffective and known by the staff to be so. For upon her
return to the nursing home B had gotten out of the wheel-
chair in which she had arrived, strode to the kitchen,
and asked the cook for food. A nurse told the cook, and B,
that B was NPO. B yelled, “Go to hell bitch. I remember
you and you are wrong.” One hour later B was caught
drinking from the water fountain and a nurse asked her
to stop and again reminded her of the danger that
forbade her to have food or water in her mouth and B
yelled “You are a fucking liar and fuck the doctor too.”
She then locked herself in a bathroom and when she
emerged it was apparent that she had been drinking out of
the sink. A nurse asked her not to lock herself in the
bathroom. B laughed.

-- 12 of 13 --

No. 09-3485 13
It is true, as Meridian points out, that B was not so
mentally impaired as to be unable to understand the
meaning of the staff’s admonitions to her. An affidavit
from one of the nurses states that “B chose to remain non-
compliant with her restrictions despite being advised of
the risks.” But she could not comply, because of her
mental illness (schizophrenia inadequately controlled by
medication—for she had delusions during her stay at
the nursing home), which doubtless both exacerbated
and was exacerbated by her sleeplessness.
Meridian complains that the case should not have been
decided on summary judgment; that there should have
been an evidentiary hearing. (This is different from its
argument that an administrative decision made without
benefit of an evidentiary hearing should be reviewed as
if the administrative agency adjudicator were a district
judge.) Meridian would be right if the nursing home
had tendered evidence that, if believed, would show
that it had done everything possible (within the meaning
of the regulation) to minimize the risk of an accident to B.
But it could not show that. It could not show that because
it had and has no evidence to rebut the argument that
placing B in a room with a noneater, and controlling
her out-of-room activities more effectively, would at
reasonable cost have significantly reduced the danger
of strangulation.
The petition for review is
DENIED.
5-6-10

-- 13 of 13 --