Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Rafael Convalescent Hospital,
Petitioner,
v.
Health Care Financing Administration.
DATE: November 19, 1996
Docket No. C-96-292
Decision No. CR444
DECISION
I decide that Rafael Convalescent Hospital (Petitioner) has no
right to a hearing. Therefore, I dismiss Petitioner's request
for a hearing.
I. Background
On January 26, 1996, Petitioner requested a hearing concerning
the results of a survey of Petitioner that Petitioner alleged was
conducted jointly by the California Department of Health Services
(California survey agency) and by the Health Care Financing
Administration (HCFA). Petitioner's hearing request was assigned
to me for disposition. HCFA moved to dismiss Petitioner's
request for a hearing, on the ground that Petitioner had no right
to a hearing. Petitioner opposed HCFA's motion. 1/
II. Issues, findings of fact and conclusions of law
The issue in this case is whether Petitioner has a right to a
hearing. I make the following findings of fact and conclusions
of law (Findings) to support my decision that Petitioner does not
have a right to a hearing. I discuss each Finding in detail,
below.
1. Petitioner participates in the Medicare program as a
skilled nursing facility (SNF), and in the California
Medicaid program as a nursing facility (NF).
2. On November 14, 1995, the California survey agency
informed Petitioner that, based on a survey that it had
conducted of Petitioner, it had found that Petitioner was
not in substantial compliance with federal requirements for
nursing homes participating in the Medicare and Medicaid
programs.
3. On November 14, 1995, the California survey agency
informed Petitioner that, if Petitioner did not attain
substantial compliance with Medicare participation
requirements, the California survey agency would recommend
to HCFA that HCFA impose the following remedies against
Petitioner:
a. A civil money penalty;
b. A denial of payment for new admissions; and
c. Termination of Petitioner's participation in
Medicare.
4. On February 13, 1996, the California survey agency
informed Petitioner that it had determined that Petitioner
had attained substantial compliance with Medicare and
Medicaid participation requirements. The California survey
agency made no recommendation to HCFA that HCFA impose as a
remedy or remedies a civil money penalty, a denial of
payment for new admissions, or termination of Petitioner's
participation in Medicare.
5. Regulations which govern the participation in
Medicare of SNFs and NFs provide that a SNF or a NF is
entitled to a hearing from a determination by HCFA which
results in the imposition of a remedy against the SNF or NF
by HCFA.
6. A SNF or a NF is not entitled to a hearing where
HCFA has made no determination concerning whether the SNF or
NF is complying with Medicare participation requirements.
7. A SNF or a NF is not entitled to a hearing where
HCFA has imposed no remedy against it.
8. HCFA made no determination concerning whether
Petitioner was complying with Medicare participation
requirements.
9. Neither the California survey agency nor HCFA
imposed any remedies against Petitioner.
10. Petitioner has no right to a hearing.
11. I do not have authority to hear and decide
Petitioner's argument that surveys conducted of Petitioner
did not comply with requirements governing surveys.
12. I do not have authority to hear and decide
Petitioner's argument that actions by the California survey
agency or HCFA may deny Petitioner its rights under the
United States Constitution.
III. Discussion
A. The relevant facts (Findings 1 - 4)
On November 6, 1995, the California survey agency conducted a
survey of Petitioner's facility to determine whether Petitioner
was complying substantially with federal requirements for nursing
homes participating in Medicare and Medicaid. HCFA Ex. 1 at 1.
Based on this survey, the California survey agency informed
Petitioner on November 14, 1995, that Petitioner was not in
substantial compliance with participation requirements. Id. The
California survey agency told Petitioner that it must submit to
the California survey agency a plan of correction which showed
how Petitioner would correct the deficiencies. Id. The
California survey agency advised Petitioner that, if Petitioner
did not achieve substantial compliance with participation
requirements, the California survey agency would recommend to
HCFA that HCFA impose remedies, which might include the
following:
• A civil money penalty of $300.00 a day, effective
November 6, 1995;
• Denial of payment for new admissions, if
Petitioner did not achieve substantial compliance
within three months from November 6, 1995; and
• Termination of Petitioner's participation in
Medicare, effective May 6, 1996, if Petitioner did
not achieve substantial compliance by that date.
Id. at 2.
On November 30, 1995, Petitioner submitted a plan of correction
to the California survey agency. HCFA Ex. 2 at 2. On January
24, 1996, Petitioner, through its legal counsel, wrote to HCFA.
HCFA Ex. 2. Petitioner recited that, on January 3, 1996, it had
participated with the California survey agency in an informal
dispute resolution conference. Id. at 2. Petitioner averred
that, at the conference, it had produced extensive documentation
and several hours of testimony to prove that it had been in
substantial compliance with participation requirements. Id.
However, the California survey agency had not accepted most of
Petitioner's assertions of substantial compliance. Id.
Petitioner asserted that, if HCFA imposed enforcement remedies
against Petitioner, then Petitioner would request a hearing to
contest the findings of noncompliance that had been made by the
California survey agency. HCFA Ex. 2 at 3. Petitioner
characterized the potential remedies concerning which it would
seek a hearing as including: prohibiting Petitioner's nurse aide
training program for two years, and the issuance of a civil money
penalty. Id.
On February 13, 1996, the California survey agency notified
Petitioner that, based on a resurvey that it had conducted of
Petitioner's facility on February 5, 1996, Petitioner had been
found to be in substantial compliance with federal participation
requirements for nursing homes participating in Medicare or
Medicaid. HCFA Ex. 3 at 1. The California survey agency advised
Petitioner also that, based on the resurvey, Petitioner continued
to manifest some deficiencies which did not establish a failure
by Petitioner to comply substantially with participation
requirements, but which Petitioner should correct. Id.
I infer from the February 13, 1996 notice that the California
survey agency did not recommend to HCFA that HCFA impose any of
the possible remedies that the California survey agency
enumerated in its November 14, 1995 notice to Petitioner. HCFA
Ex. 3; see HCFA Ex. 1. The gist of the November 14, 1995 notice
is that the California survey agency would not recommend to HCFA
that HCFA impose any of the remedies enumerated in that notice if
Petitioner attained substantial compliance with participation
requirements. HCFA Ex. 1. The certification in the February 13,
1996 notice that Petitioner had attained substantial compliance
therefore must be read consistent with the November 14, 1995
notice as a statement by the California survey agency that it
would not recommend that HCFA impose any of the previously
enumerated remedies.
I infer also that HCFA made no determination that Petitioner
failed to comply with Medicare participation requirements, nor
did it impose against Petitioner any of the remedies that were
enumerated in the California survey agency's November 14, 1995
notice. There is no evidence that the California survey agency
communicated its findings to HCFA. There is no evidence that
HCFA reviewed or acted on the findings made by the California
survey agency. HCFA never sent to Petitioner any notice
indicating that HCFA had considered, much less accepted, the
findings made by the California survey agency.
Petitioner argues, in effect, that the California survey agency
and HCFA jointly determined that Petitioner was not complying
substantially with participation requirements. Under this
theory, a determination by the California survey agency
concerning Petitioner's compliance is also a determination by
HCFA. However, this theory is not supported by the evidence. It
is true that HCFA employees participated in the November 6, 1995
survey of Petitioner. P. Ex. 2. Notwithstanding, there is no
evidence that HCFA made a determination about Petitioner's
compliance or noncompliance with participation requirements based
on the observations made by the survey participants, including
HCFA employees.
On March 22, 1996, Petitioner, through its legal counsel, wrote
again to HCFA. HCFA Ex. 5. Petitioner advised HCFA that it was
revising its request for hearing, in light of the finding by the
California survey agency that, effective February 5, 1996,
Petitioner was in substantial compliance with participation
requirements. Id. at 1. Petitioner asserted that it had been
harmed by a finding of the California survey agency that, prior
to February 5, 1996, Petitioner had provided care of a
substandard quality. Id. Petitioner asserted additionally that
it disputed the remedies which Petitioner asserted had been
imposed against it and which Petitioner averred were associated
with the finding that Petitioner had provided care of a
substandard quality. Id. at 1 - 2.
According to Petitioner, it had been harmed particularly by the
California survey agency's failure to announce an extended survey
of Petitioner, and by the California survey agency's alleged
application of arbitrary criteria in its evaluation of
Petitioner. HCFA Ex. 5 at 1 - 2. Petitioner asserted that it
had been harmed by a wrongful prohibition of its nurse aide
training, and, for that reason, it intended to pursue its hearing
rights. Id. at 2.
The evidence does not establish that either the California survey
agency or HCFA imposed a prohibition on Petitioner from
conducting nurse aide training. However, for purposes of this
decision, I find that as a consequence of the initial findings of
noncompliance made by the California survey agency, Petitioner
may have its authorization to conduct nurse aide training
suspended.
B. Whether Petitioner is entitled to a hearing
(Findings 5 - 10)
Petitioner is not entitled to a hearing, because HCFA made no
determination concerning Petitioner's compliance with Medicare
participation requirements. Moreover, even if HCFA did make a
determination concerning Petitioner's compliance with Medicare
participation requirements, it imposed no remedy against
Petitioner. In the absence of a remedy, Petitioner is not
entitled to a hearing.
The regulations which establish hearing rights for a provider are
contained in 42 C.F.R. Parts 488 and 498. The regulations
establish that, as a necessary prerequisite to a hearing, there
must be an initial determination by HCFA affecting a provider's
participation in Medicare. 42 C.F.R. § 498.3(a) and (b). The
regulation defines an "initial determination" to be a conclusion
by HCFA concerning any of several specifically enumerated
circumstances which may affect a provider's eligibility to
participate in Medicare. 42 C.F.R. § 498.3(b)(1) - (13). The
regulations do not suggest that a finding made by a State survey
agency is a determination by HCFA, unless that finding is
affirmatively accepted by HCFA or is at least ratified by HCFA
after the fact.
There is no evidence that HCFA accepted or ratified the findings
made by the California survey agency concerning Petitioner's
compliance with Medicare participation requirements. Therefore,
HCFA made no initial determination concerning Petitioner's
compliance and Petitioner has no right to a hearing.
However, even assuming that HCFA made an initial determination
concerning Petitioner's compliance, HCFA imposed no remedy
against Petitioner. A SNF or a NF may request a hearing
concerning a determination by HCFA that the SNF or NF is not
complying substantially with Medicare participation requirements
only where HCFA actually imposes a remedy against the SNF or NF.
42 C.F.R. §§ 488.408(g)(1), 498.3(b)(12); Fort Tryon Nursing
Home, DAB CR425 (1996); Ruth Taylor Institute, DAB CR430 (1996).
The word "remedy" is defined in 42 C.F.R. § 488.406. An action
taken by HCFA is a "remedy" if the action is one of those actions
which falls within the definition of a remedy. Remedies are
defined to include: termination of participation; appointment of
temporary management; denial of payment; denial of payment for
new admissions; imposition of a civil money penalty; imposition
of State monitoring of performance; directed transfer of
residents; directed closure of a facility and transfer of the
facility's residents; imposition of a directed plan of
correction; directed in-service training; and alternative or
additional State remedies that are approved by HCFA. 42 C.F.R. §
488.406(a). If an action taken by HCFA is not one of these
remedies, then it is not a "remedy," and the provider has no
right to a hearing from the action.
The record in this case establishes that the California survey
agency told Petitioner that it would recommend that HCFA impose
any of three actions against Petitioner that are remedies within
the meaning of 42 C.F.R. § 488.406, if Petitioner did not attain
compliance with Medicare participation requirements. These
possible remedies are: termination of Petitioner's participation
in Medicare, denial of payments for new admissions by Petitioner,
and imposition of a civil money penalty against Petitioner. 42
C.F.R. § 488.406(a), (a)(2), (a)(3). However, the record
establishes also that the California survey agency never imposed
any of the aforesaid remedies and that it never recommended to
HCFA that HCFA impose any of the aforesaid remedies or take any
other action defined to be a remedy under 42 C.F.R. § 488.406.
2/ Moreover, HCFA never imposed a remedy against Petitioner.
Petitioner asserts that the possible loss of its nurse aide
training program, as a consequence of the California survey
agency's determination that Petitioner was not complying
substantially with participation requirements, is a remedy from
which it has a right to a hearing. I do not agree with this
assertion. The regulation which defines those initial
determinations from which a provider has a right to a hearing
specifically states that loss of nurse aide training by a SNF or
a NF is not an initial determination by HCFA from which the SNF
or NF has a right to a hearing. 42 C.F.R. § 498.3(d)(12); Ruth
Taylor Institute, DAB CR430, at 11.
C. Petitioner's other arguments (Findings 11 - 12)
Petitioner asserts that, to the extent that HCFA failed to review
and approve the findings made by the California survey agency, it
failed to comply with an internal HCFA directive that State
survey agency findings of substandard care be reviewed and
approved by HCFA. Petitioner's opening brief at 7 - 8. I have
no authority to hear and decide the merits of this argument. My
authority to hear and decide cases is based on a determination
made by HCFA which results in the imposition of a remedy. 42
C.F.R. §§ 488.408(g)(1), 498.3(b)(12). Where HCFA makes no
determination, I have no authority to find that HCFA ought to
have made a determination.
Petitioner argues also that it would be denied a constitutional
right to a hearing if it were to lose its nurse aide training
program, but not be permitted a hearing as to the loss of that
program. Again, I am without authority to hear and decide this
assertion. My authority to hear and decide cases involving HCFA
is limited to those cases which arise from determinations
described in 42 C.F.R. § 498.3, which result in a remedy being
imposed against a provider. I have no authority to hear and
decide a provider's assertion that it has been denied a hearing
in violation of the United States Constitution, where no right to
a hearing is provided by the regulations.
IV. Conclusion
I conclude that Petitioner is not entitled to a hearing.
Therefore, I dismiss Petitioner's request for a hearing.
________________________
Steven T. Kessel
Administrative Law Judge
* * * Footnotes * * *
1. HCFA submitted five exhibits (HCFA Ex. 1 - 5) in
support of its motion. Petitioner submitted eight exhibits (P.
Ex. 1 - 8) in opposition to HCFA's motion. Neither party
objected to my receiving into evidence the other party's proposed
exhibits. I receive into evidence HCFA Ex. 1 - 5 and P. Ex. 1 -
8.
2. The regulations appear to provide that, in some
circumstances, a State agency may impose one or more of the
remedies enumerated in 42 C.F.R. § 488.406 without the approval
of HCFA. 42 C.F.R. §§ 488.400, 488.402. Arguably, a provider
would not have a right to a federal administrative hearing from a
determination by a State agency to impose a remedy which was not
reviewed and approved by HCFA, or, at least, ratified by HCFA
after the fact. That appears to be the case, because, pursuant
to 42 C.F.R. § 498.3, the right to a hearing emanates only from a
determination made by HCFA. However, it is unnecessary for me to
decide whether Petitioner would have a right to a hearing from a
remedy imposed by the California survey agency, absent a
determination by HCFA to impose a remedy. In this case, no
remedy was imposed against Petitioner, either by the California
survey agency or by HCFA.