CASE | DECISION |JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Carrington South Health Care,

Petitioner,

DATE: July 24, 2003
                                          
             - v -

 

Centers for Medicare & Medicaid

 

Docket No.C-02-741
Decision No. CR1071
DECISION
...TO TOP

DECISION

This matter is before me on the Centers for Medicare & Medicaid Services's (CMS, formerly known as the Health Care Financing Administration or HCFA) Motion to Dismiss, or, in the Alternative, for Partial Summary Judgment (Motion to Dismiss). I have determined that Carrington South Health Care Center, Inc. (Petitioner) is not entitled to a hearing in this case and, therefore, I grant the motion and dismiss Petitioner's request for hearing.

My decision is based on the memoranda and other pleadings filed by both parties, and on the documents attached to CMS's memorandum which I have admitted, in the absence of objection from Petitioner, to the record. CMS submitted six attachments, marked as Attachments A - F, with its brief (CMS Brief) on October 31, 2002. I have admitted the attachments as CMS Exhibits (CMS Exs.) A - F, rather than remarking them with numbers to conform to normal practice in this forum.

I. Background

Petitioner is a skilled nursing facility located in Youngstown, Ohio. On April 11, 2002, the Ohio Department of Health (ODH or State survey agency) completed a standard survey of the facility to determine if it was in compliance with the federal requirements for nursing homes participating in the Medicare and Medicaid programs. The ODH surveyors found that the facility was not in substantial compliance and reported numerous violations of the federal participating requirements. The violations were set forth in detail in two standard survey reports known as the Form 2567-L (Form 2567). One Form 2567, which was a single page in length, alleged a deficiency from the Life Safety Code survey completed on April 10, 2002 (CMS Ex. A), and the other Form 2567, which was 32 pages long, alleged deficiencies from the resident care survey completed on April 11, 2002 (CMS Ex. B). As usual in such survey reports, the deficiencies were organized by "F-tags," with each F-tag relating to the violation of a particular regulatory standard, and each assessed as to the scope and severity of the regulatory infraction. The two survey reports cited a total of 20 deficiency tags. I note, however, that in its brief, CMS, citing to both survey reports, refers to 17 reported deficiencies. (1)

By notice letter dated May 16, 2002, CMS informed Petitioner that it concurred with ODH's recommendation to impose certain remedies and was imposing the following: (1) mandatory denial of payment for new Medicare and Medicaid admissions (DPNA) effective July 11, 2002, and (2) a civil money penalty (CMP) of $250 per day effective April 11, 2002. CMS advised Petitioner that if it did not attain substantial compliance by October 11, 2002, its Medicare and Medicaid participation would be terminated effective on that date. CMS also informed Petitioner that, as a result of the DPNA, its Nurse Aide Training and/or Competency Evaluation Program (NATCEP) would be suspended for two years from July 11, 2002. CMS Ex. D.

In a letter dated May 22, 2002 that was issued after an informal dispute resolution (IDR) proceeding, ODH advised Petitioner that it had deleted four deficiency tags (F157, F166, F221, and F250) from the Form 2567. CMS Ex. C. ODH enclosed with the letter an amended Form 2567.

By notice letter dated July 1, 2002, CMS advised Petitioner that a revisit conducted by the State survey agency on May 16, 2002, found the facility to be in substantial compliance with the participation requirements effective May 13, 2002. CMS's letter informed Petitioner that the mandatory DPNA effective July 11, 2002, was rescinded, and that the mandatory termination of its Medicare and Medicaid agreement, which was to be effective October 11, 2002, would not be imposed. CMS advised Petitioner further that the total amount of the imposed CMP was $8,000 based on a CMP of $250 per day for 32 days beginning on April 11, 2002 and continuing through May 12, 2002. Finally, CMS informed Petitioner that although the original triggering remedy of the DPNA did not go into effect, the facility was still subject to the NATCEP suspension for two years from July 16, 2002, because a CMP in the amount of $5,000 or more had been imposed. (2) CMS Ex. E.

Petitioner timely filed its hearing request on July 11, 2002 (CMS Ex. F). In its hearing request, which is nine pages long, Petitioner disputes the ODH determination that the facility was not in substantial compliance with participation requirements based on the survey conducted on April 11, 2002. Petitioner disputes the remedies imposed by CMS and refers to CMS's notice letters dated May 16, 2002 and July 1, 2002. (3) Petitioner challenges six deficiency tags, stating that they were improperly and inappropriately cited and asserts that the remedies imposed should be withdrawn.

CMS filed its Notice of Issues for Which a Dismissal for Cause, or, in the Alternative, Summary Judgment Will Be Requested (CMS Notice of Issues) on October 15, 2002. That Notice of Issues explained CMS's theory, to which it still adheres:

It is CMS's position (1) that all the unappealed deficiencies (some 7 deficiency tags) from the same survey provide a fully adequate basis for all the remedies imposed, (2) that a hearing on the limited number of deficiencies for which [Petitioner] seeks a hearing would not result in any change in the remedies imposed, and (3) that in such a case, in accordance with the regulations and Eagle Care, Inc. d/b/a/ Beech Grove Meadows v. CMS, CR923; and The Lutheran Home - Caledonia v. HCFA, CR674 (ALJ Decision), affirmed by Decision No. 1753 (DAB Appellate Division Decision), this tribunal would not have the jurisdiction to hear such a matter.

CMS Notice of Issues, at 1.

CMS filed its Motion to Dismiss and supporting brief on October 31, 2002.

II. Issue

The sole issue before me is: whether Petitioner has a right to a hearing on the six deficiency tags it has appealed, when the seven unappealed deficiency tags arising from the same survey are sufficient to support the remedies imposed, without reliance on the appealed deficiency tags?

III. Controlling Statutes and Regulations

CMS's authority to impose penalties against non-compliant facilities derives from both statute and regulation. When CMS proposes to impose a CMP, it relies on section 1819(h)(2)(B) of the Social Security Act (Act) and the grant of authority conveyed to it by 42 C.F.R. § 488.406(a)(3), which states:

(a) General. In addition to the remedy of termination of the provider agreement, the following remedies are available:

. . .

(3) Civil Money Penalties.

When CMS proposes to prohibit approval of a facility's NATCEP, it relies on statutory language found at section 1819(f)(2)(B)(iii)(I) of the Act. The specific provisions that bear on this discussion are set out below, and they require that the Secretary of the Department of Health and Human Services (Secretary) "shall prohibit approval" of any NATCEP program if it is:

(I) offered by or in a skilled nursing facility which, within the previous 2 years -

. . .

(b) has been subject to an extended survey (or partial extended survey) under subsection (g)(2)(B)(i) . . . ; or

(c) has been assessed a civil money penalty . . . of not less than $5,000.00

. . .

Subsection (b) above refers to extended surveys or partial extended surveys prompted by a "substandard quality of care" finding, while subsection (c) comprehends any CMP imposed for whatever reasons based on deficiencies.

The range of CMP which may be imposed is based upon the scope and severity of the deficiency or deficiencies encountered. One alternative, not at issue here, is a "per instance" CMP that can range from $1,000 to $10,000 per instance of noncompliance. 42 C.F.R. § 488.408(d)(iv). The alternative chosen by CMS in the instant case is set out at 42 C.F.R. § 488.408(d)(1)(iii), which authorizes the imposition of "[c]ivil money penalties of $50-3,000 per day" in situations of "[w]idespread deficiencies that constitute no actual harm with a potential for more than minimal harm but not immediate jeopardy; or . . . [o]ne or more deficiencies that constitute actual harm that is not immediate jeopardy." 42 C.F.R. §§ 488.408(d)(2)(i), (ii). Such CMPs are defined as falling in the lower range of available penalties, both by reference to the upper and lower limits of the penalty amount and the severity of the deficiency for which they are imposed. 42 C.F.R. § 488.438(a)(ii).

Appeals from the imposition of remedies are permitted under the circumstances set out in 42 C.F.R. §§ 498.3 and 498.5. A facility may appeal an initial determination of noncompliance if it results in the imposition of a penalty such as a CMP, DPNA, or disapproval of a NATCEP, but it may not appeal deficiency findings that do not form the basis for a remedy actually imposed by CMS. A facility may appeal the level at which CMS assesses the noncompliance only if a successful appeal would affect the range of CMP imposed, or would eliminate a finding of substandard quality of care which had resulted in the loss of NATCEP approval. 42 C.F.R. §§ 498.3(b)(13), (14).

Appeals are perfected according to the terms of 42 C.F.R. § 498.40. The requirements are relatively straightforward on their face. Within 60 days of its receipt of notice of the initial determination of deficiency (42 C.F.R. § 498.40(a)(2)), the facility must file a request for hearing which must:

(1) Identify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees; and

(2) Specify the basis for contending that the findings and conclusions are incorrect.

42 C.F.R. § 498.40(b).

The terms of 42 C.F.R. § 498.40 are controlling on the question of whether potential issues have been preserved for appeal. A facility affected by a final determination, and seeking review of that determination on appeal, must invoke jurisdiction in its hearing request. Otherwise, those determinations and the findings on which they are based become final, non-reviewable, and binding on the affected facility by operation of law. 42 C.F.R. §§ 498.20(b), 498.70(a).

An administrative law judge (ALJ) must examine the contents of the document which requested a hearing in order to determine whether the right to a hearing has accrued with respect to all, some, or none of the issues stated in the document. Consequently, the fact that an affected party has filed a document containing the words "request a hearing" within the 60-day filing period does not mean that the document satisfies the applicable regulatory requirements. See Birchwood Manor Nursing Center, DAB No. 1669 (1998), aff'd, Birchwood Manor Nursing Center v. Dep't of Health and Human Servs., No. 98-60695 (5th Cir. June 29, 1999); Regency Manor Healthcare Center, et al., DAB No. 1672 (1998); Care Inn of Gladewater, DAB No. 1680 (1999).

42 C.F.R. § 498.40(c) provides that the ALJ may extend the time for filing a request for hearing for good cause shown. Under 42 C.F.R. § 498.70(c), the ALJ may dismiss a hearing request entirely or as to any stated issue if the affected party did not timely file a hearing request and the time for filing has not been extended for good cause.

IV. Findings of Fact and Conclusions of Law

I find and conclude as follows:

1. Petitioner is a skilled nursing facility, and was the subject of a standard survey completed by the ODH on April 11, 2002.

2. My review of the two Form 2567s indicates that the State survey agency surveyors cited a total of 20 deficiencies; however, it is CMS's position that the surveyors alleged 17 deficiencies. CMS Exs. A, B; CMS Brief, at 2.

3. As a result of IDR, ODH advised Petitioner that it had deleted four deficiency tags (F157, F166, F221, and F250) from the Form 2567. CMS Ex. C.

4. It is CMS's position that, following the elimination of four deficiency tags from the Form 2567, there remained 13 alleged deficiency tags, which were as follows: K075, F208, F223, F241, F248, F253, F309, F310, F314, F318, F322, F371, and F444. CMS Brief, at 2 - 3.

5. Based on the alleged deficiency citations, CMS determined to impose the following remedies: (1) a CMP of $250 per day for 32 days beginning on April 11, 2002 and continuing through May 12, 2002, for a total CMP of $8,000; and (2) NATCEP suspension for two years from July 16, 2002. CMS Ex. E.

6. CMS sent Petitioner a notice letter dated May 16, 2002, and then, following a revisit on May 16, 2002, sent Petitioner a revised notice letter dated July 1, 2002. CMS Exs. D, E.

7. Petitioner timely filed its hearing request on July 11, 2002, but appealed only six deficiency tags: F223, F241, F248, F310, F314, and F322. CMS Ex. F.

8. Petitioner's hearing request did not seek review or challenge any of the other seven reported deficiency citations, and they have now become final. 42 C.F.R. § 498.20(b).

9. The remedies imposed on Petitioner by CMS, the CMP of $8,000 and the loss of NATCEP approval for two years, are fully supported by the seven unappealed deficiencies, without reliance on the six deficiency tags that Petitioner did appeal. 42 C.F.R. §§ 408(d)(1)(iii), 408.438(a)(ii), 488.438(f)(1).

10. There is no reason to invoke my discretionary authority to allow Petitioner to amend its hearing request, or to add new issues to those already before me in this case. 42 C.F.R. §§ 498.40(c)(2), 498.56(a).

11. On the facts of this case, where there is no remedy to affirm or reverse, Petitioner has no right to a hearing, and its request for hearing must be dismissed. 42 C.F.R. §§ 498.3, 498.5.

V. Discussion

CMS has asked that I dismiss Petitioner's hearing request on the grounds that it is inadequate to preserve any issues for adjudication, including those related to the six deficiencies it did challenge or, in the alternative, that I grant partial summary judgment in its favor on the seven unappealed deficiencies. CMS Brief, at 1, 6. Petitioner disputes CMS's characterization that its request for hearing failed to challenge all the deficiency citations. Petitioner asserts that its hearing request "fully challenged all deficiencies cited by ODH and adopted by CMS, as well as all remedies imposed." Petitioner's Response (P. Response), at 3.

As stated above, Petitioner submitted a hearing request that was nine pages long and challenged, in some detail, six deficiency tags. In the introductory paragraphs of its hearing request, Petitioner stated that it "disputes the determination by the [ODH] that the facility was not in substantial compliance with the participation requirements for nursing homes participating in the Medicare and Medicaid programs based on [sic] survey conducted on April 11, 2002." Petitioner asserts further that it:

also disputes the recommendation of remedies by the [ODH], and possible additional remedies by the Health Care Financing Administration . . . and/or Department of Health and Human Services resulting from said survey conducted on April 11, 2002, and any other survey relating to the May 16, 2002, Notice of Imposition of Remedies and July 1, 2002, Rescission/Discontinuation/No Imposition of Remedies as issued by . . . (CMS) . . . . The imposed citations, which were amended by HCFA Amended 2567L, and the imposed remedies remaining after the July 1, 2002 Rescission, result in [sic] . . . ("CMP") in the total amount of eight thousand dollars ($8,000.00) based on a CMP of two hundred fifty dollars per day ($250.00) beginning April 11, 2002 through May 12, 2002.

Petitioner's Hearing Request; CMS Ex. F.

The last introductory paragraph prior to Petitioner's discussion of the six alleged deficiency tags states as follows:

[Petitioner] challenges the factual conclusions of the surveyors that resulted in the allegations of the cited deficiencies. Specifically, but without waiver of the general statements of issues above and elsewhere herein, [Petitioner] disagrees with the following findings of deficiencies and notes the reasons why such deficiencies should be removed.

Petitioner's Hearing Request; CMS Ex. F.

As appellate panels of the Departmental Appeals Board (Board) have emphasized, this tribunal should not lightly conclude that a petitioner has, contrary to clear requirements, failed to take advantage of its opportunity for hearing. See Fairview Nursing Plaza, Inc., DAB No. 1715 (2000), at 5. On the other hand, the Board's decisions mandate "strict adherence by petitioners to the regulations' requirements when filing hearing requests." Care Inn of Gladewater, Inc., DAB No. 1680, at 11; See Birchwood Manor Nursing Center, DAB No. 1669, at 10.

In Alden-Princeton Rehabilitation and Health Care Center, Inc., DAB No. 1709 (1999), and Fairview, the appellate panel set forth the process for assessing the sufficiency of a hearing request and the suitability of dismissal for failure to satisfy regulatory requirements. First, I must determine whether the language of Petitioner's hearing request, when read in the context of CMS's notice, meets the requirements set forth in the plain language of 42 C.F.R. § 498.40(b). If it fails to meet one or both of the regulatory requirements, I should consider whether to exercise my discretion not to dismiss the case.

Petitioner asserts that because it challenged all remedies imposed by CMS, incorporated CMS's notice letters in its hearing request, set forth factual contentions specifically without waiving the general contentions, its hearing request meets the Fairview standard and the requirements of 42 C.F.R. § 498.40.

It is the wording of the last introductory paragraph (quoted above) of Petitioner's hearing request that requires some scrutiny and analysis against the Board's rationale. I find that Petitioner's language leaves little room for interpretation. Petitioner's first sentence, stating that Petitioner challenges the surveyors' factual conclusions that led to the alleged deficiency tags, is very general. However, by using the word "specifically" to begin the next sentence, Petitioner signals its intention to shape its general concerns to a more narrow topic. And that is precisely what Petitioner does, for it states that it "disagrees with the following findings of deficiencies (emphasis added) . . . . " This sentence, which is also the last sentence before Petitioner begins its discussion of the six alleged deficiencies, is not in any way ambiguous or confusing. With this sentence, Petitioner has set forth notice that it intends to contest certain alleged deficiencies. Although Petitioner also states as a disclaimer that it is not waiving "the general statements of issues above and elsewhere herein," this disclaimer does not in any way undercut the plain meaning of Petitioner's sentence.

In an organized fashion, Petitioner's hearing request then sets forth its challenges to the following six alleged deficiencies, F223, F241, F248, F310, F314, and F322. As noted above, a total of 20 deficiency tags were cited as a result of the April 11, 2002 survey, and four tags were subsequently deleted after an IDR proceeding. However, no other deficiencies besides the aforementioned six tags are discussed or mentioned in Petitioner's hearing request.

Petitioner's argument that its hearing request meets the Fairview standard, and thus, should be read as also encompassing a challenge to the seven alleged deficiency tags not mentioned in the request, is contrary to the Board's rationale in Fairview. While I intend no hyper-technical reading of Fairview, it is important that I explain precisely why it does not offer support to Petitioner here. The Fairview hearing request contained the following wording:

On behalf of Fairview Nursing Plaza, a hearing is requested in regard to all deficiencies and findings of non-compliance in this matter. The facility is contesting the findings of fact for each example cited and also the conclusions reached that those findings were a violation of each tag number cited.

Fairview, DAB No. 1715, at 7.

The appellate panel found that the wording quoted above, in context with the official notice letter to Fairview, provided sufficient detail to meet the hearing request content requirements set forth in 42 C.F.R. § 498.40(b). When the appellate panel wrote that the use of the terms "all" and "each" fairly raised all findings and conclusions in each of HCFA's assertions of noncompliance, it was able to do so by treating the terms "all" and "each" as absolutes, as blanket assertions of an all-inclusive challenge to HCFA's entire case. The panel's language is unmistakable on this point:

[w]hile Fairview indeed used broad terms, "all" and "each," to convey that it intended to challenge the numerous findings and conclusions that HCFA relied on to impose the CMP, those terms were neither ambiguous nor so generalized as to be meaningless, as the ALJ concluded. To the contrary, Fairview made clear by its use of these terms, together with its reference to the CMP case number, that it wished to appeal each factual finding in every example supporting the deficiencies on which HCFA relied.

Fairview, DAB No. 1715, at 13.

If instead of using the absolute expression "all," the Fairview hearing request had complained of "some" or "several" of HCFA's charges, it is difficult to imagine the panel believing that Fairview had "made clear by the use of these terms" that it intended to place in issue "each factual finding in every example . . . ." In the same way, had the Fairview hearing request stopped short of challenging "each example" and "each tag number cited," and contested "most" or "virtually all" of them, it is not easy to suppose that the appellate panel would have been comfortable in the analysis it set out immediately preceding the language I have quoted above. In short, the Fairview hearing request may have been neither careful nor precise pleading, but it was absolutely inclusive pleading, and I understand its absoluteness and its inclusiveness to have been at the heart of the appellate panel's rationale.

Unlike the hearing request in Fairview, I find, however, that Petitioner's hearing request is precise in its non-inclusiveness. Petitioner, in its hearing request, did not use the terms "all" or "each" to suggest that it was challenging all the alleged deficiencies. Rather, the wording used by Petitioner makes clear that it has narrowed the field, so to speak, and decided, "specifically," to limit its appeal and proceed on the "following findings of deficiencies." I, thus, cannot reach the conclusion that Petitioner's hearing request puts at issue additional deficiency tags, in addition to the six tags explicitly discussed therein. I find that the only alleged deficiencies Petitioner has challenged are F223, F241, F248, F310, F314, and F322.

Accordingly, it is the simple fact that the other unappealed determinations of deficiency are precisely that: unappealed determinations. By operation of law through the application of 42 C.F.R. § 498.20(b), those determinations are now final, non-reviewable, and binding, and I may neither affirm nor disturb them. Orchard Grove Extended Care Center, DAB CR541 (1998). CMS's suggestion that I enjoy jurisdiction to affirm by summary judgment those unappealed determinations overlooks the fact that they are not before me in this case, and that I cannot rule on matters not properly before me. As stated above, the only determinations of deficiency comprehended by Petitioner's appeal are those set out at F223, F241, F248, F310, F314, and F322.

But if the unappealed determinations are not before me for review, then it follows that the penalties which they have invoked are likewise beyond review here. Insofar as the now-final determinations of deficiency, taken together, constitute a sufficient predicate for the CMP and NATCEP suspension imposed against Petitioner, then the CMP and NATCEP suspension are not within my power to reduce, amend, or set aside in this appeal. The unappealed determinations of deficiency are, in this context, the equivalent of the non-inclusive but sufficient number of deficiencies held to sustain penalties in Lakeland Continuing Care Center, DAB CR683 (2000), and Kelsey Memorial Hospital, DAB CR583 (1999). Here, as in those cases, it is not necessary that every deficiency charged against Petitioner be sustained, as long as those actually sustained are sufficient to establish a reasonable basis for the CMP actually imposed. Since the unappealed deficiencies are now final, they have been sustained ipso jure. And as sustained, they establish an entirely sufficient basis for the imposition of a $250 per day CMP, the extension of that CMP over a 32-day period for a total CMP of $8,000, and the suspension of NATCEP penalty based on the $8,000 CMP.

This point is central to the discussion that follows, so it may be well to pause briefly to re-examine the exact character of the now-final deficiencies as they relate to the scope and severity standards required to support a CMP of $250 per day. As noted above, 42 C.F.R. § 488.408 classifies the remedies available into three Categories "according to how serious the noncompliance is," and classifies CMPs of between $50 and $3,000 per day as Category 2 remedies. 42 C.F.R. § 488.408(d)(1)(iii).

The level of seriousness at which Category 2 remedies must be imposed is demonstrated "when there are - (i) [w]idespread deficiencies that constitute no actual harm with a potential for more than minimal harm but not immediate jeopardy; or (ii) [o]ne or more deficiencies that constitute actual harm that is not immediate jeopardy." 42 C.F.R. §§ 488.408(d)(2)(i), (ii). The regulations state further that CMS or the State may apply one or more of the remedies in Category 2 to any deficiency except when the facility is in substantial compliance. 42 C.F.R. § 488.408(d)(3)(i).

The now-final deficiencies include two deficiencies having a scope and severity level of D and five deficiencies having a scope and severity level of E. According to the scope and severity matrix published in the State Operations Manual (SOM), section 7400E, a scope and severity level of D, E, or F indicates a deficiency that presents no actual harm but has the potential for more than minimal harm that does not amount to immediate jeopardy. The matrix, which is based on 42 C.F.R. § 488.408, specifies which remedies are required and optional at each level based upon the frequency of the deficiency. See SOM, section 7400E. D-level deficiencies are classified as "isolated;" E-level deficiencies indicate that there is a "pattern;" and F-level deficiencies are classified as "widespread." (4)

For deficiencies at the D and E scope and severity levels, the matrix specifies that Category 1 remedies are required to be imposed, and Category 2 remedies are optional. For deficiencies at the F, G, H, and I scope and severity levels, a Category 2 remedy is required while a Category 1 remedy is optional. When deficiencies are at the immediate jeopardy level, i.e., J, K, or L scope and severity levels, Category 3 remedies are required while Category 1 and 2 remedies are optional. See SOM, section 7400E.

F309 and F318 are the now-final deficiencies at scope and severity level D. F309 establishes non-compliance with 42 C.F.R. § 483.25, and F318 establishes non-compliance with 42 C.F.R. § 483.25(e)(2). F208, F253, F371, and F444 are the now-final deficiencies at scope and severity level E and indicate violations of 42 C.F.R. § 483.12(d)(1) - (4), 42 C.F.R. § 483.15(h)(2), 42 C.F.R. § 483.35(h)(2), and 42 C.F.R. § 483.65(b)(3), respectively. Additionally, K075, another now-final deficiency, was a life safety code violation of 42 C.F.R.§ 483.70(a), also cited at scope and severity level E.

These seven deficiencies, all of which are now final by operation of 42 C.F.R. § 498.20(b), are sufficient to support CMS's imposition of Category 2 penalties on Petitioner, specifically, a Category 2 CMP of between $50 and $3,000 per day for 32 days. The Category 2 classification is thus not dependent on tags F223, F241, F248, F310, F314, and F322. Regardless of whether Petitioner was in noncompliance with the Medicare participation requirements stated at tags F223, F241, F248, F310, F314, and F322, the predicate for a Category 2 CMP lies in the now-final deficiencies, which are non-reviewable and binding. No ruling I could conceivably enter in this case addressing those six deficiency tags could disturb that predicate.

Petitioner argues that "[e]ven assuming arguendo that this Tribunal would chose [sic] to adopt CMS's contention that only six of the thirteen citations were appealed, none of the remaining seven were identified at scope and severity levels of F and above and thus, cannot . . . invoke Category 2 CMPs." P. Response, at 5. While it is true that any deficiency cited at the scope and severity level of F or above would require a Category 2 remedy under the regulations, Petitioner fails to acknowledge that the regulations also contemplate the imposition of Category 2 remedies when a facility is not in substantial compliance. 42 C.F.R. § 488.408(d)(3)(i). "Substantial compliance" is defined as "a level of compliance with the requirements of participation such that any identified deficiencies pose no greater risk to resident health or safety than the potential for causing minimal harm." 42 C.F.R. § 488.301. Under the matrix published in the SOM, a facility is in substantial compliance when it has deficiencies with a scope and severity level no greater than C. 42 C.F.R. § 488.301. As discussed above, Petitioner's now-final deficiencies include deficiencies at the D and E levels, which establish that Petitioner was not in substantial compliance. Accordingly, I find that CMS was authorized under the regulations to impose a Category 2 CMP remedy against Petitioner of between $50 and $3,000 per day. 42 C.F.R. § 488.408(d)(1)(iii).

But what of CMS's specific determination to set the CMP at $250 per day? That amount is, of course, well within the Category 2 "lower range" established by 42 C.F.R. §§ 488.408(d)(1)(iii) and 488.438(a)(ii). In fact, it represents only one-twelfth of the upper limit of the range. In the May 16, 2002 notice letter, CMS stated that it had considered Petitioner's history, its financial condition, and the factors enumerated at 42 C.F.R. § 488.404 in determining the amount of the CMP. CMS Ex. D. The scope and severity of deficiencies are included in the regulatory factors CMS was obliged to consider.

Were I called upon to decide whether the $250 per day figure is reasonable, I would declare that it is. But the short answer overlooks the stubborn fact that CMS's determination to set the CMP at that level was made in the context of the unappealed, final, and non-reviewable deficiency determinations set out in K075, F208, F253, F309, F318, F371, and F444. By operation of 42 C.F.R. § 498.20(b), the violations, their 32-days' duration, and CMS's determination to assess the CMP at $250 per day, are now absolutely binding. No ruling I might properly enter in this case concerning the six deficiency tags explicitly raised in Petitioner's hearing request could disturb them.

With the establishment of the CMP at $8,000, certain consequences follow. There are several closely defined events which require the denial of NATCEP approval, and one of them is set out in section 1819(f)(2)(B)(iii)(I)(c) of the Act. It declares that the Secretary "(I) shall prohibit approval of such a (NATCEP) program . . . offered by or in a skilled nursing facility which, within the previous 2 years . . . (c) has been assessed a civil money penalty . . . of not less than $5,000 . . . ." (5) Thus, the $8,000 amount of Petitioner's CMP, which amount is final, binding, and non-reviewable, triggers the mandatory, non-discretionary obligation of the Secretary to deny approval of Petitioner's NATCEP program. No ruling that I might contemplate within my jurisdiction could deflect, defer, or otherwise modify the operation of the Secretary's mandatory obligation.

Petitioner has attempted to suggest that by incorporating CMS's notice letters into its request for hearing and by its non-waiver of the general issues, it has put all the alleged deficiencies from the survey at issue. Petitioner's argument must fail. As noted above, the legal sufficiency of a hearing request must be examined against the content requirements contained in 42 C.F.R. § 498.40(b).

When Petitioner's hearing request is examined against the terms of 42 C.F.R. § 498.40(b), I conclude that, with respect to the six deficiency tags discussed by Petitioner (F223, F241, F248, F310, F314, and F322), Petitioner's hearing request is fully compliant with the requirements that it identify the issues, facts, and legal conclusions it contests and explain why it contests them. Petitioner's hearing request; CMS Ex. F. The hearing request adequately meets the standard that has evolved recently in Fairview and Alden-Princeton Rehabilitation and Health Care Center, Inc., DAB No. 1709 (1999).

It does not follow, however, that exemplary compliance with 42 C.F.R. § 498.40(b) is enough to defeat CMS's Motion to Dismiss. Indeed, Petitioner's careful limitation of its appeal to the six deficiencies enumerated above has had the effect I have explained above, that of leaving in place and beyond the reach of this appeal all the other deficiency citations and remedies CMS imposed.

I have considered whether I might properly exercise my discretion under 42 C.F.R. § 498.40(c)(2) to allow Petitioner to amend its hearing request to include objections to some or all of the other F-Tag citations, or whether I might through a similar exercise of discretion add additional issues to this case pursuant to 42 C.F.R. § 498.56(a). For the reasons I shall summarize next, I decline to exercise my discretion in either manner.

It does not appear that Petitioner's hearing request was casually drafted. I find that Petitioner made a thoughtful and deliberate choice to limit its appeal to the six deficiency tags specifically discussed in its request. The plain meaning of Petitioner's words made it clear that Petitioner was not appealing anything else other than those six alleged deficiencies. Further, in concluding its hearing request, Petitioner used the following words: "The aforementioned deficiencies were improperly and inappropriately cited and the remedies imposed should be withdrawn." Petitioner's hearing request, at 8; CMS Ex. F, at 8. Petitioner's statement clearly refers back to the six enumerated deficiencies, leaving little doubt as to what deficiency tags are being challenged.

I note that, pursuant to the directives contained in my initial Order dated August 14, 2002, CMS filed its Notice of Issues on October 15, 2002, announcing its intention to raise the jurisdictional issue dispositive of this appeal. Petitioner, on October 15, 2002, filed its report of readiness to present evidence for adjudication. It is noteworthy that in setting forth its factual disputes and description of proofs in its readiness report, Petitioner cites the six deficiency tags it had specifically mentioned in its hearing request, F223, F241, F248, F310, F314, and F322, and, for each tag, recites verbatim the related discussion from its hearing request. Petitioner's report of readiness, dated October 15, 2002. Such evidence contained in Petitioner's readiness report further disproves its claim that it intended to challenge other deficiency tags, in addition to those six aforementioned tags, in its hearing request.

Nor did Petitioner immediately act to invoke 42 C.F.R. §§ 498.40(c) or 498.56(a) once CMS filed its Notice of Issues on October 15, 2002. Instead, Petitioner waited almost three months, and requested in its response brief filed on January 10, 2003, that I use my discretion under 42 C.F.R. § 498.40(c)(2) to allow it "to amend its hearing request to include any and all such omissions." P. Response, at 6.

The term "good cause" is not defined at 42 C.F.R. § 498.40 or elsewhere in the 42 C.F.R. Part 498 regulations governing hearings involving determinations made by CMS. The test generally applied in assessing "good cause" requires that the ALJ's discretion may be exercised if a party has been disadvantaged by a circumstance or circumstances beyond the party's ability to control. Wellington Oaks Care Center, DAB No. 1626 (1997); Hospicio San Martin, DAB No. 1554 (1996).

I find that there is nothing in the history of this litigation that suggests an element of "good cause," as that term is understood here, which would support my exercise of discretion to allow Petitioner to amend its hearing request. Nothing can be said to have occurred in the development of the parties' positions here that happened other than as a litigative choice, fully within each party's ability to control as to its own choices.

Moreover, were I so inclined to invoke 42 C.F.R. § 498.56(a), it is not altogether clear to me that that regulation could be used to add "new issues," since the issues Petitioner seeks to litigate are, by definition, "final." In any event, I decline to exercise discretion based on either 42 C.F.R. §§ 498.40(c)(2) or 498.56(a).

VI. Conclusion

For the reasons set forth above, I grant CMS's Motion to Dismiss. The hearing request filed by Petitioner on July 11, 2002, must be, and is, dismissed.

JUDGE
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Richard J. Smith

Administrative Law Judge

FOOTNOTES
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1. I note that there is a discrepancy in the record concerning the total number of cited deficiency tags. In this decision, I am assuming that there were 17 alleged deficiencies, as stated in CMS's brief, of which four deficiency tags were later deleted as a result of IDR. Of the remaining 13 alleged deficiencies, Petitioner appealed six deficiency tags in its hearing request.

2. I note that, in the July 1, 2002 notice letter, the effective date of the NATCEP suspension is stated to be July 16, 2002, rather than July 11, 2002, which was stated in the May 16, 2002 notice letter.

3. Petitioner states that it attached copies of CMS's notice letters and incorporates them by reference.

4. A scope and severity level of A, B, or C indicates a deficiency that presents no actual harm but has the potential for minimal harm. Facilities with deficiencies of a level no greater than C remain in substantial compliance. 42 C.F.R. § 488.301. A scope and severity level of G, H, or I indicates a deficiency that involves actual harm that does not amount to immediate jeopardy. Scope and severity levels J, K, and L are deficiencies that constitute immediate jeopardy to resident health or safety.

5. In making its argument that its hearing request was sufficient to appeal all citations, Petitioner, in its response brief, states incorrectly that it was a finding of substandard quality of care that resulted in its NATCEP suspension. P. Response, at 4.

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