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

September 12, 2012
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Alan 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

BACKGROUND

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 APPEAL

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.  

THE ALJ APPEAL

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.  

After the trial, the ALJ ruled in favor of CMS, upholding the two CMPs in their entirety. The ALJ refused to accept JHEP’s claim that a quality assurance privilege protected the incident reports from disclosure. He noted that the incident reports “are filled out at the time of an incident whenever a particular patient has an unexplained accident or fall within the facility. They are not generated by the Quality Assurance Committee (QAC), although the occurrence of an accident or several may later trigger a QAC study.” JHEP appealed the ALJ’s decision to the Board.

APPEAL TO THE BOARD

On appeal to the Board, JHEP argued that the ALJ erred by failing to exclude the incident reports, which it claimed were facility quality assurance records, and the testimony derived from those records. Before addressing the issue of the incident reports, the Board, like the ALJ below, noted that during the trial and in its briefs, JHEP stipulated that it was not in compliance. Perhaps one of the reasons JHEP did not argue that it was in substantial compliance is that on one survey alone there were 10 separate residents cited under the F324 tag. As the ALJ noted, one of those 10 residents fell 11 times in as many months, sustaining serious and avoidable injuries.

In rejecting JHEP’s argument that the incident reports were privileged, the Board held, “We note that Jewish Home mistakenly refers to the Act and the regulation as creating an evidentiary privilege. Neither the Act nor the regulation employs the term ‘privilege’ or refers to rules of evidence relating to privilege. Rather than a privilege, the Act and regulation establish disclosure and use restrictions applicable to records of a QA Committee.” 

The Board reasoned that merely because incident reports may end up before a quality assurance committee, that is not a sufficient basis to treat them as the product of the committee. It noted that “such material [incident reports] is more analogous to actual patient care records, such as nursing notes or progress reports, which may well be important for the QA Committee to evaluate in determining the underlying causes of or best approaches to address a facility issue identified by the QA Committee.” The Board affirmed the ALJ’s decision in its entirety.

THIRD CIRCUIT APPEAL

Undaunted by the Board’s decision, JHEP next appealed to the Third Circuit. The court carefully examined the record and concluded, as did the ALJ and the Board, that the incident reports were not privileged. The Court characterized the incident reports as “contemporaneous, routinely-generated incident reports that were part of the residents’ medical records and were not minutes, internal papers, or conclusions generated by the Quality Assurance Committee.”

The Third Circuit also quoted from the Board’s decision that it “would be strange indeed if the very documentation which a facility is required to generate for that purpose [mandatory reporting of allegations of abuse, neglect and misappropriation of resident property] were also shielded from those very regulators whenever it has been reviewed by a [Quality Assurance] Committee.”

APPEAL TO THE SUPREME COURT

After the Third Circuit ruled against JHEP, it filed a petition for certiorari with the U.S. Supreme Court. The high court denied the petition, which makes the Third Circuit’s decision final and binding.

TAKE-AWAY

One take-away from this case is that it probably is not the best strategy to concede deficiencies a facility plans to appeal. Appeals should be carefully crafted based on the facts of a particular case and the correct application of the law. The JHEP case may be an illustration of the law of unintended consequences. As a result of this appeal, on August 14, 2012, the Third Circuit designated its decision in the JHEP case as “Precedential.” Because the Third Circuit, in affirming the holding of the ALJ and the Board, stated that the incident reports are not privileged, that decision is binding on all courts within the Third Circuit.

Considerable confusion has existed in both the government (i.e., CMS and state survey agencies) as well as the provider community about whether incident reports are discoverable. Where a contemporaneously created incident report contains raw data describing an event such as the name of a resident and the date and nature of an accident, it is analogous to the mandatory reports facilities must file. As such those incident reports will not enjoy the protection of any privilege. 

There is a significant distinction between a purely factual recitation of an accident and the subsequent deliberations and discussions that a quality assurance committee may undertake. The former is not privileged while the latter may not be used to cite a deficiency.  The applicable regulation, 42 C.F.R. §483.75(o)(4), states that good faith efforts by a quality assurance committee to identify and correct quality deficiencies “will not be used as a basis for sanctions.” 

There are many subtle nuances, and sometimes the lines may become blurred. For example, would the Third Circuit have reached the same result if the QA committee, after deliberations, directed the staff to complete an incident report for its internal purposes? What if the incident reports were completed at a point later in time at the request of the facility’s counsel? Facilities should carefully consider what constitutes legitimate quality assurance or otherwise privileged documents and how best to protect those documents.  

A senior representative from a state survey agency shared with the author that the surveyors in that state would likely continue their practice of not requiring facilities to disclose incident reports. To its credit, that state survey agency is concerned that by doing otherwise, it could have a chilling effect on the entire quality assurance process. It is likely that CMS will leave that decision to the discretion of each state.

Another take-away from this case is that SNFs need to know how best to legitimately protect bona fide QA material from being the basis for an enforcement action. Recognizing the difference between incident reports and the deliberations and internal workings of the QA committee is a good starting point.

Alan C. Horowitz, Esq., is currently Of Counsel at Arnall Golden Gregory. He is a former Assistant Regional Counsel, Office of the General Counsel, U.S. Department of Health and Human Services.  He successfully handled the JHEP appeals before the ALJ, the Board and the Third Circuit, representing CMS.  He also has clinical healthcare experience as a registered respiratory therapist and registered nurse. Contact him at alan.horowitz@agg.com

1  Jewish Home of Eastern Pennsylvania v. CMS, HHS, 413 Fed.Appx. 532 (3d Cir.2011), cert denied, 132 S.Ct. 837 (2011).

Disclaimer: This article is not legal advice. Consultation with licensed and experienced legal counsel is advised.

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