Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Fort Tryon Nursing Home,
Petitioner,
- v. -
Health Care Financing Administration.
DATE: July 3, 1996
Docket No. C-96-173
Decision No. CR425
DECISION
I decide that, where the Health Care Financing
Administration (HCFA) has imposed no remedy against
Petitioner, Petitioner does not have a right to a hearing
from HCFA's determination that Petitioner failed to
comply with a Medicare participation requirement.
I. Background and undisputed material facts
The background and the material facts of this case are
not disputed. 1/ Petitioner is a skilled nursing
facility (SNF) and a participating provider in Medicare.
The conditions for participation in Medicare of SNFs are
set forth in regulations contained in 42 C.F.R. Part 483.
As a SNF, Petitioner is subject to the survey,
certification, and remedies provisions of 42 C.F.R. Part
488. Petitioner's rights to a hearing from an adverse
determination by HCFA, made pursuant to 42 C.F.R. Parts
483 and 488, are established by 42 C.F.R. Part 498.
On September 29, 1995, the New York State Department of
Health (New York State Agency), acting on behalf of HCFA,
conducted a survey of Petitioner. On October 17, 1995,
the New York State Agency advised Petitioner that it had
found Petitioner not to be in substantial compliance with
Medicare participation requirements. HCFA Ex. 1. On
October 27, 1995, Petitioner responded to this notice by
submitting a plan of correction to the New York State
Agency, and by asserting that it was complying with
Medicare participation requirements. HCFA Ex. 2.
On December 7, 1995, the New York State Agency conducted
a resurvey of Petitioner to determine whether Petitioner
had achieved substantial compliance with Medicare
participation requirements. HCFA Ex. 6. On December 22,
1995, the New York State Agency advised Petitioner that
it had determined that Petitioner had not achieved
substantial compliance with participation requirements.
Id. The New York State Agency advised Petitioner that it
would recommend to HCFA that remedies be imposed against
Petitioner, consisting of a denial of payment for new
admissions, and termination of Petitionerþs participation
in Medicare. Id.
On January 22, 1996, HCFA advised Petitioner that it had
accepted the New York State Agencyþs recommendation.
HCFA Ex. 7. HCFA advised Petitioner that it would impose
against Petitioner the remedy of denial of payment for
new admissions, effective February 7, 1996.
Additionally, HCFA informed Petitioner that it would
terminate Petitionerþs participation in Medicare on March
27, 1996, if Petitioner had not achieved substantial
compliance with Medicare participation requirements by
that date. Id. In this notice, HCFA told Petitioner
that, if Petitioner disagreed with HCFAþs determination,
Petitioner could request a hearing before an
administrative law judge. Id.
However, HCFA never imposed a remedy against Petitioner.
On December 29, 1995, Petitioner submitted a plan of
correction to the New York State Agency. HCFA Ex. 8. On
January 29, 1996, the New York State Agency advised
Petitioner that it had accepted Petitionerþs plan of
correction. Id. The New York State Agency advised
Petitioner also that it accepted Petitionerþs assertion
that, as of January 24, 1996, Petitioner was complying
with Medicare participation requirements. Id. The New
York State Agency advised Petitioner that it would notify
HCFA that Petitioner had achieved substantial compliance
with Medicare participation requirements. The New York
State Agency told Petitioner that any recommendations
made previously for the imposition of remedies against
Petitioner would be withdrawn, and that any remedies
imposed previously would be lifted, effective January 24,
1996. Id.
Additionally, on January 29, 1996, HCFA notified
Petitioner that it would not be imposing a denial of
payment for new admissions against Petitioner. HCFA Ex.
9. 2/ HCFA advised Petitioner that the remedy would not
be imposed, because, based on a revisit to Petitioner,
the New York State Agency found that Petitioner had
attained substantial compliance with Medicare
participation requirements, effective January 24, 1996.
Id. 3/
On March 18, 1996, Petitioner requested a hearing. In
its request, Petitioner noted that it had received the
January 29, 1996 letter from the New York State Agency.
See HCFA Ex. 8. However, Petitioner asserted that it
wished to have a hearing from the New York State Agencyþs
September 29, 1995 conclusion that Petitioner was not
complying substantially with Medicare participation
requirements, because Petitioner allegedly faced a threat
of future adverse actions by either HCFA or the New York
State Agency, based on the conclusion that Petitioner was
deficient.
HCFA moved for summary disposition. In its motion, HCFA
asserted that Petitioner had no right to a hearing
because HCFA had not imposed a remedy against Petitioner.
HCFA argued additionally that the case was moot.
Petitioner opposed the motion. HCFA requested the
opportunity to reply to Petitionerþs opposition to the
motion. I granted that opportunity to HCFA and also gave
Petitioner the opportunity to respond to HCFAþs reply.
HCFA filed a reply and Petitioner responded to it.
II. Issue, findings of fact and conclusions of law
The issue in this case is whether Petitioner has a right
to a hearing from a determination by HCFA that it did not
comply substantially with Medicare participation
requirements, where HCFA imposed no remedy against
Petitioner.
I base my decision on the following findings of fact and
conclusions of law (Findings). I discuss my Findings in
detail, below.
1. Where HCFA has not imposed a remedy against
Petitioner, Petitioner does not have a right to a
hearing from HCFAþs determination that Petitioner
did not comply substantially with Medicare
participation requirements.
2. HCFAþs argument that the case is moot is
irrelevant, inasmuch as Petitioner has no right to a
hearing.
III. Discussion
A. Whether Petitioner has a right to a hearing
(Finding 1)
There are two regulations which define the circumstances
under which a SNF is entitled to a hearing from a
determination by HCFA that it is not complying with
participation requirements. Pursuant to 42 C.F.R.
498.3(b)(12), a SNF is entitled to a hearing from:
the finding of non-compliance leading to the
imposition of enforcement actions specified in
488.406 of this chapter, . . . .
Similar, but not identical, language is in 42 C.F.R.
488.408(g)(1), which states that:
A facility may appeal a certification of
noncompliance leading to an enforcement remedy.
The language of the two regulations is not precise. When
read in isolation, the phrase þenforcement actionsþ in 42
C.F.R. 498.3(b)(12) might mean remedies. Or, it might
mean the institution of an action by HCFA intended to
compel compliance with Medicare participation
requirements, including the threat to impose a remedy.
Additionally, the phrase þleading toþ in 42 C.F.R.
488.408(g)(1) and in 42 C.F.R. 498.3(b)(12) could refer
to a determination by HCFA to impose a remedy.
Alternatively, the phrase might mean a determination by
HCFA to threaten to impose a remedy against a SNF unless
the SNF complies with participation requirements.
I conclude that the more reasonable reading of 42 C.F.R.
488.408(g)(1) and 498.3(b)(12) is that a SNF has a
right to a hearing only where HCFA finds that the SNF is
not complying substantially with Medicare participation
requirements and imposes a remedy against the SNF. A SNF
does not have a right to a hearing from a determination
by HCFA where HCFA does not actually impose a remedy. I
base my decision on the following considerations.
First, I interpret the phrase þenforcement actionsþ in 42
C.F.R. 498.3(b)(12) to mean remedies. My
interpretation therefore makes the term þimposition of
enforcement actionsþ in 42 C.F.R. 498.3(b)(12) parallel
with the term þenforcement remedyþ in 42 C.F.R.
488.408(g)(1). I base my interpretation on the fact
that, in 42 C.F.R. 498.3(b)(12), the term þimposition
of enforcement actionsþ is qualified by the term
þspecified in 488.406 of this chapter.þ The referenced
regulation, 42 C.F.R. 488.406, does not refer to
þenforcement actions,þ but instead, enumerates remedies.
Thus, it is remedies that are "specified in 42 C.F.R.
488.406," and not something else.
Furthermore, it would make no sense for the Secretary to
write two regulations addressing the same issue which
confer different rights on a SNF. However, if I were to
interpret the term þenforcement actionsþ in 42 C.F.R.
498.3(b)(12) to mean something other than remedies, the
consequence would be that 42 C.F.R. 488.408(g)(1) and
498.3(b)(12) would have different meanings, and would
confer different rights on a SNF.
Second, I conclude that the ambiguous phrase þleading toþ
in 42 C.F.R. 488.408(g)(1) and 498.3(b)(12) is best
interpreted to mean a determination resulting in the
imposition of a remedy. I do not find that it describes
an action by HCFA -- such as the threat to impose a
remedy -- which falls short of imposition of a remedy.
One definition of the word "lead" is "to tend toward or
have a result." Websterþs Ninth New Collegiate
Dictionary 679 (1990). The phrase þleading toþ therefore
means þresulting in.þ When read in this way, the
regulations may be interpreted, reasonably, to mean that
a SNF would have a right to a hearing from a
determination by HCFA that results in the imposition of a
remedy against the SNF.
In order to agree with Petitionerþs interpretation of the
regulations, I would have to construe the phrase þleading
toþ to mean þpossibly resulting in.þ Using this
construction, the regulations would then mean that a SNF
would have a right to a hearing from a determination by
HCFA that may result in, but which does not necessarily
result in, the imposition of a remedy against the SNF. I
find this construction of the phrase þleading toþ to be a
more strained and unnatural interpretation of the phrase
than þresulting in,þ and, for that reason, I do not find
it to be the correct interpretation.
I find support for my conclusion in a comment to the
revised Parts 488 and 498 regulations, published at 59
Fed. Reg. 56,116, 56,158 (1994). This comment makes it
plain that the Secretary intended to confer on a SNF the
right to a hearing only in the circumstance where HCFA
finds that the SNF is not complying substantially with
Medicare participation requirements and where HCFA
imposes a remedy:
Comment: Several commenters wanted a right to
appeal all deficiencies, even if no remedy was
imposed.
Response: We are not accepting this suggestion
because if no remedy is imposed, the provider
has suffered no injury calling for an appeal.
We agree that deficiencies that constitute
noncompliance and that result in a remedy
imposed are appealable (except for minor
remedies such as State monitoring).
I would not rely on a comment to a regulation to
interpret that regulation where the meaning of the
regulation is plain. Here, however, the language of 42
C.F.R. 488.408(g)(1) and 498.3(b)(12) is ambiguous,
and is, arguably, susceptible to more than one
interpretation. Given that, I find the comment to be
persuasive evidence of the Secretaryþs intent.
Petitioner asserts that this comment does not mean that
it is without a right to a hearing. According to
Petitioner, HCFA imposed a remedy against it. Petitioner
premises this assertion on its characterization of HCFAþs
determination to impose a remedy against Petitioner as
being tantamount to actual imposition of the remedy. I
do not agree with Petitionerþs characterization of HCFAþs
determination. A determination to impose a remedy is not
in fact, imposition of that remedy, if the remedy is
never put into effect.
HCFA asserts that added support for its argument that
Petitioner is without a right to a hearing may be found
in Administrative Law Judge Edward Steinmanþs decision in
Villa Northwest Restorative Care Center, DAB CR362
(1995). In that case, Administrative Law Judge Steinman
found that a provider did not have a right to a hearing
from a determination by HCFA to terminate the providerþs
participation in Medicare, in view of the fact that HCFA
never effectuated the remedy. I do not find the Villa
Northwest decision to constitute persuasive authority
because it addresses a section of the regulations which
is different from those under consideration here. In
Villa Northwest, the regulation at issue was 42 C.F.R.
498.3(b)(7), which gives a right to a hearing to a
provider, other than a SNF or a nursing facility, whose
participation in Medicare has been terminated by HCFA.
Petitioner argues that to interpret 42 C.F.R.
498.3(b)(12) as conferring a right to a hearing on a SNF
only where HCFA finds that the SNF is not complying
substantially with participation requirements and imposes
a remedy against the SNF would deprive Petitioner of due
process. Petitioner argues that it might be harmed if it
is deprived of the opportunity for a hearing because, at
some future date, either HCFA or the New York State
Agency might impose remedies against Petitioner based on
the determination of noncompliance on which Petitioner
bases its current hearing request.
I am not persuaded that Petitioner will be harmed if it
is not given a right to a hearing at this time. Although
Petitioner does not now have a right to a hearing,
Petitioner would have that right if HCFA ever determined
in the future to impose a remedy against Petitioner based
on the finding of deficiency that is at issue here.
Therefore, Petitioner will not be denied due process
should HCFA ever use the finding as a basis for imposing
a remedy against Petitioner.
Neither 42 C.F.R. 488.408(g)(1) nor 498.3(b)(12)
suggests that a SNF would be deprived of its right to a
hearing from HCFAþs imposition of a remedy based on a
lapse of time between the finding of deficiency on which
the remedy is premised, and the imposition of the remedy.
All that these two regulations require, as a basis for a
valid hearing request, is a finding of a deficiency by
HCFA and imposition of a remedy by HCFA based on that
finding. Therefore, Petitioner would have a right to a
hearing from the finding of noncompliance which is at
issue here whenever HCFA determines to impose a remedy
based on that finding.
The Part 488 regulations provide that HCFA may impose a
remedy against a SNF, based not only on a current finding
of a deficiency, but also on a previous finding of a
deficiency by the SNF. 42 C.F.R. 488.404(c)(2). It is
possible that, after a future compliance survey of
Petitioner, HCFA might find that Petitioner is not
complying substantially with a Medicare participation
requirement. If HCFA then determined to impose a remedy
based on the finding of a new deficiency coupled with
Petitionerþs past compliance record, including the
finding of deficiency on which Petitioner bases its
current hearing request, then Petitioner would have a
right to a hearing, both as to the existence of the new
deficiency, and as to the existence of the deficiency
which is at issue here.
My conclusion that Petitioner may at some future date
have a right to a hearing is premised on the fact that
HCFA has not at this time imposed any remedy against
Petitioner from the finding of deficiency on which
Petitioner bases its current hearing request. I am not
suggesting that a SNF would have a right to a second
hearing as to the existence of a deficiency in the event
that HCFA, after imposing a remedy based on that
deficiency, later opts to impose an additional remedy
based on a finding of a new deficiency, coupled with its
earlier finding of the first deficiency. In that event,
the SNFþs right to a hearing as to the first deficiency
would depend on whether HCFA notified the SNF that that
first deficiency was a basis for the imposition of the
remedy. The SNF would then have 60 days from its receipt
of that notification within which to request a hearing.
42 C.F.R. 498.40(a)(2).
I am not persuaded that Petitioner is denied due process
because of the possibility that the New York State Agency
may yet impose a remedy against Petitioner from the
finding of noncompliance on which Petitioner bases its
hearing request. Petitioner has no right to a hearing in
this Department where a State imposes a remedy and HCFA
does not impose a remedy. The regulations which define
providersþ hearing rights apply only to remedies imposed
by HCFA. See 42 C.F.R. 498.3(a). 4/ Furthermore, if
the New York State Agency at some date in the future
determines to impose a remedy against Petitioner,
Petitioner may have a right to a hearing from that
determination in an appropriate State forum.
The notice which HCFA sent to Petitioner on January 22,
1996, in which HCFA stated its intent to impose a remedy
against Petitioner, is misleading in that it advises
Petitioner that Petitioner has a right to a hearing from
HCFAþs determination. HCFA Ex. 7. However, Petitioner
does not have a right to a hearing inasmuch as HCFA never
imposed the remedies that were described in the notice.
HCFA cannot confer a right to a hearing on a provider
where that provider has no right to a hearing under
applicable regulations.
I would note, however, that the notice which HCFA sent to
Petitioner in this case is not unique. HCFAþs practice
is to send a notice to a provider informing the provider
of HCFAþs determination to impose a remedy and to advise
the provider of its right to a hearing from that
determination, in advance -- at times, weeks or even
months in advance -- of the date that the remedy is to
become effective. Under regulations which govern
hearings from determinations made by HCFA, the time
within which a provider may request a hearing begins to
run as of the date that the provider receives notice of
HCFAþs determination to impose a remedy. 42 C.F.R.
498.40. Thus, a provider that receives a notice from
HCFA in which HCFA announces that it will be imposing a
remedy against the provider may have no choice, if it
wishes to protect its right to a hearing, other than to
request a hearing prior to the date that the remedy is to
become effective. 5/ The consequence is that I and the
other administrative law judges who are associated with
the Departmental Appeals Board receive many premature
hearing requests.
B. Mootness (Finding 2)
HCFA argues that this case is moot because no remedy was
imposed against Petitioner and, therefore, Petitioner was
not affected adversely by HCFAþs determination that
Petitioner was deficient. HCFAþs brief at 9. HCFAþs
assertion that the case is moot is irrelevant because
Petitioner does not have a right to a hearing.
IV. Conclusion
I conclude that Petitioner does not have a right to a
hearing. I dismiss Petitionerþs request for a hearing.
________________________
Steven T. Kessel
Administrative Law Judge
1. HCFA submitted nine exhibits in support of its
motion for summary disposition (HCFA Exs. 1 - 9).
Petitioner did not object to my admitting these exhibits
into evidence. Therefore, I am admitting into evidence
HCFA Exs. 1 - 9. However, inasmuch as the material facts
are not disputed, I do not cite exhaustively to the
exhibits in my recitation of the undisputed facts.
2. The notice characterizes the proposed remedy as a
þban on new admissions.þ HCFA Ex. 9.
3. Although HCFAþs notice refers to a revisit by the
New York State Agency, it is unclear that a revisit
occurred. The New York State Agency recommendation to
HCFA, as described in the January 29, 1996 New York State
Agency notice to Petitioner, appears to have been based
on Petitionerþs plan of correction and allegation of
compliance with participation requirements, and not on a
revisit. HCFA Ex. 8. However, it is not necessary for
me to decide whether a revisit occurred in order for me
to decide this case.
4. There may be circumstances where a State imposes a
remedy and HCFA subsequently ratifies the Stateþs
determination. In that event, I would likely find that
the affected provider has a right to a hearing.
5. In this case, however, Petitioner requested a
hearing on March 18, 1996, after the date when it was
told by the New York State Agency and by HCFA that
proposed remedies would not be imposed against it. HCFA
Exs. 8, 9.