December 16, 2004

Double Penalties

If you have a pending nursing home Civil Penalty case based on a survey that predates September 1, 2003 and you have already paid a Federal Civil Monetary penalty, the Fort Worth Court of Appeals has rendered a favorable decision. The case is The State of Texas v. Haltom Medical Investors, L.L.C. d/b/a Haltom Convalescent Center.

The facts of the case involve a survey done in July, 2002 which resulted in a recommendation of Federal Civil Money Penalties and a referral to the Texas Attorney General for Civil Penalties. The CMP's and Civil Penalties were to arise from the same facts. The nursing home accepted the Federal waiver and paid the reduced CMP amount. In January of 2003, DHS got around to sending a letter to the Texas Attorney General referring the matter for Civil Penalties.

On September 17, 2003, the OAG filed suit. The problem for the State is that during the 2003 Legislative session, the Texas Legislature changed section 242.070 to read:

The department may not assess more than one monetary penalty under this chapter and Chapter 32, Human Resources Code, for a violation arising out of the same act or failure to act, except as provided by Section 242.0665(c). The department may assess the greater of a monetary penalty under this chapter or a monetary penalty under Chapter 32, Human Resources Code, for the same act or failure to act.


The nursing home had already paid the CMP and argued that the changes in the law which were effective on September 1, 2003 precluded the State from collecting additional monetary penalties. The State argued that the Civil Penalties were assessed in 2002 before the change in the law and that the prior law applied allowing the State to collect additional monetary penalties. Apparently, the State's idea of assessment was the letter sent with the 2567 indicating that DHS was recommending referral to the OAG for imposition of Civil Penalties. Of course, there was no notice in the letter about how much the Civil Penalties would be or for which violations the CP's were being pursued.

The OAG also argued that giving notice that the State was seeking Civil Penalties is the same as assessing them. The trial court and Court of Appeals decided otherwise. The Court of Appeals looked at the Health & Safety Code, section 242.067(g) which says:

If the person charged with the violation consents to the administrative penalty recommended by the department, does not timely respond to a notice sent under Subsection (c) or (e), or fails to correct the violation to the department’s satisfaction, the commissioner or the commissioner’s designee shall assess the administrative penalty recommended by the department.

Also, the 2002 TDHS annual report to the Texas legislature interprets the term assess differently from the State's argument against Haltom. It says:

Penalties assessed are the final actions after the appeal process has been completed (or an agreement to settle has been reached) and a final amount has been decided. The facility is notified of the amount to be paid. There may be a lump sum payment or a monthly payment scheme agreed upon during the appeal or settlement process.

Thus, it appears that if the OAG hasn't already collected or settled a Civil Penalty matter pending from a pre-September 1, 2003 survey--and the facility has already paid a CMP, the State is out of luck according to this decision.

The case was delivered on December 9, 2004. I'll continue to watch it in case further motions or appeals overturn the decision.