I hereby dismiss this case based on the following findings of fact and conclusions of law:

1. The only document of record which might be interpreted as a request for hearing is the letter written by the Administrator of Petitioner's facility on March 31, 1998.

2. Dismissal is appropriate under 42 C.F.R. § 498.69(a) even assuming that:

a. Petitioner had intended to use its letter dated March 31, 1998 to seek a hearing in this forum; and

b. Petitioner had acquired the right to litigate before me the threshold issue of whether its March 31, 1998 letter constitutes a timely filed hearing request under 42 C.F.R. § 498.40.

3. Dismissal is the appropriate sanction under section 1128A(c)(4) of the Social Security Act (Act), as incorporated by section 1819(h)(2)(B)(ii) of the Act, even assuming that:

a. Petitioner had intended to use its letter dated March 31, 1998 to seek a hearing in this forum; and

b. Petitioner had acquired the right to litigate before me the threshold issue of whether its March 31, 1998 letter constitutes a timely filed hearing request under 42 C.F.R. § 498.40.

I. Discussion

A. Petitioner's letter dated March 31, 1998

It is questionable whether, in sending a letter on March 31, 1998 to an Iowa state agency official, Petitioner had intended to request a hearing in this forum subject to the provisions of 42 C.F.R. Part 498. In this letter to Ms. Rose Ditmer of the Iowa Division of Health Facilities in Des Moines, Iowa, the Petitioner's Administrator had mentioned a hearing in the following context:

We are in receipt of your survey response cover letter, with attachments dated March 25, 1998.

Enclosed you will find a plan of correction for F 324 and F490. At this time we would also request all supporting documentation used to write F324, surveyor typed notes presented to the fine and citation committee .... I would also like to request a formal appeal to the State or Federal agency which would govern over this matter.

Enclosed you will find $10.00 to cover the cost of all supporting documentation to write F324.

P.'s March 31, 1998 Letter (emphasis added).

The "survey response cover letter, with attachments dated March 25, 1998" referenced by Petitioner's Administrator are not the notices required by federal regulations when the Health Care Financing Administration (HCFA) adopts a state surveying agency's findings of noncompliance and imposes enforcement remedies. It was not until April 9, 1998 that HCFA issued such a notice to Petitioner, as required by 42 C.F.R. §§ 488.402(f) and 488.434. In its notice letter dated April 9, 1998, HCFA noted that certain recommendations had been received from the Iowa Department of Inspections and Appeals as a result of a survey that was conducted on March 13, 1998. HCFA stated also in its April 9, 1998 notice letter that it was concurring with the State's recommendations and was, therefore, imposing a civil money penalty (CMP) of $40,000 (or $10,000 per day) for each of the four days during which immediate jeopardy to residents' health had been found to exist. HCFA's notice letter also advised that it was imposing the denial of payments for new Medicare and Medicaid residents (DPNA) as an additional enforcement remedy, effective on June 13, 1998.

HCFA's notice letter dated April 9, 1998 referred to 42 C.F.R. § 498.40 and advised Petitioner of its right to request a hearing before a federal administrative law judge within 60 days of receiving HCFA's April 9 notice letter. The addresses provided in HCFA's notice letter for filing the hearing request was not of the Iowa state agency or any location in Iowa, but of HCFA's Regional Administrator in Kansas City, Missouri, and the Departmental Appeals Board in Washington, D.C.

Until HCFA issued its April 9, 1998 notice letter imposing the above-specified enforcement remedies, Petitioner had no right to request a hearing in this forum. 42 C.F.R. § 498.3(b)(12). Recommendations from a state surveying agency are not subject to challenge in this forum. Additionally, the regulation at 42 C.F.R. § 498.40 cited in HCFA's notice letter contains detailed requirements concerning what must be included in a document for it to be considered a request for hearing. The time frame provided in said regulation for filing a hearing request is also 60 days after the receipt of the relevant notice letter from HCFA. 42 C.F.R. § 498.40(a). The federal regulation does not provide any exceptions for the anticipatory filing of a request for hearing, even if a provider were able to comply with the content requirements and believes that a state surveying agency's recommendations on noncompliance and remedies would be adopted by HCFA.⁽¹⁾ Id.

In the context of the relevant federal regulations, simple chronology would indicate that Petitioner had no right to request a hearing in this forum when its Administrator sent the letter dated March 31, 1998 to a state official in Des Moines and included a request for "a formal appeal to the State or Federal agency which would govern over this matter." Petitioner had no federal right of action at that time because none had arisen yet. For that very reason, Petitioner's March 31, 1998 letter was not in compliance with the timeliness and content requirements of 42 C.F.R. § 498.40. The wordings of the March 31 letter shows that Petitioner's Administrator was not aware of any hearing rights before a state or federal agency. Therefore, he asked for a formal hearing before whichever entity, federal or state, with jurisdiction to address the matters mentioned in his letter: the "survey response cover letter, with attachments dated March 25, 1998" sent by the Iowa state official, the plan of correction sent to the state agency, or the surveyor's notes and supporting documents concerning a deficiency citation denoted as F324.

Instead of retaining Petitioner's March 31, 1998 letter and processing it as a request for a hearing before the state agency, Iowa's Department of Inspection and Appeals forwarded the document to HCFA.⁽²⁾ The letter of transmittal from Iowa's Department of Inspection and Appeals is dated April 9, 1998, and it states that "the facility has also been informed the request has been forwarded." The state's transmittal letter indicates also that Petitioner's Administrator was being sent a copy of said letter.

On April 16, 1998, one of HCFA's attorneys in Kansas City, Missouri, forwarded to the Departmental Appeals Board (DAB) Petitioner's March 31, 1998 letter, along with a copy of HCFA's notice of imposition of remedies dated April 9, 1998. The Assistant Regional Counsel for HCFA stated in his transmittal letter that the enclosure was "a Request for Hearing filed on behalf of Osceola Nursing and Rehabilitation Center ...[,]" that it was received by HCFA on April 13, 1998, and that he would be appearing on behalf of HCFA in this matter.

Thereafter, the case was assigned to me for appropriate proceedings.

On April 30, 1998, I entered an Order setting forth certain filing requirements and deadlines which both parties were to comply with. Additionally, the April 30 Order provided instructions on when and how to file motions, to raise issues of law, or to seek relief on grounds which do not pertain to the merits of HCFA's noncompliance determination.

When I issued my April 30 Order, Petitioner was still within its right to submit a request for hearing in conformity with the requirements of 42 C.F.R. § 498.40 in order to challenge HCFA's determinations, as described in HCFA's notice letter of April 6, 1998. However, no document filed by or on behalf of Petitioner⁽³⁾ within the 60 days provided by the regulation has been denoted as a request for hearing. After the 60-day deadline for filing a hearing request had expired, Petitioner has placed nothing before me to indicate that it wishes to amend its March 31, 1998 letter or to submit another document in place of that letter.

As detailed in the next section, Petitioner has repeatedly failed or refused to comply with the Orders I have issued. The waste of administrative resources and time already caused by Petitioner's noncompliance has been considerable and without justification. Therefore, even though I had the option of raising the threshold jurisdictional issue on my own initiative to solicit responses from the parties, I did not consider the option to be one which needed to be exercised. As discussed below, there is sufficient information for concluding that Petitioner has failed or refused to do as I have directed, has not been a willing participant in the proceedings before me, and has abandoned its right to litigate any matter before me, including questions concerning the intent and legal effect of the March 31, 1998 letter sent by Petitioner's Administrator to the State of Iowa.

Accordingly, I have made no formal finding on the questions of whether a hearing request within the meaning of 42 C.F.R. § 498.40 has ever been filed by Petitioner. Nor am I basing this Decision on 42 C.F.R. § 498.70(c), which authorizes dismissals when no request for hearing has been filed timely by a petitioner. For purposes of discussing my reasons for dismissing this case on other grounds, I will assume that Petitioner had wanted a hearing in this federal forum notwithstanding the indications to the contrary, and that Petitioner had the right (if it had chosen to exercise it) to either defend the use of its March 31, 1998 letter as a hearing request, or to seek leave to amend it or file a new document in its place.

B. Dismissal under 42 C.F.R. § 498.69(a) for Petitioner's abandonment of its hearing rights

Petitioner has acted in disregard of my Orders on repeated occasions and over prolonged periods of time.

Paragraph 2 of my Order dated April 30, 1998 required the parties to submit one of the documents specified within 60 days. On June 17, 1998 I granted the parties a 90-day stay (until September 15, 1998 to allow for settlement discussions. When no report was filed by the end of that stay, my office requested that the parties inform me wether they had reached a settlement. If the parties had not reached a settlement, they were directed to either request a further stay if continued settlement discussions would be likely to resolve the matter or to file one of the documents specifioed in my Order dated April 30, 1998. As of November 18, 1998, no response had been received. Therefore, the parties were directed to inform my office by November 23, 1998 as to the status of this case.

On December 9, 1998, I granted a motion by the parties to stay these proceedings for 90 days to allow the parties to continue their settlement discussions. However, my Order made clear that Petitioner has not been excused from follow my previously issued directives and that it may not disregard a deadline I have imposed if it wishes to proceed before me after February 22, 1999. My Order specifically stated that, if the parties were unable to reach a settlement by February 22, 1999, then Petitioner must confer with HCFA and file at least one of the documents specified in Paragraph 2 of my April 30, 1998 Order. I specifically informed Petitioner in this Order that the burden was on it to file the required document after consultation with HCFA. Additionally, I made clear in the Order that Petitioner's failure to comply may be deemed to be evidence that it has abandoned its hearing rights.

My December 9, 1998 Order was sent to both parties. By February 22, 1999, there was no request from Petitioner for voluntary dismissal of this action due to settlement of the case. Nor was there any filing by Petitioner in compliance with my December 9, 1998 Order, which incorporated relevant parts of my April 30, 1998 Order.

Because nothing had been received from Petitioner by March 31, 1999, the information contained in my December 9, 1998 Order was re-issued to Petitioner by facsimile (a receipt indicates transmission was successful). By that time, more than one year had elapsed since Petitioner sought a hearing. Yet, the record before me remained devoid of any issues or controversies presented by Petitioner for adjudication. After the substance of my December 9, 1998 Order was sent by facsimile to Petitioner on March 31, 1999, Petitioner still did not respond.

On April 12, 1999, I issued an Order to Show Cause to Petitioner. Petitioner was given the opportunity to show why this case should not be dismissed due to the abandonment of its hearing rights, or, in the alternative, to file a voluntary withdrawal of its request for hearing.⁽⁴⁾

On the final date made available by my Order to Show Cause, Petitioner submitted a filing stating that the E-Mail sent on April 31, 1999 had not been received and that it did not wish to abandon its hearing rights. It uses the fact that it is filing a response to my Show Cause Order as proof that it does not intend to abandon its hearing rights. It stated, moreover, that it wishes to utilize the procedures specified in my April 30, 1998 Order for the purpose of bringing this case to a hearing. Specifically, Petitioner submitted with its response to the Show Cause Order its Report of Readiness to proceed to a hearing.

Paragraph 2D of my April 30, 1998 Order had permitted either party to submit such a Report of Readiness within the following 60 days. Petitioner had allowed that deadline to elapse. My December 9, 1998 Order had permitted Petitioner to file such a Report of Readiness by February 22, 1999. Petitioner's submission of its Report of Readiness for hearing (which assumes the existence of a valid and timely filed hearing request) on April 26, 1999 was untimely and not authorized by any order I have issued. Therefore, Petitioner's late submission of this report does not suffice as a showing of good cause on the issue of whether Petitioner had already abandoned its hearing rights before receiving my Show Cause Order. Nor is the late filing of Petitioner's Report of Readiness supported by anything other than a showing of lack of diligence on Petitioner's part.⁽⁵⁾

My Show Cause Order required Petitioner to show why its previous noncompliance with my directives should not be construed as its voluntary relinquishment of its right to proceed before me. My Order did not ask Petitioner to state what it prefers to do, now that it is faced with the likelihood of imminent dismissal. Therefore, I reject Petitioner's contention that its filing of a response to my Show Cause Order demonstrates its lack of intent to abandon its hearing rights. This contention has no bearing on why Petitioner had failed or refused to follow my prior directives on repeated occasions, and for prolonged periods of time. Nor does this contention by Petitioner show that its hearing rights had not been abandoned previous to my issuance of the Show Cause Order on April 12, 1999.

I find immaterial also Petitioner's claim that it did not receive the E-Mail facsimile transmission of March 31, 1999, which summarized the substance of my December 9, 1998 Order. Petitioner does not claim to have been without a copy of my December 9, 1998 Order. Therefore, Petitioner knew to comply with my December 9, 1998 Order even if it had not received the subsequent E-Mail transmission. The E-Mail transmission was sent to Petitioner only after it had allowed the February 22, 1999 deadline specified in my December 9, 1998 Order to elapse by more than a month.

Nor does my Show Cause Order contain the first warning of dismissal. Previously, I had warned Petitioner to follow the directives contained in my December 9, 1998 Order, or its failure to do so may be construed as abandonment of its hearing rights. Yet, Petitioner does not even attempt to set forth any good reasons for having failed to comply with my December 9, 1998 Order. Nothing provided by Petitioner in response to my later issued Show Cause Order suggests that Petitioner had made any effort to comply with my December 9, 1998 Order until having received my Show Cause Order sometime after April 12, 1999. Petitioner has made no attempt to explain what, if anything, it was doing for this case between December 9, 1998 until its receipt of my April 12, 1999 Order to Show Cause.

Therefore, based on the information before me showing that Petitioner had already abandoned its hearing rights before receiving my Show Cause Order, I am dismissing this action pursuant to 42 C.F.R. § 498.69(a).

C. Dismissal as a sanction for Petitioner's repeated failures or refusals to proceeding in accordance with my directives

The survey findings of noncompliance resulted in HCFA's determination of April 9, 1998 to impose against Petitioner a CMP totalling $40,000 for the findings of immediate jeopardy to residents. In cases involving CMPs, section 1819(h)(2)(B)(ii) of the Act incorporates the following authorities:

The official conducting a hearing under this section may sanction a person, including any party or attorney, for failing to comply with an order or procedure, failing to defend an action, or other misconduct as would interfere with the speedy, orderly, or fair conduct of the hearing. Such sanction shall reasonably relate to the severity and nature of the failure or misconduct.

Section 1128A(c)(4) of the Act.

I incorporate my previous discussions concerning Petitioner's failure or refusal to comply with my Orders. My Orders dated April 30, 1998 and December 9, 1998 contain directives which, if followed by the parties, would have resulted in the expeditiously adjudication of all issues of law and fact presented to me. For the reasons noted above, there has been no issue of law or fact presented by Petitioner for adjudication.

Petitioner's March 31, 1998 letter requesting a hearing identified no issue of law or fact. My Orders of April 30 and December 9, 1998 set deadlines for the presentation of issues and motions by Petitioner. By complying with the April 30, 1998 Order, Petitioner should have reviewed the potential issues in the case, and it could have, for example, filed a new request for hearing of right within the 60 days following its receipt of HCFA's April 9, 1998 notice letter. By complying with my December 9, 1998 Order, Petitioner should have again reviewed the potential issues for presentation to me, and it could have, for example, requested leave to amend its hearing request for good cause pursuant to 42 C.F.R. § 498.40(c) or moved to withdraw its request for hearing dated March 31, 1998. Petitioner has declined to avail itself of the opportunities to present issues for adjudication in accordance with use of the procedures, motion practices, and timetables provided by my Orders of April 30, 1998 and December 9, 1998. I have rejected Petitioner's Report of Readiness for hearing because the document was submitted more than two months after the most recently established deadline and was not supported by any showing of good cause.

The nature and consequences of Petitioner's omissions or misconduct have rendered impossible the adjudication of any issue other than whether this case, in its present posture, should be dismissed. Additionally, Petitioner has gained the advantage of delaying HCFA's ability to collect the CMP of $40,000 by flouting my deadlines and needlessly prolonging the proceedings in a case where no controversy has been timely present since its inception.⁽⁶⁾ 42 C.F.R. § 488.442(a).

For the foregoing reasons, I have determined that dismissal of this action is the sanction appropriate to Petitioner's omissions or misconduct.

This case is hereby dismissed pursuant to 42 C.F.R. § 498.40(b) due to Petitioner's abandonment of its hearing rights, and, alteratively, pursuant to my authority to impose sanctions under the statute governing hearings in CMP cases.

1. HCFA has the right to review and reject even the state surveying agency's certifications of noncompliance. In the case of Medicaid-certified nursing facilities that are not owned by the state, the state agency's certification of compliance or noncompliance is final -- except if HCFA conducts its own survey or reviews the state's findings. 42 C.F.R. § 488.330(a)(1)(A). In the case of Medicare-certified skilled nursing facilities, the state agency certifies compliance or noncompliance "subject to the approval of HCFA." 42 C.F.R. § 483.330(a)(1)(C).

2. According to the documents forwarded to this office by HCFA with Petitioner's March 31, 1998 letter, Petitioner has both a Medicare/Medicaid provider number, as well as a "State Vendor or Medicaid No." Medicare/Medicaid Certification and Transmittal (containing Rose Dittmer's signature, dated March 31, 1999, for the State Survey Agency).

Petitioner would have been entitled to a full evidentiary hearing before an Iowa state agency if, at the time of Petitioner's March 31 letter (also 9 days before HCFA had reviewed and adopted the state surveying agency's recommendations), the State of Iowa had imposed an enforcement remedy pursuant to its own authority to regulate non-state operated Medicaid-certified nursing facilities. 42 C.F.R. § 488.330(d)(4), 42 C.F.R. Part 431, subpart D.

The documents before me are not clear as to whether the State of Iowa had used its own authority under the Medicaid program to impose remedies against Petitioner prior to Petitioner's submission of its March 31 letter. Nor do they explain why the Iowa Department of Inspection and Appeals chose to forward Petitioner's March 31 letter to HCFA for processing. There is no indication that any Iowa state agency had made the necessary jurisdiction determination.

3. Petitioner has been represented by counsel in the proceedings before me.

4. My Order to Show Cause stated that the information in my letter ruling of December 9, 1998 was again transmitted to the parties by e-mail on March 31, 1999 from my office. A more accurate statement would be that it was sent to Petitioner by facsimile generated by the office e-mail program and by e-mail to HCFA. In any event, receipts for each transission indicates that the respective transmission was sent and received by both parties.

5. Petitioner alleges generally that it had commenced work on the report when HCFA inquired about its status on April 14, 1999, nearly a month after the elapse of the February 22, 1999 filing deadline I had imposed. Moreover, my December 9, 1998 Order had specifically placed the duty on Petitioner to confer with HCFA in order to prepare a filing by the specified deadline.

Petitioner has indicated its awareness that even the version of the Report of Readiness that is being submitted so late with its response to my Show Cause Order does not satisfy the terms of my December 9, 1998 Order. Even though my Order had directed Petitioner to work with HCFA on the report, Petitioner acknowledges that it has not even shown HCFA's counsel a copy of the report prior to filing. According to Petitioner,

After review by counsel for HCFA, it is anticipated that the Report of Readiness can be recast as a Joint Report.

P. Resp. to Order to Show Cause, para. 8. (Petitioner claims also that the "interest of time" has prompted its actions and omissions.)

6. I am aware that HCFA is not blameless in this matter, since it had the same opportunities as Petitioner to present the issue of Petitioner's March 31, 1998 request letter for resolution. HCFA could have, for example, used Petitioner's March 31, 1998 letter as the basis for a motion to dismiss this case pursuant to 42 C.F.R. § 498.70(c).

However, Petitioner bears the greater legal responsibility for the delays since it knew that these proceedings were initiated on the basis of its March 31, 1998. In my December 9, 1998 Order, I had specifically placed the burden upon Petitioner to undertake and complete certain affirmative actions timely. If Petitioner did not wish to remain in this forum and be subject to my Orders, it had the opportunity to request a voluntary dismissal of the case at any time. In contrast to the advantage gained by Petitioner by its prolonged and repeated disregard of my directives, HCFA has no apparent incentive to prolong these proceedings unnecessarily or to delay its collection of the $40,000 assessed against Petitioner more than one year ago.