$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
University Towers Medical
Pavilion,
Petitioner,
- v. -
Health Care Financing Administration.
Date: September 12, 1996
Docket No. C-96-242
Decision No. CR436
DECISION
In this decision, I grant the motion to dismiss filed by the Health Care Financing
Administration (HCFA).
1/
HCFA's motion to dismiss is based on the fact that HCFA issued, then rescinded
prior to effectuation, a
determination to terminate Petitioner's participation in the Medicare and Medicaid
programs. HCFA relies
primarily upon the regulation which states that there is a right to a hearing
only if the determination
contested by Petitioner contains:
. . . the finding of noncompliance [made by HCFA] leading to the imposition
of enforcement actions
specified in 488.406 of this chapter . . .
42 C.F.R. 498.3(b)(12). Even though termination of a provider agreement is
subject to review under 42
C.F.R. 498.3(b)(12) because termination of a provider agreement is among the
enforcement actions
specified in 42 C.F.R. 488.406, HCFA notes in its supporting memorandum that
the commentaries to
these regulations specifically made the hearing rights 2/ contingent on the
actual imposition of the 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.
59 Fed. Reg. 56,158 (1994). Based on the foregoing legal authorities, HCFA
contends that Petitioner has
no right to a hearing because, by rescinding its earlier determination, HCFA
did not actually impose the
termination remedy against Petitioner.
Petitioner does not specifically contest the fact that HCFA has rescinded its
termination determination.
Nor does Petitioner specifically contest HCFA's conclusions concerning the absence
of hearing rights on
the termination issue. Instead, Petitioner quotes from HCFA's earlier notice
letter to argue that, prior to the
rescission of the termination decision, HCFA has already taken adverse actions
against Petitioner. P. Br.,
2. The portion of HCFA's letter quoted by Petitioner is as follows:
Your facility's noncompliance with Quality of Care (483.25) has been determined
to constitute
substandard quality of care as defined at 488.301. Sections 1819(g)(5)(C) and
1919(g)(5)(C) of the
Social Security Act, as well as implementing regulations at 488.325(h), require
that the attending
physician of the resident who was found to have received substandard quality
of care as well as the State
Board responsible for licensing the facility's administrator, be notified by
the survey agency of the
substandard quality of care.
Please note that Federal law, as specified in the Social Security Act at sections
1819(f)(2)(B) and
1919(f)(2)(B), prohibits approval of nurse aide training and competence evaluation
programs offered by or
in a facility which within the last two years has operated under a 1819(b)(4)(C)(ii)(II)
or
1919(b)(4)(C)(ii)(II) waiver; has been subject to an extended or partial extended
survey; has been assessed
a civil money penalty of not less than $5,000.00; or, has been subject to a
denial of payment, the
appointment of a temporary manager, termination or, in the case of an emergency,
been closed and/or had
its residents transferred to other facilities. As a result of the complaint
investigation on February 26, 1996,
this provision is applicable to your facility. You will receive further notification
from the State.
P. Br., 2 (citations omitted). Petitioner opposes the motion to dismiss also
because, in issuing the earlier
(now rescinded) determination to end Petitioner's participation in the programs,
HCFA's letter had
informed Petitioner of its right to request a hearing. P. Br., 1 - 2.
For the reasons detailed below, I reject Petitioner's arguments and grant HCFA's
motion to dismiss
pursuant to 42 C.F.R. 498.70(b).
FINDINGS OF FACT AND CONCLUSIONS OF LAW (FFCL)
Background facts
1. At all relevant times, Petitioner has been a provider of services under
the Medicare and Medicaid
programs. 42 C.F.R. 498.2, 498.4; HCFA letter dated March 20, 1996 attached
to Hearing Request.
2. On February 26, 1996, the Missouri Division of Aging (the State) completed
a survey based on a
complaint and found that:
a. Petitioner was not in substantial compliance with the Medicare participation requirements, and
b. Petitioner's compliance posed immediate jeopardy to patients' health and safety.
HCFA Ex. 1.
3. By letter dated February 29, 1996, the State notified Petitioner of the
deficiencies found during the
February 26, 1996 survey and informed Petitioner that the State was recommending
to HCFA the
termination of Petitioner's participation in the Medicare and Medicaid programs
based on the immediate
jeopardy determination. HCFA Ex. 1.
4. Based on the February 26, 1996 survey results and the State's recommendation,
HCFA notified
Petitioner that:
a. HCFA would terminate Petitioner's participation in the Medicare and Medicaid
programs on March
20, 1996 unless Petitioner eliminated the immediate jeopardy to resident health
or safety;
b. Petitioner had an opportunity to question the findings of deficiencies
through the informal dispute
resolution (IDR) process under 42 C.F.R. 488.331;
c. Because Petitioner's noncompliance with the Quality of Care requirements
(42 C.F.R. 483.25) had
been determined to constitute substandard quality of care, sections 1819(g)(5)(C)
and 1919(g)(5)(C) of the
Social Security Act (Act) require that the State give notice of said determination
to the attending physician
of the resident who was found to have received substandard quality of care,
as well as to the State Board
responsible for licensing Petitioner's administrator; and
d. Petitioner was subject to being prohibited from conducting any nurse aide
training and competency
evaluation programs for a period of two years, and Petitioner would receive
further communication from
the State on this matter.
HCFA notice letter (undated) attached to Hearing Request.
5. By letter dated March 20, 1996, HCFA notified Petitioner that:
a. The State had conducted a revisit survey following Petitioner's submission
of a credible allegation of
compliance;
b. The State found that Petitioner had successfully removed the immediate jeopardy to residents; and
c. "Therefore, the facility's participation in the Medicare program will continue uninterrupted."
HCFA notice letter dated March 20, 1996, attached to Hearing Request.
6. On March 25, 1996, Petitioner met with the State and submitted information
under the IDR process to
question the February 26, 1996 survey findings. HCFA Ex. 2.
7. On April 26, 1996, Petitioner submitted its request for hearing before an
administrative law judge to
challenge all determinations contained in:
a. The letter, Statement of Deficiencies, and Plan of Correction HCFA issued by HCFA;
b. The February 29, 1996 letter issued by the State; and
c. The Statement of Deficiencies and Plan of Correction issued by the State.
Hearing Request.
8. By letter dated May 7, 1996, the State notified Petitioner that, pursuant
to the IDR process, the State had
determined that the deficiencies from the February 26, 1996 survey were correctly
cited. HCFA Ex. 2.
The regulatory scheme on administrative review
9. Part 498 of volume 42 of the Code of Federal Regulations specifies the right
to and procedures for
requesting hearings on determinations by HCFA which affect participation in
the Medicare and Medicaid
programs. 42 C.F.R. 498.1.
10. A hearing may be requested only by an "affected party" or its
legal representative. 42 C.F.R.
498.40(a).
11. An "affected party" means a provider or other enumerated entity
that is affected by an "initial
determination" or subsequent determination issued under 42 C.F.R. Part
498. 42 C.F.R. 498.2.
12. As relevant to this case, an "initial determination" or subsequent
determination must be made by
HCFA. 42 C.F.R. 498.3, 498.20(a), 498.30, 498.32.
13. Unless the disputed administrative action taken by HCFA is among those
specifically enumerated in
the regulations, the action cannot be considered an "initial determination"
by HCFA and is not subject to
the hearing process of 42 C.F.R. Part 498. 42 C.F.R. 498.3(d).
Petitioner's request for hearing on HCFA's determinations regarding Petitioner's participation agreement
14. As relevant to this case, a provider dissatisfied with an initial determination
to terminate its provider
agreement is entitled to a hearing before an administrative law judge. 42 C.F.R.
498.5(b).
15. As relevant to this case, HCFA makes an initial determination subject to
the hearing procedures of 42
C.F.R. Part 498 if it makes a finding of "noncompliance leading to the
imposition of enforcement actions
specified in 488.406 . . . ." 42 C.F.R. 498.3(b)(12).
16. "[L]eading to the imposition of enforcement actions specified in 488.406"
(42 C.F.R. 498.3(b)(12))
means that an enforcement action or remedy specified in 42 C.F.R. 488.406 was
imposed by HCFA. 59
Fed. Reg. 56,158 (1994); Arcadia Acres, Inc., DAB CR424 (1996); Fort Tryon Nursing
Home, DAB
CR425 (1996).
17. The other regulatory definitions of "initial determination" are
not relevant to the facts of this case. See
FFCL 1 - 7.
18. Termination of a provider agreement is a remedy or enforcement action specified
in 42 C.F.R.
488.406.
19. Prior to the issuance of its March 20, 1996 notice letter, HCFA had made
a finding of noncompliance
which was leading to the imposition of an enforcement action specified in 42
C.F.R. 488.406 against
Petitioner. FFCL 4, 15, 16.
20. Prior to HCFA's issuance of its March 20, 1996 notice letter, Petitioner
was in receipt of an initial
determination within the meaning of 42 C.F.R. 498.3(b)(12). FFCL 19.
21. HCFA has the authority to reopen and revise any initial determination on
its own initiative within 12
months after the notice date of the initial determination. 42 C.F.R. 498.30,
498.32.
22. An initial determination issued by HCFA is not binding if it has been revised
in accordance with 42
C.F.R. 498.32. 42 C.F.R. 498.20(b)(3).
23. HCFA's March 20, 1996 letter constituted notice of HCFA's reopening and
revision of its earlier
determination to end Petitioner's program participation on March 20, 1996. FFCL
5, 20.
24. HCFA's earlier determination to end Petitioner's participation in the Medicare
and Medicaid programs
by March 20, 1996 had no force or legal effect after HCFA revised said determination
in the March 20,
1996 notice letter. FFCL 20 - 23.
25. Petitioner does not have a right to a hearing on the merits of HCFA's prior
(now rescinded)
determination that Petitioner's participation in the Medicare and Medicaid programs
should end on March
20, 1996. FFCL 24.
26. HCFA's March 20, 1996 letter contains no initial determination. FFCL 5,
15, 16; 42 C.F.R.
498.3(d)(1).
27. The hearing procedures of 42 C.F.R. Part 498 do not apply to any finding
by HCFA that a provider has
deficiencies but is in compliance with the conditions of participation for the
Medicare and Medicaid
programs. 42 C.F.R. 498.3(d)(1).
Petitioner's request for hearing on HCFA's notice on the need to inform the
patient's physicians and the
State licensure board of the survey results
28. Notifications to physicians or licensure boards are not initial determinations
within the meaning of the
regulations. See 42 C.F.R. 498.3(b), (d).
29. Petitioner has no right to a hearing on the merits of whether, due to the
survey findings of substandard
care given to a patient, the State should provide notice of the findings to
the patient's physician and to the
State board licensing Petitioner's administrator. FFCL 4c, 28.
Petitioner's request for hearing on HCFA's notice that a ban might be imposed
on the provision of nurse
aide training and competency evaluations
30. The language of HCFA's notice letter does not support Petitioner's contention
that it has suffered actual
injury with respect to nurse aide training and competency evaluations. See P.
Br., 2 (quoting HCFA's
letter).
31. There is no evidence in the record showing whether Petitioner was conducting
nurse aide training and
competency evaluation programs when HCFA notified Petitioner that it was subject
to being prohibited
from conducting such programs.
32. There is no evidence in the record showing whether a ban has ever been
imposed against Petitioner's
conducting nurse aide training and competency evaluations.
33. Even if HCFA had imposed a ban against Petitioner's conducting nurse aide
training and competency
evaluations, such a ban is not included in the definitions of an "initial
determination" and has been
expressly designated unreviewable by the regulations. 42 C.F.R. 498.3(b), 498.3(d)(11).
34. Petitioner has no right to a hearing on the issue of any ban on nurse aide
training and competency
evaluation HCFA has imposed or might impose. FFCL 33.
Petitioner's request for hearing on the State's letter dated February 29, 1996
35. As relevant to the facts of this case, only an initial or subsequent determination
made by HCFA is
subject to the hearing procedures of 42 C.F.R. Part 498. 42 C.F.R. 498.3(a),
498.2 (definition of
"affected party").
36. To the extent any portions of the State's February 29, 1996 letter were
adopted by HCFA, they were
adopted in formulating HCFA's now rescinded determination to terminate Petitioner's
provider agreement.
FFCL 3 - 5.
37. Since HCFA's rescission of the termination decision on March 20, 1996,
Petitioner has had no right to
a hearing even on those portions of the State's letter dated February 29, 1996
which were adopted by
HCFA. FFCL 25, 27, 35, 36.
Dismissal
38. Petitioner has received no initial determination or subsequent determination
which is subject to the
hearing procedures of 42 C.F.R. Part 498. FFCL 25 - 28, 33 - 37.
39. At present, Petitioner is not an affected party within the meaning of the
regulations. 42 C.F.R. 498.2;
FFCL 38.
40. Petitioner is not a proper party and does not otherwise have a right to
a hearing. 42 C.F.R. 498.70(b);
FFCL 38, 39.
DISCUSSION
As outlined in the FFCL, there are several related legal principles which control
the disposition of HCFA's
motion to dismiss.
A hearing before an administrative law judge is part of the administrative
review process set forth at 42
C.F.R. Part 498. A provider's right to appeal under 42 C.F.R. Part 498 depends
on whether it is an
"affected party" within the meaning of the regulations. 42 C.F.R.
498.20, 498.40. An "affected party"
means a provider or other entity affected by an "initial determination
or by any subsequent determination
or decision issued under this part . . . ." 42 C.F.R. 498.2. Under this
definition, a provider's status as an
affected party depends in the first instance on whether it has received an "initial
determination" within the
meaning of the regulations. 42 C.F.R. 498.3, 498.5(b).
At 42 C.F.R. 498.3(b) and 498.5(b), the regulations define with great specificity
which determinations
issued to providers are "initial determinations" subject to the hearing
process. As relevant to this action, an
initial determination must be issued by HCFA. 42 C.F.R. 498.3(a), 498.5(b).
Those decisions by HCFA
which are not specifically defined to be initial determinations cannot give
rise to any hearing rights. 42
C.F.R. 498.3(d). If a provider receives an initial determination, it becomes
an affected party (42 C.F.R.
498.2) and has a right to a hearing on the initial determination to the forum
and in the manner specified by
the regulations (42 C.F.R. Part 498, subparts B and D).
However, whether or not a hearing is requested, HCFA has the right to reopen
and revise its initial
determinations within 12 months. 42 C.F.R. 498.30, 498.32. 3/ HCFA has the discretion
to reopen and
revise its determinations pursuant to an entity's request or on HCFA's own initiative.
Id. When HCFA
revises its own earlier issued initial determination in accordance with the
regulations, the initial
determination loses all legal effect. 42 C.F.R. 498.20(b)(3). HCFA's revised
determination becomes
binding on the provider, unless HCFA further revises the revised determination
or the "affected party
requests a hearing before an ALJ. . . ." 42 C.F.R. 498.32(b)(1). Again,
the regulation has specified that a
provider's right to a hearing on a revised determination by HCFA depends on
whether it is an affected
party. Id. Therefore, for the provider to have a hearing right under 42 C.F.R.
Part 498, the revised
determination issued by HCFA to the provider must meet the same substantive
requirements as those
specified by the regulations for initial determinations. See 42 C.F.R. 498.3(b),
498.5(b).
In listing which actions taken by HCFA constitute initial determinations, the
regulations authorize a
provider to request a hearing on the "finding of noncompliance leading
to the imposition of enforcement
actions specified in 488.406 of this chapter . . ." 42 C.F.R. 498.3(b)(12).
As explained in the
commentaries to the regulations, the Secretary of Health and Human Services
rejected the suggestion that
there should be a right to a hearing on all findings of deficiencies even if
no remedy is imposed because, as
she reasoned, "[i]f no remedy is imposed, the provider has suffered no
injury calling for an appeal." 59
Fed. Reg. 56,158 (1994). Thus, the regulation codified at 42 C.F.R. 498.3(b)(12)
does not mean that a
provider may request a hearing on the findings of deficiencies or noncompliance
from surveys when
HCFA has not imposed a remedy listed in 42 C.F.R. 488.406 but has the legal
right to impose such a
remedy someday in the future. 4/ The commentaries to 42 C.F.R. 498.3(b)(12)
are consistent with
another subsection of the same regulation, 42 C.F.R. 498.3(d)(1), which prohibits
a hearing when a
provider has been found to have deficiencies but has been found also to be in
compliance with the
conditions of program participation.
My decision to dismiss this case is based on my application of the foregoing
regulations and principles to
the facts of this case. There is no doubt in this case that, until HCFA issued
its revised determination on
March 20, 1996, HCFA had determined that Petitioner's provider agreement should
be terminated on
March 20, 1996. Therefore, Petitioner was, prior to March 20, 1996, in possession
of an initial
determination under the relevant regulations. Petitioner was entitled to file
a request for hearing within 60
days from its receipt of said determination. 42 C.F.R. 498.40(a)(2). However,
on March 20, 1996,
HCFA exercised its discretion to revise its initial determinations sua sponte
by rescinding its prior
termination decision.
I decide in this case, as I did in Arcadia Acres, that Petitioner's right to
a hearing on the termination issue
and the underlying survey results was extinguished by HCFA's rescission of its
earlier determination to
impose the termination action, as well as by the fact that the threatened termination
had never gone into
effect prior to HCFA's revising its initial determination. That is to say, due
to the contents of the March 20,
1996 notice, Petitioner no longer had an initial determination within the meaning
of the regulations, and,
therefore, Petitioner was no longer an affected party entitled to request a
hearing as of March 20, 1996.
Since no remedy or enforcement action within the meaning of 42 C.F.R. 488.406
was ever effectuated by
HCFA, Petitioner cannot be viewed as having suffered the harm or injury contemplated
by 42 C.F.R.
498.3(b)(12). See FFCL 15, 16.
As indicated in FFCL 28 - 33, I have rejected Petitioner's arguments concerning
the alleged harms caused
by the notification requirements of the statute and the possibility that a ban
might be imposed against
Petitioner's conducting nurse aide training and competency evaluations. Petitioner
appears to have
interposed these allegations of harm in response to HCFA's citation to the commentaries
for 42 C.F.R.
498.3(b)(12). However, as explained above, the commentaries referred to harm
or injury in order to clarify
the phrase "finding of noncompliance leading to the imposition of enforcement
actions specified in
488.406 of this chapter," which is contained in 42 C.F.R. 498.3(b)(12).
The existence of harm or injury
to Petitioner, standing alone, does not give rise to hearing rights in this
forum. The notification
requirements and possible ban on nurse aide training and competency evaluations
are not listed as initial
determinations in the regulations. 42 C.F.R. 498.3(b), 498.3(d)(11). Therefore,
they cannot be
adjudicated at hearing or otherwise contested by Petitioner under 42 C.F.R.
Part 498, even if HCFA has
acted or caused injury to Petitioner.
With respect to the portion of Petitioner's hearing request which seeks to
contest the contents of the State's
letter dated February 29, 1996, I note that a State's determination does not
generally give rise to hearing
rights under 42 C.F.R. Part 498. To the extent HCFA has adopted the State's
findings from its February 29,
1996 letter, HCFA did so in deciding to terminate Petitioner's provider agreement
on March 20, 1996.
FFCL 3, 4. Since HCFA has decided not to terminate Petitioner's provider agreement,
there is no initial
determination or subsequent determination which would permit Petitioner to challenge
the contents of the
February 29, 1996 letter adopted by HCFA. FFCL 36.
CONCLUSION
I conclude that Petitioner has not received any initial determination or subsequent
determination that gave
rise to hearing rights in this case. Therefore, Petitioner is not an affected
party within the meaning of the
regulations.
Accordingly, I dismiss the hearing request with prejudice on the basis that
"[t]he party requesting a hearing
is not a proper party or does not otherwise have a right to a hearing."
42 C.F.R. 498.70(b).
Mimi Hwang Leahy
Administrative Law Judge
1. HCFA has submitted a motion to dismiss with a supporting memorandum (HCFA
Br.) and two
exhibits (HCFA Ex. 1 - 2). Petitioner submitted a brief in opposition (P. Br.)
without any exhibits. HCFA
then filed a reply brief (HCFA Reply). In considering the motion to dismiss,
I have made all of the
foregoing submissions a part of the record.
2. As discussed below, only certain determinations are defined as "initial
determinations." If a
determination is not defined as an initial determination, then it is not subject
to a hearing or to any of the
other levels of administrative review specified in 42 C.F.R. Part 498.
3. The prohibitions against issuing revised determinations do not apply to
the facts of this case. 42
C.F.R. 498.30.
4. As in Arcadia Acres, DAB CR424, at 2, n.2, my legal interpretations would
permit Petitioner to obtain
a hearing in the future if HCFA actually imposes a remedy listed in 42 C.F.R.
488.406 based on the
unadjudicated findings of noncompliance which underlie Petitioner's present
action.