SUBJECT:

Oak Lawn Endoscopy,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

I enter summary disposition in favor of the Centers for Medicare & Medicaid Services (CMS) and against Petitioner, Oak Lawn Endoscopy. The consequence of my decision is that Petitioner's effective date of participation in the Medicare program is July 2, 2003.

I. Introduction

Petitioner is an ambulatory surgical center in the State of Illinois. It filed a hearing request in this case in order to contend that CMS ought to have certified it to participate in the Medicare program effective January 9, 2003. CMS asserts that the correct date of certification is July 2, 2003.

This case was assigned to me for a hearing and a decision. The parties submitted pre-hearing exchanges which included their proposed exhibits. With its exchange CMS filed a motion for summary disposition. Petitioner opposed the motion.

CMS filed 46 proposed exhibits with its pre-hearing exchange (CMS Ex. 1 - CMS Ex. 46). Petitioner filed 10 proposed exhibits (P. Ex. 1 - 10) (Petitioner also notified me that it intended to rely on many of CMS's proposed exhibits). CMS submitted a reply brief accompanied by the declaration of Stephen Kaufman, R.N., M.A., attached to which was a 61-page document entitled "Attachment A." While I gave CMS the opportunity to file a reply, I did not give it permission to file this proposed exhibit. I also note that there is a prior document marked CMS Ex. 45 in the record, the declaration of Michael J. Sullivan, accompanied by Attachments A - C. I am thus re-marking the Kaufman declaration as CMS Ex. 47.

For purposes of completing the record I am receiving all of the parties' proposed exhibits. Below I cite to them, as is appropriate, as sources of the undisputed material facts which are the basis for my decision. However, although I am admitting CMS Ex. 47 into the record, I am not considering it in making my decision.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. Summary disposition is appropriate; and

2. The effective date of Petitioner's participation is July 2, 2003 or an earlier date.

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. I discuss each Finding in detail.

1. Summary disposition is appropriate because there are no disputed issues of material fact.

The regulations which govern administrative hearings in cases involving CMS, which are found at 42 C.F.R. Part 498, make no mention of summary disposition. However, administrative law judges are vested with authority to manage cases and they routinely hear and decide motions for summary disposition by applying the principles for summary judgment set forth at Rule 56 of the Federal Rules of Civil Procedure.

Summary disposition is appropriate only where there are no disputed issues of material fact. A "material fact" is a fact which might affect the outcome of a case. In making a motion for summary disposition the burden is on the moving party to allege facts which, if true, would be a basis for awarding a favorable disposition to that party. If the moving party alleges such facts, the burden is then on the opposing party to allege facts which, if true, would dispute those that are alleged by the moving party. If the opposing party alleges such facts, then a dispute as to material facts exists and summary disposition may not be granted. But, if the opposing party does not raise a genuine fact dispute, then the facts offered by the moving party must be accepted as undisputed. The issue then becomes whether, as a matter of law, the undisputed material facts establish a basis for a disposition that is favorable to the moving party.

A "fact" is something that can be demonstrated objectively. It is distinguishable from, and must not be confused with, an opinion that is based on fact. Arguing that facts should be interpreted to mean something does not raise a dispute as to material facts if the facts that underlie the opinion are not in dispute.

Here, and as I discuss in more detail at Finding 2, there are no disputed issues of material fact. The central issue in this case is whether CMS correctly certified Petitioner to participate in Medicare on July 2, 2003. Petitioner's principal argument to challenge this certification date is that it should have been "deemed" to have been certified effective January 9, 2003 based on an accreditation that it received from the Accreditation Association for Ambulatory Health Care, Inc. (AAAHC). Petitioner asserts that this accreditation ought to have been accepted by CMS because the AAAHC is an organization whose accreditation of a provider or a supplier of items of services is accepted under applicable regulations as sufficient to deem that provider as having met Medicare participation requirements.

There is no dispute that Petitioner had AAAHC accreditation as of January 9, 2003. CMS asserts, however, that the accreditation that Petitioner received from AAAHC was not for purposes of Medicare certification and that, therefore, Petitioner's AAAHC accreditation is not sufficient for it to be deemed to have met Medicare participation requirements. It has supported that assertion with facts which describe two different types of accreditation that are issued by AAAHC: a regular accreditation which does not address all Medicare certification requirements; and a Medicare accreditation which specifically addresses Medicare certification requirements. CMS contends that Petitioner's AAAHC certification is regular and not Medicare specific.

If Petitioner asserted that its accreditation from AAAHC was a Medicare accreditation by that entity, then there would be a dispute as to a material fact. But, and as I discuss at Finding 2, Petitioner has not offered any facts to challenge those offered by CMS concerning the scope of its accreditation. Although it argues that CMS ought to have accepted its AAAHC accreditation, it does not dispute that AAAHC issues two types of accreditations consisting of a general accreditation and an accreditation for Medicare certification. Nor does Petitioner contend that its AAAHC accreditation was Medicare specific. Therefore, there is not a dispute as to the type of accreditation that Petitioner received from AAAHC and, consequently, no dispute as to the underlying material facts of this case.

Other facts averred by Petitioner relate to its assertion that CMS should be estopped from denying Petitioner Medicare certification effective January 9, 2003. As I discuss below, Petitioner's estoppel argument is unavailing because I do not have authority to consider it. Moreover, estoppel does not, as a general rule, apply to the federal government. And, even assuming Petitioner's facts to be true, it has not made out a case of estoppel under accepted principles of estoppel.

2. The effective date of Petitioner's participation in Medicare is July 2, 2003.

The regulations that govern the certification of a provider or a supplier to participate in Medicare are set forth at 42 C.F.R. Part 489. The effective date of a provider or supplier's participation is governed specifically by 42 C.F.R. § 489.13. As a general rule, a provider or supplier will be certified to participate in Medicare on the date when CMS is satisfied that the provider or supplier is complying with all Medicare participation requirements, including the requirements of the Life Safety Code. That date may be determined by applying the following rules:

• In most cases CMS will have a provider or supplier surveyed to determine whether or not the provider or supplier is complying with all participation requirements. If the provider or supplier is found to be compliant as of the date of the survey, then the survey date will be the effective date of participation. 42 C.F.R. § 489.13(b).

• If the provider or supplier is found not to be complying with all participation requirements as of the date of the survey, then the provider or supplier will be certified to participate either on the date when it corrects all deficiencies or, in the event of lower level deficiencies, the date when it submits a plan of correction and/or a waiver request that is acceptable to CMS. 42 C.F.R. § 489.13(c)(2)(i), (ii). ⁽¹⁾ In either case, the date of certification will be subsequent to the survey date.

• CMS may deem a provider or supplier to have met all participation requirements if the provider or supplier is accredited by a national accrediting organization whose program had CMS approval at the time of the accreditation survey. 42 C.F.R. § 489.13(d)(1). The effective date of certification depends on whether or not the accreditation includes all Medicare participation requirements including the requirement that the provider or supplier comply with the Life Safety Code.

• If the provider or supplier is subject to participation requirements that are outside of the scope of the provider or supplier's accreditation, then the effective date of participation will be the date on which the provider or supplier complies with the additional participation requirements. 42 C.F.R. § 489.13(d)(1)(i). Implicitly, CMS may require that the provider or supplier be surveyed in order to determine whether the additional requirements have been met. In the event that a survey establishes that the additional requirements have been met, then the date of certification would be the survey date.

• If, however, the accreditation addresses all Medicare participation requirements, then the effective date will be the date of the provider or supplier's initial request to participate in Medicare. 42 C.F.R. § 489.13(d)(1)(ii).

• CMS may make retroactive for up to one year the effective date of certification of a provider or supplier who meets the requirements of either 42 C.F.R. § 489.13(d)(1)(i) or (d)(1)(ii) to encompass dates on which the provider or supplier furnished to a beneficiary Medicare covered services for which the provider or supplier has not been paid. 42 C.F.R. § 489.13(d)(2).

The following facts are central to CMS's contention that the effective date of certification of Petitioner to participate in Medicare is July 2, 2003:

• Petitioner began providing services to patients on January 9, 2003. CMS Ex. 27, at 2. On January 24, 2003, Petitioner filed an application for Medicare certification. CMS Ex. 14, at 1.

• On April 24, 2003, Petitioner received and forwarded to the Illinois Department of Public Health (survey agency) a letter from AAAHC. The letter advised Petitioner that accreditation meant that AAAHC had confidence that Petitioner met, and would continue to meet, AAAHC accreditation standards through March 31, 2006, the date that Petitioner's accreditation would expire. CMS Ex. 22.

• AAAHC is an organization which was approved by CMS to accredit ambulatory surgical centers such as Petitioner for participation in Medicare. CMS Ex. 44, at 1. A supplier that is accredited by AAAHC to participate in Medicare will be deemed by CMS to meet Medicare participation requirements. Id.

• AAAHC offers two types of accreditation to ambulatory surgical centers. These consist of: (1) accreditation as having met regular AAAHC standards; and (2) accreditation as having met regular AAAHC standards plus additional Medicare-specific standards. CMS Ex. 44, at 1.

• An ambulatory surgical center that is certified by AAAHC as meeting regular, but not Medicare, standards is not automatically certified as an AAAHC Medicare accredited supplier. If an ambulatory surgical center which has a regular AAAHC accreditation wishes to become certified to participate in Medicare, it must either apply for and undergo an AAAHC Medicare certification survey, or, it must apply for participation to a survey agency and must be surveyed by it. CMS Ex. 44, at 2.

• Petitioner's AAAHC accreditation is a regular AAAHC accreditation. Petitioner did not receive an AAAHC Medicare accreditation. See CMS Ex. 22; CMS Ex. 46, at 2.

• On June 16, 2003, the survey agency conducted a Medicare certification survey of Petitioner's facility. The survey included a survey for compliance with Medicare participation requirements and a survey for compliance with the requirements of the Life Safety Code. CMS Ex. 24; CMS Ex. 26.

• At the June 16, 2003 survey, Petitioner was found to be in compliance with all health related Medicare requirements. CMS Ex. 24, at 1. However, Petitioner was found not to be complying fully with the requirements of the Life Safety Code. CMS Ex. 26, at 2 - 7.

• On June 26, 2003, Petitioner submitted a plan of correction which addressed the Life Safety Code deficiencies. CMS Ex. 26, at 1. The survey agency then resurveyed Petitioner on July 2, 2003 and found Petitioner to be in compliance with Life Safety Code requirements as of that date. CMS Ex. 25, at 1.

CMS asserts from the foregoing that the earliest date that Petitioner was in compliance with all Medicare participation requirements, including Life Safety Code requirements, was July 2, 2003. It argues that, pursuant to 42 C.F.R. § 489.13(c)(2)(i), it properly certified Petitioner to participate in Medicare effective the date when a survey established that Petitioner actually corrected the Life Safety Code deficiencies at its facility. CMS argues additionally that Petitioner cannot be deemed to have been certified at an earlier date because the AAAHC certification that Petitioner received did not cover all Medicare requirements of participation and, therefore, was not an accreditation which could be accepted by CMS in lieu of an on-site survey.

I agree with CMS that, if the facts of this case are as CMS depicts them to be, then CMS acted within its authority to certify Petitioner to participate on July 2, 2003. The facts asserted by CMS describe Petitioner as not being in full compliance with all Medicare participation requirements prior to that date. ⁽²⁾ The facts also show that Petitioner did not have an accreditation from AAAHC which addressed all Medicare participation requirements. If Petitioner's AAAHC certification was not a Medicare certification, then it was insufficient for Petitioner to be deemed to have met participation requirements on a date that is earlier than July 2, 2003.

I do not find that Petitioner has contested any of the material facts that CMS asserts and which I have described above, although it characterizes those facts somewhat differently from the way in which CMS characterizes them. Petitioner's brief at 2 - 5. Petitioner agrees that CMS authorized AAAHC to accredit ambulatory surgical centers for Medicare participation purposes. Petitioner does not disagree with CMS's assertion that AAAHC offers two types of accreditations consisting of a general accreditation and a Medicare accreditation. Petitioner avers that it had an accreditation from AAAHC effective January 9, 2003, but Petitioner offers no facts to dispute CMS's contention that the accreditation that it received from AAAHC was a general certification and not certification for Medicare participation purposes.

Petitioner suggests, without offering any facts to support its suggestion, that there is a fact dispute as to whether its AAAHC accreditation was a regular accreditation or a Medicare accreditation which included accreditation for meeting Life Safety Code requirements. Petitioner's brief at 12. However, simply averring that is inadequate to create a genuine dispute as to material facts. CMS offered facts which define the differences between the two types of accreditation offered by AAAHC and which show that Petitioner did not have AAAHC Medicare accreditation. To rebut those facts Petitioner must offer specific facts to show that its accreditation actually covered all elements of Medicare participation. It failed to do so.

Petitioner acknowledges that it did not receive certification from AAAHC, prior to July 2, 2003, that it met Life Safety Code requirements. Consequently, the specific facts averred by Petitioner do not call into question CMS's contention that Petitioner received no certification from AAAHC or from CMS that it met Life Safety Code requirements prior to being surveyed for compliance on June 16, 2003. Furthermore, Petitioner admits that, at the June 16, 2003 survey, it was found to be deficient Petitioner makes additional arguments to support its contention that it ought to have been certified to participate effective January 9, 2003. None of these arguments challenge the material facts which are the basis for CMS's motion. Moreover, I find that these arguments do not establish a basis for me to rule in Petitioner's favor on the merits of this case.

Petitioner asserts that CMS has previously allowed and currently allows a provider or a supplier to claim reimbursement retroactively for services provided between the date that the provider or supplier first applies to be certified to participate in Medicare and the date on which CMS acts to certify it to participate. Petitioner's brief at 4. Petitioner characterizes retroactive certification as "a disputed fact." Id. It argues that it ought to be certified retroactively, as a matter of fairness, and as a matter of sound public policy. Id. at 16.

Petitioner's argument fails for two reasons. First, the undisputed facts of this case do not describe a situation which might qualify Petitioner for retroactive certification. Second, a determination by CMS to certify a provider or supplier retroactively is a discretionary act which Petitioner may not challenge.

As I discuss above, there are circumstances, set forth at 42 C.F.R. § 489.13(d)(2), under which CMS will allow a certified provider or supplier to claim reimbursement for up to one year retroactive from the certification date. Published comments to the regulation explain that the intent of the regulation is to permit CMS to award, for reimbursement purposes, a certification date to a provider or supplier of up to one year previous to the date on which CMS acts to certify that provider. 62 Fed. Reg. 4931, 4932 (Aug. 18, 1997). But, the condition on which such retroactive certification may be awarded is that the provider or supplier be accredited as meeting all Medicare participation requirements, including Life Safety Code requirements, as of the retroactive certification date. Id.

Petitioner has not offered any facts to show that it met that condition. Petitioner does not contend that it had Medicare certification from AAAHC at any date prior to the date that CMS certified it. Moreover, Petitioner admits that it had Life Safety Code violations as of the June 16, 2003 certification survey which it did not correct until subsequently. ⁽³⁾

CMS has discretion to determine whether to award retroactive certification to a provider or a supplier. The regulation plainly states that CMS "may" award retroactive certification under enumerated circumstances. 42 C.F.R. § 489.13(d)(2). "May" does not mean "must" and, thus, Petitioner would not have a right to be certified retroactively even if it could prove that it met the condition for retroactive certification.

Petitioner argues that regulations give CMS discretion to waive the requirement that an ambulatory surgery center comply strictly with the Life Safety Code. Petitioner's brief at 5, 10; see 42 C.F.R. § 416.44(b)(2). It asserts that CMS ought to have given Petitioner a waiver from code requirements. It characterizes CMS's failure to give it a waiver to be a denial to Petitioner of equal protection under the law and an act of bad faith on CMS's part. Petitioner's brief at 10. I find these assertions not to be persuasive. As with the issue of retroactive certification, waiver of a Life Safety Code requirement is a discretionary act. CMS may waive a Life Safety Code requirement:

which, if rigidly applied, would result in unreasonable hardship upon an . . . [ambulatory surgical center], but only if the waiver will not adversely affect the health and safety of the patients.

Id. But, "may" does not mean "must." Nothing in the regulation requires CMS to grant a waiver. Nothing in the regulations at 42 C.F.R. Part 498 governing provider and supplier certification gives a provider or a supplier a right to a hearing to contest a failure by CMS to grant a waiver from Life Safety Code requirements.

Petitioner's remaining argument is that CMS should be estopped from denying certification to Petitioner effective January 9, 2003. Petitioner argues that it was misled into believing that it would be certified based on the accreditation that it had received from AAAHC. It contends that it was told by a survey agency representative that an "AAAHC accreditation survey was sufficient for participation in the Medicare [p]rogram." Petitioner's brief at 12. Petitioner implies that it did not request Medicare accreditation from AAAHC because it assumed, from what it allegedly was told by the survey agency representative, that the accreditation that it had received from AAAHC was sufficient to deem it to have met participation requirements. From this, Petitioner contends that it was denied payment for procedures for which it otherwise would have received reimbursement from Medicare. Petitioner characterizes this failure to receive reimbursement as "unjust enrichment" of the Medicare program and it contends that the doctrine of equitable estoppel should apply to compel CMS to certify Petitioner to participate retroactively in Medicare to January 9, 2003.

I conclude that principles of estoppel do not apply to this case. It is unnecessary for me to closely analyze the facts of this case to support this conclusion because, as a matter of law, I may not estop CMS under the circumstances raised by Petitioner in its hearing request.

First, I do not have authority to apply principles of estoppel to the facts of this case. My authority to hear and decide a case involving CMS is limited to that which the Secretary has delegated to me through his regulations. The Secretary has not delegated to administrative law judges authority to decide whether principles of estoppel - or, for that matter, whether any equitable principles - apply to the merits of cases involving CMS. The governing regulations contain not a word to suggest that I can set aside their substantive criteria based on principles of equity, including principles of equitable estoppel. See 42 C.F.R. § 489.13; 42 C.F.R. Part 498. ⁽⁴⁾

Second, Petitioner's arguments for application of estoppel do not describe circumstances where estoppel arguably might apply to the federal government. In Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), the United States Supreme Court addressed the circumstances where estoppel might apply to the federal government. The Richmond case was based on a claim by a federal beneficiary that he had been denied benefits as a consequence of his reliance on a misleading statement made by an officer of the federal government. The Supreme Court rejected arguments that common law principles of equitable estoppel might apply in such circumstances. It held explicitly that in a case involving a claim for money from the federal treasury a payment may only be made if authorized by a statute. 496 U.S. at 424. Citing with approval its earlier decision in Cincinnati Soap Co. v. United States, 301 U.S. 308, 321 (1937), the Supreme Court held that its decision meant:

simply that no money can be paid out of the Treasury unless it has been appropriated by an act of Congress. (citations omitted).

Id.

The Richmond decision makes it clear that CMS may not be compelled to make payments in the absence of federal legislation which specifically authorizes such an action. 496 U.S. at 428. Changing Petitioner's effective date of certification based on principles of estoppel would have the consequence of compelling CMS to make payments to Petitioner for Medicare claims to which Petitioner would not otherwise be eligible under federal law. That would contravene the holding of Richmond.

Consistent with Richmond, administrative law judges have held that estoppel will not be applied to compel CMS to certify a provider or a supplier on a particular date. Ophthalmology Ltd. Eye Surgery Center, DAB CR658 (2000); GranCare Home Health Service & Hospice, DAB CR464 (1997). I note that in Carmel Convalescent Hospital, DAB No. 1584 (1996), the Departmental Appeals Board analyzed the merits of a provider's estoppel claim and concluded that the provider's allegations, if true, would not establish grounds for estoppel under traditional common law principles. I do not conduct such an analysis here because I lack the authority to apply the doctrine of estoppel in cases involving CMS, and because Richmond makes it clear that common law principles have no application in a case such as this one. However, I do not see any inconsistency between my decision in this case and the outcome of Carmel Convalescent Hospital.

Steven T. Kessel

Administrative Law Judge

1. There are separate rules governing the effective date of participation of a skilled nursing facility. I do not discuss them here because Petitioner is not a skilled nursing facility. See 42 C.F.R. § 489.13(c)(1).

2. Arguably, under the facts depicted by CMS, it could have certified Petitioner to participate on June 26, 2003, the date that Petitioner submitted a plan of correction which addressed its Life Safety Code deficiencies. The regulations give CMS the option, in the case of lower level deficiencies, of either accepting a plan of correction and certifying a provider or supplier to participate as of the completion date in the plan or of resurveying a previously deficient facility in order to verify compliance. See 42 C.F.R. § 489.13(c)(2)(ii).

3. Although there is ambiguous language in its brief with regard to whether Petitioner intended to dispute these Life Safety Code violations (Petitioner's brief at 10), in other parts of its brief Petitioner concedes the Life Safety Code violations (Petitioner's brief at 2, 4 - 5). More importantly, however, Petitioner did not raise the issue of its compliance with the Life Safety Code in its hearing request and thus it is not an issue in the case.

4. The Secretary granted authority to administrative law judges to apply equitable principles in only the most limited circumstances. An administrative law judge may extend the 60-day deadline for filing a hearing request where a party establishes "good cause" for missing that deadline. 42 C.F.R. § 498.40(c)(2). "Good cause" might include an estoppel-like situation. For example, there might be good cause to extend a deadline for filing a hearing request where CMS or a state survey agency affirmatively misleads a provider or supplier into believing that its deadline for filing the request has been extended.