Date: December 19, 1997

In the Case of:

Southwest Organ Bank, Inc., LifeGift Organ Donation Center,
Petitioners,

- v. -

Health Care Financing Administration.

Docket No. C-97-243
Decision No. CR512

DECISION

I decide to remand this case to the Health Care Financing Administration (HCFA) for reconsideration of issues 1 - 3 which Petitioner Southwest Organ Bank, Inc. (Petitioner Southwest) identified in its November 25, 1996 request for reconsideration. See P. Ex. 10 at 3. I decide that Petitioner Southwest has no right to reconsideration or to a hearing as to the request it made under issue 4 of its reconsideration request that it be assigned the entire Dallas-Fort Worth Metropolitan Statistical Area (MSA). See Id. I dismiss Petitioner Southwest's request for a hearing as to that request.

I. Governing law and background facts

The governing law and the background facts which I recite in this background section are not disputed by the parties to this case.

A. The governing law

This case involves a competition between Organ Procurement Organizations (OPOs) for service areas. An OPO is defined by section 1138(b) of the Social Security Act (Act) to be an entity which is established to obtain organs for transplant. Section 1138(b) of the Act establishes a mechanism whereby an OPO may qualify for reimbursement for its services under Medicare and state Medicaid programs. The Act authorizes the Secretary of the United States Department of Health and Human Services (the Secretary) to select an OPO to obtain organs for transplant from a designated service area. Section 1138(b) specifies that the Secretary may not select more than one OPO to provide organ procurement services to a designated service area.

The Secretary has published regulations to implement the process whereby OPOs apply for and are selected to serve service areas. These are published at 42 C.F.R. Part 486. Previously, these regulations were published at 42 C.F.R. Part 485. The regulations reiterate the statutory requirement that only one OPO may be selected to serve a designated service area. 42 C.F.R. § 486.316(a). The regulations establish a process whereby qualified OPOs may compete for selection by HCFA, acting on behalf of the Secretary, to serve a designated service area. Id. Where more than one qualified OPO applies to serve a designated service area, HCFA will select one of the competing OPOs to serve the service area based on consideration of certain tie breaking criteria that are defined in the regulations. 42 C.F.R. § 486.316(a)(1) - (6).

An OPO that is dissatisfied with a service area selection has no statutory right to an administrative appeal or to a hearing from the selection. See Act, section 1138(b). However, the Secretary has granted appeal and hearing rights to a dissatisfied OPO. 42 C.F.R. §§ 486.316(b); 498.2; see 42 C.F.R. § 498.3(b)(4). An OPO that is dissatisfied with a service area selection determination may request reconsideration by HCFA of that determination pursuant to the regulations contained at 42 C.F.R. Part 498. 42 C.F.R. §§ 486.316(b); 498.22. The criteria by which HCFA is to conduct a reconsideration are stated in 42 C.F.R. § 498.24. An OPO that is dissatisfied with a reconsideration determination may request a hearing before an administrative law judge. 42 C.F.R. §§ 486.316(b); 498.5(d)(2). The Part 498 regulations establish the criteria by which an administrative law judge is to conduct a hearing.

B. Background facts

The parties to this case are Petitioner Southwest, Petitioner LifeGift Organ Donation Center (Petitioner LifeGift), and HCFA. I base this statement of the background facts on exhibits submitted by the parties. Petitioner Southwest submitted 13 exhibits which are designated as P. Ex. 1 - 13. Petitioner LifeGift submitted six exhibits which are designated as R. Ex. 1 - 7. HCFA did not submit any exhibits. No party objects to my receiving into evidence any of the exhibits. I receive into evidence P. Ex. 1 - 13 and R. Ex. 1 - 7.

Petitioners Southwest and LifeGift are qualified OPOs. Each Petitioner has a service area in the State of Texas. On June 14, 1996, Petitioner Southwest applied to HCFA to be reselected for the service area that it had been serving up until that date. P. Ex. 3. The Texas counties for which Petitioner Southwest applied for reselection included the counties of: Somervell, Hood, Hamilton, Wise, Palo Pinto, Erath, Limestone, Calhoun, Cherokee, and Hardin. Id. at 3 - 5. On June 30, 1996, Petitioner Southwest amended its application by requesting that it be selected to serve the Texas county of Brazos in addition to those counties for which it had previously requested selection. P. Ex. 4. At the time, Brazos County was part of Petitioner LifeGift's service area.

On June 10, 1996, Petitioner LifeGift applied to HCFA to be reselected to serve the service area that it had been serving up until that date. R. Ex. 1. Additionally, Petitioner LifeGift requested that it be designated to serve Somervell, Hood, Hamilton, Wise, Palo Pinto, Erath, Limestone, Calhoun, Cherokee, and Hardin counties. Id. at 1 - 2. Thus, each Petitioner competed to serve part of the service area that had been designated previously to the other Petitioner. A total of 11 counties in Texas were competed for by Petitioners Southwest and LifeGift.

On July 31, 1996, HCFA notified Petitioners Southwest and LifeGift that they had been selected to continue serving those counties in Texas which had comprised their respective service areas except for those counties for which the two Petitioners were competing. P. Ex. 5; P. Ex. 6. HCFA advised the Petitioners that it would advise each of them at a later date of HCFA's determination concerning the contested counties. Id.

Each Petitioner then submitted information to HCFA for HCFA to use in considering the tie breaking criteria of 42 C.F.R. § 486.316(a)(1) - (6). P. Ex. 7; P. Ex. 8. On September 27, 1996, HCFA announced that it had selected Petitioner Southwest to be the OPO for the Texas counties of: Brazos, Cherokee, and Limestone. P. Ex. 9 at 2. HCFA announced that it had selected Petitioner LifeGift to be the OPO for the Texas counties of: Calhoun, Erath, Hamilton, Hardin, Hood, Palo Pinto, Somervell, and Wise. Id.

On November 25, 1996, Petitioner Southwest filed a request for reconsideration by HCFA of its determination. P. Ex. 10. In its request, Petitioner Southwest identified four issues as to which it sought reconsideration. It stated these issues as follows:

1. In weighing each of the tie-breaker criteria, did HCFA err by assigning an equal value to each of the six . . . [tie breaking criteria identified in 42 C.F.R. § 486.316(a)(1) - (6)]?

2. Did HCFA err in applying the tie-breaker criteria of actual number of donors compared to the number of potential donors?

3. Did HCFA err in failing to find that . . . [Petitioner Southwest] had a working relationship with the hospitals in the counties of Hamilton, Hardin, Hood, and Palo Pinto?

4. Has HCFA improperly awarded [Petitioner] LifeGift part of the Dallas-Fort Worth MSA and Beaumont-Port Arthur MSA in violation of 42 U.S.C. § 273(b)(1)(E)?

Id. at 3.

In its request for reconsideration, Petitioner Southwest specifically asked HCFA for the opportunity to present to HCFA evidence and statements that were relevant to the matters which were at issue. P. Ex. 10 at 5. Petitioner Southwest also requested the opportunity to meet with representatives of HCFA to discuss any of the matters that were raised in the reconsideration request, if HCFA determined that such a meeting would be helpful to making a reconsideration determination. Id.

The evidence and arguments which Petitioner Southwest sought to provide HCFA concerning issues 1 - 3 related to HCFA's determination to assign some of the 11 contested counties to Petitioner LifeGift. P. Ex. 10 at 3 - 5. However, as Petitioner Southwest acknowledged, issue 4 broached a legal issue that Petitioner Southwest did not raise in either its initial or amended application. Id. at 5.

Issue 4 raised the question of whether HCFA lawfully could assign counties within an MSA to more than one OPO. Petitioner Southwest argued that HCFA was prohibited by statute from dividing an MSA among competing OPOs. Petitioner Southwest asserted, in effect, that HCFA had unlawfully divided the Beaumont-Port Arthur MSA between Petitioners Southwest and LifeGift, with the result that HCFA unlawfully assigned Hardin County to Petitioner LifeGift. Id. Petitioner Southwest asserted additionally, in effect, that HCFA should have assigned the entire Dallas-Fort Worth Consolidated MSA, including Hood County, to Petitioner Southwest. Id.

On December 23, 1996, HCFA responded to Petitioner Southwest's request for reconsideration. P. Ex. 11. HCFA made its reconsideration determination without accepting any additional evidence or statements from Petitioner Southwest. See Id. HCFA advised Petitioner Southwest that HCFA had conducted a review of its files. Id. at 1. HCFA told Petitioner Southwest that, based on HCFA's review of its files, it had determined that it had incorrectly designated Hardin County to Petitioner LifeGift. Id. at 3. HCFA stated additionally that it had concluded that its designation of the other contested counties was correct. Id. The effect of the reconsideration determination was to reassign Hardin County to Petitioner Southwest, but to affirm HCFA's initial determination concerning the assignment of the remaining 10 contested counties.

Petitioner Southwest then requested a hearing before an administrative law judge. The case was assigned to me for a hearing and a decision. I determined that it would be appropriate to offer Petitioner LifeGift the opportunity to participate as a party to this case inasmuch as any decision that I issued could affect Petitioner LifeGift's service area. Petitioner LifeGift accepted my offer to participate and I made it a party.

I then issued a prehearing order which identified the issues in the case and established a schedule for presentation of evidence and for briefing the issues. At that point, the parties requested that I divide the case into two stages. They requested that I hear and decide issues relating to the scope of the hearing at the first stage and that I address substantive issues after I had decided the preliminary issues. I agreed to this request and modified my prehearing order to reflect the parties' request.

The parties filed motions and briefs which addressed the preliminary issues. Petitioner Southwest moved that the case be remanded back to HCFA so that HCFA could make a reconsideration determination that is in accord with the requirements of the regulations contained in 42 C.F.R. Part 498. HCFA did not object to this request. However, HCFA and Petitioner LifeGift asserted that Petitioner Southwest had no right to a hearing concerning issue 4 that Petitioner Southwest identified in its November 25, 1996 reconsideration request. HCFA and Petitioner LifeGift requested that I dismiss this aspect of Petitioner Southwest's request for a hearing.

II. Issues

The issues which I am deciding are as follows:

1. Is it appropriate to remand to HCFA any part of this case so that HCFA may make a reconsideration determination that is in accord with the requirements of the regulations contained in 42 C.F.R. Part 498?

2. Is Petitioner Southwest entitled to reconsideration or a hearing concerning its request that it be assigned the entire Dallas-Fort Worth MSA?

III. Findings of fact and conclusions of law

In deciding this case, I make findings of fact and conclusions of law (Findings) which I set forth below as separately numbered headings. I analyze each of my Findings in detail.

1. HCFA failed to consider Petitioner Southwest's request for reconsideration in accord with the requirements of the regulations contained in 42 C.F.R. Part 498.

In requesting reconsideration, Petitioner Southwest offered to provide HCFA with additional evidence and statements which were relevant to HCFA's determination to select service areas. P. Ex. 10 at 5. Under 42 C.F.R. § 498.24(a), HCFA was obligated to receive relevant and material evidence and statements that Petitioner Southwest offered, assuming that Petitioner was able to supply it to HCFA within a reasonable period of time. Under 42 C.F.R. § 498.24(b), HCFA was obligated to consider, among other things, relevant and material evidence and statements that it received from Petitioner Southwest in making a reconsideration determination. HCFA did not respond to Petitioner Southwest's offer to provide additional evidence and statements to HCFA. Rather, HCFA proceeded to make a reconsideration determination based solely on the evidence that HCFA had obtained prior to Petitioner Southwest's request for reconsideration. P. Ex. 11 at 3.

HCFA plainly failed to consider Petitioner Southwest's offer of additional evidence and statements. Thus, HCFA failed to comply with the requirements of 42 C.F.R. § 498.24(a), (b).

The facts of this case are very similar to the facts of Center for Organ Recovery and Education, DAB CR313 (1994) ("CORE"). CORE also involved a competition among OPOs for a service area. And, as is the case here, in conducting its reconsideration in CORE, HCFA failed to accept proffered additional evidence from the OPO that had requested reconsideration. I held in CORE that, under the requirements of 42 C.F.R. § 498.24(a) and (b), HCFA was obligated to accept the additional evidence and to consider it in conducting its reconsideration. CORE at 30 - 31. I acknowledged that, in order to conduct reconsideration, HCFA might have to invite the other competing OPOs to submit additional evidence to HCFA. Id. However, I held that a process whereby HCFA accepted additional evidence from all of the competing OPOs is consistent with what is required by the regulations in Part 498. That is because the reconsideration process is not an appellate review by HCFA of its initial determination. Reconsideration is a new determination in which parties submit additional relevant evidence which HCFA considers. CORE at 31.

2. Petitioner Southwest did not request that it be assigned any part of the Dallas-Fort Worth Consolidated MSA other than Hood County in its initial and amended applications for reselection. In its request for reconsideration, at issue 4, Petitioner Southwest effectively sought assignment to it of the entire Dallas-Fort Worth Consolidated MSA.

Issue 4 of Petitioner Southwest's request for reconsideration raised the question of whether HCFA unlawfully awarded Petitioner LifeGift part of the Dallas-Fort Worth Consolidated MSA and part of the Beaumont-Port Arthur MSA. P. Ex. 10 at 5. Petitioner Southwest couched its issue 4 as a legal argument. The argument which Petitioner Southwest made in raising the issue is that the Act precludes HCFA from dividing an MSA so as to award different OPOs separate counties within that MSA.

In part, Petitioner Southwest raised the issue of possible unlawful division of MSAs by HCFA to question HCFA's assignment of Hardin County to Petitioner LifeGift. Hardin County is within the Beaumont-Port Arthur MSA. I take notice of the fact that the remainder of that MSA had been assigned to Petitioner Southwest. Petitioner Southwest contended, in effect, that the award of Hardin County to Petitioner LifeGift was an unlawful division of the Beaumont-Port Arthur MSA between itself and Petitioner LifeGift. P. Ex. 10 at 5.

Petitioner Southwest also made its argument concerning possible unlawful division of MSAs as a way of arguing that it should be assigned Hood County as a part of the entire Dallas-Fort Worth Consolidated MSA. Here, the argument had different ramifications than it had with respect to HCFA's asserted unlawful division of the Beaumont-Port Arthur MSA. In its request for reconsideration, Petitioner Southwest implicitly recognized that it could not assert that HCFA had incorrectly assigned Hood County to Petitioner LifeGift without first asserting a claim for the MSA of which Hood County is a part. That is because Hood County is part of the Fort Worth-Arlington Primary MSA, which is in turn, part of the Dallas-Fort Worth Consolidated MSA. P. Ex. 11 at 3. HCFA had assigned the Fort Worth-Arlington MSA to Petitioner LifeGift. HCFA could not split lawfully the Fort Worth-Arlington Primary MSA by assigning only part of it (Hood County) to Petitioner Southwest. Thus, Petitioner Southwest concluded that it had to make a claim for the entire Dallas-Fort Worth Consolidated MSA in order to argue that HCFA should assign Hood County to it.

At reconsideration, Petitioner Southwest succeeded in convincing HCFA that it had improperly divided the Beaumont-Port Arthur MSA among competing OPOs. In its reconsideration determination, HCFA found that it had incorrectly designated Hardin County to Petitioner LifeGift. P. Ex. 11 at 3. Therefore, HCFA reassigned Hardin County to Petitioner Southwest. Id.

However, HCFA concluded that it had not divided improperly the Dallas-Fort Worth Consolidated MSA or the Fort Worth-Arlington Primary MSA by assigning Hood County to Petitioner LifeGift. P. Ex. 11 at 3. In effect, HCFA concluded on reconsideration that the assignment of Hood County to Petitioner LifeGift did not raise an issue of unlawful division by HCFA of an MSA, because Hood County was part of an undivided service area, consisting of the Fort Worth-Arlington Primary MSA. See Id.

Petitioner Southwest's assertions in its reconsideration request concerning the Dallas-Fort Worth Consolidated MSA plainly exceeded the scope of either its original or amended application. Petitioner Southwest sought to expand its application for reselection to include counties for which it had not applied previously. Petitioner Southwest did so, at least in part, to make viable its continued arguments that HCFA ought to assign Hood County to it. In its initial application, Petitioner Southwest asked HCFA that it be assigned Hood County. P. Ex. 3. Petitioner Southwest made no request for the other counties in either the Fort Worth-Arlington Primary MSA or the Dallas-Fort Worth Consolidated MSA. Id. Implicit in Petitioner Southwest's request for reconsideration is its recognition that HCFA could not designate Petitioner Southwest to serve Hood County unless HCFA assigned the entire Dallas-Fort Worth Consolidated MSA--or, perhaps, the Fort Worth-Arlington Primary MSA--to Petitioner Southwest. Thus, at reconsideration, Petitioner Southwest questioned HCFA's assignment of the entire Dallas-Fort Worth Consolidated MSA.

I conclude that HCFA was not obligated as part of the reconsideration process to accept or consider evidence and statements from Petitioner Southwest concerning the assignment of the Dallas-Fort Worth Consolidated MSA. Although the reconsideration process contemplates a new determination by HCFA, the scope of a reconsideration review is determined by the scope of the initial determination and by the request on which the initial determination is predicated. 42 C.F.R. § 498.22(a). HCFA had no duty to "reconsider" an issue which Petitioner Southwest did not address in its initial and amended applications for reselection.

3. It is appropriate to dismiss Petitioner Southwest's hearing request as to issue 4.

Petitioner Southwest has no right to a hearing concerning an issue that would not properly be the subject of reconsideration. Under the Part 498 regulations, a party's entitlement to a hearing derives from the scope and issues considered by HCFA in its initial and reconsideration determinations. 42 C.F.R. § 498.5(d)(2). A party is not entitled to a hearing as to matters which are not part of the initial and reconsideration determinations. Id.; CORE at 24.

An administrative law judge may dismiss a request for a hearing where the party requesting the hearing has no right to a hearing. 42 C.F.R. § 498.70(b). I have concluded that Petitioner Southwest has no right to reconsideration concerning HCFA's assignment of the Dallas-Fort Worth Consolidated MSA. Therefore, Petitioner Southwest has no right to a hearing as to that issue. Consequently, I dismiss Petitioner Southwest's hearing request as to HCFA's assignment of the Dallas-Fort Worth Consolidated MSA.

Petitioner Southwest opposes my dismissing its hearing request as to issue 4 on several grounds. I have considered each of Petitioner Southwest's arguments, and I find them not to be persuasive.

First, Petitioner Southwest asserts that it did not request in its initial application for reselection that it be assigned the Dallas-Fort Worth Consolidated MSA because the application form which Petitioner Southwest completed requests information from an OPO pertaining to the counties in the OPO's service area and not to MSAs. Letter of Petitioner Southwest's counsel, dated November 7, 1997 at 2; attachment 1. In effect, Petitioner Southwest is asserting that it did not apply for the counties in the Fort Worth-Arlington Primary MSA, other than Hood County, or the other counties in the Dallas-Fort Worth Consolidated MSA, because it was misled by HCFA's application form into concluding that it need only apply for a specific county within its proposed service area.

I am not persuaded by this argument. The application form requires an OPO to "list counties served." Letter of Petitioner Southwest's counsel, dated November 7, 1997; attachment 1. That language does not suggest that an OPO should not list all of the counties within a MSA if it desires to serve that MSA. Petitioner Southwest was on notice that, if it desired to serve a county within an MSA, it had to apply for assignment of all of the counties within the MSA. Petitioner Southwest knew, or should have known, that HCFA considered it unlawful to divide an MSA among competing OPOs. That is made evident from Petitioner Southwest's reconsideration request. P. Ex. 10.

Second, Petitioner Southwest asserts that it impliedly sought to be assigned the entire Dallas-Fort Worth Consolidated MSA by applying originally to be assigned Hood County, which is one of the counties within that Consolidated MSA. The logic of Petitioner Southwest's argument is that HCFA should have interpreted Petitioner Southwest's application for Hood County as being an application for the entire Dallas-Fort Worth Consolidated MSA inasmuch as HCFA could not lawfully divide an MSA by assigning an OPO only one county within the MSA.

This argument is contradicted by the facts of this case. The facts of this case simply do not support a conclusion that Petitioner's initial and amended applications were impliedly to be applications for assigned counties in the Dallas-Fort Worth Consolidated MSA other than Hood County. Prior to requesting reconsideration, Petitioner Southwest never offered evidence to HCFA to show that it ought to be assigned counties within the Dallas-Fort Worth Consolidated MSA other than Hood County. Indeed, Petitioner Southwest acknowledged in its reconsideration request to HCFA that it was raising the issue of unlawful division of MSAs for the first time in its reconsideration request. P. Ex. 10 at 5.

Finally, Petitioner Southwest points out that, by dismissing its hearing request as to issue 4, I am potentially complicating the procedural status of this case. As Petitioner Southwest observes, a dismissal of issue 4 divides the case into two parts. Issues 1 - 3 are preserved as issues about which additional evidence and findings may be made. As I discuss below, at Finding 4, I am remanding issues 1 - 3 to HCFA so that HCFA may receive and consider evidence and statements about those issues consistent with the requirements of the regulations at 42 C.F.R. Part 498. Potentially, those issues may return to me in the form of a hearing request by an affected OPO once HCFA completes its reconsideration on remand. On the other hand, by dismissing Petitioner Southwest's hearing request as to issue 4, I am denying Petitioner Southwest both an additional reconsideration determination and a hearing as to that issue. Arguably, however, I am giving it further appeal rights as to that issue. See 42 C.F.R. § 498.80.

As a consequence, the likelihood exists that final resolution of issues 1 - 3 and 4 may proceed along separate tracks. Conceivably, an appellate panel of the Departmental Appeals Board might disagree with my decision to dismiss Petitioner's hearing request as to issue 4. That, in turn, might necessitate further proceedings before me and/or HCFA in order to finally resolve issue 4.

Petitioner Southwest urges that I not dismiss its hearing request as to issue 4 in order to avoid the potential complications that a dismissal would raise and which I have discussed. I am not anxious to complicate this case gratuitously. However, I have considered the possible alternatives to dismissing Petitioner Southwest's hearing request as to issue 4 and I find these alternatives to be unacceptable.

It is wholly inappropriate to remand issue 4 to HCFA for a further reconsideration by HCFA where Petitioner has no right to further review of the issue by HCFA. Nor is it appropriate for me to retain jurisdiction over issue 4 without deciding to remand it or to dismiss it. That action would only delay the inevitable outcome.

Furthermore, I am not persuaded that any party would be denied due process if, in the worst case scenario, HCFA and I were required ultimately to consider the merits of issue 4 as a result of an appellate panel decision which reverses and remands my decision to dismiss Petitioner Southwest's hearing request as to the issue. Issue 4 involves counties that are not involved in issues 1 - 3. The merits of Petitioner Southwest's assertion that it should be assigned the entire Dallas-Fort Worth Consolidated MSA may be heard and decided independently of the merits of issues 1 - 3.

4. It is appropriate to remand to HCFA for reconsideration of issues 1 - 3 in Petitioner Southwest's request for reconsideration.

HCFA's failure to accept or consider the additional evidence that was proffered by Petitioner Southwest that is relevant to HCFA's assignment of the contested counties renders invalid HCFA's reconsideration determination. I conclude that it is appropriate to remand back to HCFA issues 1 - 3 in Petitioner Southwest's request for reconsideration so that HCFA may make a reconsideration determination in accordance with the requirements of 42 C.F.R. § 498.24(a), (b).

An administrative law judge may remand a case back to HCFA where HCFA requests a remand and the affected party concurs with the request in writing or on the record. 42 C.F.R. § 498.78(a). Here, HCFA has requested a remand of issues 1 - 3 in Petitioner Southwest's reconsideration determination. Petitioner Southwest has concurred with the request, although Petitioner Southwest also is requesting that issue 4 be remanded as well. Petitioner LifeGift appears not to object to a remand of issues 1 - 3, so long as issue 4 is not remanded.

I have dismissed Petitioner Southwest's hearing request as to issue 4 insofar as it requests allocation to Petitioner Southwest of the Dallas-Fort Worth Consolidated MSA. What is at issue here, and what I am remanding to HCFA for reconsideration, is Petitioner Southwest's assertion, as is made in issues 1 - 3 of its request for reconsideration, that certain of the 11 contested counties should have been assigned to Petitioner Southwest. No party objects to my remanding issues 1 - 3 to HCFA. Therefore, I remand issues 1 - 3 to HCFA so that HCFA may conduct a reconsideration of these issues in compliance with 42 C.F.R. § 498.24(a), (b).

In CORE, I found that it would be appropriate that, in conducting its reconsideration, HCFA accept evidence from other OPOs affected by HCFA's initial determination in that case. CORE at 31, 34. It would be appropriate for HCFA to accept additional evidence from Petitioner LifeGift as part of the reconsideration that it conducts to the extent that Petitioner LifeGift offers such evidence. Id.

The regulations governing reconsideration require HCFA to accept "statements," in addition to written evidence, that are relevant and material to the issues that are being reconsidered. 42 C.F.R. § 498.24(a). The term "statements" is not defined. Arguably, "statements" might include in-person testimony or written declarations, including affidavits. A "statement" might also be a written argument in the nature of a legal brief or memorandum. I strongly suggest, however, that to the extent that HCFA receives statements from a party during reconsideration, it and the parties agree to a format which reduces "statements" to writing. As I discuss below, at Finding 5, I may rule ultimately that any case which returns to me as a request for a hearing from either Petitioner Southwest or Petitioner LifeGift be heard and decided based on the record created during the initial application process and on reconsideration. For that reason, the parties' statements ought to be preserved so that I may consider them if a hearing request is made to me. Possibly, HCFA and the parties might agree that HCFA receive affidavits or declarations in lieu of in-person statements.

I note that in its memorandum to me, HCFA outlines the procedures it intends to employ in conducting a reconsideration determination, if issues 1 - 3 are remanded to it. HCFA's memorandum at 6 - 7. The procedures which HCFA advocates appear to be reasonable. I note that HCFA intends to permit Petitioner LifeGift to participate in the remanded reconsideration. However, I do not give explicit directions to HCFA concerning how it is to conduct a remanded reconsideration determination. As I read 42 C.F.R. § 498.24(a) and (b), the regulation gives HCFA discretion to control the timing and format of reconsideration.

5. It is not necessary that I decide the additional issues that are argued by Petitioner Southwest.

In CORE, I concluded that a hearing concerning a determination made by HCFA to assign a service area to an OPO pursuant to the regulations contained in 42 C.F.R. Part 486 should be limited to a review of the propriety of HCFA's determinations, based on the record created before HCFA. CORE at 18 - 22. I did not make a finding as to whether a hearing involving determinations made under Part 486 would involve an appellate standard of review (substantial evidence), or some other standard. Id. at 21, n.15.

Petitioner Southwest argues that I should revisit my findings in CORE that a hearing involving determinations made under Part 486 be based on the record generated before HCFA. Additionally, Petitioner Southwest asserts that I should apply a preponderance of the evidence standard in any hearing I conduct involving determinations made under Part 486.

It is not necessary for me to decide these issues at this time. However, HCFA should make every effort to record as precisely as possible the evidence it receives in the remanded reconsideration proceeding, in light of the possibility that, should this case return to me in the form of a new hearing request by either Petitioner Southwest or Petitioner LifeGift, I may decide to reaffirm my conclusion in CORE that a hearing from determinations made pursuant to the Part 486 regulations should be based on the record created before HCFA.

Steven T. Kessel
Administrative Law Judge