Cedar Lake Nursing Home v. United States Department of Health and Human Services

Cedar Lake Nursing Home (Cedar Lake) (defendant) participated in the Medicare program. Cedar Lake had a 92-year-old female resident known as Resident 10. Resident 10 had a history of wandering off and trying to leave the facility. Accordingly, Cedar Lake’s care plan for Resident 10 required that the staff keep her somewhere that she could be constantly observed. Cedar Lake also had a door alarm that sounded if a resident attempted to leave the facility. However, a contractor was installing a new alarm system and disconnected the door alarm without notifying Cedar Lake’s staff. While the door alarm was disconnected, Resident 10 left the facility and was later found walking alone next to a highway. The United States Department of Health and Human Services (HHS) (plaintiff) sent surveyors from its Medicare division to investigate the incident. HHS determined that Cedar Lake had violated 42 C.F.R. § 483.25(h). Specifically, HHS found that Cedar Lake’s staff had not kept Resident 10 under frequent observation, which meant that the staff had not acted reasonably to ensure that Resident 10 was adequately supervised and safe. HHS issued a civil monetary penalty to, i.e., fined, Cedar Lake $5,000 for the violation. Cedar Lake appealed the fine to an administrative-law judge and an administrative appeals board, both of which affirmed the fine. Cedar Lake then petitioned the Fifth Circuit to review the matter.