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Incident reports, surveys and privilege: Protecting QA material from enforcement action

September 12, 2012
by Alan C. Horowitz, Esq.
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Imagine that a survey is occurring at your facility. The director of nursing just informed you that the survey team asked to see all incident reports for the past three months. Not knowing whether or not the incident reports had to be disclosed to the surveyors, the nursing home administrator called the facility’s attorney. In turn, the attorney advised that the incident reports are shielded by a “quality assurance privilege.”  When the DON informed the surveyors of this, they contacted their supervisor for guidance and afterwards said they would cite a deficiency at the “immediate jeopardy” level and possibly terminate the facility if the incident reports were not disclosed.

The incident reports were reluctantly turned over and a number of deficiencies were later cited. The most serious deficiency had a scope and severity at a G-level, an isolated instance of actual harm. Weeks later, after the facility received notice of imposition of a civil money penalty (CMP), it filed an appeal with an administrative law judge (ALJ) at the Departmental Appeals Board (Board). In its appeal, the facility asserted that the Centers for Medicare and Medicaid Services (CMS) may not cite the deficiencies and impose a CMP since it relied on information contained in the facility’s incident reports. The ALJ would have to address the thorny question of whether there is a quality assurance privilege that shields incident reports from surveyors.

If the above scenario sounds far-fetched, it shouldn’t. That is precisely what happened in a case that recently made new binding law for the Third Circuit. It would be the first time any federal court addressed that specific issue. The case is the Jewish Home of Eastern Pennsylvania v. CMS, HHS (JHEP), and its significance for skilled nursing facilities is discussed below.1


The case began in December 2005, when surveyors from the Pennsylvania Department of Health were conducting a survey at the JHEP. Eight separate deficiencies were determined, the most serious of which caused actual harm to residents. As a consequence, CMS imposed a $350-per-day CMP from December 9, 2005, until JHEP achieved substantial compliance on January 26, 2006. Thus, the total CMP was $17,150. JHEP filed an appeal with an ALJ, challenging the basis for the CMP. On October 16, 2006, another survey at JHEP was conducted and it found 12 deficiencies, some of which were repeat deficiencies. CMS imposed a $400-per-day CMP from October 16, 2006 through November 16, 2006, totaling $12,800. JHEP appealed this CMP as well, and both appeals were consolidated. JHEP claimed that the CMS deficiency findings and the two CMPs were invalid because CMS (and the state survey agency) relied on incident reports which, according to JHEP, were protected by the quality assurance privilege found in the Federal Nursing Home Reform Act (also known as OBRA ’87).

Although JHEP claimed that federal law created a “privilege” against discovery by surveyors, the word “privilege” does not appear in the statute or the implementing regulations. There is, however, a limitation on disclosure of quality assurance documents found at Section 1396r(b)(1)(B) of the Social Security Act (Act). The relevant language in the Act is as follows, “A State or the Secretary may not require the disclosure of the records of such committee [QA Committee] except insofar as such disclosure is related to the compliance of such committee with the requirements of this subparagraph.” The regulation at 42 C.F.R. §483.75(o)(3), mirrors the statutory language. 


The ultimate question for the ALJ, a subsequent appeal before the Board and ultimately the Third Circuit, was whether the JHEP’s incident reports were quality assurance documents and shielded from discovery by the surveyors. JHEP argued that the incident reports were privileged because they were “generated or acquired” by its quality assurance committee. CMS countered that neither the statute nor the regulations provide a privilege that shields incident reports from discovery. Additionally, CMS asserted that documents which merely contain a factual account of an incident, such as a fall resulting in harm to a resident, contain the same type of information that SNFs are required to report to the state survey agencies. Specifically, 42 C.F.R. §493.13(c) requires SNFs to investigate promptly and report allegations of abuse, neglect and misappropriation of property.  


In an unusual twist, on the first day of the trial, immediately before it was to begin, JHEP conceded the deficiencies from both surveys.  At that point, the only legal issue for the ALJ was to determine whether the CMP was reasonable. Still, the ALJ proceeded to conduct the trial. JHEP renewed its objection to the incident reports and sought to have the ALJ exclude them. Its motion was denied and the trial proceeded. CMS pointed out that in addition to conceding the F324 deficiency (failure to provide adequate supervision and assistance devices to prevent accidents) from both surveys, JHEP did not even challenge seven deficiencies from the December 2005 survey and 11 deficiencies from the October 2006 survey.