I deny Petitioner's motion to amend the letter it had sent on October 14, 1996 to request a hearing, and I grant the motion to dismiss filed by the Health Care Financing Administration (HCFA).I deny Petitioner's motion to amend the letter it had sent on October 14, 1996 to request a hearing, and I grant the motion to dismiss filed by the Health Care Financing Administration (HCFA).

On October 8, 1996, HCFA issued a written notification of its determination to impose a civil money penalty (CMP) against Petitioner. HCFA's notice letter stated, inter alia, that the CMP was being imposed for the period from April 19, 1996 until August 14, 1996, inclusive,⁽¹⁾ because Petitioner had been found to be out of compliance with certain federal requirements for participation in the Medicare and Medicaid programs. In order to contest the merits of HCFA's determination, Petitioner had until December 7, 1996 to file a request for hearing. 42 C.F.R. §§ 498.40(a) and 498.22(b)(3) .

On October 14, 1996, Petitioner requested a hearing by use of a letter containing the following two paragraphs:

Notwithstanding Petitioner's arguments to the contrary, there should be no dispute that Petitioner's October 14, 1996 letter does not constitute a request for hearing within the meaning of 42 C.F.R. § 498.40(b). It does not "[i]dentify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees." 42 C.F.R. § 498.40(b)(1). Nor does it meet the additional requirement for "[s]pecify[ing] the basis for contending that the findings and conclusions are incorrect." 42 C.F.R. § 498.40(b)(2). For these reasons, there was no request for hearing timely filed by Petitioner within the 60-day time limit allowed by 42 C.F.R. § 498.40(a). See, e.g., Birchwood Manor Nursing Center, DAB 1669 (1998), aff'd, No. 98-60695 (5th Cir. filed June 29, 1999).

However, the regulation permits the administrative law judge to extend the filing deadline if the entity seeking a hearing requests an extension in writing and the request is supported by a showing of good cause. 42 C.F.R. § 498.40(c). Petitioner herein did not seek leave to file an amended request for hearing until February 26, 1999. As I find below, Petitioner has not yet offered any amended hearing request for filing in this case. HCFA objects to extending the filing deadline. HCFA argues that good cause has not been shown in support of an extension and that this case should be dismissed pursuant to 42 C.F.R. § 498.70(c) due to the absence of any timely filed hearing request.

The parties' cross-motions present the overarching question of whether Petitioner's time for filing a valid hearing request has been equitably tolled for the reasons asserted by Petitioner until at least February 26, 1999, when Petitioner filed its motion to amend. To resolve the question of whether the time limit has been tolled for the good cause alleged by Petitioner, I have given consideration to: (1) whether any person or circumstance beyond Petitioner's control had caused Petitioner's failure to comply with the requirements of 42 C.F.R. § 498.40(b) when it drafted its October 14, 1996 letter; (2) whether any person or circumstance beyond Petitioner's control had prevented Petitioner from filing an amended hearing request of right on or before December 7, 1996, as provided by 42 C.F.R. § 498.40(a); (3) whether any person or circumstance beyond Petitioner's control caused Petitioner's failure to file a motion to amend until February 26, 1999; and (4) whether Petitioner's course of conduct in this case has exhibited the exercise of reasonable diligence and due vigilance of its rights.

Only if I find that the time limit has been equitably tolled until at least February 26, 1999, when Petitioner filed its motion to amend, would I need to reach the question of how many additional days should be allowed for Petitioner to prepare and file an amended request.

Having considered facts of record, the parties' cross-motions, and their supporting briefs and documents, I conclude that good cause has not been shown by Petitioner for tolling the filing period until at least February 26, 1999.

The applicable regulation states in relevant parts:

42 C.F.R. § 498.70(c) (emphasis added).

If standing alone, the word "may" could convey two principal alternative meanings. "May" is sometimes used in legal documents to vest in someone the power and obligation to perform some particular act. (For example, "Congress may determine the time of choosing the electors," U.S. Const. Art. II, §1.) In other situations, "may" is sometimes used to signify that the individual has the discretion to do or not do some act. The meaning of "may" often depends on context, on the meaning of the other words surrounding it.

As used within 42 C.F.R. § 498.70, the word "may" means only that the administrative law judge has been given the authority and obligation to dismiss cases or issues for the enumerated reasons. Use of the word "may" does not signify that an administrative law judge has the discretion to dismiss or not dismiss for the specified reasons. ⁽²⁾ Looking at the position of the words "may dismiss" within the structure of 42 C.F.R. § 498.70 makes the distinction clear. "[M]ay dismiss" applies to issues that have become res judicata (42 C.F.R. § 498.70(a)), issues for which no hearing right exists (42 C.F.R. § 498.70(b)), and issues for which no timely request for hearing has been filed (42 C.F.R. § 498.70(c). It is legally impossible to conclude, for example, that the administrative law judge has the discretion not to dismiss a case when no hearing right exists, but may, instead, retain it to schedule evidentiary hearings for parties without hearing rights. Nor can subsection (a) of the regulation be interpreted reasonably as meaning that the administrative law judge has the discretion not to dismiss an issue that has already been resolved with finality, but may, instead, disregard the doctrine of res judicata and retry the same issue de novo. Given its position in the regulation, the words "may dismiss" cannot be given a meaning that is different for cases which are without a timely filed hearing request.

Therefore, I do not interpret 42 C.F.R. § 498.70(c) as permitting me to retain a case for the scheduling of an evidentiary hearing or any other on-merit proceeding when no request for hearing has been filed timely in accordance with the requirements of 42 C.F.R. § 498.40. ⁽³⁾ Instead, I interpret "may dismiss" for 42 C.F.R. § 498.70(c) in the same manner as those words apply to dismissal of cases for res judicata and because the parties are without hearing rights. "[M]ay dismiss," as used in the regulation, means that the authority and the obligation to dismiss for the enumerated reasons has been given to the administrative law judge. This interpretation is not only in accord with the contextual meaning of the words "may dismiss" in 42 C.F.R. § 498.70, it also avoids nullifying the requirements of 42 C.F.R. § 498.40.


B. Petitioner has not offered any draft amended hearing request for filing

I address as a preliminary matter the effect of the various unexplained papers also filed by Petitioner on February 26, 1999.

With its "Motion to Reactivate and Set This Cause for Hearing and for Leave to File an Amended Hearing Request," Petitioner has sent over one hundred sheets of paper marked as Attachments 1 through 11. The accompanying cover letter dated February 26, 1999 states that these papers constitute "supporting documentation regarding the above captioned matter." Petitioner stated at page 4 of its motion that "Petitioner herewith submits its Amended Request for Hearing."

I am unable to determine Petitioner's purpose for having submitted these documents. Attachments 1 through 8 and Attachment 11 appear to relate to proceedings in a different forum. Petitioner does not assert that these 11 attachments constitute a hearing request within the meaning of 42 C.F.R. § 498.40. Even if such an assertion could be inferred from Petitioner's submission of these papers, they do not constitute a valid hearing request or a valid amended hearing request. Petitioner has provided no interpretation of the handwritten entries, abbreviations, forms, and other information contained in these papers. Information appearing on these papers are written by persons who have not been identified by name or affiliation. Some of those writings are not legible and are not understandable without interpretations by experts. Additionally, there is no information from Petitioner as to why documents carrying the dates of "3/26/96," if they somehow form the request for hearing Petitioner wishes to file now, were not included with Petitioner's October 14, 1996 letter.

The requirements of 42 C.F.R. § 498.40 do not permit Petitioner to drop off a stack of paper with no more explanation than the assertion that they are "supporting documentation regarding the above captioned matter." Therefore, I do not find that any draft amended hearing request has been offered by Petitioner to date. If Petitioner had wished to use the documents sent to me on February 26, 1999 as its amended request for hearing, I must conclude that Petitioner has not proceeded in good faith in this matter.

C. The equity arguments presented by Petitioner are unreasonable and unpersuasive.

Petitioner has presented the following inter-related "detrimental reliance" arguments to support its contention that the equities are against HCFA , and in favor of Petitioner, for allowing amendments to the October 14, 1996 letter:

The chronology of events included in Petitioner's arguments is essentially accurate. However, contrary to Petitioner's intimations, no one and no event caused Petitioner to file an invalid request for hearing on October 14, 1996, within a few days of having received HCFA's notice letter dated October 8, 1996. No one and no event prevented Petitioner from amending its hearing request of right between October 14, 1996 and December 7, 1996, the day the filing period guaranteed by 42 C.F.R. § 498.40(a) expired. No one and no event induced Petitioner into delaying its efforts to amend its October 14, 1996 request letter until February 26, 1999. A litigant mindful of its obligations under the law, if proceeding with reasonable diligence and acting with due vigilance in its dealings with an adverse party, would not have interpreted the events as Petitioner says it had. Petitioner's detrimental reliance arguments are rejected below mainly for those reasons.

1. My dismissal of an earlier docketed case initiated by Petitioner

An earlier docketed case initiated by Petitioner against HCFA, Docket No.C-96-399, was indeed dismissed by my order dated December 3, 1996. A copy of that order is attached as Appendix A. Whereas the October 14, 1996 letter sent by Petitioner in this case refers to a CMP imposed by HCFA which resulted in this case, my order dismissing Docket No. C-96-399 stated very clearly that no CMP was at issue in that case. When Petitioner caused Docket No. C-96-399 to be docketed,⁽⁴⁾ HCFA had not yet decided to impose any CMP against Petitioner.

As for those appealable remedies which might have been encompassed by Petitioner's initiation of Docket No. C-96-399, the status report filed by Petitioner in that case stated that HCFA had given notice that it would not be imposing them. Petitioner then voluntarily withdrew the hearing request underlying Docket No. C-96-399 for those reasons, and also because Petitioner had filed its October 14, 1996 letter in response to having received the October 8, 1996 HCFA notice imposing a CMP. At the time Petitioner stated that it was withdrawing whatever hearing rights it might have had under Docket No. C-96-399, Petitioner had already filed its October 14, 1996 request letter, and the present case of Docket No. C-97-020 had already been docketed as a result.

After I issued my Order Dismissing Case in C-96-399, Petitioner did not take exception to its contents. Nor did Petitioner ask me to vacate that order for good cause under 42 C.F.R. § 498.72. Therefore, I am constrained to point out that nothing in my December 3, 1996 order dismissing Docket No. C-96-399 supports Petitioner's current intimation that it was led into believing that its October 14, 1996 letter had been determined by me or HCFA to be a valid hearing request. Nor is there anything in my order of dismissal supporting the suggestion that Petitioner's withdrawal of Docket No. C-96-399 was conditioned upon being allowed to litigate the merits of HCFA's October 8, 1996 CMP determination. Plainly, Petitioner was not even in a position to negotiate the terms for withdrawing Docket No. C-96-399 when its own status report showed that there was no appealable issue to be litigated in that case and Petitioner had already commenced another action against HCFA after receiving its separate determination to impose a CMP.

For the foregoing reasons, I find no merit in Petitioner's arguments that my dismissal of Docket No. C-96-399 on December 3, 1996 had somehow affected the content of its October 14, 1996 request letter and caused its subsequent failure to file a motion to amend the letter until February 26, 1999.

2. The orders of stay I granted following prehearing conferences

As for the parties' having obtained from me two orders staying proceedings pending settlement negotiations, Petitioner has given unreasonable significance to that fact as well.

As reflected by my orders dated December 2, 1996 and March 25, 1997, I had held prehearing conferences with the parties wherein they informed me that they wished to negotiate a settlement of this case, and, therefore, I granted their motions for a stay of proceedings. I authorized the parties to suspend their litigation efforts before me only because they had requested that I do so to facilitate their settlement efforts. Therefore, Petitioner could not have reasonably inferred from my adoption of the parties' proposed orders that I had made any determination concerning the validity of Petitioner's October 14, 1996 request letter or the issue of whether Petitioner had a right to litigate the merits of HCFA's CMP determination. During the prehearing conferences which resulted in my issuance of the stay orders dated December 2, 1996 and March 25, 1997, the parties told me only that they wished to discuss settlement. It was not my role to question why the parties wished to discuss settlement, and my stay orders did not limit them to negotiating only those issues which were subject to my review pursuant to Petitioner's October 14, 1996 letter.

One of the usual motives for parties to settle their case is to avoid the expense of litigation. The potential costs of litigation may prompt a defendant to settle even non-meritorious claims or claims which it does not believe to be legally maintainable . Therefore, any reasonable litigant would have known that HCFA's willingness to discuss compromise of this case should not be interpreted as meaning that HCFA thought Petitioner's October 14, 1996 request letter had given rise to any cause of action in this forum. Petitioner had no reasonable basis for ruling out the likelihood that HCFA was entering into settlement discussions in order to avoid expending the time and costs necessary for litigating the invalidity of Petitioner's October 14, 1996 letter as a hearing request.

Even though I had entered the stays requested by the parties, Petitioner had the right to ask that the case be activated at any time. At any time before and after October 14, 1996, Petitioner could have looked at the regulation codified at 42 C.F.R. § 498.40 and determined on its own that it has not yet filed a hearing request timely. Such endeavors are expected of litigants. A petitioner acting reasonably would have read the regulations and taken appropriate actions long before now.

The stay orders I entered at the parties' request did not bar Petitioner from filing a motion in accordance with the requirements of 42 C.F.R. § 498.40(c) and thereby reactivate this case. At any time after its 60-day filing period guaranteed by 42 C.F.R. § 498.40(a) had expired, Petitioner could have brought before me a motion for enlargement of the filing deadline supported by a showing of good cause. Instead, it repeatedly and voluntarily asked for all proceedings to be stayed before me in order to participate in settlement discussions with HCFA, and Petitioner refrained from attempting to comply with 42 C.F.R. § 498.40 until February 26, 1999.

For the foregoing reasons, I find no merit in Petitioner's arguments that my granting of stays in this case had somehow caused Petitioner to refrain from trying to amend its October 14, 1996 letter until February 26, 1999.

3. My having held prehearing conferences, during which HCFA did not raise any objection to Petitioner's October 14, 1996 letter

Petitioner relies on the fact that, long before HCFA moved to dismiss the October 14, 1996 request letter, I had held prehearing conferences with the parties.⁽⁵⁾

I convene prehearing conferences to determine how the cases before me should proceed. As indicated by the orders I issued following the two conferences in this case, I spoke with the parties' counsel by telephone, and they informed me that they wished to proceed with settlement discussions. Accordingly, I determined after each of these prehearing conferences that a stay of the proceedings would be appropriate for the reason presented by the parties.

During the prehearing conferences in this case, there was no discussion of whether or how the case would be proceed if settlement negotiation failed. Neither party identified, nor did I ask for, a list of all disputes for which settlement would be attempted. It was to avoid litigation of all potential issues that the parties asked me to grant them a stay of the proceedings. In the foregoing section, I have already noted why HCFA might prefer to explore settlement possibilities, as opposed to litigating the question of whether this case should be dismissed. Therefore, neither my holding these prehearing conferences nor HCFA's failure to raise objections to the October 14, 1996 letter could have led Petitioner to conclude reasonably that it would later have the opportunity to contest the merits of HCFA's CMP determination on the basis of said letter or by offering amendments to it.

Additionally, Petitioner's efforts to cast fault on HCFA for failing to object to the content of the October 14, 1996 letter during any of these prehearing conferences implies that HCFA had a duty to alert an adverse party of a patently obvious legal conclusion. The implication is a false one. The October 14, 1996 letter was drafted by Petitioner, who should have read the requirements of 42 C.F.R. § 498.40. HCFA had even referred Petitioner to 42 C.F.R. § 498.40 at the second page of the October 8, 1996 notice letter imposing the CMP. Neither equity nor any legal requirement dictated that, during any of the prehearing conferences with me, HCFA should have announced that, even though it was joining in Petitioner's motion to stay proceedings to discuss settlement, HCFA would be raising the invalidity of Petitioner's October 14, 1996 letter to seek dismissal of this action in the event that settlement discussions failed.

Also misleading are Petitioner's arguments that HCFA's failure to question the content of the October 14, 1996 letter at the prehearing conferences implies that HCFA was able to identify the disputes for which adjudication had been sought. HCFA has made no such concession in its response briefs. Nor do I think that it logically follows from HCFA's representations of its willingness to enter into settlement discussions with Petitioner that HCFA knew what Petitioner meant when it drafted its vaguely worded two paragraphs on October 14, 1996.

More importantly, what HCFA could have guessed from having read Petitioner's October 14, 1996 letter is not at issue here. The regulation at 42 C.F.R. § 498.40 does not exempt any petitioner from following its clear mandates for any reason. The regulation does not authorize any waiver of its requirements by agreement of the parties or by me. Under that regulation, no entity may intentionally disregard the 60-day time limit for filing a valid hearing request because it thinks no one would object or notice. Therefore, in considering Petitioner's motion for extending the deadline presented pursuant to 42 C.F.R. § 498.40(c), the issue is whether Petitioner had good cause for failing to request leave to amend an obviously invalid request for hearing until February 26, 1999.

I find that no good cause has been shown on the basis of the two prehearing conferences I held in this case, during which the parties told me they wished to explore settlement possibilities. Nor has good cause been shown by HCFA's failure to object to the October 14, 1996 letter during these conferences while it was joining with Petitioner in requesting a stay of the proceedings to discuss settlement of this case.

4. HCFA's presentation of the motion to dismiss more than two years after the case was docketed

In Petitioner's briefs, HCFA is portrayed as having ambushed Petitioner with the motion to dismiss, after lying in wait to do so for more than two years. Aside from the time lapse, there is no fact to support Petitioner's attribution of sinister motives to HCFA. As noted before, Petitioner and HCFA had jointly represented on repeated occasions over the past years that the proceedings before me should be held in abeyance so that they may discuss settlement options. According to information provided by Petitioner in its briefs now before me, HCFA's counsel received the settlement documents provided by Petitioner during February, 1998, but HCFA's counsel did not provide any response to those documents. In answer to inquiries made by Petitioner almost one year later, HCFA's counsel said that settlement of this case was not possible. Petitioner then sent to HCFA's counsel a draft letter asking that I set this case for an evidentiary hearing. HCFA responded to Petitioner's draft letter by filing on February 11, 1999 what is the substantive equivalent of a motion to dismiss case.⁽⁶⁾ Then on February 26, 1999, Petitioner responded to HCFA's motion to dismiss by filing its "Motion to Reactivate and Set This Cause for Hearing and for Leave to File an Amended Hearing Request."

Given the foregoing facts, there is nothing improper or sinister to be inferred from the timing of HCFA's presentation of the motion to dismiss. A motion to dismiss entails litigation, and the parties had both indicated that they wished to avoid litigation. The filing of a motion to dismiss became unavoidable after HCFA determined that no settlement could be reached, and Petitioner provided HCFA with a copy of a draft letter requesting that the case be scheduled for an evidentiary hearing on the basis of its October 14, 1996 letter.

The same conclusions cannot be drawn from Petitioner's actions. Even though Petitioner had also put forth efforts to settle this case, it cannot be concluded that Petitioner's decision to discuss settlement before filing a valid hearing request was reasonable. Nor can it be concluded that Petitioner's failure to request leave to amend its hearing request until late February, 1999 was reasonable.

First, if Petitioner had done what was required by 42 C.F.R. § 498.40(b) within 60 days of its having received HCFA's October 8, 1996 notice of the CMP determination, the case would not be in its present posture. Petitioner has given no explanation for having disregarded the requirements of 42 C.F.R. § 498.40(b) when it drafted its request letter of October 14, 1996. Nor has Petitioner given any credible explanation for its failure to exercise its right to amend said letter of right within the time allowed by 42 C.F.R. § 498.40(a), which did not expire in this case until December 7, 1996. Without having shown any valid reasons for having allowed the 60-days provided by regulation to elapse without appropriate actions, Petitioner fails to persuade me that that equity requires my looking at only what transpired after December 7, 1996.

Additionally, even the facts relevant to the parties' settlement efforts do not weigh in Petitioner's favor. According to my December 2, 1996 order, Petitioner was the party that first interjected the proposal to try for a settlement of the case. HCFA did not object to that proposal. There then followed a lengthy period during which Petitioner participated in and did not complain of the settlement efforts. Knowing that it could reactivate litigation before me at any time and file a motion to amend its hearing request, Petitioner chose not do so until February 26, 1999. Petitioner had made no attempt to amend its hearing request before HCFA filed the motion to dismiss this case.

Nothing presented to me indicates that HCFA had required, as a condition for discussing settlement, that Petitioner should refrain from filing a request to amend its October 14, 1996 letter. In fact, all indications are to the contrary, since Petitioner complains that HCFA never raised the hearing request issue until recently. It is obvious that HCFA was in a position to expect considerable concessions from Petitioner in the settlement process because Petitioner's October 14, 1996 letter would bar the scheduling of any on-merit hearing; but Petitioner could not have reasonably expected to gain any advantage for itself by voluntarily withholding efforts to file a valid hearing request while discussing settlement of this case with HCFA. Additionally, the motion to amend hearing request was filed only after HCFA had moved to dismiss this case. These facts lead me to conclude that, when Petitioner knew or could have known that its October 14, 1996 letter was not a valid hearing request, it made the choice to enter into settlement discussions with HCFA from a position of weakness instead of moving to amend the request letter forthwith. The choice made by Petitioner begs the question of whether Petitioner was without the facts and valid legal arguments necessary to compose a hearing request cognizable under 42 C.F.R. § 498.40(b). Petitioner's October 14, 1996 letter states only that it wants a hearing. To date, Petitioner has not presented any fact or legal arguments showing that there is some useful, legitimate purpose to be served by granting Petitioner's wish for an evidentiary hearing.

Petitioner's equity arguments also interjects the improper suggestion that HCFA, Petitioner's opponent in this case, had a duty to alert Petitioner to a problem that is patently clear from a plain reading of the relevant regulation,⁽⁷⁾ so that Petitioner would be on notice to submit the appropriate filings timely in order to preserve its right to litigate against HCFA. Adverse parties and their counsel are not required or expected to perform one another's work. HCFA's counsel was under a duty to advance her client's interests. It was proper for her to execute that duty by negotiating a settlement when she considered it beneficial to her client, and by filing the instant motion to dismiss when she considered it necessary to her client's interest. It was not reasonable for Petitioner to expect HCFA's counsel to do otherwise.

For all of the foregoing reasons, I cannot conclude reasonably that anyone else, or any circumstance beyond Petitioner's ability to control, had prevented Petitioner from moving to amend its hearing request prior to February, 1999. The facts also do not support Petitioner's arguments that the equities weigh in favor of Petitioner because HCFA had participated in settlement discussions for over two years without having alerted Petitioner to the invalidity of its hearing request. A litigant acting reasonably and with due vigilance of its rights would not have relied on HCFA's actions as Petitioner claims to have done.

5. Petitioner's expenditure of time and efforts to settle this case

The equities are not weighed in Petitioner's favor because, before HCFA presented its motion to dismiss, Petitioner has expended time and resources in trying to settle this case.

As discussed previously, Petitioner was not induced by HCFA into discussing settlement. Rather, according to the summary of the initial prehearing conference set forth in my order of December 2, 1996, Petitioner was the one who suggested settlement discussions. My orders staying the proceedings committed to the parties' discretion the length and content of their settlement discussions. Petitioner had the right and opportunity to terminate the discussions at any time. Petitioner does not allege that an agreement of any nature had been made with HCFA, or that HCFA had reneged on any specific promise. Therefore, I cannot conclude reasonably that the deadline for filing a hearing request should be extended till at least February 26, 1999 because Petitioner had chosen, without inducement or coercion by HCFA, to spend its time and money on trying to settle this case in lieu of trying to file a valid hearing request at an earlier time.

6. HCFA's failure to expressly reject Petitioner's settlement documents for nearly a year

Petitioner complains that, for nearly a year, HCFA never responded to the settlement-related documents sent by Petitioner during late February, 1998. Petitioner notes that it was not until it made follow-up calls during late January, 1999 that HCFA's counsel said that the case would not be settled. According to Petitioner, these facts support its argument that good cause has been shown for extending the deadline for filing an amended hearing request.

I disagree. If what Petitioner sent to HCFA during late February, 1998 was a settlement offer, then it appears from Petitioner's representations that the document contained no deadline set by Petitioner for HCFA to accept the offer. Nor does it appear that Petitioner had inserted any language into the settlement documents to provide that the failure to affirmatively accept would be construed as rejection of the offer. Additionally, Petitioner portrays itself as having been unwilling to interpret HCFA's lack of response over an 11- month period as rejection of the settlement offer.

There is no allegation that HCFA had caused Petitioner to omit setting a deadline for accepting the settlement proposal. There is also no indication that HCFA had caused Petitioner to act unreasonably by awaiting a response for nearly one year. A party vigilant of its rights and interests would have interpreted HCFA's silence as rejection of the settlement offer and as HCFA's refusal to even make a counter-offer. Acting reasonably, a party vigilant of its rights and interests would have proceeded to move for leave to amend its invalid hearing request forthwith,instead of enduring 11 months of silence from HCFA and then calling HCFA to obtain confirmation that it will not settle this case.

Moreover, Petitioner did not file its motion to amend immediately after being told that HCFA will not settle this case. Petitioner filed its motion to amend after HCFA had requested dismissal of this action. Even the chronology of events fails to adequately support Petitioner's argument that the timing of its motion to amend the hearing request was caused by HCFA's failure to provide a prompt response to February, 1998 settlement documents.

For all of the foregoing reasons, , I conclude that HCFA's failure for nearly one year to make explicit its rejection of Petitioner's settlement documents does not help establish the good cause necessary for granting Petitioner's February 26, 1999 motion to amend its hearing request.

7. The question of harm to HCFA, and whether HCFA will have trouble responding to Petitioner's claim

Petitioner argues that an evidentiary hearing should be scheduled on the basis of its October 14, 1996 letter, or on the basis of an amended request for hearing, because no harm will result to HCFA. To support this argument, Petitioner points out that HCFA did not assert in its briefs that it would have difficulty responding to Petitioner's claim. Petitioner's arguments are off the mark.

If the criteria for scheduling on-merit evidentiary hearings were as described by Petitioner, there would be no need for compliance with any portion of 42 C.F.R. § 498.40. When, as here, no request for hearing within the meaning of the regulation has been filed timely, a good cause showing must be made by the party seeking the extension of time to submit a new or different hearing request. The explicit requirements of 42 C.F.R. § 498.40(c) foreclose the conclusion that the failure to file a valid hearing request timely should ever be considered harmless error, or that the filing of a valid hearing request is but a formality. Therefore, good cause cannot be shown by the moving party if there has been harm to HCFA or if HCFA will have difficulty defending itself against any matter asserted pursuant to an extension of the filing deadline. However, the good cause a petitioner must show cannot be established by the mere absence of harm to HCFA or by HCFA's failure to assert that it will have difficulty defending its position.

HCFA was not under an obligation to address the questions of harm or whether it will have difficulty defending itself. HCFA's motion to dismiss arises from Petitioner's failure to timely file a hearing request. Dismissal of an untimely filed hearing request is authorized by 42 C.F.R. § 498.70(c), which does not require any allegation or showing that HCFA has been harmed, that HCFA did not understand what Petitioner hopes to litigate, or that HCFA will have difficulty defending itself. Moreover, since no amended hearing request has been received into the record to date, any opinion as to whether HCFA will have difficulty litigating against Petitioner's claims would be pure speculation.

For these reasons, I find unpersuasive Petitioner's efforts to show good cause with use of assertions concerning the lack of harm to HCFA and HCFA's ability to defend itself.

Mimi Hwang Leahy
Administrative Law Judge

1. HCFA set the rate at $100 for each of the first 56 days, and a $300 for each of the remaining 62 days.

2. My interpretation of the word "may" in 42 C.F.R. ^§ 498.70 does not signify that an appropriate analysis should not be undertaken in accordance with other relevant regulations.

In the matter of timeliness, for exanple, if a hearing request was filed outside of the 60-day period specified by 42 C.F.R. ^§ 498.40(a), but a motion for extension of time is presented pursuant to 42 C.F.R. ^§ 498.40(c), the administrative law judge must exercise his or her discretion to determine whether the 60-day time limit should be extended for good cause shown. If the administrative law judge grants the ^§ 498.40 c) motion pursuant to his or her exercise of discretion, then that exercise of discretion makes inapplicabe the dismissal requirement of 42 C.F.R. ^§ 498.70(c). However, if the administrative law judge denies the ^§ 498.40 (c) motion pursuant to his or her exercise of discretion, then that exercise of discretion makes applicable the dismissal requitement of 42 C.F.R. ^§ 498.70(c).

In the foregoing situation, the administrative law judge's exercise of discretion is authoritzed by 42 C.F.R. ^§ 498.40 (c), not by 42 C.F.R. ^§ 498.70(c). How the judge exercises discretion pursuant to 42 C.F.R. ^§ 498.40 (c) determines, as a matter of law, whether the untimely filed hearing request must be dismissed, or whether it acquires the status of a timely filed hearing request under an extension of time granted by the administrative law judge.

3. Timely filed means that a request containing the information specified by 42 C.F.R. ^§ 498.40(b) has been filed within the period provided by subsection (a) of that same regulation, or within any period of extension granted by the adminstrative law judge pursuant to the requirements of subsection (c). If no extension of time is granted, and no request for hearing within the meaning of 42 C.F.R. ^§ 498.40(b) had been filed within the time limit specified by subsecton (a), then there is no timely filed request for hearing.

4. In one of its briefs arguing the equities in this case, Petitioner asserts that confusion on procedures existed in 1996 at HCFA, as evidenced by the docketing of two "overlapping cases," Docket No. C-96-399 and this present action, Docket No. C-97-020. There is no merit in this assertion. Two cases were docketed by the Civil Remedies Division of the Departmental Appeals Board because Petitioner, represented by counsel, had filed two request letters to seek hearings. Whether the two letters overlapped, or whether one letter would have sufficed for Petitioner's needs, were matters solely within Petitioner's knowledge to determine. Even disregarding the fact that there existed no CMP determination by HCFA when Petitioner filed its first letter and caused Docket No. C-96-399 to be docketed, the staff performing the docketing function for the Civil Remedies Division were not responsible for deciding why Petitioner had filed another request letter. Therefore, the existence of any confusion in this matter must be laid at Petitioner's door.

5. Petitioner mistakenly states that I held three prehearing conferences in this case on January 9, 1997, March 17, 1997, and March 25, 1997. However, according to the orders I issued on December 2, 1996 and March 25, 1997, I held only two prehearing conferences. The dates for these prehearing conferences were November 26, 1996 and March 19, 1997. Although Petitioner inaccurately stated the dates of the conferences in this case, I believe that Petitioner was referring to the conferences mentioned in the December 2, 1996 and March 25, 1997 orders.

6. HCFA asked that I issue an order requiring Petitioner to show cause why its invalid hearing request should not be dismissed in accordance with the Board's decisions in Birchwood Manor Nursing Center, DAB 1669 (1998) and Regency Manor Healthcare Center, et al., DAB 1672 (1998). Petitioner's briefs treat HCFA's filing as a motion to dismiss.

7. Additionally, long before February 26,1999, I had issued several rulings and decisions in other cases addressing the same issue now before me. Whatever Petitioner's opinions of those decisions and rulings, appellate panels of the Departmental Appeals Board had affirmed my analysis and results several months before Petitioner requested leave to amend its letter. See Birchwood Manor Nursing Center, DAB 1669 (1998) issued in September, 1998. Petitioner does not allege that it had been prevented from foreseeing what would likely result on the basis of its October 14, 1996 filing.