$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Temple Community Hospital,
Petitioner,
- v. -
Health Care Financing Administration.
Date: August 7, 1995
Docket No. C-94-297
Decision No. CR385
DECISION
In this case, I conclude that I am without authority to hear and
decide Petitioner's assertion that the Health Care Financing
Administration (HCFA) improperly refused to waive a requirement for
participation in the Medicare program. I conclude also that I do
not have the discretion to provide Petitioner with a hearing on
this issue. Finally, I conclude that Petitioner withdrew its
request for a hearing on the issue of whether HCFA improperly
declined to certify Petitioner as a skilled nursing facility (SNF)
prior to December 6, 1991. I am, therefore, without authority to
hear this issue. Based on these conclusions, I dismiss
Petitioner's request for a hearing.
I. Undisputed material facts, summary of arguments and
procedural history
A. Facts
These facts are material and are undisputed. 1/ In 1991,
Petitioner applied to HCFA to become certified to participate in
the Medicare program as an SNF. Petitioner applied to participate
as a 20-bed SNF. In April 1991, Petitioner was surveyed on behalf
of HCFA by the Los Angeles County Department of Health Services
(State survey agency) in order to determine whether Petitioner met
the applicable requirements to participate as an SNF in the
Medicare program.
The State survey agency concluded that Petitioner did not comply
with Medicare participation requirements. The deficiencies
identified by the State survey agency included failures to comply
with certain requirements that an SNF must meet in order to be
certified for participation in Medicare (level A requirements).
The deficiencies that were identified by the State survey agency
included the finding that Petitioner failed to comply with the
requirements of 42 C.F.R. 483.70, which governs the physical
environment of a participating SNF. Specifically, the State survey
agency found that several of the rooms which Petitioner proposed to
utilize as residential facilities for its patients failed to meet
the minimum square footage requirements contained in 42 C.F.R.
483.70. On May 30, 1991, HCFA determined that Petitioner was not
eligible to participate in Medicare, based on the findings made by
the State survey agency.
Petitioner then submitted to HCFA a plan of correction which
addressed most of the deficiencies that the State survey agency had
identified. However, HCFA concluded that Petitioner was not
eligible to submit a plan of correction to HCFA, inasmuch as some
of the deficiencies identified by the State survey agency were
failures to meet level A requirements. 2/ Petitioner requested
also that HCFA grant it a waiver or variance from the residential
room size requirements. HCFA denied this request. Petitioner
filed a request for a hearing on HCFA's determination that
Petitioner was not eligible to participate in Medicare and on
HCFA's refusal to waive the minimum room size requirement.
Petitioner then submitted to HCFA a new application for
certification as an SNF. In its new application, Petitioner
applied for certification as an 11-bed SNF, thus eliminating from
consideration the issue of whether certain of its residential rooms
failed to meet the minimum square footage requirement. 3/ In
October 1991, the State survey agency conducted a second survey of
Petitioner's facility. The State survey agency concluded that
Petitioner continued to be deficient in complying with some level
B requirements for participation in Medicare, but that Petitioner
had corrected its prior noncompliance with level A requirements.
Petitioner submitted a plan of correction to address the level B
deficiencies found in the October 1991 survey. HCFA accepted this
plan of correction, and Petitioner was certified to participate in
Medicare as an 11-bed SNF, effective December 6, 1991.
B. Summary of arguments and procedural history
Petitioner continues to assert that HCFA improperly denied its
waiver request. Petitioner argues that I should afford it a
hearing to determine whether the request was denied improperly, and
to decide whether the room size requirement should be waived.
Petitioner has withdrawn its assertions that HCFA concluded
incorrectly that level A deficiencies existed as of the April 1991
survey, and it is not asserting now that it was improperly denied
the opportunity to submit a plan of correction to address these
deficiencies. In sum, Petitioner accepts the certification date of
December 6, 1991, except that it argues that, effective that date,
HCFA should have waived the room size requirement and approved it
to participate in Medicare as a 20-bed SNF.
HCFA asserts that I am without authority to hear and decide the
issue of whether it properly refused to waive the room size
requirements. HCFA asserts also that, notwithstanding that
Petitioner no longer is challenging HCFA's refusal to certify
Petitioner as an SNF on May 30, 1991, the issues of the propriety
of HCFA's May 1991 determination to deny Petitioner's first
application, and HCFA's subsequent refusal to accept a plan of
correction from Petitioner, remain before me and I ought to hear
and decide these issues.
This case was originally assigned to an administrative law judge in
the Office of Hearings and Appeals of the Social Security
Administration. Effective October 1, 1993, the Secretary of the
Department of Health and Human Services (Secretary) redelegated the
authority to hear and decide administrative cases involving HCFA to
administrative law judges of the Department of Health and Human
Services Departmental Appeals Board (DAB). On March 4, 1994, this
case was reassigned to Administrative Law Judge Charles E. Stratton
of the DAB. At the request of the parties, Judge Stratton stayed
the DAB proceedings in the case.
The case was reassigned to me in late 1994, after the death of
Judge Stratton. In December 1994, I was advised by Petitioner that
it desired that the stay be ended and that the issues in the case
be heard and decided. I ended the stay. Shortly thereafter, I
directed the parties to file briefs on questions of law. The
parties filed briefs and reply briefs. On June 20, 1995, I held an
oral argument on the issues by telephone. My decision in this case
is based on the relevant law, the undisputed facts, and the
parties' arguments.
II. Issues
The issues in this case are whether:
1. Petitioner has a right to a hearing as to whether HCFA
improperly refused to waive the minimum room size requirement.
2. I have the discretion to provide Petitioner with a
hearing as to whether HCFA improperly refused to waive the minimum
room size requirement.
3. I may hear and decide whether HCFA properly declined to
certify Petitioner as an SNF in May 1991.
III. Findings of fact and conclusions of law
I make the following findings of fact and conclusions of law. My
findings of fact are based on the undisputed material facts which
I recite at Part I.A. of this decision. After each finding or
conclusion, I cite to the page or pages of this decision at which
I discuss the finding or conclusion in detail.
1. HCFA's determination not to waive the minimum room size
requirement is not an initial determination from which Petitioner
has a right to a hearing. Pages 5 - 8.
2. I do not have the discretion to provide Petitioner with
a hearing on HCFA's determination not to waive the minimum room
size requirement. Pages 7 - 8.
3. Petitioner withdrew its contention that HCFA improperly
declined to certify Petitioner as an SNF in May 1991. Petitioner
accepts HCFA's determination to certify Petitioner as an SNF
effective December 6, 1991, except that Petitioner argues that, as
of that date, it should have been certified as a 20-bed SNF and not
as an 11-bed SNF. Page 9.
4. I do not have the authority to hear the issue of whether
HCFA properly declined to certify Petitioner as an SNF in May 1991.
Pages 9 - 10.
IV. Discussion
A. Petitioner's request that I hear the issue of whether
HCFA improperly declined to waive the minimum room size requirement
A determination by HCFA not to waive a Medicare participation
requirement is not an initial determination from which an applicant
for participation in Medicare has a right to a hearing. Petitioner
has no right to a hearing on HCFA's determination not to waive the
minimum room size requirement applicable to SNFs. I do not have
the authority to hear the issue of whether HCFA improperly declined
to waive the minimum room size requirement.
An applicant for participation in Medicare does not enjoy a general
right to a hearing from every determination by HCFA with which that
applicant might not be satisfied. An applicant for participation
in Medicare has only limited hearing rights. The Social Security
Act (Act) essentially gives an applicant for participation a right
to a hearing only on HCFA's determination that the applicant does
not meet the participation requirements contained in the Act,
regulations, or a participation agreement. See Social Security
Act, sections 1861, 1866(b)(2), and 1866(h)(1).
This limited right to a hearing is stated also in regulations.
Under the regulations, an applicant for participation as a provider
is entitled to a hearing only from an initial determination by HCFA
that it does not meet participation requirements. 42 C.F.R.
498.5(a)(1), (2). 4/
Petitioner argues that it has a right to be heard on its assertion
that HCFA improperly declined to waive the room size requirement.
It asserts that HCFA's determination not to waive the room size
requirement is a determination by HCFA that Petitioner does not
meet participation requirements. I am not persuaded by this
argument.
A determination by HCFA not to waive a participation requirement is
a determination which addresses an issue other than the question of
whether a provider meets a participation requirement. It is a
discretionary determination by HCFA to permit an applicant to
participate in Medicare even though the applicant did not meet a
participation requirement.
The dichotomy between a determination by HCFA that a provider does
not meet a participation requirement and a determination by HCFA to
certify a provider notwithstanding that provider's failure to meet
a participation requirement is stated in the regulations governing
participation. The regulation which governs the size of residents'
rooms in SNFs provides that a determination by HCFA to waive the
room size requirement is an act of discretion to allow a provider
to participate even though the provider fails to meet a
participation requirement, and not a determination by HCFA that the
applicant meets the requirement. It states that:
HCFA . . . may permit variations in requirements . . .
relating to rooms in individual cases when the facility
demonstrates in writing that the variations --
(i) Are in accordance with the special needs of the residents;
and
(ii) Will not adversely affect residents' health and safety.
42 C.F.R. 483.70(d)(3) (emphasis added).
The regulation which generally governs approvals by HCFA of
applications for participation in Medicare states also that a
waiver determination is a discretionary act to allow an applicant
to participate despite that applicant's failure to satisfy a
participation requirement, and not a determination as to whether an
applicant meets participation requirements. The regulation
provides that, where an applicant for participation is found not to
have met all participation requirements, HCFA will certify that
provider for participation on the earlier of the following dates:
(1) The date on which the provider meets all requirements.
(2) The date on which the provider submits a correction plan
acceptable to HCFA or an approvable waiver request, or both.
42 C.F.R. 489.13(b).
There is nothing about the use of the term "waiver" in 42 C.F.R.
489.13(b) to suggest that the Secretary intended that it be given
something other than its ordinary meaning. "Waiver" is defined to
mean "the act of intentionally relinquishing or abandoning a known
right, claim, or privilege." Webster's New Collegiate Dictionary,
1977 Ed. In the context of a certification by HCFA, "waiver" means
HCFA's discretionary determination to relinquish its right to
disapprove an application.
Petitioner argues that I would be denying it due process by not
giving it a hearing as to the propriety of HCFA's determination not
to waive the room size requirement. However, Petitioner's due
process rights, including its limited hearing rights, are defined
by the Act and regulations. I am not denying Petitioner due
process in concluding that it has no right to a hearing, inasmuch
as neither the Act nor regulations give Petitioner a right to a
hearing on HCFA's determination not to waive the room size
requirement.
I conclude additionally that I do not have the discretionary
authority to give Petitioner a hearing where it has no right to
request a hearing on a determination by HCFA. My authority to
provide a hearing in any case is delegated to me by the Secretary.
I have no authority to conduct a hearing in the absence of a
delegation of authority which is either expressly made by the
Secretary or implied in the regulations. The regulations which
govern hearings by administrative law judges in cases involving
determinations by HCFA are in 42 C.F.R. Part 498. As I find above,
the regulations give an applicant for participation as a provider
a right to a hearing only on a determination by HCFA that the
applicant does not meet participation requirements. The Part 498
regulations neither state nor suggest that I have discretion to
give an applicant a hearing on some other issue, including the
issue of whether a waiver ought to have been granted. 5/
Petitioner argues that its challenge to HCFA's determination not to
waive the room size requirements is supported by a proposed
decision rendered by a State administrative law judge in a hearing
before the State of California Department of Health Services,
Temple Community Hospital, Audit Appeal No. PS2-0791-046 (July 19,
1991). 6/ In this decision, the State administrative law judge
concluded that Petitioner should have been granted a waiver of the
room size requirement by the State survey agency, for purposes of
certification under the California Medicaid program (Medi-Cal).
Id.
I do not find the proposed decision to be persuasive. The proposed
decision does not address the issue of whether an applicant for
participation in Medicare is entitled to a hearing on a
determination by HCFA not to grant a waiver from a Medicare
participation requirement. The administrative law judge who heard
the case evidently assumed that he had authority to consider the
issue of whether the State survey agency ought to have granted a
waiver to Petitioner from the room size requirement as it pertained
to Petitioner's certification under Medi-Cal. It appears from that
decision that the administrative law judge assumed that he had the
authority to hear that issue without analyzing it or making any
findings on it. Indeed, it is not clear that the parties to the
proceeding even addressed that issue to the State administrative
law judge.
B. HCFA's request that I hear and decide the propriety of
its determination in May 1991 not to certify Petitioner as an SNF
HCFA asserts that the issue before me is whether it acted
reasonably on May 30, 1991 in denying Petitioner's request for
certification. However, Petitioner is no longer asserting that it
should have been certified as an SNF prior to December 6, 1991.
Transcript of June 20, 1995 oral argument (Tr.) at 4 - 5. 7/ In no
longer contesting HCFA's determinations, except as to the number of
beds that were certified by HCFA effective December 6, 1991,
Petitioner has effectively withdrawn its challenge to HCFA's May
1991 determination that Petitioner manifested level A deficiencies.
8/ HCFA argues that I should hear and decide the issue of whether
it properly declined to certify Petitioner in May 1991 despite the
fact that Petitioner has abandoned that issue.
Both the Act and the Part 498 regulations governing administrative
hearings concerning determinations by HCFA provide applicants for
participation and, in enumerated circumstances, providers and
suppliers, hearing rights only if they are dissatisfied with
determinations by HCFA. Neither the Act nor regulations provide
HCFA with the right to request an administrative hearing.
Petitioner's withdrawal of its assertions concerning HCFA's May
1991 determination and HCFA's subsequent refusal to consider
Petitioner's plan of correction is tantamount to a withdrawal of
its request for a hearing concerning those issues. If Petitioner
no longer requests that I hear these issues then the issues are no
longer before me. HCFA has no right to insist that I hear these
issues if Petitioner no longer requests me to hear them. 9/
V. Conclusion
I conclude that there exists no issue in this case that I have
authority to hear and decide. Therefore, I dismiss Petitioner's
request for a hearing.
Steven T. Kessel
Administrative Law Judge
1. In reciting the undisputed material facts, I make no
citations to exhibits, as I have received none into evidence. My
recitation of the facts is based entirely on the parties'
representations, contained in their respective briefs. I do not
consider it necessary to burden the parties with the obligation to
offer exhibits to support the facts which they aver to be relevant
where, as in this case, none of the facts are disputed.
2. Under applicable regulations, an applicant for certification
as an SNF may file a plan of correction to address a failure to
meet a level B requirement for participation. 42 C.F.R. 488.28.
A level B requirement is a standard which describes some component
or element of a level A requirement. An applicant for
certification as an SNF is not afforded the opportunity to file a
plan of correction to address a failure to meet a level A
requirement. 42 C.F.R. 488.24, 488.28.
3. Petitioner did so by converting several of its residential
rooms from proposed two-bed residential rooms to proposed
single-bed residential rooms. The reconfigured rooms met the
square footage requirement for single-bed residential rooms.
4. As an interim step before being entitled to a hearing, a
prospective provider that is dissatisfied with an initial
determination by HCFA that it does not qualify as a provider must
first request reconsideration of the initial determination from
HCFA, and HCFA must issue a reconsidered determination. Id. Thus,
technically, a prospective provider's entitlement to a hearing is
from a reconsidered determination. Id.
5. My conclusion on this question of jurisdiction is in accord
with that reached by Administrative Law Judge Mimi Hwang Leahy in
Piedmont Family Clinic, DAB CR355, at 13 (1995).
6. The proposed decision is an attachment to Petitioner's
initial brief. Although Petitioner apparently did not offer the
decision as an exhibit, HCFA objected to its admission into
evidence, contending that it contains hearsay. HCFA's reply brief
at 1 - 7. The fact that an exhibit might contain hearsay would not
preclude me from admitting it into evidence. However, I am not
admitting the proposed decision into evidence. It is being offered
by Petitioner not as evidence, but as a non-binding precedent on
the merits of the waiver issue.
7. However, Petitioner continues to assert that, as of December
6, 1991, HCFA should have waived the requirement for residents'
room size and certified Petitioner as a 20-bed SNF, rather than as
an 11-bed SNF.
8. It is unclear that Petitioner requested a hearing concerning
HCFA's refusal to consider a plan of correction from Petitioner
addressing the level A deficiencies on which HCFA based its May
1991 determination not to certify Petitioner as an SNF. However,
by accepting December 6, 1991 as the certification date, Petitioner
has effectively abandoned that issue to the extent it raised it.
I note, furthermore, that, under applicable regulations, HCFA is
not required to afford an applicant the opportunity to submit a
plan of correction to address level A or condition-level
deficiencies. See 42 C.F.R. 488.28.
9. Furthermore, I am at a total loss to explain why HCFA would
want me to hear these issues. It would seem that HCFA stands to
gain nothing by my hearing these issues. In its initial brief,
HCFA seemed to suggest that it wanted the issues heard because it
was unclear that Petitioner had abandoned them. However,
Petitioner made it clear, both in its reply brief, and at the oral
argument which I held on June 20, 1995, that it was no longer
pursuing the issues. At the oral argument, HCFA continued to
assert that I should hear these issues. Tr. at 5 - 9. But it
offered no explanation as to why I should hear them.