Piedmont Family Clinic, CR No. 355 (1995)

$05:Civil Money Penalty

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Piedmont Family Clinic,

Petitioner,

- v. -

Health Care Financing Administration.

DATE: January 30, 1995
Docket No. C-94-418
Decision No. CR355

DECISION

In the case before me, the Piedmont Family Clinic (Petitioner)
challenges the determination made by the Health Care Financing
Administration (HCFA) to terminate Petitioner's Medicare provider
agreement effective June 1, 1994. As a rural health clinic,
Petitioner had obtained a waiver from HCFA in May of 1993 exempting
Petitioner from meeting the staffing requirements specified by
section 1861(aa)(2)(J) of the Social Security Act (Act). HCFA
considers the waiver to have expired on April 7, 1994. It
terminated Petitioner's provider agreement because it concluded,
based on surveys conducted in late March and late May of 1994, that
Petitioner was out of compliance with the staffing requirements of
the Act. Petitioner contends that HCFA's termination action was
improper because HCFA had affixed an incorrect expiration date to
the waiver. Petitioner contends also that HCFA's termination
action was barred because Petitioner was entitled to request or
receive another waiver.

Having reviewed the parties' evidence and arguments, 1/ I find in
favor of HCFA for the reasons set forth below.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

I. Background Facts and Law

1. Petitioner is a medical clinic located in Piedmont, Missouri.
E.g., P. Ex. 1.

2. The Lucy Lee Hospital operates Petitioner and other medical
clinics, including the Van Buren Medical Clinic. HCFA Ex. 2 at 2;
P. Ex. 2, 3, 5, 6, 8, 9.

3. Except during the period from June 2 to August 9, 1994,
Petitioner was participating in the Medicare program as a rural
health clinic. See, e.g., P. Ex. 4; Section 1866(a) of the Act.

4. To meet the definition of a rural health clinic for
participation in the Medicare program, a clinic must satisfy two
staffing requirements:

a) the clinic must employ a nurse practitioner, a
physician assistant, or a certified nurse-midwife, and

b) the employed nurse practitioner, physician assistant,
or certified nurse-midwife must be available to furnish patient
care services not less than 50 percent of the time the clinic
operates.

Section 1861(aa)(2)(J) of the Act.

5. A facility which otherwise meets the definition of a rural
health clinic may request that the Secretary of Health and Human
Services (Secretary) waive one or both of the staffing requirements
specified by the Act's section 1861(aa)(2)(J). Section 1861(aa)(7)
of the Act.

6. If a rural health clinic demonstrates to the Secretary's
satisfaction that it has been unable, despite reasonable efforts,
to meet the requirements of section 1861(aa)(2)(J) of the Act
during the previous 90-day period, the Secretary shall grant a
waiver for a period of one year. Section 1861(aa)(7)(A) of the
Act.

7. The Act states also: "The Secretary may not grant such a
waiver under subparagraph (A) to a facility if the request for the
waiver is made less than 6 months after the date of the expiration
of any previous such waiver for the facility." Section
1861(aa)(7)(B).

8. The Secretary has delegated to HCFA her responsibilities for
administering the Medicare program, including making determinations
on whether to grant staffing waivers and whether to terminate
provider agreements. HCFA Ex. 14 at 2 (49 Fed. Reg. 35247, 35248
(1984)); 42 C.F.R. 498.1(f).

9. HCFA has authority to terminate a Medicare provider agreement
with a rural health clinic if the clinic: a) no longer meets
conditions for certification under 42 C.F.R. 491; or b) is not
in substantial compliance with the provisions of the agreement,
other applicable regulations of 42 C.F.R. 405, subpart X, or any
applicable provisions of Title XVIII of the Act (Medicare). 42
C.F.R. 405.2404(b); sections 1861(aa)(2)(K) and 1866(b)(2)(B) of
the Act.

10. HCFA's Kansas City Regional Office (Region VII) has
jurisdiction over Medicare providers located in the State of
Missouri. HCFA Ex. 1, 2, 12; P. Ex. 4.

11. HCFA has contracted with the Missouri Department of Health to
conduct surveys and assist HCFA in determining whether providers in
Missouri are in compliance with the conditions of participation in
the Medicare program. See Section 1864 of the Act; e.g., HCFA Ex.
6; P. Ex. 1, 7.

II. Relevant Events

A. Events between April, 1993 and April 7, 1994

12. By letter dated April 9, 1993, HCFA's Region VII Office
notified Petitioner: a) that Petitioner's request for a staffing
waiver had been approved; b) that the waiver would expire on April
7, 1994; and c) that no subsequent request for waiver by Petitioner
would be approved within six months of April 7, 1994. HCFA Ex. 1.

13. Barbara Goodrick, of HCFA's Region VII Division of Health
Standards and Quality, who reviewed Petitioner's request for a
staffing waiver, discussed HCFA's waiver approval letter with
Warren N. Kerber, Lucy Lee Hospital's Director of Outreach
Services. Ms. Goodrick informed Mr. Kerber that, absent a waiver,
a nurse practitioner or physician assistant would be required to
work in the rural health clinic for at least 50 percent of the
clinic's operating hours. HCFA Ex. 2 at 2.

14. Mr. Kerber was a duly designated representative and
spokesperson for Petitioner. E.g., HCFA Ex. 2, 3, 5, 7.

15. On or about January 3, 1994, a nurse practitioner named
Barbara Collrin began working for Petitioner and the Van Buren
Medical Clinic. P. Ex. 2; HCFA Ex. 5 at 4 - 6.

16. By letter dated February 3, 1994 to the Missouri Department of
Health, Mr. Kerber represented that Ms. Collrin was scheduled to
work alternate weeks at Petitioner's facility (i.e., 40 hours at
Petitioner's facility and then 40 hours at the Van Buren Medical
Clinic). P. Ex. 2.

17. On February 24, 1994, HCFA received a complaint from an
individual purporting to be Barbara Collrin, who alleged, inter
alia, that Petitioner and Van Buren Medical Clinic were engaged in
unfair practices against her by restricting her scope of practice,
by not permitting her to care for patients, and by improperly
utilizing her to do clerical work at times. HCFA Ex. 4, 6 at 2.

18. Effective March 3, 1994, Ms. Collrin resigned from her
position with Petitioner and the Van Buren Medical Clinic. HCFA
Ex. 5 at 1.

19. Petitioner did not immediately report Ms. Collrin's
resignation to HCFA or to the Missouri Department of Health. See
HCFA Ex. 7.

20. While conducting an investigation of the above described
complaints (see Finding 17) at the Van Buren Medical Clinic on
March 23, 1994, the Missouri Department of Health learned of Ms.
Collrin's resignation. HCFA Ex. 5 at 1 - 2; HCFA Ex. 6 at 2; see
also Finding 11.

21. While investigating the allegations against Petitioner and the
Van Buren Medical Clinic, the Missouri Department of Health
surveyor obtained information from Mr. Kerber and also reviewed
patient records at the Van Buren Medical Clinic. HCFA Ex. 5 at 1.

22. On March 31, 1994, the Missouri Department of Health adopted
the surveyor's conclusions that there was corroboration for the
allegations that Petitioner had engaged in "unfair practices" with
respect to Ms. Collrin and her scope of practice by not having
properly utilized her as a nurse practitioner in a rural health
setting under the Medicare program. HCFA Ex. 5 at 1 - 2; HCFA Ex.
6 at 2; see also Finding 55, infra.

23. In a letter dated April 1, 1994, Mr. Kerber confirmed to the
Missouri Department of Health that Ms. Collrin had resigned
effective March 3, 1994 and that Petitioner was operating without
a nurse practitioner. HCFA Ex. 7.

24. On April 7, 1994, Petitioner's staffing waiver expired under
its own terms. P. Ex. 1.

B. Events after April 7, 1994 and until June 2, 1994

25. On April 15, 1994, Ms. Goodrick noted that Ms. Collrin's
working every other week at Petitioner's facility was not the
equivalent of working 50 percent of Petitioner's operational hours
as required by law. HCFA Ex. 5 at 3.

26. On April 29, 1994, the Missouri Department of Health
recommended that HCFA terminate Petitioner's Medicare provider
contract, based on the results of the March 23, 1994 survey. HCFA
Ex. 6.

27. In a letter dated May 4, 1994, HCFA's Region VII Office
notified Petitioner of its determination to terminate Petitioner's
provider contract "at the close of" June 1, 1994, due to
Petitioner's noncompliance with the conditions of coverage,
staffing, and staff responsibility requirements set forth in 42
C.F.R. 491.8. P. Ex. 4.

28. Also in its May 4, 1994 letter to Petitioner, HCFA's Region
VII Office reiterated its belief that Petitioner was not eligible
for another waiver within six months of the date the previous
waiver expired, April 7, 1994. P. Ex. 4.

29. In a letter dated May 18, 1994, Petitioner requested a hearing
by asserting that:

a) Petitioner's employment of the certified nurse practitioner
(Ms. Collrin) on January 3, 1994 "interrupted the staffing waiver
that was in effect until April 7, 1994;"

b) Petitioner hired the certified nurse practitioner on
January 3, 1994 with the intent to "immediately expire the waiver
that was in effect until April 7, 1994;" and

c) Petitioner was eligible to apply for a staffing waiver from
42 C.F.R. 491.8 "if unable to locate a nurse practitioner after
ninety (90) days" of Ms. Collrin's resignation.

P. Ex. 5.

30. Ninety days after Ms. Collrin's resignation date (March 3,
1994) would have been June 1, 1994. See Findings 23, 29.

31. In a letter dated May 19, 1994, Mr. Kerber asserted to HCFA
that, as of May 18, 1994, Petitioner had come into compliance with
the conditions for coverage, staffing, and staff responsibilities
set forth in 42 C.F.R. 491.8. P. Ex. 6.

32. On May 27, 1994, the Missouri Department of Health, at HCFA's
request, surveyed Petitioner and found that:

a) Sondra Reese, who graduated from a nurse practitioner
program on May 14, 1994, was working for Petitioner;

b) Petitioner's facility was open for a total of 49 hours each
week; and

c) Ms. Reese worked at Petitioner's facility for a total of
18.5 hours each week.

See HCFA Ex. 10 at 1.

33. Ms. Reese's hours of work equalled less than the required 50
percent of the hours that Petitioner was in operation. See Section
1861(aa)(2)(J) of the Act; Finding 32.

34. In a letter dated June 2, 1994, HCFA's Region VII Office
notified Petitioner of HCFA's determination that Petitioner
remained out of compliance with the law because the nurse
practitioner (Ms. Reese) was not available to provide services for
at least 50 percent of the time Petitioner's facility was in
operation, and, therefore, Petitioner's participation in the
Medicare program had been terminated at the close of June 1, 1994.
P. Ex. 7.

C. Events after June 2, 1994 and until August 10, 1994

35. HCFA's termination notice dated June 2, 1994 also informed
Petitioner that it could reapply for participation in the Medicare
program and that it would have to demonstrate compliance for a
period of 60 days before HCFA would readmit it into the program.
P. Ex. 4 at 2; P. Ex. 7.

36. In a letter dated June 14, 1994, Mr. Kerber informed HCFA that
Petitioner was meeting the staffing requirements by using two nurse
practitioners to provide patient care services. P. Ex. 8.

37. By June 28, 1994, HCFA had determined to its satisfaction that
Petitioner had reduced its operation to 35.5 hours per week and,
therefore, Petitioner's employing two nurse practitioners to work
a total of 18.5 hours per week satisfied the staffing requirements.
HCFA Ex. 11 at 2.

38. HCFA issued Petitioner a new provider agreement effective
August 10, 1994. HCFA Br. at 4 (Proposed Finding #15); P. Resp. at
3.

III. Expiration Date of the Staffing Waiver

A. HCFA's Policy Statements

39. Under the Act, the latest date on which Petitioner's staffing
waiver could have expired was on April 7, 1994. Findings 6, 12.

40. Since at least November 8, 1991, HCFA's policy has been to
grant waivers to requesting rural health clinics that do not employ
a nurse practitioner, physician assistant, or nurse-midwife, or
because such individuals do not furnish services during at least 50
percent of the time the clinic is in operation. HCFA Ex. 13.

41. Instructions implementing HCFA's policy, dated November 8,
1991, refer to a "1 - YEAR WAIVER" but do not address the situation
where a rural health clinic that has received a one year waiver
comes into compliance with the law during the waived period. HCFA
Ex. 13.

42. In a memorandum dated July 14, 1994, HCFA advised all
Associate Regional Administrators:

If an RHC [rural health clinic] which has been granted a
waiver employs the required staff member subsequent to the
effective date of the waiver, the expiration date of the waiver is
the effective date of employment of the staff member.

HCFA Ex. 12 at 2.

43. Nothing in the Act or the Secretary's regulations prevents
HCFA from ending a staffing waiver before one calendar year has
elapsed from the date the waiver was approved. See section
1861(aa)(7)(A) of the Act.

44. As long as the term "required staff member" refers to both of
the staffing requirements found in section 1861(aa)(2)(J) of the
Act, HCFA's policy of using the hiring of the "required staff
member" to end an outstanding one year waiver does not contravene
section 1861(aa)(7) of the Act. HCFA Ex. 12, 13. See Findings 47,
48.

45. Using the hiring of the "required staff member" to end an
outstanding one year waiver is not inconsistent with or precluded
by the instructions contained in HCFA's implementing instructions
dated November 8, 1991. See HCFA Ex. 12, 13.

46. The evidence is insufficient to prove that, prior to July 14,
1994, HCFA's policy directed its Regional Office(s) to set the
expiration dates of all waivers at one full year after the waivers
were granted.

B. HCFA's Policy on Expiration Dates as applied to this Case

47. HCFA's policy statement concerning the hiring of a "required
staff member" (HCFA Ex. 12 at 2 (emphasis added)) means that a
waiver will expire during the 12-month period with the employment
of a nurse practitioner, nurse-midwife, or physician assistant who
is available to provide patient care services at least 50 percent
of the time the rural health clinic operates. See section
1861(aa)(2)(J) of the Act.

48. HCFA's policy cannot be interpreted as meaning that a staffing
waiver will expire automatically whenever a clinic hires a nurse
practitioner, nurse-midwife, or physician assistant. See section
1861(aa)(2)(J) of the Act; HCFA Ex. 12, 13.

49. During the Missouri Department of Health's investigation of
March 23, 1994, Mr. Kerber stated that Ms. Collrin resigned because
the physician(s) working for Petitioner refused to sign a
collaborative work agreement with her, and others heard Ms. Collrin
say that she was unwilling to work under and in the presence of a
physician 100 percent of the time. HCFA Ex. 5 at 1 - 2; HCFA Ex.
6 at 2.

50. Mr. Kerber's admission for Petitioner is consistent with the
complaint that HCFA received against Petitioner and Van Buren
Medical Clinic. Findings 14, 17, 22, 49.

51. As defined by statute, "collaboration" means:

a process in which a nurse practitioner works with a
physician to deliver health care services within the scope of the
practitioner's professional expertise, with medical direction and
appropriate supervision as provided for in jointly developed
guidelines or other mechanisms as defined by the law of the State
in which the services are performed.

Section 1861(aa)(6) of the Act.

52. In order for Petitioner to qualify for the receipt of Medicare
reimbursement as a rural health clinic, the nurse practitioner's
responsibilities must include: a) participation with a physician
in a periodic review of the patients' health records; b) to the
extent they are not being performed by a physician, arranging or
referring patients for services that cannot be provided at the
facility; and c) assuring that adequate patient health records are
maintained and transferred as required when patients are referred.
42 C.F.R. 491.1, 491.8(c).

53. Ms. Collrin's alternating her presence for one week at a time
between Petitioner's clinic and the Van Buren Medical Clinic did
not satisfy Petitioner's obligation under the Medicare program to
staff its facility with a nurse practitioner, nurse-midwife, or
physician assistant who is available to provide services during at
least 50 percent of the time that Petitioner was in operation. See
section 1861(aa)(2)(J); P. Ex. 2.

54. The evidence of record supports HCFA's contention that Ms.
Collrin's employment by Petitioner did not substantially satisfy
the staffing requirements for a rural health clinic. See HCFA
Resp. at 1 n.1; Findings 49 - 53.

55. The evidence is insufficient to show that, if the Missouri
Department of Health had conducted its March 27, 1994 investigation
at Petitioner's facility instead of at the Van Buren Medical
Clinic, the surveyor would have concluded that Petitioner was
utilizing Ms. Collrin as a nurse practitioner in a manner required
for Medicare participation. See, e.g., Findings 21, 22, 49 - 53.

56. Petitioner has not introduced sufficient evidence to support
its affirmative argument that Petitioner was in compliance with the
staffing requirements of section 1861(aa)(2)(J) during Ms.
Collrin's employment from January 3 to March 3, 1994. See P. Br.
at 10 - 11.

57. There is no statutory or regulatory basis for tolling the time
period covered by a staffing waiver granted by HCFA.

58. Even if legal authority existed for tolling the time period
covered by a staffing waiver, Petitioner has introduced no evidence
to rebut HCFA's evidence that Petitioner improperly utilized or
under-utilized Ms. Collrin as a nurse practitioner. See, e.g.,
Findings 54 - 56.

59. On the facts of this case, the staffing waiver granted by HCFA
to Petitioner expired on April 7, 1994. Findings 47 - 58.

IV. Petitioner's Asserted Right to Request or Receive a Staffing
Waiver to Cover the Period up to August 9, 1994

60. A rural health clinic seeking a staffing waiver must apply for
it. See Section 1861(aa)(7) of the Act.

61. HCFA will not approve a request for waiver unless the
applicant attaches its request to a HCFA-29 form and supplies
documentation showing that, during the preceding 90 day period and
despite reasonable efforts, it has been unable to hire the staff
required by law, or that the individual hired is unavailable to
work the quantity of time specified by law. HCFA Ex. 13 at 2 - 3.

62. Petitioner's hearing request does not suffice as an
application for waiver. See P. Ex. 5; Finding 61.

63. A waiver request is deemed granted only if the Secretary, by
HCFA, has received the request and has failed to deny the request
within 60 days of the date it was received. Section 1861(aa)(7)(C)
of the Act.

64. Under HCFA's longstanding policy, a waiver request that is not
specifically disapproved by HCFA is deemed approved (and becomes
effective) on the 61st day after the date HCFA received the
application. HCFA Ex. 13 at 2; see section 1861(aa)(7)(C).

65. Under HCFA's longstanding policy, the effective date of a
waiver specifically approved by HCFA may not be any earlier than
the date HCFA's regional office approves it. HCFA Ex. 12 at 2.

66. HCFA's policies do not contravene any statute or regulation.
See Findings 60 - 65.

67. Petitioner has not submitted a waiver request to HCFA for
consideration at any time since HCFA granted Petitioner a staffing
waiver in April of 1993.

68. Petitioner's contention that it "was entitled to a new waiver
effective on or before" June 1, 1994 (P. Resp. at 7) is wrong as a
matter of law. Findings 60 - 65, 67.

69. While Petitioner was operating under an unexpired staffing
waiver from April of 1993 until April 7, 1994, Petitioner was not
entitled to receive another staffing waiver even if Petitioner had
requested it. See, e.g., Section 1861(aa)(7) of the Act.

70. There is no support for Petitioner's affirmative argument that
HCFA was required to consider a request for a subsequent waiver
from Petitioner pursuant to section 1861(aa)(7)(A) of the Act
"because there had been no `expiration of any previous such waiver
for the facility'" within the meaning of section 1861(aa)(7)(B).
P. Br. at 11; Finding 69.

71. Petitioner did not reapply for a waiver prior to June 1, 1994
pursuant to Petitioner's own interpretation of its legal rights.
P. Ex. 4, 5; Finding 29.

72. Before and after June 1, 1994, Petitioner consistently sought
to demonstrate to HCFA that it had come into compliance with
Medicare's staffing requirements as of May 18, 1994. P. Ex. 6 - 8;
Findings 31, 36, 37.

73. From at least May 18, 1994 until October 9, 1994, Petitioner
could not have alleged in good faith to HCFA that Petitioner needed
a waiver because, despite reasonable efforts to do so during the
preceding 90 days, it had not been able to hire the necessary
staff member to work the hours required by law. See Finding 72.

74. HCFA's decision to recertify Petitioner for participation in
the Medicare program effective August 10, 1994 means that HCFA
found Petitioner in compliance with the staffing requirements
during the 60 days preceding August 10, 1994 (i.e., from June 10 to
August 9, 1994). E.g., P. Ex. 7.

75. The facts of this case do not support Petitioner's alternative
affirmative argument that it was eligible to apply for a subsequent
waiver pursuant to section 1861(aa)(7)(b) of the Act by July 3,
1994 (i.e., six months after Petitioner hired Ms. Collrin). See P.
Br. at 11; Findings 62, 73, 74.

76. From June 10 until August 9, 1994, Petitioner was not in need
of, nor was it entitled to receive, any staffing waiver from HCFA
even if Petitioner had applied for one to cover that period.
Findings 73, 74.

77. The evidence does not show that Petitioner's failure to seek
a second waiver from HCFA was due to the information from HCFA's
Region VII Office that no subsequent waiver request would be
approved if it was submitted before October 7, 1994 (i.e., within
six months of the date the prior waiver expired). See HCFA Ex. 1;
P. Ex. 7; Findings 28, 71, 72.

78. Petitioner has not proven its contention that, "[a]bsent
HCFA's arbitrary, capricious and unreasonable determination" that
no waiver request would be granted if it was submitted before
October 7, 1994, "Petitioner would have had a waiver in effect as
of June 1, 1994, and the termination [of the provider agreement]
would not have occurred." P. Resp. at 8; see Findings 60 - 77.

79. The Secretary has not delegated to administrative law judges
the authority to grant or deny requests for staffing waivers. See
Finding 8.

80. It is not appropriate for me to grant Petitioner's requested
relief by remanding this case to HCFA for the purpose of permitting
Petitioner to file with HCFA, or for HCFA to consider, a new
request to waive Petitioner's staffing requirements during any
period from June 2 to August 9, 1994. See 42 C.F.R.
498.56(d), 498.78; Findings 64, 65, 71 - 78.

V. HCFA's Basis for Terminating Petitioner's Provider Agreement

81. Petitioner did not have a nurse practitioner, physician
assistant, or nurse-midwife on staff between March 3 and May 18,
1994. HCFA Ex. 7; P. Ex. 6.

82. Beginning on April 7, 1994, Petitioner was no longer exempt
from complying with the staffing requirements for a rural health
clinic. E.g., Finding 59.

83. Petitioner was out of compliance with the staffing
requirements when the Missouri Department of Health conducted its
survey on May 27, 1994. Section 1861(aa)(2)(J) of the Act; HCFA
Ex. 10; see Findings 32, 33.

84. Petitioner did not hire additional staff, shorten its hours of
operation, or otherwise comply with the requirement that a nurse
practitioner be available during 50 percent of its hours of
operation until some time after June 1, 1994. P. Ex. 8; HCFA Ex.
11.

85. Petitioner has introduced no evidence to support its
statement, "Petitioner disputes ... that it was not in compliance
with RHC [Rural Health Clinic] staffing requirements as of May 27,
1994." P. Resp. at 3.

86. In the face of HCFA's evidence that Petitioner was out of
compliance with the staffing requirements from April 7, 1994 until
some time after June 1, 1994 (e.g., Findings 81 - 84), Petitioner's
allegations or denials do not suffice to create any genuine issues
of fact requiring an in-person hearing. See generally Fed. R. Civ.
P. 56(e).

87. There exists no genuine issue of fact concerning Petitioner's
non-compliance with the Medicare staffing requirements at the time
HCFA terminated Petitioner's provider agreement. Findings 81 - 86.

88. On May 4 and June 2, 1994, HCFA correctly determined that
Petitioner's provider agreement should be terminated due to
Petitioner's failure substantially to meet the applicable
provisions of section 1861 and 42 C.F.R. 405, subpart X, and
491, subpart A. See, e.g., Section 1866(b)(2)(B) of the Act; 42
C.F.R. 405.2404(b); P. Ex. 4, 7; Findings 27, 34, 81 - 87.

89. HCFA properly set the effective date for terminating the
provider agreement at June 1, 1994 (27 days after the date of its
May 4, 1994 notice letter to Petitioner). See 42 C.F.R.
405.2404(b)(2); Finding 27.

VI. HCFA's Recertification of Petitioner as a Medicare Provider,
effective August 10, 1994

90. The Act and regulations do not specify hearing rights for
providers dissatisfied with HCFA's decision to recertify them
following the termination of their provider agreements. See
Section 1866(h); 42 C.F.R. 498, subpart A, 405, subpart X.

91. Even if Petitioner could be considered a "prospective
provider" for purposes of seeking its recertification after
termination, Petitioner is not entitled to a hearing unless it has
requested a reconsideration from HCFA and obtained an adverse
reconsideration determination from HCFA. 42 C.F.R.
405.2402(f), 498.2, 498.5(a).

92. Assuming that Petitioner had the status of a prospective
provider after June 1, 1994, there is no evidence of any
reconsideration determination by HCFA on the issue of whether
Petitioner should have been recertified as a provider prior to
August 10, 1994.

93. I am without authority to grant the relief Petitioner
requested, i.e., placing into effect a provider agreement earlier
than the date of Petitioner's recertification by HCFA (August 10,
1994). Findings 88 -92.

ANALYSIS

Many of my findings of fact and conclusions of law are
self-explanatory and therefore require no discussion. However, I
will use this part of my decision to analyze the parties' arguments
on various issues that they consider to be controlling, as well as
the facts on which their contentions are based. I do so for the
purpose of providing a context for the findings and conclusions I
have reached.

In order to emphasize the parties' respective burdens of proof, I
will begin with the evidentiary principles I applied in this case.
Then I will discuss the prima facie case established by HCFA.
Finally, I will discuss the affirmative arguments and requests for
relief advanced by Petitioner.

I. Summary Judgment and Disposition on the Written Record

In analyzing the merits of the case, I have been mindful of the
parties' request that I apply the principles of summary judgment to
the extent possible, and, if there remain any disputed issues of
fact to which neither side is entitled to prevail on summary
judgment, I am to resolve such factual disputes on the basis of the
written record before me. See Confirming Letter for December 1,
1994 prehearing conference. Both parties have repeatedly stated to
me at the prehearing conferences I held in this case that they did
not wish to present evidence at an in-person hearing. Petitioner
confirmed at the last prehearing conference that it did not have
any additional evidence to present on the issues before me.

Rule 56 of the Federal Rules of Civil Procedure contains the
principles for adjudicating summary judgment motions. To prevail on
a summary judgment motion in federal district court, a moving party
must establish, by use of affidavits or other filings of record,
that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c). When the motion for summary judgment is properly supported,
the adverse party may not rest upon mere allegations or denials.
Fed. R. Civ. P. 56(e). The very function of the summary judgment
procedure is to pierce the pleadings and to assess the parties'
proof to determine whether there is a genuine need for further
proceedings. Therefore, summary judgment may be entered if the
adverse party does not respond to a properly supported summary
judgment motion or does not set forth specific facts showing that
there is a genuine issue that should be reserved for trial or other
disposition. Fed. R. Civ. P. 56(e) and advisory committee's note.

Even though the Federal Rules of Civil Procedure have no binding
force in administrative proceedings, the legal principles they
embody have often been used for guidance. I agree with the parties
that summary judgment is an appropriate and useful method for
promptly disposing of disputes in which there exists no genuine
issue as to any material fact. Therefore, I have used the
above-discussed contents of Rule 56 to resolve many of the
arguments before me. Where application of the standards and
principles inherent in Rule 56 does not entitle either party to
judgment as a matter of law on a given issue, I have (as requested
by the parties) proceeded to evaluate and weigh the documentary
evidence of record to reach my conclusions.

As noted in my prehearing order dated August 25, 1994, the standard
of proof required to prevail on any genuine issues of material fact
is a preponderance of the evidence. HCFA must prove, by use of a
summary judgment motion or otherwise, that there is a basis for
terminating Petitioner's provider agreement. Prehearing Order
dated August 25, 1994. Petitioner has the burden of proving the
affirmative defenses it has advanced. Id.

II. HCFA's Prima Facie Case

The ultimate issue before me is whether Petitioner's provider
agreement was properly terminated by HCFA effective "at the close
of" June 1, 1994. See P. Ex. 4, 7. 2/ The law is clear that HCFA
is authorized to terminate a provider agreement when the provider
fails substantially to meet the applicable provisions of section
1861 of the Act. Section 1866(b)(2)(B) of the Act. Section 1861
of the Act is equally clear that, for a facility to participate as
a rural health clinic in the Medicare program, it must employ a
nurse practitioner, a physician assistant, or a certified
nurse-midwife who is available to furnish patient care services not
less than 50 percent of the time it operates. Section
1861(aa)(2)(J) of the Act. Under the regulations applicable to
rural health clinics, HCFA is authorized to terminate a provider
agreement if the clinic fails to meet the conditions of
participation specified by the regulations or is not in substantial
compliance with provisions of the provider agreement, other
relevant regulations, or any applicable provisions of the Medicare
laws. 42 C.F.R. 405.2404(b). In its effort to meet its burden
of proof under this issue, HCFA has sought to establish that its
termination action resulted from Petitioner's failure substantially
to meet the staffing requirements set forth at section
1861(aa)(2)(J) of the Act through Petitioner's use of a nurse
practitioner. HCFA Br. at 5 - 6. 3/

Until June 2, 1994, Petitioner was participating in the Medicare
program as a rural health clinic. There is no material dispute
concerning the central events that took place in this case between
April of 1993, when HCFA granted Petitioner a staffing waiver, and
May 4, 1994, when HCFA notified Petitioner that its provider
agreement would end at the close of June 1, 1994. Findings 12 -
34.

The evidence submitted by both parties establishes that, during the
period between March 1993 and January 3, 1994, Petitioner did not
employ the staff required by law (i.e., a nurse practitioner,
certified nurse-midwife, or physician assistant). See section
1861(aa)(2)(J) of the Act. After Petitioner obtained a one year
staffing waiver in April of 1993, Petitioner employed a nurse
practitioner from January 3 until March 3, 1994 to work alternate
weeks at Petitioner's facility. After March 3, 1994, Petitioner
continued to participate in the Medicare program without the staff
specified by law. Petitioner had no nurse practitioner on staff
between March 3, 1994 and May 18, 1994. 4/ HCFA took no action
against Petitioner until after April 7, 1994, when HCFA considered
the waiver to have expired.

After Petitioner was notified by HCFA on May 4, 1994, that its
provider agreement would terminate at the close of June 1, 1994,
due to Petitioner's failure to meet the staffing requirements
mandated by law, Petitioner hired a nurse practitioner on May 18,
1994, and argued that it had come into compliance as of that date.
P. Ex. 6. However, a survey conducted on May 27, 1994, disclosed
that the newly hired nurse practitioner was working fewer than 50
percent of the hours that Petitioner was in operation. Therefore,
on June 2, 1994, HCFA reaffirmed its earlier determination to end
Petitioner's provider agreement effective "at the close of" June 1,
1994, because HCFA concluded that Petitioner was not in compliance
with the staffing requirements of section 1861(aa)(2)(J) of the
Act.

Petitioner objects to HCFA's evidence concerning the May 27, 1994
survey by claiming that the findings and conclusions of the
surveyor are vague and ambiguous. P. Resp. at 3 (referring to HCFA
Ex. 10). I disagree. The findings and conclusions of the surveyor
are clear in the context of the laws and regulations applicable to
a rural health clinic and the purpose for which the survey was
being conducted. Even though the surveyor did not specifically
articulate a conclusion as to the 50 percent requirement, the
surveyor listed Petitioner's hours of operation and the hours
worked by the nurse practitioner. HCFA Ex. 10. Application of
simple arithmetic to the two categories of hours listed by the
surveyor compels the conclusion that HCFA correctly determined that
Petitioner's nurse practitioner was not available 50 percent of
Petitioner's hours of operation. See HCFA Ex. 10, 11.

Petitioner has offered no proof in support of its statement that it
"disputes ... it was not in compliance with the RHC requirements as
of May 27, 1994." P. Resp. at 3. As already discussed above, an
adverse party cannot defeat a properly supported summary judgment
motion with bald denials or pleadings. Petitioner has created no
genuine issue as to any material fact concerning whether it was in
compliance with the staffing requirements of law when HCFA decided
to terminate its provider agreement.

For the foregoing reasons, I have concluded that HCFA has
satisfactorily established that Petitioner was substantially out of
compliance with the staffing requirements for a rural health clinic
between April 8 and June 1, 1994. On the basis of the
uncontroverted facts identified above, HCFA has proven that its
termination action was valid prima facie. The burden of moving
forward therefore shifts to Petitioner to demonstrate why I should
not enter judgment in HCFA's favor.

III. Petitioner's Affirmative Arguments

Petitioner has advanced several interrelated affirmative arguments
to show that HCFA's termination of the provider agreement at the
close of June 1, 1994 was improper or barred. Such affirmative
arguments relate to the expiration date of the staffing waiver
granted by HCFA in April of 1993 5/ and the date on which
Petitioner would have become eligible to apply for or obtain
another waiver. As already noted, Petitioner bears the burden of
proof on these affirmative arguments.

In reviewing the merits of the arguments on waivers, I do not imply
that I have authority to grant or deny waiver requests from rural
health clinics. I have made clear in my findings that I do not
have such authority. Finding 79. I analyze the waiver issues
presented by Petitioner for the limited purpose of deciding whether
HCFA was prohibited from terminating Petitioner's provider
agreement as of June 1, 1994 due to Petitioner's legal status or
rights (if any) under the laws governing waivers for rural health
clinics. According to Petitioner, "[t]he salient issue ... is not
one of compliance, but whether Petitioner's original waiver was
still in effect when the agreement was terminated, and if it was
not, whether Petitioner was entitled to seek and obtain a new
waiver." P. Resp. at 7.

Under the Act, HCFA cannot grant a waiver for more than one year.
Finding 6. In granting a waiver to Petitioner during April of
1993, HCFA specified an expiration date of April 7, 1994. Findings
12, 39. The undisputed facts noted above show that Petitioner
enjoyed the benefits of the waiver until after April 7, 1994:
Petitioner had remained in the Medicare program until June 1, 1994,
even though, by Petitioner's own admission and under its own
theories, it did not satisfy the staffing requirements of the law
from March 3 until May 18, 1994. Nevertheless, Petitioner argues
that HCFA's setting the expiration date of the waiver in this case
at April 7, 1994, is arbitrary and capricious, inconsistent with
the statutory mandate, and frustrates the congressional purpose
underlying the Act. P. Resp. at 4.

A. Petitioner's Tolling Theory

Under one of Petitioner's alternative theories, Petitioner asks me
to construe the waiver granted by HCFA in April of 1993 as having
been tolled for the two months (January 3, 1994 to March 3, 1994)
that Petitioner employed Ms. Collrin, a nurse practitioner. E.g.,
P. Br. at 10, 14. Thus, the waiver originally scheduled to expire
on April 7, 1994, would have remained in effect until June 7, 1994,
and precluded HCFA from terminating the provider agreement on June
1, 1994. P. Br. at 14. In support of its tolling theory,
Petitioner contends that it was in compliance with the staffing
requirements during the two months that it employed Ms. Collrin, a
nurse practitioner. P. Br. at 11.

I reject Petitioner's tolling theory. Neither the Act nor the
regulations authorize the tolling of a staffing waiver. Moreover,
HCFA has offered a substantial amount of evidence that Petitioner
was not properly utilizing Ms. Collrin as a nurse practitioner and
that Ms. Collrin was not available to provide patient care services
for the amount of time specified by law. E.g., Findings 50 - 55.

A rural clinic does not satisfy the staffing requirements of the
law merely by hiring someone with the credentials of a nurse
practitioner. Such an individual also must provide services
appropriate to a nurse practitioner and be available to render
patient care services at least 50 percent of the time that the
clinic is in operation. Sections 1861(aa)(2)(J), 1861(aa)(6) of
the Act; 42 C.F.R. 491.8(c). Therefore, the fact that Ms.
Collrin was licensed as a nurse practitioner and employed by
Petitioner from January 3 to March 3, 1994 is not sufficient for
proving Petitioner's allegation that it was in compliance with the
law.

I have considered the evidence concerning the number of hours Ms.
Collrin worked at Petitioner's facility. During the relevant
period, Ms. Collrin worked at Petitioner's facility every other
week. During the alternate weeks, she worked at the Van Buren
Medical Clinic. I infer from the available evidence that
Petitioner was open for business every week. Petitioner has not
introduced any evidence to the contrary. Therefore, even assuming
that Ms. Collrin was being properly utilized as a nurse
practitioner by Petitioner during the alternate weeks she worked at
Petitioner's clinic, I would agree with HCFA that Petitioner was
not in substantial compliance with the requirements of the Act.
This is because I conclude that a rural health clinic is not in
compliance with the Act when it has no nurse practitioner or
similar personnel providing patient care services during every
second week that its clinic is open. Findings 53, 54. Similarly,
the 50 percent requirement would not be satisfied if a clinic
employed a nurse practitioner only during the first six months of
every year that it was open for business, or if the nurse
practitioner worked only during every other month that the clinic
was open for business.

I have reviewed also the evidence concerning whether Ms. Collrin
was being utilized appropriately. HCFA offered a memorandum dated
March 28, 1994 in which the Missouri Department of Health opined
that Petitioner had not properly utilized the nurse practitioner.
HCFA Ex. 5. Given that Petitioner has the burden to prove its
affirmative defenses, Petitioner cannot succeed in establishing
compliance during Ms. Collrin's employment by objecting to HCFA's
evidence and conclusion.

Petitioner objects to HCFA Ex. 5 and the conclusion it contains as
irrelevant. According to Petitioner, the evidence is irrelevant
because the Missouri Department of Health visited only the Van
Buren Medical Clinic and concluded that the Van Buren Medical
Clinic was not properly utilizing the services of the nurse
practitioner. P. Resp. at 2.

I find no merit in the objection or the arguments. The survey was
triggered by a complaint involving the under-utilization and
improper utilization of a nurse practitioner (Barbara Collrin)
filed against Petitioner as well as the Van Buren Medical Clinic by
an individual claiming to be Barbara Collrin. HCFA Ex. 4, 5. The
charges were identical against both facilities. Id. The
investigative report at issue is clearly denoted with "Subject:
Piedmont and Van Buren RHC -- Unfair Practice." HCFA Ex. 5 at 1.

At the Van Buren Medical Clinic, the surveyor spoke to Warren N.
Kerber, who represented Petitioner, the Van Buren Medical Clinic,
and their parent entity, Lucy Lee Hospital. E.g., Finding 14; HCFA
Ex. 5 at 1 - 2. Mr. Kerber told the surveyor that Petitioner's
doctor(s) refused to sign a collaboration practice agreement with
Ms. Collrin, and Ms. Collrin was heard to say that she did not wish
to work in the presence of a physician 100 percent of the time.
HCFA Ex. 5 at 1.

The surveyor identified various problems after she reviewed patient
records at the Van Buren Medical Clinic. Id. However, the
evidence of record does not suggest that Ms. Collrin performed her
work differently at the Van Buren Medical Clinic and Petitioner's
clinic. Petitioner has introduced no evidence to show that, after
hiring Ms. Collrin because she was a nurse practitioner, Petitioner
properly utilized her services as a nurse practitioner. I
therefore conclude that Petitioner has failed to meet its burden of
proving its affirmative argument that it was in compliance with the
staffing requirements during Ms. Collrin's employment. No tolling
of the expiration date is appropriate even if tolling were
permitted by the Act or the regulations. Finding 58.

B. Petitioner's Using January 3, 1994 as an Expiration Date and
its Related Alternative Interpretations of Section 1861(aa)(7)(B)

1. Petitioner's theories and arguments

Petitioner asked me also to construe the waiver as having expired
on January 3, 1994, the date on which it hired Ms. Collrin.
Petitioner makes this request for several reasons having to do with
its asserted eligibility to seek a subsequent waiver from HCFA. As
I have noted earlier, section 1861(aa)(7)(B) of the Act states,
"The Secretary may not grant such a waiver under subparagraph (A)
to a facility if the request for the waiver is made less than 6
months after the date of the expiration of any previous such waiver
for the facility."

By contending that its waiver expired on January 3, 1994,
Petitioner argues that, under section 1861(aa)(7)(B) of the Act, it
became eligible to apply for a subsequent waiver on July 3, 1994.
P. Br. at 11.

Under its alternative reading of section 1861(aa)(7)(B), Petitioner
argues that the clause "[t]he Secretary may not grant such a
waiver" means that HCFA has discretion either to grant or deny a
waiver request filed less than six months after the date the
original waiver expired. Pursuant to its interpretation of the
Secretary's discretion under the "may not grant such a waiver"
provision of section 1861(aa)(7)(B), Petitioner alleges that HCFA
improperly terminated the provider agreement without providing
Petitioner any opportunity to demonstrate its continuous reasonable
efforts to comply with the staffing requirements. P. Br. at 7 - 9.
Petitioner alleges also that it "made good faith efforts to, and in
fact did, achieve compliance with the RHC staffing requirements
notwithstanding the initial waiver it received." P. Br. at 9.
Under this line of reasoning, Petitioner's conclusion is that HCFA
acted arbitrarily, capriciously, contrary to the language and
intent of the Act, and without authority "in terminating
Petitioner's provider agreement and predetermining that Petitioner
could not seek a subsequent waiver before October 7, 1994 [i.e.,
six months after the waiver's expiration date as set by HCFA]." P.
Br. at 9.

Another of Petitioner's alternative readings of section
1861(aa)(7)(B) is that the provisions contained therein are
inapplicable to this case. P. Br. at 10 - 11. Petitioner
theorizes that the waiver granted by HCFA in April of 1993 did not
"expire"; it "terminated" or "ended" on January 3, 1994. P. Br. at
10. Petitioner defines "expiration" as "termination which occurs
merely due to the lapse of time," while it contends its waiver
"terminated" or "ended" when Petitioner "hired a nurse practitioner
on January 3, 1994." P. Br. at 10. Because Petitioner alleges
that the waiver granted in April of 1993 never "expired,"
Petitioner concludes that it was also free of the six month waiting
period referenced by section 1861(aa)(7)(B) of the Act. P. Br. at
10 - 11.

On the basis of its argument that the waiver granted in April of
1993 had never "expired" within the meaning of section
1861(aa)(7)(B) of the Act, Petitioner concludes further that HCFA
was required to accept a request for waiver from Petitioner under
section 1861(aa)(7)(A), which directs the Secretary to grant a
waiver for a period of one year when a rural health clinic
demonstrates that it has been unable to satisfy the staffing
requirements during the preceding 90 days. P. Br. at 11.
According to Petitioner, HCFA's improper refusal to accept a waiver
request from Petitioner under
section 1861(aa)(7)(A) of the Act resulted in HCFA's improperly
terminating Petitioner's provider agreement. P. Br. at 11.

In a related theory advanced by Petitioner before the termination
of its provider agreement took effect, Petitioner contended that it
was entitled to apply for another waiver on June 1, 1994, 90 days
after Ms. Collrin's resignation. See P. Ex. 5. Petitioner appears
to have been relying on section 1861(aa)(7)(A) of the Act and its
requirement that the applicant demonstrate inability to hire the
requisite staff member after due diligence exercised during the
preceding 90 days.

2. Merits of Petitioner's theories and arguments

I find no merit in any of Petitioner's arguments for construing the
waiver as having expired on January 3, 1994. Petitioner chose the
January 3, 1994 date only because it contends that it came into
compliance with the law on that date by hiring Ms. Collrin. I have
already discussed my conclusion that Petitioner failed to prove its
affirmative argument that it was in compliance with the staffing
requirements between January 3 and March 3, 1994. For the same
reasons, I reject as factually untenable the use of January 3, 1994
as the expiration date of the waiver under any of Petitioner's
alternate theories of law.

Nor do HCFA's interpretations of its policy on the expiration date
issue validate Petitioner's use of the January 3, 1994 date. As
indicated in my Findings 41 - 46, the evidence of record does not
establish that HCFA had a substantively different policy on the
matter prior to July 14, 1994. Neither the Act nor HCFA's policy
statements of record (dated November 8, 1991 and July 14, 1994)
countenance automatically ending a waiver whenever the provider
succeeds in hiring a nurse practitioner, nurse-midwife, or
physician assistant. Id. On the facts of this case, the waiver
granted to Petitioner during April of 1993 did not end and could
not have ended until April 7, 1994. At most, HCFA's Region VII
Office committed harmless error in failing to inform Petitioner
that, under a different set of facts, the waiver could have expired
before April 7, 1994.

As for Petitioner's legal arguments concerning the alleged January
3, 1994 expiration date and its relationship to section
1861(aa)(7)(B) of the Act, I find them strained and unpersuasive.
For example, I am not persuaded by Petitioner's arguments that,
when an entity of greater authority (Congress) instructs its
delegate (the Secretary) that she "may not grant" a waiver of the
type described in section 1861(aa)(7)(B), what Congress meant was
that the Secretary may grant such waivers. Nothing in section
1861(aa) implies that rural health clinics have a legitimate right
to expect approval of those requests the Secretary "may not
approve" under subsection (7)(B). Nor is there merit to
Petitioner's argument that section 1861(aa)(7)(B) is inapplicable
because the waiver granted in April of 1993 "ended" instead of
"expired." Under Petitioner's legal interpretations, there would
be no incentive for any rural health clinic to achieve and maintain
compliance with the staffing requirements of the law.

HCFA is authorized to terminate provider agreements when the
provider fails substantially to meet the applicable provisions of
section 1861. Section 1861(b)(2)(B) of the Act; 42 C.F.R.
405.2404(b). The staffing requirements discussed herein are
contained in section 1861 and help define what is a rural health
clinic for purposes of participation in the Medicare program.
Finding 4. The evidence establishes that, from at least April of
1993 until at least May 27, 1994, Petitioner did not meet the
staffing requirements for participation in the Medicare program.
E.g., Findings 12, 23, 32, 54, 58. Such prolonged noncompliance
with critical requirements of participation is evidence that
Petitioner failed substantially to meet an applicable provision of
section 1861. The waiver in effect until April 7, 1994, precluded
HCFA from attaching legal consequences to Petitioner's
noncompliance until after its expiration. However, the pendency of
the waiver did not negate the requirement that Petitioner come into
substantial compliance with this critical element of program
participation after April 7, 1994. Petitioner's failure to do so
provided the basis for HCFA's termination action. Findings 82 -
89.

Without doubt, Petitioner made attempts to come into compliance
during the waived period. However, Petitioner's attempts at
compliance during the 12 months do not negate or excuse its
noncompliance after April 7, 1994. Petitioner was given the
12-month waiver to bring itself into compliance. Petitioner's lack
of success in its endeavors before and after April 7, 1994 does not
render invalid HCFA's termination action.

Nor do Petitioner's attempts at compliance mitigate the seriousness
of its noncompliance after April 7, 1994. I note as an example
that, by May 14, 1994, Petitioner had hired a nurse practitioner
named Sondra Reese. However, Petitioner remained out of compliance
with the requirement that the nurse practitioner be available to
render patient care services for at least 50 percent of the time
that Petitioner was in operation. Petitioner failed to satisfy
this requirement even after HCFA specifically explained it to
Petitioner. E.g., HCFA Ex. 2 at 2; HCFA Ex. 10; P. Ex. 7. Before
HCFA terminated the provider agreement, Petitioner had the means
for complying with the 50 percent requirement. When Petitioner
hired Ms. Reese on May 14, 1994, to work 18.5 hours a week,
Petitioner could have reduced its hours of operation
correspondingly (i.e., from its 49 hours a week to, for example, 37
hours a week). See HCFA Ex. 10; Findings 32, 37. However, it was
not until after its provider agreement was terminated on June 1,
1994, that Petitioner reduced its hours of operation to 35.5 hours
a week and thereby came into compliance. HCFA Ex. 11. 6/
Especially in the context of these facts, Petitioner's arguments do
not prove that HCFA acted contrary to law.
C. The Absence of any Subsequent Request for Waiver and HCFA's
Representations to Petitioner concerning any Waiver Request filed
before October 7, 1994

I have issued no formal finding on the meaning of section
1861(aa)(7)(B) because I do not find it necessary to do so.
Petitioner's failure to apply for another waiver, Petitioner's
efforts to prove its compliance with Medicare's staffing
requirements since May 18, 1994, and its success at proving
compliance since at least June 10, 1994, have rendered moot the
legal question of whether, under section 1861(aa)(7)(B), HCFA may
grant a waiver if it is requested less than six months after the
expiration of a previous waiver. Findings 60 - 76. For the same
reasons, I have not issued any formal finding on whether Petitioner
was eligible to request a second waiver under section
1861(aa)(7)(A) between January 3 and August 9, 1994.

Because Petitioner appears to argue that it filed no request for a
subsequent waiver due to HCFA's notice that such a request would be
rejected if filed before October 7, 1994, I issued formal findings
on the merits of such arguments by Petitioner. I reached those
findings after having considered Petitioner's burden of proof. If
Petitioner wishes to avail itself of an affirmative argument based
on a reliance theory, Petitioner bears the burden of proving the
truth of all facts necessary for supporting the theory. Petitioner
has merely pointed to HCFA's letters stating that no subsequent
waiver would be granted until six months after April 7, 1994.

The contents of HCFA's letters provide very little support for a
reliance theory, especially viewed in light of other evidence of
record. At least by May 18, 1994, Petitioner had formulated its
own legal theory under which it would not be eligible to seek
another waiver until June 1, 1994. However, by May 19, Petitioner
had represented to HCFA that it had come into compliance with the
law and would not need a waiver. Findings 29, 31. Good faith
allegations are required for waiver requests and assertions of
compliance. As a matter of law, a facility cannot assert in good
faith that it believes itself in compliance while it simultaneously
asserts, also in good faith, that it does not believe itself in
compliance and therefore needs a waiver. There is no evidence
contradicting the inference that, in making the assertions of its
compliance to HCFA on May 19, 1994, Petitioner believed in the
truth of its statements. Moreover, the evidence shows that, after
May 19, 1994, Petitioner again represented to HCFA that it was in
compliance. P. Ex. 8. At no time on or after June 1, 1994, did
Petitioner request a waiver from HCFA by stating that Petitioner
believed itself out of compliance with the staffing requirements.

Petitioner requested no waiver from HCFA on or after June 1, 1994,
even after having asserted a right to do so in its request for
hearing. Finding 29. After Petitioner took the initiative to
challenge HCFA's position on the six month waiting period, I do not
find it credible that HCFA's advance warning of denial would have
caused Petitioner to forebear preserving its rights by filing such
a waiver request with HCFA. It is not possible that Petitioner
thought it should send its waiver request to me after filing its
request for hearing. I have received no such request, and
Petitioner has not asked me to approve any waiver request.
Petitioner knew and should have known that HCFA is the only entity
authorized to approve or disapprove a waiver request.

IV. Petitioner's Requested Relief

The relief sought by Petitioner is for me to reinstate its provider
agreement retroactively to June 1, 1994 and to permit Petitioner to
request a waiver for any period since June 1, 1994 during which it
has been unable to meet the staffing requirements despite
reasonable efforts to do so. P. Br. at 14. As discussed above,
the relief sought by Petitioner is based on its contention that it
was entitled to submit a subsequent request for waiver to HCFA,
even though it has submitted no such request to date. I have
stated in my formal findings that HCFA properly terminated
Petitioner's provider agreement effective at the close of June 1,
1994. Findings 88, 89.
The limitations on Petitioner's hearing rights, the correctness of
HCFA's termination action, Petitioner's failure to file a waiver
request before the close of June 1, 1994, as well as the authority
vested in HCFA for approving (or disapproving) all requests for
waivers, preclude my altering the June 1, 1994 termination date.
In this case, Petitioner was a provider at the time it requested a
hearing. Therefore, my jurisdiction is limited to the question of
whether the provider agreement was properly terminated.

Because both parties made allegations concerning events that
occurred after the close of June 1, 1994, I analyzed them to the
extent they were relevant to the termination issue before me. I
examined them also for the purpose of determining whether
Petitioner should have the opportunity to seek relief from HCFA at
this juncture. In my formal findings, I rejected the possibility
of remanding the case to HCFA and denied Petitioner's request that
I allow it to seek a waiver from HCFA "for any period since June 1,
1994 ...." P. Br. at 14; Finding 80.

Under 42 C.F.R. 498.78, if no new issues are present, I may
remand a case to HCFA only if HCFA requests a remand, the affected
party concurs in writing or on the record, and the remand is for a
determination by HCFA "satisfactory to the affected party." In
these proceedings, HCFA has not requested a remand of the pending
case, and HCFA has expressed no agreement with Petitioner's
arguments for a waiver after June 1, 1994. Even if HCFA were
willing to grant Petitioner the opportunity to submit a new waiver
request, HCFA's longstanding policies would preclude HCFA from
assigning a retroactive approval date to the waiver, as requested
by Petitioner. See Findings 64, 65. Therefore, a remand is not
appropriate under 42 C.F.R. 498.78.

I have decided also against remanding the case to HCFA for
consideration of Petitioner's new arguments on the waiver issue.
Under 42 C.F.R. 498.56(d), I have the discretion to remand a new
issue for consideration and determination by HCFA at the request of
either party or on my own motion. However, the parties have had
long and detailed dealings with one another on the staffing issues.
If Petitioner had truly believed itself in need of a waiver and
entitled to HCFA's approval of it after April 7, 1994, Petitioner
had the opportunity to file such a request with HCFA long before
now.

More importantly, there is no legal merit to Petitioner's arguments
concerning its right to receive a waiver to cover "any period since
June 1, 1994." Findings 60 - 78. HCFA has considered these
arguments in the course of the proceedings before me and has
refused to accept them. For all these reasons, I have concluded
that there is no legitimate interest to be served by remanding the
case to HCFA under 42 C.F.R. 498.56(d).

Finally, I make clear that I have not adjudicated the merits of
HCFA's decision to recertify Petitioner as a Medicare provider
effective August 10, 1994. I have looked at the events after June
1, 1994 in the context of evaluating Petitioner's waiver theories.
However, as noted in my formal findings, Petitioner cannot dispute
in this proceeding the correctness of HCFA's recertification
determination or HCFA's setting the effective date of
recertification at August 10, 1994. Findings 90 - 93.

CONCLUSION

For the foregoing reasons, I uphold HCFA's determination to
terminate the provider agreement with Petitioner, effective June 1,
1994.

________________________
Mimi Hwang Leahy
Administrative Law Judge

1. As discussed below, the parties agreed to submit this case
for decision on a written record. I have admitted into evidence
all exhibits submitted by the parties, consisting of HCFA's
Exhibits 1 to 15 (HCFA Ex. 1 to 15) and Petitioner's Exhibits 1 to
10 (P. Ex. 1 to 10). In the analysis section of this decision, I
explain why I have overruled Petitioner's objections to HCFA's
evidence. I note that there is some duplication among the parties'
exhibits. However, because each party has referred to its own
exhibits by number, I am admitting all the exhibits.

Each party has filed a brief in chief (P. Br. and HCFA Br.), as
well as a response brief (P. Resp. and HCFA Resp.).

2. For the sake of convenience, I will refer to the termination
date as June 1, 1994.

3. There is no evidence that, during any relevant period,
Petitioner utilized a nurse-midwife or physician assistant in an
effort to satisfy the staffing requirements of section
1861(aa)(2)(J) of the Act.

4. In its notice of termination dated May 4, 1994, HCFA stated
that there was a telephone call on April 28, 1994, between the
Missouri Department of Health and Petitioner, which confirmed that
Petitioner had not yet hired a nurse practitioner or equivalent
personnel since the survey of March 23, 1994. P. Ex. 4. HCFA has
submitted no other evidence of this April 28th telephone call.
However, the facts allegedly confirmed by the telephone call are
not in dispute. After Ms. Collrin's resignation, effective March
3, 1994, Petitioner said it next hired a nurse practitioner on May
18, 1994. See P. Ex. 6.

5. As discussed herein, Petitioner seeks to draw a distinction
between a waiver's "expiration" and "termination." I use the term
"expiration" throughout the decision because it is the only one
used in the Act and neither the regulations or HCFA's policy
statements refer to the "termination" of the staffing waiver.
However it was caused, the expiration date of a waiver still
denotes the point in time at which the waiver changed from being in
effect to being no longer in effect.

6. Some time after June 1, 1994, Petitioner also hired a second
nurse practitioner to share the 18.5 hours previously worked by Ms.
Reese.