SUBJECT:

Woodland Care Center,

Petitioner,

I find that the Health Care Financing Administration (HCFA) has not imposed a remedy against Woodland Care Center (Petitioner). Petitioner does not have a right to a hearing from its State Survey Agency's initial findings, that Petitioner failed to comply with a Medicare participation requirement, which were rescinded prior to any action by HCFA imposing a remedy. Consequently, I dismiss Petitioner's request for a hearing.

BACKGROUND

The background and material facts of this case are not disputed. Petitioner is a skilled nursing facility (SNF) provider and a Medicare participant. The conditions for a SNF's participation in Medicare are set out in regulations at 42 C.F.R. Part 483. Petitioner is subject to the survey, certification, and enforcement provisions of 42 C.F.R. Part 488. Regulations at 42 C.F.R. Part 498 establish Petitioner's right to a hearing following an adverse determination by HCFA made pursuant to 42 C.F.R. Parts 483 and 488.

On December 2, 1998, the New Jersey Department of Health and Senior Services (State Survey Agency) surveyed Petitioner's facility. A February 2, 1999 notice letter to Petitioner cited the deficiencies found during the survey and outlined recommendations that the State Survey Agency would make to HCFA, if Petitioner failed to remedy the deficiencies and achieve substantial compliance within six months of the survey date.

The State Survey Agency revisited the facility on March 2, 1999. On March 18, 1999, the State Survey Agency issued a letter notifying Petitioner that it was now in substantial compliance with Federal requirements. That letter also rescinded any recommendations for imposition of remedies contained in its February 2, 1999 notice letter.

On June 11, 1999 Petitioner filed a request for a hearing. By motion dated September 21, 1999, Petitioner requested that further proceedings in this case be stayed 60 days to pursue settlement negotiations. By submission dated September 20, 1999, HCFA submitted a Notice of Issues for Dismissal for Cause. By letter dated September 24, 1999, HCFA objected to Petitioner's motion for a stay and argued that the motion should be denied in all respects.

On November 1, 1999, I issued an Order directing Petitioner to show cause why its request for a hearing should not be dismissed pursuant to 42 C.F.R. § 498.70. My preliminary analysis was that, pursuant to 42 C.F.R. § 498.3(b)(12), Petitioner did not have a right to a hearing because HCFA had not imposed remedies against it for deficiencies identified in the December 2, 1998 survey. Further, Petitioner had been found in compliance after the March 2, 1999 revisit.

In Response to my Order, Petitioner noted that it had been cited for two "Level G" deficiencies following the December 2, 1998 survey.⁽¹⁾ Petitioner conceded that, based on the recission of those deficiencies after the March 2, 1999, follow-up survey, the program regulation at 42 C.F.R. § 498.3(b)(12), precluded an adjudicative hearing on the proposed remedies.

However, Petitioner also noted that during the pendency of its appeal, HCFA promulgated a final rule, which essentially provides that prior survey history shall be a factor to be considered in determining civil monetary penalties (CMPs). See 64 Fed.

Reg. 13354-62 (March 18, 1999). Effective September 9, 1999, a revision to the State Operations Manual (SOM) mandated denial of the opportunity to correct deficiencies when a current and the previous standard survey contain Level "G" deficiencies, that is, a deficiency signifying actual harm or above. SOM § 7304A. Moreover, a nursing home chain, i.e., two or more facilities participating in Medicare or Medicaid under common management or ownership, could lose the opportunity to correct for all chain facilities based upon citations for Level "G" deficiencies found in 25% of the facilities in the chain. Id. at § 7304G.

Petitioner asserted that, based upon these changes, it was adversely affected by the December 2, 1998 deficiency citations.

Finally, Petitioner referenced Illinois Council on Long Term Care, Inc. v. Shalala, 143 F.3d 1072 (7^th Cir. 1998), cert. granted, U.S. , 119 S.Ct. 1459 (1999)) asserting that this decision upheld the rights of nursing home facilities to challenge the limitations on hearing imposed under 42 C.F.R. § 498.3(b)(12) on due process grounds and for failure to promulgate standards which serve to enhance or accelerate a facility's exposure to standards without notice and comment rulemaking. Petitioner asserted that its inability to challenge the deficiencies assigned following the December 1998 survey would constitute a denial of due process similar to that at issue in Illinois Council. On February 29, 2000, the Supreme Court reversed the Seventh Circuit Decision upon which Petitioner relied. See Shalala v. Illinois Council on Long TermCare, Inc., U.S. , 120 S.Ct. 1084 (2000). Consequently, I need not consider below Petitioner's arguments based on this case.

The issue in this case is whether Petitioner has a right to a hearing from an initial determination by its State Survey Agency that it did not comply substantially with Medicare participation requirements, where HCFA imposed no remedy against Petitioner.

In prior decisions, administrative law judges, once with the support of an appellate panel of the Departmental Appeals Board, have found that a petitioner is not entitled to a hearing when HCFA has not imposed a remedy against the petitioner based on survey results. See Arcadia Acres, Inc., DAB CR424 (1996), aff'd, DAB No. 1607 (1997); Fort Tryon Nursing Home, DAB CR425 (1996). See also Jacinto City Healthcare Center, DAB CR 627 (1999).

I conclude that, based on 42 C.F.R. § 498.3(b)(12), Petitioner has no right to a hearing because HCFA did not impose remedies against Petitioner for any deficiencies found in the initial survey conducted on December 2, 1998, as Petitioner was in substantial compliance following the March 2, 1999, revisit.

DISCUSSION

The issues in this case are essentially similar to those presented in Fort Tryon. There, Administrative Law Judge Steven T. Kessel presented a thorough analysis of the applicable program regulations (42 C.F.R. §§ 498.3(b)(12), 488.408(g)(1) and 488.406) in support of his conclusion that a petitioner is not entitled to a hearing when HCFA has not imposed a remedy against the petitioner based on survey results. Fort Tryon, at 4-7. I will not revisit Judge Kessel's analysis. However, I do incorporate the Fort Tryon analysis by reference in reaching my conclusions here.

Petitioner concedes implicitly that, if I were to simply consider the regulatory scheme previously analyzed in Arcadia and Fort Tryon, Petitioner would not be entitled to a hearing as HCFA did not impose a remedy. However, Petitioner asserts that HCFA's Final Rule, promulgated subsequent to the surveys in question, under which HCFA would consider a facility's prior survey history when calculating a CMP, as well as the revisions to the SOM, which also factor in prior survey history, mandate a hearing in this case.

Petitioner's position is tenuous at best. If HCFA conducts a survey in the future and if, as a result of that survey, HCFA finds deficiencies for which it imposes remedies against Petitioner, then HCFA may consider these current deficiencies in assessing a CMP. The hearing process available to Medicare providers is not founded in speculative potential. Rather, the process is established to give providers an opportunity to be heard prior to the imposition of a remedy certain. The fact that HCFA may eventually consider the results of the December 1998 survey, for which no remedy was otherwise imposed, does not elevate those results to the status of deficiencies for which a remedy was imposed. As noted in Fort Tryon, when HCFA relies upon those earlier deficiencies to impose a remedy against a petitioner, then those earlier deficiencies are reviewable on appeal. Id. at 8. Until that time, however, there is simply no supportable basis for a hearing, as a remedy has not been imposed upon Petitioner. The absence of a remedy precludes any right to a hearing. Jacinto City, at 3.

Joseph K. Riotto
Administrative Law Judge

1. Petitioner submitted nine exhibits (Petitioner Exhibits (P. Exs.) A-I) as part of its initial request for a hearing. HCFA did not object to my admitting these exhibits into evidence. Therefore, I admit Petitioner's exhibits into evidence, but reidentify them numerically as P. Exs. 1-9.