Third Circuit Designates Case Involving Skilled Nursing Facility’s Incident Reports as Precedential

On August 14, 2012, the U.S. Court of Appeals for the Third Circuit ordered that its February 2, 2011 decision in the case of the Jewish Home of Eastern PA v. Centers for Medicare and Medicaid Services, HHS1, be designated as precedential. Significantly, this is the first time any federal court has dealt with the issue of whether a skilled nursing facility’s (SNF) incident reports are shielded by a quality assurance privilege in the context of federally mandated

There is no paucity of cases involving discovery of incident reports and claims of privilege by hospitals, SNFs and other health care providers. However, no federal court has previously addressed the issue of whether the Federal Nursing Home Reform Act, also known as “OBRA ’87,” creates a privilege that shields incident reports from discovery by surveyors conducting a survey on
behalf of the Centers for Medicare & Medicaid Services (“CMS”). 42 U.S.C. § 1396r(b)(1)(B).


The case began as an appeal before an Administrative Law Judge (“ALJ”) of the Health and Human Services’ Departmental Appeals Board. In order to participate in the Medicare program, skilled nursing facilities such as the Jewish Home of Eastern Pennsylvania (“JHEP”) must be in substantial compliance with federal requirements. CMS enters into agreements with each state to have surveyors from a state agency, typically a state department of health, conduct unannounced surveys to determine whether a SNF is in
substantial compliance with program requirements.

On two separate surveys, surveyors found that JHEP was not in substantial compliance. Specifically, it violated eight federal regulations according to one survey and twelve additional regulations, determined by another survey. Consequently, CMS imposed two civil monetary penalties (CMPs) totaling $29,950. Although JHEP appealed the imposition of the CMPs, it neither challenged the underlying basis for the CMP nor asserted that it was in compliance with federal program requirements. Rather, it claimed that CMS’ determination of noncompliance was invalid because it was based on “privileged” quality assurance records that should not have been given to the surveyors. Specifically, JHEP claimed that the surveyors relied on information contained in the facility’s incident reports as a basis for the deficiency citations2. Prior to the trial, it filed a motion to suppress the quality assurance documents, which
the ALJ denied.

The government argued that there is no privilege that allows a SNF (or other Medicare provider) to refuse to provide incident reports to federal or state surveyors conducting a survey for purposes of participation in the Medicare program, pointing to 42 C.F.R. § 483.13(c) which requires SNFs to investigate and report all allegations of resident mistreatment, neglect or abuse and misappropriation of resident property to State survey agencies. The incident reports at issue contained the same information that the regulations require SNFs to report to state survey agencies.

Immediately prior to the trial, JHEP stipulated that it was not in substantial compliance with the federal regulations that served as a basis for the two CMPs. It also renewed its objection to admitting the incident reports into evidence. The ALJ refused to exclude the incident reports, finding that they were not generated by the Quality Assurance Committee and after post-trial briefing, upheld the two CMPs in their entirety.

JHEP appealed the ALJ’s decision to the Departmental Appeals Board (“Board”) and again argued, among
other things, that its incident reports were quality assurance documents and therefore protected from disclosure by the “quality assurance privilege” found at 42 U.S.C.§ 1396r(b)(1)(B). The Board observed that neither the Social Security Act (“Act”) nor the applicable regulations employs the term “privilege” and
affirmed the ALJ’s finding.

In upholding the government’s position the Board noted, “it would be strange indeed if the very documentation which a facility is required to generate for a[regulatory compliance] purpose were also shielded from those very regulators whenever it has been reviewed by a QA Committee or whenever an individual whose responsibilities include conducting or documenting such investigations also serves on a QA Committee.”

The Board refused to accept the claim that incident reports (also called “event reports” and “occurrence reports”) are bona fide quality assurance documents which are subject to disclosure restrictions under the Act and implementing regulation at 42 C.F.R. § 483.75(o). To the contrary, the Board held that although incident reports might end up before a Quality Assurance (QA) Committee, it could find “no basis to treat such raw factual material as itself the product of the QA Committee process.” The incident reports are
analogous to patient care records, such as nursing notes and progress reports, reasoned the Board.

On appeal to the Third Circuit, JHEP again asserted that the Act and the regulation shielded incident reports from discovery based on the quality assurance privilege. The Third Circuit noted that 42 U.S.C. § 1396r(b)(1)(B) requires a nursing home to have a quality assessment and assurance committee that meets at least quarterly and develops and implements appropriate plans of action to correct identified quality deficiencies.  The Court noted that the relevant section of the Act states, in part:

A State or the Secretary may not require disclosure of the records of such committee except insofar as such disclosure is related to the compliance of such committee with the requirements of this subparagraph.

Accepting HHS’ position, the Court held that the incident reports at issue were “contemporaneous, routinelygenerated incident reports that were part of the residents’ medical records and were not minutes, internal papers, or conclusions generated by the Quality Assurance Committee.”


Much confusion has existed among both the provider community and even the government regarding the discoverability of incident reports in the context of Medicare-related surveys. Skilled nursing facilities need to understand the import of the Third Circuit’s decision. Simply put, an incident report, which is merely a factual document contemporaneously generated at the time of an accident or incident, will not enjoy any privilege from discovery in the context of Medicare-required surveys. Merely because a document such as
an incident report may up before a Quality Assurance Committee does not transform its essential character into a Quality Assurance document that can be shielded from discovery. On the other hand, bona fide Quality Assurance documents such as the deliberations, internal working papers and minutes of a Quality Assurance committee are protected by statute from being used by surveyors as a basis to cite a deficiency.  In the wake of the Third Circuit’s precedential decision in the JHEP case above, facilities should carefully consider how they can best protect those documents that are bona fide Quality Assurance documents.

CMS imposed a third CMP on the JHEP of $600 per day effective from November 2, 2007 through January 17, 2008, based on ongoing noncompliance with federal participation requirements. JHEP appealed the CMP and argued that the regulation at 42 C.F.R. § 483.75(o) precludes the Secretary from relying on privileged quality assurance documents. As before, it conceded that it was not in compliance with program requirements. Rather than asserting it was in compliance, it objected to CMS introducing its Plan of Correction into evidence, again asserting a quality assurance privilege. The ALJ upheld the CMP and found that no privilege existed for the Plan of Correction which was not even prepared for the facility’s Quality Assurance Committee. The ALJ observed that the Plan of Correction is a necessary document that SNFs must submit to state survey agencies within 10 days of being cited for a deficiency. The JHEP appealed the ALJ’s decision and the Board affirmed. JHEP next appealed to the Third Circuit which denied its petition for review.  Jewish Home of Eastern Pennsylvania, CR2242 (2010), aff’d DAB No. 2451 (2011), aff’d Jewish Home of Eastern
Pennsylvania v. CMS, HHS, (No. 11-2616, 3d Cir. 2012).

1 Jewish Home of Eastern PA v. Centers for Medicare and Medicaid Services, HHS, 413 Fed.Appx.
532 (3d Cir. 2011), cert denied, 132 S.Ct. 837 (2011).

2 A “deficiency” is a reference to a violation of a specific federal regulation at 42 C.F.R. Part 483.

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