CASE | DECISION |JUDGE | FOOTNOTES

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


SUBJECT:

Signet Health and Rehab Center,

Petitioner,

DATE: October 17, 2003
                                          
             - v -

 

Centers for Medicare & Medicaid

 

Docket No.C-03-164
Decision No. CR1096
DECISION
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DECISION

I enter summary disposition in favor of the Centers for Medicare & Medicaid Services (CMS) and against Petitioner, Signet Health and Rehab Center. Petitioner has made no showing that it would be unable to pay civil money penalties totaling $20,250.

I. Background

Petitioner is a skilled nursing facility in New Richmond, Wisconsin. (1) It participates in the Medicare program and its participation is governed by federal laws and regulations. Social Security Act (Act), sections 1819, 1866; 42 C.F.R. Parts 483, 488.

A survey of Petitioner's facility was completed on April 29, 2002. Petitioner was found not to be complying substantially with several federal participation requirements. As a consequence, CMS determined to impose a remedy against Petitioner consisting of civil money penalties totaling $20,250. Petitioner requested a hearing to challenge the remedy and the case was assigned to me for a hearing and a decision.

Petitioner's hearing request was extremely laconic. Aside from requesting a hearing, Petitioner averred only that:

Contrary to your agency's contention, I am not in a financial position to pay this fine.

Petitioner submitted with its request a document which appears to be a statement of its revenues and expenses for the year 2001.

CMS moved that I compel Petitioner to file a more definite statement of its reasons for requesting a hearing. CMS asserted that 42 C.F.R. § 498.40(b) requires a party who requests a hearing to state exactly what determination or findings it is contesting and why it is contesting them. According to CMS, Petitioner failed to comply with this requirement. Petitioner filed no response to CMS' motion. On April 23, 2003, I issued a ruling in which I held that Petitioner's hearing request addressed only the single issue of whether Petitioner has the wherewithal to pay the civil money penalties that CMS determined to impose. I held that Petitioner's hearing request was, on its face, adequate to raise that issue but that it raised no other issues for me to hear and decide. Ruling Denying Motion to Postpone Prehearing Deadlines and Defining Issue to be Heard and Decided dated April 23, 2003.

CMS then submitted a prehearing exchange on May 6, 2003, in compliance with the initial prehearing order that I issued in the case. As part of its exchange, CMS moved for summary disposition. Petitioner's exchange and response to the motion was due 30 days after its receipt of CMS' exchange. However, Petitioner filed no exchange of its own, nor did it reply to CMS' motion for summary disposition.

On August 28, 2003, I issued an Order to Show Cause to Petitioner in which I directed it to file a response. I told Petitioner in that Order that, if Petitioner failed to do so, I might dismiss its hearing request without further motions or argument from the parties. On September 12, 2003, Petitioner submitted a one-page letter in response to the Order to Show Cause. In its entirety, the letter states:

In response to your Order to Show Cause of August 28, 2003, I remain unable to pay the civil monetary penalty associated with a citation received in 2002 at the Signet Health and Rehabilitation Center of New Richmond.

The facility is operating with 42 patients in its 61 beds, and accordingly loses money. Previously, I have forwarded financial information supporting this claim. I remain unable to afford legal representation in this matter.

I am unclear as to what more I can show you.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. Summary disposition, or some other final disposition, is appropriate at this time; and

2. Petitioner failed to offer facts that would be sufficient for me to find that a legitimate fact dispute existed over Petitioner's ability to pay civil money penalties totaling $20,250.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading.

1. Summary disposition is appropriate in this case.

Summary disposition is appropriate here because Petitioner has not disputed any of CMS' fact allegations. (2) Petitioner's sole disagreement is with CMS' conclusion that, based on the facts, Petitioner would be able to pay the civil money penalties that CMS determined to impose. Furthermore, the facts that Petitioner does allege - that its financial status in 2001 precluded it from paying the civil money penalties that are at issue here, and that Petitioner "loses money" - is not sufficient to show that it would be unable to pay civil money penalties.

In its prehearing brief and motion for summary disposition (Brief) CMS alleged the following facts:

• Petitioner had a positive cash balance of $82,303 as of December 31, 2000. Brief at 5.

• In fact, Petitioner's profits for the year 2000 should have been higher than that which Petitioner reported because Petitioner listed inappropriate expenses in its cost report for 2000. Id.

• At the end of 2001, Petitioner had assets in excess of $1.4 million with liabilities of less than $100,000. Id. at 6.

• One of the liabilities that Petitioner listed at the end of 2001 was in the amount of $96,650, due to Petitioner's owner. Id. at 7.

From these facts, CMS argues that Petitioner would certainly be able to pay the $20,250 civil money penalties that CMS determined to impose. CMS contends that Petitioner's assets at the end of 2001 greatly exceeded its liabilities. Moreover, according to CMS, Petitioner could restructure most of its liability - the $96,650 reported as being due to Petitioner's owner - so that payments could be made on the civil money penalties imposed by CMS without jeopardizing Petitioner's operations.

Petitioner has not contested any of these asserted facts and thus, for purposes of deciding CMS' motion for summary disposition, I must accept them as correct. Taken together, they show that Petitioner had ample assets at the end of 2001, even assuming to be true its assertions that it lost money during that year, to pay the civil money penalties that CMS determined to impose.

Moreover, the facts that Petitioner has alleged - that it lost a substantial sum in 2001 and that it "loses money" - are not, in my judgment, sufficient to show that Petitioner would be unable to pay the civil money penalties that CMS imposed. Assuming those facts to be true, they prove only that Petitioner was not profitable in 2001 and may not be making a profit as of this moment in time. But, short term profitability is not by itself the test of whether a facility is capable of paying civil money penalties. Ridge Terrace, DAB CR938 (2002). In Ridge Terrace, I held that:

Profits or losses alone are not the measure of a facility's ability to pay civil money penalties. A facility's profits or losses may rise and fall over short periods of time depending on business conditions, including reimbursement rates for services that the facility provides, its resident census at any given moment, and a host of other factors. But those short-term profits and/or losses may not accurately describe the facility's overall financial health.

Id. at 4. Petitioner's argument here is exactly the same argument made by the petitioner in Ridge Terrace, and which I found to be inadequate in that decision. Petitioner asserts that it lost money in 2001, the year prior to that in which the civil money penalties were imposed. It also asserts, without supplying any supporting facts, that it currently "loses money." But, these assertions fail to establish Petitioner's overall financial health, in 2001, 2002 or in other years. Consequently, even if I accept as true Petitioner's representations that it lost money in 2001, or that it loses money as of this moment, they fail to establish that Petitioner is not in a position to pay the civil money penalties which CMS determined to impose.

So, the undisputed material facts of this case establish that Petitioner had substantial cash reserves at the close of 2001. And, even if Petitioner lost money in that year, Petitioner has not shown how losses in that year detract from its overall financial health, either then or now. Nor is Petitioner's bald claim that it currently loses money, assuming it to be true, sufficient to establish that it lacks the wherewithal presently to pay the civil money penalties that are at issue in this case.

2. Summary disposition sustaining civil money penalties totaling $20,250 is appropriate in light of the undisputed material facts.

Regulations governing the imposition of civil money penalties establish factors to be considered in deciding reasonable penalty amounts. 42 C.F.R. §§ 488.438(f)(1) - (4), 488.404 (incorporated by reference into 42 C.F.R. § 488.438(f)(3)). In this case, the only factor that is at issue is Petitioner's financial condition inasmuch as Petitioner did not allege that evidence pertaining to any other regulatory factor would show the penalty determination to be unreasonable. As I discuss at Finding 1, the undisputed material facts do not show that Petitioner lacks the wherewithal to pay the $20,250 civil money penalties that CMS determined to impose. In light of that, I impose summary disposition in favor of CMS affirming this remedy.

JUDGE
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Steven T. Kessel

Administrative Law Judge

FOOTNOTES
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1. A survey report submitted by CMS appears to suggest that Petitioner may have done business under the name of "Maple Manor."

2. I would have had a basis for dismissing Petitioner's hearing request without considering the merits of CMS' motion for summary disposition. Petitioner has consistently failed to comply with my Orders in this case. However, I am electing not to do that, but to decide CMS' motion on its merits.

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