Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: GranCare Home Health Service & Hospice, Petitioner,
- v. -
Health Care Financing Administration.
Date: March 3, 1997
Docket No. C-96-406
Decision No. CR464
DECISION
I sustain the determinations of the Health Care Financing
Administration (HCFA) to certify Petitioner, GranCare Home
Health Service & Hospice, to participate in Medicare, as a
home health agency and hospice, effective November 28, 1995.
I. Background
On February 7, 1996, HCFA sent notices to Petitioner advising
it that HCFA had determined to certify Petitioner to
participate in Medicare, both as a hospice and as a home
health agency, effective November 28, 1995. HCFA Ex. 3; HCFA
Ex. 4. 1/ Petitioner requested reconsideration of these
determinations. HCFA Ex. 5; HCFA Ex. 6. By letters of May
24 and 28, 1996, HCFA denied Petitioner's requests. 2/
Petitioner requested a hearing and the case was assigned to
me. I held a prehearing conference at which HCFA advised me
that it intended to move for disposition of the case, based
on undisputed facts and the law. I established a schedule
for the parties to submit proposed exhibits, briefs, and
reply briefs. The parties complied with this schedule. I
base my decision in this case on the undisputed facts, the
law, and the parties' arguments.
II. Issue, findings of fact and conclusions of law
The issue in this case is whether HCFA properly certified
Petitioner to participate in Medicare, as a home health
agency and as a hospice, effective November 28, 1995. This
issue involves the question of whether I may direct HCFA to
certify a provider to participate in Medicare on a date
earlier than the date of completion of an on-site survey of
that provider which has been conducted to determine whether
the provider complies with Medicare participation
requirements. In deciding that HCFA properly determined to
certify Petitioner to participate in Medicare, as a home
health agency and as a hospice, effective November 28, 1995,
I make the following findings of fact and conclusions of law
(Findings). I discuss these Findings below.
1. On December 24, 1994, Petitioner applied to HCFA
for certification to participate in the Medicare program
as a home health agency.
2. On February 21, 1995, Petitioner applied to HCFA
for certification to participate in the Medicare program
as a hospice.
3. On April 6, 1995, the California Department of
Health Services (California State survey agency)
surveyed Petitioner to determine whether Petitioner
complied with applicable State licensing requirements.
Based on this survey, the California State survey agency
concluded that Petitioner complied with all applicable
State licensing requirements.
4. On November 28, 1995, the California State survey
agency, acting on behalf of HCFA, surveyed Petitioner to
determine whether Petitioner complied with Medicare
participation requirements which govern home health
agencies and hospices. Based on these surveys, the
California State survey agency concluded that Petitioner
complied with all applicable Medicare participation
requirements which govern home health agencies and
hospices.
5. HCFA determined to certify Petitioner to
participate in Medicare, effective November 28, 1995.
6. In order to be certified to participate in
Medicare, a provider must apply to HCFA to participate,
and then must be surveyed, in order to determine whether
it complies with applicable Medicare participation
requirements.
7. The first date on which a provider may participate
in Medicare is the date of completion of an initial
survey of that provider which finds that the provider
complies with all applicable Medicare participation
requirements.
8. November 28, 1995, is the date when surveys were
completed of Petitioner which established that
Petitioner complied with all Medicare participation
requirements which apply to home health agencies and
hospices.
9. November 28, 1995, is the first date on which
Petitioner qualified to be certified to participate in
Medicare.
10. I am without authority to direct HCFA to certify
Petitioner to participate in Medicare on the date when
Petitioner met State license requirements, even assuming
that State license requirements impose on Petitioner the
same obligations and duties as do Medicare participation
requirements.
11. I am without authority to decide that HCFA is
estopped from certifying Petitioner to participate in
Medicare, as a home health agency and a hospice,
effective November 28, 1995.
12. I am without authority to decide that Petitioner
is entitled, as the beneficiary of a contract between
HCFA and the California State survey agency, to be
certified to participate in Medicare at any date prior
to November 28, 1995.
III. Discussion
A. The relevant facts (Findings 1 - 5)
The following facts are not in dispute. On December 24,
1994, Petitioner applied to participate in the Medicare
program as a home health agency. P. Ex. 1 at 2; Petitioner's
Brief (P. Br.) at 3. On February 21, 1995, Petitioner
applied to participate in the Medicare program as a hospice.
P. Ex. 1 at 1; P. Br. at 3.
Petitioner applied also to the State of California for a
license to operate as a home health agency and as a hospice.
On April 6, 1995, the California State survey agency
conducted a survey of Petitioner in order to determine
whether Petitioner complied with applicable State licensing
requirements. It determined that, as of the date of the
survey, Petitioner was complying with State licensing
requirements. P. Ex. 2.
Although Petitioner applied to participate in Medicare in
December 1994 and February 1995, HCFA did not have Petitioner
surveyed for compliance with Medicare participation
requirements until November 28, 1995. On that date, the
California State survey agency conducted surveys on behalf of
HCFA to determine whether Petitioner complied with Medicare
requirements which govern home health agencies and hospices.
P. Ex. 7 at 1 - 4. The California State survey agency
concluded, on the basis of the November 28, 1995 surveys,
that Petitioner complied with all Medicare participation
requirements governing home health agencies and hospices.
Id. On February 7, 1996, HCFA determined to accept the
California State survey agency's conclusions, and certified
Petitioner to participate in Medicare, as a home health
agency and a hospice, effective November 28, 1995, the date
that the California State survey agency conducted and
completed its Medicare certification surveys of Petitioner.
P. Ex. 8.
B. Governing law (Findings 6 - 7)
A provider may participate in Medicare if it enters into a
participation agreement with the Secretary of the United
States Department of Health and Human Services (Secretary).
Social Security Act (Act), section 1866(a)(1). However, the
Secretary is not required to enter into a participation
agreement with a provider if the Secretary determines that
the provider is not complying substantially with Medicare
participation requirements. Act, section 1866(b)(2).
The Secretary has published regulations which establish a
process by which HCFA, acting on behalf of the Secretary,
determines whether an applicant for participation in Medicare
is complying with Medicare participation requirements. An
entity must apply to HCFA to be certified to participate in
Medicare. 42 C.F.R. § 489.10(a). In order to be certified,
an applicant for participation first must be surveyed in
order to determine whether that applicant meets all Medicare
participation requirements. 42 C.F.R. §§ 488.10, 489.10(d).
HCFA has delegated to State survey agencies the authority to
conduct surveys on behalf of HCFA. Id. HCFA will accept an
applicant's participation agreement and certify that
applicant to participate in Medicare on the date that a
survey of that applicant is completed, assuming that the
applicant meets all participation requirements on that date.
42 C.F.R. § 489.13(a).
The regulations plainly state that the earliest date that an
applicant may participate in Medicare is the date of
completion of the initial certification survey, assuming that
the applicant satisfies all Medicare participation
requirements as of that date. 42 C.F.R. § 489.13(a). An
applicant for participation may not be certified to
participate in Medicare at a date that is earlier than the
date the initial survey is completed, even assuming that the
applicant might have been able to satisfy HCFA that it met
participation requirements at an earlier date, had the survey
been conducted on that earlier date. See id.
C. Application of the law to the undisputed facts
(Findings 8 - 12)
It is evident from application of the law to the undisputed
facts that HCFA certified Petitioner to participate in
Medicare, as a home health agency and as a hospice, on the
earliest date on which Petitioner qualified to participate.
That date was November 28, 1995, the date when the California
State survey agency, acting on HCFA's behalf, completed
initial surveys of Petitioner and concluded that Petitioner
complied with all Medicare participation requirements, both
as a home health agency and as a hospice. There is no
provision in the regulations which would enable Petitioner to
be certified at any date earlier than November 28, 1995.
Consequently, I conclude that HCFA properly certified
Petitioner to participate in Medicare, effective November 28,
1995.
Petitioner's arguments that it ought to have been certified
to participate at an earlier date all devolve from the fact
that many months transpired from the dates when Petitioner
first applied to HCFA to participate as a home health agency
and as a hospice, and the date of the initial surveys of
Petitioner. Eleven months transpired from the date that
Petitioner first applied to participate in HCFA as a home
health agency and the initial certification survey that was
conducted of Petitioner by the California State survey
agency; about nine months transpired from the date that
Petitioner first applied to HCFA to participate as a hospice
and the initial certification survey.
Petitioner essentially concedes that the regulations do not,
on their face, permit it to have been certified prior to the
date of completion of the initial certification surveys of
Petitioner by the California State survey agency. Petitioner
argues that the delays were contrary to HCFA's policies
concerning the timeliness of initial certification surveys
and were unfair to Petitioner. Petitioner argues that, in
light of the asserted unreasonable delays between the dates
of Petitioner's applications and the date of the initial
surveys, I should direct HCFA to certify Petitioner at an
earlier date than November 28, 1995. The date advocated by
Petitioner is April 6, 1995, the date on which Petitioner was
found to qualify for a State license by the California State
survey agency.
Petitioner makes three arguments to support its assertion
that it should be certified to participate effective April 6,
1995. First, Petitioner argues that the license survey which
was completed by the California State survey agency on April
6, 1995, constituted a survey by the same agency as performed
the initial certification surveys of Petitioner on November
28, 1995. Petitioner asserts, furthermore, that the criteria
used by the California State survey agency to determine
whether Petitioner qualified for a State license are
identical to those used by HCFA to assess compliance with
Medicare participation requirements. From this, Petitioner
argues that I ought to accept the finding by the California
State survey agency that Petitioner met State license
requirements as the functional equivalent of findings that
Petitioner met Medicare participation requirements, and order
HCFA to certify Petitioner to participate, as a home health
agency and as a hospice, effective April 6, 1995.
Second, Petitioner asserts that the delays in conducting
Medicare certification surveys of Petitioner contravene
HCFA's policies concerning the timeliness of such surveys.
Petitioner argues that it was harmed by these delays. From
this, Petitioner asserts that HCFA is estopped from
certifying Petitioner to participate effective November 28,
1995, and must be directed to certify Petitioner to
participate effective April 5, 1995.
Third, Petitioner argues that the agreement between HCFA and
the California State survey agency, pursuant to which the
California State survey agency conducts Medicare
participation surveys, is intended to benefit applicants for
participation in Medicare. Petitioner argues that one
requirement of this agreement is that surveys be conducted in
a timely manner. Petitioner asserts that, in this case, the
California State survey agency failed to comply with this
requirement, to Petitioner's loss. Petitioner argues that,
as a third-party beneficiary of the agreement between HCFA
and the California State survey agency, it should be granted
relief in the form of an earlier date of certification to
participate in Medicare.
I am without authority to grant the relief which Petitioner
requests. In evaluating Petitioner's arguments, I must apply
to the evidence the letter of the regulations which govern
initial certification. These regulations give me no
authority to direct HCFA to accept the results of a State
license survey as a substitute for initial certification
surveys, even if the license survey was performed by the same
agency as performed the later certification surveys, and even
assuming that the criteria for licensure are identical with
the criteria which govern participation in Medicare. I have
no authority to find that HCFA is estopped from certifying
Petitioner, effective November 28, 1995, on the grounds that
the delays in surveying Petitioner harmed Petitioner,
contravene HCFA's policies, and are unreasonable. Finally, I
have no authority to direct that HCFA certify Petitioner
prior to November 28, 1995, on the ground that Petitioner, as
the third-party beneficiary of a contract between HCFA and
the California State survey agency, had a right to be
surveyed timely and was damaged by the alleged failure of the
California State survey agency to fulfill its obligations
under the agreement.
That is not to say that I am unsympathetic to Petitioner. A
great deal of time transpired between Petitioner's initial
applications for participation and the certification surveys.
Delays of eleven and nine months occurred between the dates
when Petitioner applied to participate in Medicare as a home
health agency and as a hospice and completion of the initial
surveys of Petitioner by the California State survey agency.
It is at least possible that Petitioner would have been able
to demonstrate that it complied with applicable participation
requirements months prior to November 28, 1995, had the
California State survey agency conducted participation
surveys of Petitioner in a more timely manner. Petitioner
may well have been damaged financially by the delayed
surveys.
1. Petitioner's argument that the results of the
State license survey must be accepted by HCFA as
proof of compliance with Medicare participation
requirements (Finding 10)
Petitioner argues that there is nothing in the regulations
which prohibits HCFA from using the results of a State
license survey of Petitioner to determine whether Petitioner
meets Medicare participation requirements. Petitioner
observes that the regulations which govern certification do
not specifically define what an on-site survey for
certification purposes constitutes, nor do they contain any
language precluding HCFA from using the results of a license
survey as a basis for determining whether a provider
qualifies to participate in Medicare.
Petitioner's characterization of what the regulations contain
may be true, but it begs the question of whether HCFA may be
directed to use the results of a State license survey to
determine whether a provider qualifies to participate in
Medicare. The regulations give HCFA authority to decide what
it will accept from a State survey agency as a basis for
certifying an applicant to participate in Medicare. 42
C.F.R. §§ 488.10; 488.11(c); 488.12; 488.18. It is apparent
from the record of this case that HCFA has chosen not to
consider the State license survey as being equivalent to the
provider certification surveys that were conducted
subsequently. The regulations do not require HCFA to accept
any substitute for a provider certification survey. I have
no authority to direct that HCFA do so. Thus, it is not
relevant that the agency which performed the State license
survey is the same agency as that which performed the
Medicare certification surveys, nor is it relevant that the
criteria for attaining a license in California to operate as
a home health agency and as a hospice arguably may be the
same as those which govern participation in Medicare of home
health agencies and hospices. 3/
In its reply to Petitioner's brief, HCFA asserts that the
issues in this case do not include the issue of whether
California State license requirements and Medicare
participation requirements are the same. From this, HCFA
seems to be asserting that I should preclude Petitioner even
from arguing that it should be certified based on the results
of the California State license survey. Petitioner responded
to this assertion by moving to expand the issues in the case.
I deny Petitioner's motion as moot. Deciding the issue of
whether State license and Medicare participation requirements
are identical would have no affect on the outcome of this
case, inasmuch as the regulations which govern participation
of providers do not compel HCFA to accept the results of a
State license survey as proof of compliance with
participation requirements. However, I would have permitted
Petitioner to argue and offer evidence that is relevant to
its assertion that State license requirements and Medicare
participation requirements are identical, had I concluded
that the regulations did provide HCFA's acceptance of the
results of a State license survey as a substitute for the
results of a Medicare certification survey.
2. Petitioner's estoppel argument (Finding 11)
I do not have authority to direct HCFA to certify Petitioner
to participate in Medicare on a date prior to November 28,
1995, on the grounds that the delay in surveying Petitioner
was unfair to Petitioner, or that the delay is contrary to
HCFA's policy that applicants for participation be surveyed
promptly. My authority thus is limited to deciding whether
HCFA certified Petitioner to participate in accordance with
applicable regulations governing participation. The
regulations which govern certification neither state nor
suggest that HCFA may be estopped from certifying a provider
to participate on the date when an initial survey of that
provider is completed, even where the survey has been delayed
through no fault of the provider. See 42 C.F.R. § 489.13(a).
Petitioner notes that I have held in other cases that HCFA
may not be estopped from certifying a provider pursuant to 42
C.F.R. § 489.13, but it attempts to distinguish the facts of
those cases from the facts of the present case. I have held
that, where an applicant for participation in Medicare fails
at the initial survey to demonstrate that it meets all
participation requirements, HCFA may not be estopped from
certifying the applicant to participate as of the date that
it establishes that it has corrected outstanding
deficiencies, on the ground that HCFA or a State survey
agency delayed unreasonably in conducting a resurvey of the
applicant. SRA Inc., D/B/A St. Mary Parish Dialysis Center,
DAB CR341 (1994); The Rivers HealthCare Resources, Inc., DAB
CR446 (1996).
Petitioner argues that, in every other case where I have
declined to find that HCFA is estopped, the provider bore
some responsibility for the delays in its certification,
because it was found to be deficient in complying with
participation requirements at the initial survey. Petitioner
asserts that it bears no responsibility for the delay in
certification, because there is no evidence that it was
deficient at any time prior to November 28, 1995.
I agree with Petitioner that this case differs from those
cases in which I have held that HCFA may not be estopped, in
that, here, there is no evidence that Petitioner bears
responsibility for the lapse of time between the date it
applied to be certified and the effective date of its
certification. However, I am, nevertheless, without
authority to find that HCFA is estopped from certifying
Petitioner to participate in Medicare, effective November 28,
1995. The regulations which govern certification do not
authorize me to supersede their explicit requirements based
on principles of equity, including estoppel.
I would not find that Petitioner established the factual
predicate for its equitable argument ¾ that HCFA failed to
comply with a policy which required that Petitioner be
surveyed within three weeks of the dates of its applications
for participation ¾ even if I were to conclude that I had
the authority to grant the equitable relief that Petitioner
seeks. It is not clear that the California State survey
agency contravened HCFA's policy concerning the timing of
participation surveys.
Petitioner proved that HCFA's general policy concerning the
timing of certification surveys is to require that an initial
certification survey be performed of an applicant for
participation within three weeks of the date when the
applicant submits an application for participation which
recites that the applicant is operational. An excerpt from
the State Operations Manual, a document which HCFA provides
to State survey agencies as policy guidance, states:
When the provider notifies . . . [the State
survey agency] of full operation, document the file
with the date of notification and conduct the
survey within 3 weeks of that date.
P. Ex. 4. This excerpt is corroborated by the affidavit of
Petitioner's counsel. P. Ex. 4a. Petitioner's counsel
recites being present at a "special training session," which
he asserts that HCFA held for administrative law judges, on
January 14, 1997. He recites that, at that session, Ms.
Mavis Connolly, a representative of HCFA, advised the
participants that the State survey agency conducts an initial
survey within three weeks of its receipt of an application by
a provider which indicates that the provider is operational.
Id. 4/
However, in February 1995, HCFA felt it necessary to advise
State survey agencies that, due to budget constraints, it
might be necessary for them to waive the requirement that a
survey of an applicant for participation be conducted within
three weeks of the date of the application for certification
"if the State budget does not permit all initial surveys to
be done." P. Ex. 6 at 2. It is unclear from the evidence in
this case whether the California State survey agency delayed
surveying Petitioner consistent with HCFA's 1995 exception to
the overall policy concerning the timing of initial surveys.
3. Petitioner's argument that, as the
beneficiary of a contract between HCFA and the
California State survey agency, it should be
certified to participate in Medicare earlier than
November 28, 1995 (Finding 12)
I am without authority to direct HCFA to certify Petitioner
to participate in Medicare prior to November 28, 1995, as
relief for an alleged breach of what Petitioner characterizes
to be a third-party beneficiary contract between HCFA and the
California State survey agency. My authority, again, is
limited to deciding whether HCFA's certification of
Petitioner complied with the requirements of applicable
regulations. I make no finding as to whether any agreement
between HCFA and the California State survey agency is a
third-party beneficiary agreement which operates to
Petitioner's benefit, inasmuch as I have no authority to
direct any relief based on an asserted breach of that
agreement.
For the same reason, I make no finding that the California
State survey agency failed to comply with its obligations
under any contract it had with HCFA.
IV. Conclusion
I conclude that HCFA properly certified Petitioner to
participate in Medicare, as a home health agency and as a
hospice, effective November 28, 1995. Therefore, I sustain
HCFA's determinations.
________________________
Steven T. Kessel
Administrative Law
Judge
* * * Footnotes * * *
1. HCFA submitted six proposed exhibits (HCFA Ex.
1 - 6). Petitioner submitted nine proposed exhibits (P. Ex.
1 - 4, 4a, 5 - 8). Neither party objected to my receiving
into evidence any of these proposed exhibits. I receive into
evidence HCFA Ex. 1 - 6 and P. Ex. 1 - 4, 4a, 5 - 8.
2. Neither HCFA nor Petitioner offered into
evidence HCFA's notice of denial of Petitioner's requests for
reconsideration. However, that document was provided by HCFA
as part of the documentation of Petitioner's hearing request
and is, therefore, part of the record of this case.
3. I make no finding as to whether the criteria
are the same, because it is not necessary that I do so.
4. As Petitioner's counsel recites in his
affidavit, I was present at this meeting (I would not
characterize it as a "special training session"), along with
other administrative law judges, members of the Departmental
Appeals Board, representatives of the Departmental Appeals
Board Appellate Division and Civil Remedies Division staffs,
and representatives of the public. I make no findings as to
what was said at that meeting, based on my memory of what
occurred. My findings are based solely on the unrebutted
statement of Petitioner's counsel.