$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Villa Northwest Restorative Care Center,
Petitioner,
- v. -
Health Care Financing Administration.
DATE: February 17, 1995
Docket No. C-94-372
Decision No. CR362
DECISION
Petitioner requested a hearing to contest the termination of
Petitioner's Medicare provider agreement (subsequently rescinded)
by the Health Care Financing Administration (HCFA). HCFA
rescinded its termination of Petitioner's agreement prior to the
date on which it was to take effect. Petitioner contends that 1)
it was harmed by the proposed termination, 2) such harm was not
cured by the recession of the termination action prior to its
effective date, and 3) it is entitled to a hearing to address the
issues raised by HCFA's actions and to exonerate itself. I do not
agree that Petitioner is entitled in this forum to address either
HCFA's rescinded termination or the collateral State effects
arising from such termination. For the following reasons, I
DISMISS Petitioner's request for hearing.
BACKGROUND
In response to a complaint, the Texas Department of Human Services
(State survey agency) conducted an investigational survey of
Petitioner (a skilled nursing facility participating in the
Medicare program). The State survey agency found Petitioner to be
out of compliance with two Level A requirements and identified four
Level B deficiencies. Based upon the violations found to exist,
the State survey agency recommended that HCFA terminate
Petitioner's participation in the Medicare program. HCFA adopted
the recommendation of the State survey agency and notified
Petitioner that its Medicare provider agreement would be
terminated.
In an undated letter received by HCFA on June 13, 1994, Petitioner
alleged correction of the deficiencies that had been identified by
the State survey agency. HCFA Ex. 3. Prior to the termination of
Petitioner's provider agreement, HCFA determined that Petitioner
had either corrected or ameliorated the deficiencies. Based on
Petitioner's actions to correct or ameliorate the deficiencies,
HCFA rescinded the termination action prior to its effective date.
1/ In a letter dated June 15, 1994, Petitioner requested a hearing
to contest HCFA's proposed termination and the case was assigned to
me.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. The State survey agency conducted an investigational survey of
Petitioner from May 24, 1994 through June 6, 1994. HCFA Ex. 3.
2. The State survey agency found Petitioner to be out of
compliance with Level A requirements for quality of care (42 C.F.R.
483.25) and for administration (42 C.F.R. 483.75). HCFA Ex.
2.
3. The State survey agency found Petitioner to be out of compliance
with the following four Level B requirements: resident rights (42
C.F.R. 483.10), quality of care (42 C.F.R. 483.25), pharmacy
services (42 C.F.R. 483.60) and administration (42 C.F.R.
483.75). HCFA Ex. 2, 5.
4. On June 8, 1994, the State survey agency recommended
that HCFA terminate Petitioner's provider agreement. HCFA Ex. 2.
5. In a letter dated June 13, 1994, HCFA informed Petitioner that
it agreed with the recommendation of the State survey agency and
that Petitioner's Medicare provider agreement would be terminated
effective June 29, 1994. HCFA Ex. 1, 2.
6. HCFA's June 13, 1994 notice of termination informed Petitioner
that it was not in compliance with two Level A requirements and
further informed Petitioner that its noncompliance with these two
Level A requirements posed an immediate threat to patient health
and safety. HCFA Ex. 1.
7. HCFA is required to terminate a skilled nursing facility which
no longer meets a Level A requirement and such deficiency poses
immediate jeopardy to patient's health and safety. 42 C.F.R.
489.53(b),
8. HCFA's June 13, 1994 notice of termination to Petitioner was
accompanied by a detailed listing of each deficiency that had been
identified by the State survey agency and specifically identified
each Level A requirement that Petitioner was allegedly not in
compliance with, and identified the standards and elements within
the requirement and the basis for Petitioner's alleged
noncompliance with each Level A requirement. HCFA Ex. 1, 2.
9. On June 13, 1994, HCFA received an undated letter from
Petitioner alleging correction of each of the deficiencies that had
been identified by the State survey agency. HCFA Ex. 3, 4.
10. HCFA determined Petitioner's allegations of correction to be
credible and authorized the State survey agency to conduct a
follow-up survey. HCFA Ex. 4, 5.
11. On June 21, 1994, the State survey agency conducted a follow-up
survey and found Petitioner had corrected or ameliorated its
deficiencies such that they no longer posed an immediate threat to
patients' health and safety. HCFA Ex. 5.
12. HCFA rescinded its termination of Petitioner's provider
agreement on June 24, 1994, five days prior to the date the
termination was to become effective (June 29, 1994). HCFA Ex. 1 -
5.
13. Petitioner's provider agreement was never terminated. Finding
12.
14. HCFA's June 13, 1994 determination that Petitioner would be
terminated as of June 29, 1994, subsequently rescinded by HCFA's
June 24 letter is not an "initial determination." 42 C.F.R.
489.53, 42 C.F.R. 498.3(b)(1) - (11), 42 C.F.R. 498.5; Pages
4 - 5.
15. Petitioner has no right to appeal HCFA's June 13, 1994
determination to terminate Petitioner's Medicare provider agreement
effective June 29, 1994. Pages 4 - 6.
16. HCFA's determination that patients' health and safety were at
risk based on Level A violations is not appealable in any event.
Finding 6; Pages 7 - 8.
17. All but two of the collateral harms alleged by Petitioner are
prospective, and not ripe for determination in any event. Pages 8
- 12.
18. In this forum, I do not have the authority to address or
provide Petitioner relief from the collateral harms, including
those collateral harms that subsequently may become ripe,
Petitioner alleges resulted from HCFA's rescinded termination.
Pages 8 - 12.
19. Petitioner's request for hearing has been rendered moot by
HCFA's rescission of Petitioner's termination prior to the date
such termination was to have gone into effect. Pages 8 - 12;
Findings 12 - 18.
20. Petitioner has not offered any persuasive evidence or argument
from which I can conclude that I have the authority to hear and
decide any of the issues related to HCFA's rescinded termination of
Petitioner. Pages 8 - 12; Findings 12 - 19.
21. I do not have the authority to hear and decide any of the
issues presented by Petitioner in this case. Pages 4 - 12;
Findings 12 - 20.
22. Petitioner's request for hearing in this matter must be
dismissed. Findings 1 - 21.
DISCUSSION
HCFA's rescinded termination of Petitioner's provider agreement is
not an "initial determination" within the meaning of the
regulations.
Although HCFA rescinded its termination of Petitioner's Medicare
provider agreement prior to the date it was to become effective,
Petitioner seeks an opportunity to challenge HCFA's determination
in an effort to repair the damage Petitioner alleges was caused by
HCFA's actions. HCFA contends that Petitioner is not entitled to
a hearing in this matter because HCFA's determination was not an
"initial determination" within the meaning of 42 C.F.R.
498.5(b), which states that a provider dissatisfied with an initial
determination to terminate its provider agreement is entitled to a
hearing before an administrative law judge (ALJ). Moreover, HCFA
contends that, because the termination was merely proposed and
never finalized, it does not confer upon Petitioner the right to
have a hearing to contest the determination.
HCFA argues that the term "initial determination" as defined by the
regulations does not encompass the situation at issue in this case,
where HCFA's termination was rescinded prior to the date on which
it was to take effect. HCFA contends that since the rescinded
termination is not an "initial determination" within the meaning of
the regulations, Petitioner has no right to a hearing.
Petitioner does not dispute that HCFA rescinded its termination
prior to the date on which it was to take effect. Nonetheless,
Petitioner contends that HCFA's rescinded termination is an initial
determination, within the meaning of 42 C.F.R. 498.5(b), from
which Petitioner has a right to appeal.
The regulations contain no definition of the term "initial
determination". However, the regulations at 42 C.F.R.
498.3(b)(1) - (11) specify a list of determinations by HCFA that
are considered to be initial determinations. This list includes
"the termination of a provider agreement in accordance with
489.53 of this chapter . . . ." 42 C.F.R. 498.3(b)(7). 2/
Petitioner's position is that HCFA made an "initial determination"
when it informed Petitioner that it would be terminated as of June
29, 1994. According to Petitioner, the fact that HCFA acted to
terminate Petitioner in accordance with 42 C.F.R. 489.53 is
dispositive of HCFA making an "initial determination" pursuant to
42 C.F.R. 498.3(b)(7). Petitioner contends this is true even
though the termination was rescinded prior to the date it was to
become effective.
Because Petitioner interprets HCFA's actions in this case as an
initial determination, Petitioner contends that it is entitled to
a hearing to contest such determination in accordance with 42
C.F.R. 498.5(b).
The regulations at 42 C.F.R. 489.53(b) provide that "HCFA will
terminate a SNF's provider agreement if it determines that -- (1)
The SNF no longer meets a level A requirement specified in part
483, subpart B of this chapter; and (2) The SNF's deficiencies pose
immediate jeopardy to patients' health and safety."
HCFA's position is that its action against Petitioner is a
"proposed termination" that is not an "initial determination"
within the meaning of 42 C.F.R. 498.3(b)(7). HCFA's argument is
that, because a "proposed termination" is not specifically listed
in the regulations as an "initial determination" which gives
Petitioner appeal rights, such proposed termination gives
Petitioner no right to appeal. Moreover, HCFA argues that, because
the termination was rescinded prior to the date it was to go into
effect, even if it could be construed as an initial determination,
it was never finalized, nor has there been any final agency action
from which Petitioner has the right to appeal.
HCFA made no final determination that would entitle Petitioner to
appeal under 42 C.F.R. 498.3(b)(7).
Although I do not find support for HCFA's characterization of its
actions in this case as a "proposed termination", I do agree that
HCFA never terminated Petitioner's provider agreement. The
regulation at 42 C.F.R. 498.3(b)(7) does specify that HCFA's
termination of a provider agreement is an action which gives rise
to a right to appeal. However, in this case, the termination was
never effectuated. My conclusion is that 42 C.F.R. 498.3(b)(7)
mandates that the agency action to terminate Petitioner's provider
agreement must go into effect before Petitioner has the right to
appeal in this forum.
The State survey agency found Petitioner to be out of compliance
with several important requirements. By letter dated June 13,
1994, HCFA sent written notice to Petitioner of the alleged
deficiencies found by the State survey agency and informed
Petitioner that its Medicare provider agreement would be terminated
on June 29, 1994. However, prior to the date the termination was
to have taken place, Petitioner claimed to have corrected the
alleged deficiencies and requested that HCFA conduct another
survey. The regulations do not require that HCFA resurvey an
entity prior to the date of termination of its provider agreement.
However, HCFA provided Petitioner the opportunity to be resurveyed
prior to June 29, 1994, the date of termination. HCFA resurveyed
Petitioner on June 21, 1994 and found that Petitioner had either
corrected all alleged deficiencies or that the deficiencies no
longer posed a threat to resident health or safety. HCFA Ex. 5.
Based on the results of the re-survey, in a letter dated June 24,
1994, HCFA rescinded its termination before it was to take effect
(June 29, 1994).
Accordingly, because HCFA rescinded its termination of Petitioner
before it ever took effect, such rescinded termination does not
qualify as an initial determination within the meaning of 42 C.F.R.
498.3. Simply, HCFA took no final action against Petitioner.
By the very words of the regulation, it is the actual termination
that gives a provider the right to appeal, not the decision to
terminate. However, in this case, Petitioner's provider agreement
was never terminated because HCFA's determination to terminate as
reflected in its letter of June 13, 1994 was rescinded on June 24,
1994, five days prior to the date it was to take effect. Because
Petitioner's right to a hearing is based on the presence of an
actual termination, not merely a proposed termination that is never
effectuated, Petitioner has no right to a hearing in this case.
HCFA's determination that the health and safety of patients were at
risk based on Level A violations is not appealable in any event.
The regulations at 42 C.F.R. 489.53 provide bases for HCFA to
terminate a provider. 3/ The regulation at 42 C.F.R. 489.53(b)
mandates that HCFA will terminate the provider agreement of any SNF
that HCFA determines no longer meets a level A requirement and
whose deficiencies pose an immediate risk to patients' health and
safety. The wording of this regulation indicates that HCFA must
act to terminate a facility found to meet the enumerated regulatory
requirements.
The regulation at 42 C.F.R. 498.5(b) gives providers who are
dissatisfied with initial determinations the right to appeal.
However, the regulation at 42 C.F.R. 498.3(d)(1) explicitly
provides that any administrative action other than specifically
enumerated at 42 C.F.R. 498.3(b) is not an initial
determination. This regulation further provides a list of
determinations that are not to be construed as initial
determinations. 4/ Specifically, 42 C.F.R. 498.3(d)(10)
provides that with respect to an SNF that is not in compliance with
a condition of participation or a level A requirement, HCFA's
finding that an SNF's deficiencies pose immediate jeopardy to
patients' health and safety is not an initial determination.
Accordingly, in this forum, Petitioner has no right to contest
HCFA's finding that Petitioner's level A violations posed immediate
jeopardy to patients' health and safety. Nor does this finding,
which is the basis for HCFA's mandatory determination to terminate
Petitioner, provide an additional basis for my affording Petitioner
a hearing.
Even assuming that Petitioner has the right to appeal HCFA's
rescinded determination, I do not have the authority to address in
this forum the harm alleged by Petitioner.
Petitioner contends that it is entitled to challenge the validity
of HCFA's decision to terminate because, although HCFA's decision
to terminate was rescinded, it nonetheless set in motion a chain of
events which caused real and potential harm to Petitioner's
business.
Petitioner contends that, even though it was rescinded, HCFA's
determination caused a series of actions that either were or will
be detrimental to Petitioner. These adverse consequences include
the publication by HCFA of allegedly erroneous State survey agency
findings to physicians and the general public. 5/ Petitioner
contends that it has been harmed because, in order to obtain
renewal of its license, it is required to disclose that it was
subject to a termination. Petitioner avers that, even though the
termination was rescinded, once it has been disclosed to State
officials, it can potentially result in the State denying a license
to Petitioner or result in the State refusing to renew Petitioner's
license.
Petitioner asserts that it has a stake in the ownership of nine
other facilities in Texas and alleges that this proposed
termination is a "black mark" against this facility which will
apply also to each of the other nine facilities. In support of
this argument, Petitioner cites Texas regulations which specify
that "failure to maintain compliance on a continuous basis" is a
criterion for denying a license renewal. See Texas Administrative
Code 90.17(a)(1)(B). According to Petitioner, failure to
maintain continuous compliance could serve as a ground for the
State denying Petitioner a license should it seek to operate
additional facilities in the future.
Petitioner alleges also that HCFA's rescinded termination has a
negative effect on the day to day business activities of financing,
mortgaging, and structuring ownership as all of these matters
require a provider to disclose proposed terminations of Medicare
agreements even if the termination is subsequently rescinded.
Petitioner asserts that it is currently in the process of
attempting to obtain approval from the Texas Department of Human
Services for a restructuring of its ownership and alleges that it
has had difficulty in doing so in large part because of HCFA's
rescinded determination.
Finally, Petitioner alleges that its participation in the Nurse
Aide Training and Competency Evaluation Program (NATCEP) will be
terminated by HCFA's determination. According to Petitioner, this
program is critical to Petitioner's ability to have adequately
trained staff at its facility. Citing 42 C.F.R. 483.151,
Petitioner contends that it will be terminated from participation
in the NATCEP program if it has been terminated as a Medicare
provider. Petitioner contends that this termination is compelled
by the regulations even though HCFA rescinded its termination prior
to the date upon which it was to become effective.
I am delegated by the Secretary to hear and decide appeals of HCFA
provider terminations. 58 Fed. Reg. 58,170 (1993). The remedy
which I am able to provide within this framework is relief from an
improper, irregular or otherwise deficient termination of a
facility's provider agreement. 58 Fed. Reg. 58,170 (1993). The
Secretary has not delegated to me the authority to hear, decide, or
provide redress for any of the collateral harms that Petitioner has
alleged. Furthermore, the authority delegated to me by the
Secretary is not so broad as to encompass having a hearing on a
sanction that HCFA never put into effect. 58 Fed. Reg. 58,170
(1993).
HCFA has argued that Petitioner's request for hearing should be
denied as moot. I agree. A tribunal has no jurisdiction over
matters which are moot. Tennessee Gas Pipeline Co. v. Federal
Power Commission, 606 F. 2d 1373 (CADC 1979). Since my authority
here is limited to hearing and deciding issues arising from of HCFA
terminations, the fact that HCFA rescinded its termination of
Petitioner prior to the imposition of the sanction is a serious
jurisdictional defect which Petitioner has failed to overcome. The
relief that I can provide Petitioner is no more than it has already
received from HCFA when it rescinded the determination to terminate
Petitioner's provider agreement. Since Petitioner has already been
granted all the relief that I have the authority to grant, the
request for hearing is moot.
Even assuming I had the authority to examine each specific harm
that Petitioner alleges resulted from HCFA's determination to
terminate prior to the recession of that decision, most of the
harms which Petitioner has alleged are prospective. Petitioner has
contended that only two are occurring at the present time. These
are Petitioner's loss of part or all of its NATCEP funding and
Petitioner's difficulty in obtaining business financing and in
restructuring its business ownership.
With regard to Petitioner's loss of NATCEP funding, I have no
authority to hear and decide that issue. As I have stated above,
my authority is limited to deciding whether a HCFA termination is
appropriate. Moreover, HCFA's assertion that there is an avenue of
appeal at the State level from which Petitioner could have
challenged the NATCEP reduction is unchallenged by Petitioner, as
is HCFA's assertion that it informed Petitioner of this appeal
right. 6/ HCFA Reply at 6.
With regard to the alleged adverse impact HCFA's actions have had
upon Petitioner's ability to obtain financing and restructure its
ownership, I find that, again, there is no remedy before me. The
harm Petitioner alleges stems from the actions of a State agency
fulfilling its statutory role. Petitioner does not dispute that
these notices were required by regulation. P. Br. at 3. Moreover,
Petitioner has failed to state with any specificity what these
adverse consequences are and how they are related to HCFA's
rescinded termination. Most importantly, Petitioner concedes that
HCFA was required by regulation to make the State survey agency's
findings of immediate jeopardy and Petitioner's alleged
noncompliance public. 42 C.F.R. 489.53(c)(4). To the extent
that Petitioner is arguably adversely affected by such notice,
Petitioner has the ability to remedy such ill effects by simply
advising any interested party that HCFA rescinded the termination
prior to its effective date.
Petitioner has failed to present to me any issue which either the
Secretary's delegation or the regulations gives me the authority to
hear. In any event, Petitioner's concerns are moot since HCFA
rescinded its termination prior to the effective date.
Additionally, in all but two instances, Petitioner has failed to
allege anything but prospective harm, making all but two of the
issues raised by Petitioner not ripe for my consideration.
In one of the instances where Petitioner has alleged he has been
harmed, he has a remedy in a hearing before a State administrative
law judge. Moreover, in addition to being mooted by HCFA's
rescission, Petitioner has failed to show any authority for me to
hear and decide issues related to his loss of NATCEP funding. With
regard to Petitioner's contention that HCFA's rescinded termination
has harmed Petitioner's business, again, I find no basis on which
I have the authority to hear and decide these issues.
CONCLUSION
Petitioner has placed no issue before me which I have the authority
to hear and decide, or which has not been mooted by HCFA's
rescission. Accordingly, I DISMISS Petitioner's request for
hearing.
____________________________
Edward D. Steinman
Administrative Law Judge
CERTIFIED MAIL -- RETURN RECEIPT REQUESTED
Kevin A. Reed, Esq.
Davis & Wilkerson, P.C.
Attorneys at Law
200 One American Center
600 Congress Avenue
Austin, Texas 78701
and
Mark S. Kennedy, Esq.
Assistant Regional Counsel
DHHS - Region VI
1200 Main Tower, Room 1330
Dallas, Texas 75202
1. HCFA submitted six exhibits in conjunction with its October
5, 1994 motion to dismiss. Petitioner did not object to any of
these exhibits. Accordingly, I admit HCFA exhibits 1 - 6.
Petitioner submitted three exhibits, marked as P. Ex. 1, P. Ex. A,
and P. Ex. B. I have remarked these exhibits as P. Ex. 1, P. Ex.
2, and P. Ex. 3. P. Ex. 1 is a four page exhibit, that duplicates
HCFA Ex. 1. I reject P. Ex. 1 because it is duplicative. One
exhibit will suffice. I admit P. Ex. 2 and P. Ex. 3 into evidence.
2. Pursuant to 42 C.F.R. 489.53(a)(1), HCFA may terminate an
agreement with any provider who is not complying with the
provisions and regulations of the Medicare program.
3. The regulations at 42 C.F.R. 489.53(a) provide:
HCFA may terminate the agreement with any provider if
HCFA finds that any of the following failings is attributable to
that provider:
(1) It is not complying with the provisions of title
XVIII and the applicable regulations of this chapter or with the
provisions of the agreement. . .
(3) It no longer meets the appropriate conditions of
participation or requirements (for SNFs and NFs) set forth
elsewhere in this chapter.
4. Among these is 42 C.F.R. 498.3(d)(10), which provides as
follows:
Administrative actions that are not initial determinations.
Administrative actions other than those specified in paragraphs (b)
and (c) of this section are not initial determinations and thus are
not subject to this part. Administrative actions that are not
initial determinations include, but are not limited to, the
following:
. . . (10) With respect to a SNF that is not in compliance
with a condition of participation or a level A requirement (for
SNFs and NFs) -
(i) The finding that the SNF's deficiencies pose
immediate jeopardy to patients' health and safety; and
(ii) When the SNF's deficiencies do not pose immediate
jeopardy, the decision to deny payment for new admissions.
5. Petitioner points to the publication by HCFA in the Houston
Chronicle of its determination to terminate Petitioner's provider
agreement. According to Petitioner, the Houston Chronicle is one
of two major newspapers published in Houston. Petitioner further
states that these notices resulted in further dissemination by
television and other media, which, in turn, repeated the
allegations.
6. Indeed, HCFA's counsel has been informed that Petitioner has
appealed the State survey agency's finding of immediate jeopardy
and its effect on the Medicaid program and NATCEP. Petitioner is
scheduled to go to hearing on these issues before a State
administrative law judge in Villa Northwest Restorative Care Center
v. TDHS on May 9, 1995.