SUBJECT:

Lutheran Home - Caledonia,

Petitioner,

Health Care Financing Administration

1. By letter dated August 21, 1998, HCFA notified Petitioner that various survey findings of noncompliance with program participation requirements had resulted in the determination to impose against Petitioner an enforcement remedy of a civil money penalty (CMP) calculated at certain designated per diem rates.

2. During October of 1998, Petitioner timely exercised its rights under 42 C.F.R. § 498.3(b)(12) and (13) to request a hearing for the purpose of challenging the survey findings which have resulted in HCFA's initial determinations to impose a CMP as the enforcement remedy and to set the CMP at the designated amounts.

3. No other enforcement remedy appealable under the provisions of 42 C.F.R. § 498.3(b) had been imposed by HCFA against Petitioner as a result of those survey findings.

4. After litigation commenced in this forum, HCFA decided to reduce to zero ($0.00) the CMP remedy previously imposed against Petitioner.

5. By issuing on May 18, 1999 its decision to reduce the CMP to zero, HCFA's action fell within the 12 month period allowed by 42 C.F.R. § 498.30 and 42 C.F.R. § 498.32 for HCFA to reopen and revise its own initial determination of August 21, 1998.

6. HCFA's May 18, 1999 letter contains no appealable determination within the definition of 42 C.F.R. § 498.3(b).

7. Prior to the issuance of a final administrative decision in any pending litigation, HCFA has the authority to settle all cases where it has imposed the enforcement remedy in controversy. 42 C.F.R. § 488.444(a).

8. As a matter of law, HCFA's reduction of the CMP to zero nullified the existence of a CMP remedy.

9. As a matter of law, HCFA's reduction of the CMP to zero has the same effect as a decision to rescind a previously imposed CMP enforcement remedy.

10. Petitioner no longer has any right to an administrative hearing under 42 C.F.R. § 498.3(b)(12) or (13).

I. Background

I take notice that Petitioner is a skilled nursing facility located in Caledonia, Minnesota, participating in the Medicare and Medicaid programs. There is no dispute that when Petitioner filed its request for hearing, the filing had been done pursuant to 42 C.F.R. § 498.3(b), in response to an appealable initial determination issued by HCFA. The initial determination challenged by Petitioner consisted of HCFA's finding that Petitioner had been out of substantial compliance with various Medicare and Medicaid participation requirements and that, therefore, a CMP totaling $127,450 would be collected from Petitioner for the period of alleged noncompliance from July 20, 1998 and until August 20, 1998.⁽¹⁾ Petitioner timely filed a request for hearing for the purpose of challenging, inter alia, the citations of noncompliance adopted by HCFA following two surveys of Petitioner conducted by HCFA's agent, the Minnesota Department of Health (MDH). Those two surveys were conducted during July and August 1998.

HCFA selected the CMP amount with use of the level of noncompliance determined by the surveyors. After conducting the July 1998 survey, MDH found that the health of various residents had been placed into "immediate jeopardy" by Petitioner's failure to comply substantially with Medicare participation requirements. See 42 C.F.R. § 488.301 (definition of "immediate jeopardy"). Following the August 1998 resurvey, MDH determined that, even though there was no longer "immediate jeopardy" to residents, some aspects of Petitioner's noncompliance had caused "actual harm" to residents. HCFA's adoption of the "immediate jeopardy" finding resulted in HCFA's decision to set the CMP at $5000 per day for the corresponding period of July 20 through August 13, 1998. See 42 C.F.R. § 488.438(a)(1)(i); Attachment 1 of HCFA Brief. HCFA's adoption of the "actual harm" finding resulted in HCFA's determination to set the CMP at $350 per day for the remaining period of alleged noncompliance. See 42 C.F.R. § 488.438(a)(1)(ii); Attachment 1 of HCFA Brief.

HCFA's August 21, 1998 notice letter informed Petitioner of its right to request a hearing before an administrative law judge of the Departmental Appeals Board (DAB). HCFA informed Petitioner also:

The CMP will not be collected until after it has stopped accruing and a final administrative decision upholding its imposition has been made, if a hearing is requested.

Id. at 2.

By letter dated October 23, 1998, Petitioner timely appealed. See Attachment 2 of HCFA Brief. During November of 1998, after the DAB received Petitioner's hearing request, the above-captioned case was docketed and assigned to me for appropriate proceedings.

On December 8, 1998, HCFA notified Petitioner that, as a result of a September 2 revisit finding that the facility had attained substantial compliance, the CMP previously imposed was discontinued on August 20, 1998. Attachment 3 of HCFA Brief.

Thereafter, on May 18, 1999, HCFA issued another notice letter to Petitioner. As relevant to the portion of the CMP which was based on the finding of "immediate jeopardy" from the July 1998 survey, HCFA's notice informed Petitioner:

As a result of the apparent misunderstanding related to restraint-usage by providers and patients' families [,] and because of other factors, we are reducing the CMP initially imposed for deficiencies cited in the July 28, 1998 survey of your facility.

Attachment 4 of HCFA Brief. HCFA's May 18, 1999 letter further stated:

We have considered your facility [sic] history, your financial condition, and the factors enumerated in the Federal requirement at 42 C.F.R. § 488.404 in determining the amount of the CMP that we will impose for each day of noncompliance. The CMP has been reduced to $0.00 per day, a significant revision from the total $127,450 previously imposed for the period July 20, 1998 through August 20, 1998. While we have reduced the CMP, the hearing on the prior imposition of remedies is pending.

Id. According to HCFA, its May 18, 1999 letter did not rescind any of the findings of deficiency that had been made during the July, 1998 and August, 1998 surveys. HCFA Brief at 3. Petitioner indicated no disagreement with HCFA's representation that Petitioner had asked for rescission of the "immediate jeopardy" findings in exchange for voluntarily withdrawing its request for hearing. Id. HCFA was unwilling to rescind those survey findings and, therefore, filed its motion to dismiss in response to Petitioner's refusal to voluntarily withdraw its request for hearing. Id.

In the motion to dismiss, HCFA argues that, since no money is currently being sought from Petitioner, Petitioner is effectively left with no appealable remedies of any kind. HCFA acknowledges that a long term care facility is entitled to request an administrative hearing if HCFA's citation of noncompliance results in the imposition of certain enforcement remedies, such as a CMP, against the facility. 42 C.F.R. § 498.3(b)(12) (incorporating parts of 42 C.F.R. § 488.406). However, HCFA cites also the cases which hold that the facility's hearing rights are extinguished if HCFA subsequently determines not to impose any of those enforcement remedies which had entitled the facility to file an appeal. See, e.g., Arcadia Acres, Inc., DAB CR424 (1996), aff'd, DAB No. 1607 (1997); Schowalter Villa, DAB CR568 (1999), aff'd, DAB No. 1688 (1999). In this case, HCFA contends that Petitioner has been apprised of just such a rescission by HCFA's notice letter dated May 18, 1999, which stated that the previously imposed CMP of $127,450 has been reduced to zero.

Petitioner opposes HCFA's motion to dismiss by arguing that there remains an appealable initial determination as defined by 42 C.F.R. § 498.3(b)(12) because HCFA has not rescinded the CMP remedy. Petitioner especially relies on the portion of HCFA's May 18, 1999 notice letter which refers to the reduction of the CMP amount and which acknowledges the pendency of Petitioner's hearing request. Petitioner contends that a reduction of the CMP amount to zero is not the equivalent of a rescission of the CMP remedy since HCFA has created a "distinction that remains on the public record still today."⁽²⁾ Petitioner further contends that granting the dismissal would violate due process because the state survey agency, MDH, failed to grant it the opportunity to dispute its survey findings by use of the Informal Dispute Resolution process (IDR). According to Petitioner, it had wished to use the IDR process to challenge the prohibitions placed upon its nurse's aide training program. Finally, Petitioner believes that HCFA's reduction of the CMP to zero is inconsistent with its refusal to withdraw the citations of noncompliance. Petitioner wants me to deem HCFA's reduction of the CMP to zero as HCFA's admission that no sufficient factual basis exists to support the CMP remedy.

HCFA argues that it is irrelevant whether the agency used the term "reduction" or "rescission." The result is indisputable that no CMP has been imposed. Petitioner's argument emphasizes semantics over substance. Secondly, Petitioner's complaint about its inability to contest limitations on its nurse's aide training program is governed by 42 C.F.R. § 498.3(b)(12), which prohibits appeals on such a basis. Finally, in light of the seriousness and scope of deficiencies initially identified in the survey, HCFA's reduction of the CMP can hardly be deemed an admission that there is no factual basis to justify its imposition; moreover, this issue is moot in light of the fact no CMP was ultimately imposed.

Petitioner does not allege that it has paid any of the $127,450 previously assessed by HCFA. HCFA's August 18, 1998 notice letter informed Petitioner that, if it should file a request for hearing, no CMP would be collected until the issuance of a final administrative decision upholding imposition of the CMP. Attachment 1 of HCFA Brief at 2. This information correctly reflects the parties' respective rights and obligations under 42 C.F.R. § 488.432(a).

II. Issue

HCFA has filed its motion under a regulation which authorizes dismissal of a hearing request when "[t]he party requesting a hearing . . . does not otherwise have a right to a hearing." 42 C.F.R. § 498.70(b). A long-term care facility's hearing rights are set forth in 42 C.F.R. Part 498. Therefore, the central question presented by the parties' opposing arguments is:

What legal effect, if any, did HCFA's determination to reduce the CMP amount to zero (0) have on Petitioner's right to proceed with a hearing in this forum under the provisions of 42 C.F.R. Part 498?

III. Discussion

A. Petitioner does not have a right to proceed to a hearing under 42 C.F.R. Part 498 on the basis of any harm it might suffer due to the existence of HCFA's noncompliance citations in the public domain or the alleged ineffectiveness of the State's IDR process.

A long-term care facility has a right to contest, by use of the hearing process, only those determinations issued by HCFA which are of the types described in 42 C.F.R. § 498.3(b).⁽³⁾ As relevant to the facts of this case, a skilled nursing facility or nursing facility may appeal:

. . . a finding of noncompliance that results in the imposition of a remedy specified in [42 C.F.R.] 488.406 . . . except the state monitoring remedy, and the loss of approval for a nurse-aide training program.

42 C.F.R. § 498.3(b)(12), (15). A CMP is listed among those remedies which trigger administrative appeal rights. 42 C.F.R. § 488.406(a)(3).

In the event HCFA determines to impose the CMP remedy for any finding of noncompliance, it is authorized to choose the rate(s) of the CMP from the higher monetary range ($3,050 to $10,000 per day) for those findings of noncompliance which are alleged to pose "immediate jeopardy" to residents, or from the lower range ($50 to $3,000 per day) for those findings of noncompliance which are alleged to pose lesser levels of risks to residents. 42 C.F.R. § 488.438(a). Therefore, if an "immediate jeopardy" finding has led to HCFA's selection of the higher CMP rate, the affected facility may also request that the administrative law judge review and reduce the level of noncompliance determined by HCFA. 42 C.F.R. § 498.3(b)(13).

It is HCFA's decision to impose the specified remedies, and not the finding of noncompliance which triggers an adversely affected facility's right to obtain an administrative hearing. The information provided by the Secretary of Health and Human Services in promulgating 42 C.F.R. § 498.3(b)(12) explicitly rejected the proposal to make every finding of noncompliance appealable:

Comment: Several commentators wanted a right to appeal all deficiencies even if no remedy was imposed.

Response: We are not accepting this suggestion because if no remedy is imposed, the provider has suffered no injury calling for an appeal . . .

59 Fed. Reg. 56158 (1994) (emphasis added).

Therefore, if HCFA has made findings of noncompliance against a facility but has issued none of the designated enforcement remedies which trigger appeal rights under 42 C.F.R. § 498.3(b)(12), then the facility cannot seek or obtain relief from this forum. The facility may obtain administrative review of the noncompliance determinations only if they have resulted in HCFA's imposing one of the enumerated remedies which are considered by the Secretary to have caused an "injury calling for an appeal." 59 Fed. Reg. 56158; 42 C.F.R. § 498.3(b)(12).

In this and other cases, recipients of HCFA's noncompliance citations have noted other injuries, which do not trigger appeal rights under 42 C.F.R. § 498.3(b)(12). They ask for hearings to contest the validity of those noncompliance citations by arguing that, even in the absence of any enforcement remedy imposed by HCFA, the existence of those citations cause other injuries which are in need of redress. In this case Petitioner argues that, if its hearing request is dismissed, the unadjudicated noncompliance citations will remain in the public record, and the loss of its nurse's aide training program cannot be successfully contested under the IDR process.⁽⁴⁾ P. Brief at 7 (citing P. Ex.10), and 10. Similar arguments have been submitted by other petitioners in like situations.

In Arcadia Acres, for example, the petitioner noted its obligation to make available to its residents all deficiency citations issued by HCFA, even though HCFA had withdrawn the previously imposed enforcement remedy. I took notice of these arguments interposed by that petitioner in its effort to circumvent the limitations imposed by 42 C.F.R. § 498.3(b)(12):

1) a regulatory equivalent of a "hit and run" has occurred . . . 2) HCFA is seeking to "wash its hands" of the matter . . . 3) the procedural due process rights of Arcadia will be left "without a guardian" if HCFA's motion is granted . . . 4) Arcadia has been subjected to "administrative arrest" and "punishment" in having had to undergo surveys and take follow-up actions "to free itself of absurd deficiencies" . . . and 5) Arcadia has been "buffeted by the winds of . . . surveys without the shelter of a hearing" . . . Arcadia asked that we proceed to a hearing on the findings of deficiencies in order to protect against "injustice" resulting from unjust and inadequate survey results . . . and because, "[i]f not in the instant appeal, where else will Arcadia Acres have a forum?" . . .

Arcadia Acres, Inc., CR424 at 2.

Also in another case, I took notice that the facility made the following arguments in opposing HCFA's motion to dismiss due to the absence of any hearing rights under 42 C.F.R. § 498.3(b)(12):

Petitioner professes to disbelieve that the Secretary of the United States Department of Health and Human Services had promulgated hearing regulations which do not permit a facility to challenge a ban on its nurse-aide training or a finding of noncompliance that creates a bad record, even after HCFA has rescinded the enforcement remedies.

Schowalter Villa, CR538 at 3.

In these and like cases, I have rejected the foregoing types of "injury" arguments because they seek to create hearing rights for matters which lie beyond the parameters clearly delineated by the plain language of 42 C.F.R. § 498.3(b). The regulation leaves no doubt that a loss of nurse's aide training is not among those enforcement remedies which trigger the right to a hearing in this forum.⁽⁵⁾ 42 C.F.R. § 498.3(b)(12). In the absence of any enforcement remedy incorporated by 42 C.F.R. § 498.3(b)(12), the merits of the underlying noncompliance citations themselves cannot be reviewed in this forum, even if those citations are in the public domain, and even if the facilities think that they will be harmed by the existence of those citations. As made clear in the commentaries to 42 C.F.R. § 498.3(b)(12), the only injury which is legally cognizable in this forum (and therefore subject to redress by us) is the facility's receipt of an enforcement remedy imposed by HCFA.⁽⁶⁾ 59 Fed. Reg. 56158. My decisions in cases such as Arcadia Acres and Schowalter Villa set forth these reasons as grounds for granting HCFA's motions to dismiss the requests for hearing. These decisions were affirmed in their entirety. Arcadia Acres, Inc., DAB CR424 (1996), aff'd, DAB No. 1607 (1997); Schowalter Villa, DAB CR568, aff'd, DAB No. 1688 (1999).

For all these reasons, I reject Petitioner's arguments that HCFA's motion to dismiss should be denied because the noncompliance citations issued by HCFA are a matter of public record and Petitioner believes that it cannot use the state's IDR process to successfully dispute the prohibitions against providing training to nurse's aides.

B. The May 12, 1999 letter reflects HCFA's lawful exercise of its non-reviewable discretion in certain areas, and I find no admission by HCFA that any finding of noncompliance is lacking adequate factual support.

Within 12 months of the date of an initial determination, HCFA has the authority to reopen and revise that determination. 42 C.F.R. §§ 498.30 and 498.32. In this case, HCFA's notice of its initial determination is dated August 21, 1998, and its letter containing the changes under review was issued by HCFA on May 18, 1999. The content of the May 18, 1999 letter, together with its use of the phrase "significant revision" to describe its actions, establish to my satisfaction that HCFA had acted within its discretion to reopen and revise its initial determination under 42 C.F.R. §§ 498.30 and 498.32. Consent was not needed from Petitioner or me. Accordingly, the content and effect of HCFA's prior determination dated August 21, 1998 have been superceded by the May 18, 1999 revisions. 42 C.F.R. § 498.20(b)(3).

Petitioner uses the content of the May 12, 1999 revisions to oppose HCFA's motion for dismissal, as well as to seek a ruling of law concerning the merits of HCFA's findings of noncompliance. For example, Petitioner contends that, by stating in its May 12, 1999 letter that the CMP was reduced to zero, HCFA has admitted that its findings of noncompliance lack adequate factual support. P. Brief at 13. Petitioner asserts also that "HCFA's admission that the CMP should be zero is inconsistent with its assertion that a factual basis exists for the CMP." P. Brief at 13.

I am not persuaded by these arguments. Also, I decline to find that HCFA has acted inconsistently or that HCFA has made an admission that it has no adequate factual support for the noncompliance findings that remain outstanding.

I note by way of background that HCFA's revised letter of May 18, 1999 does not contain any statement that there remains a factual basis for imposing a CMP remedy against Petitioner. However, as HCFA has explained without disagreement from Petitioner, Petitioner had asked for rescission of the noncompliance findings on immediate jeopardy in exchange for withdrawing its hearing request. HCFA Brief at 3. HCFA refused to rescind those findings and then made clear in its brief that the May 18, 1999 letter does not rescind any finding of noncompliance. Id. To oppose HCFA's arguments that this case should be dismissed for the absence of any outstanding enforcement remedy within the meaning of 42 C.F.R. § 498.3(b)(12), Petitioner did not need to ask me to draw legal conclusions about the merits of the noncompliance citations themselves. Therefore, it would appear that, by arguing that HCFA's actions on May18, 1999 should be deemed an admission that the CMP remedy lacks adequate factual support, Petitioner is attempting to attain the result that HCFA refused to provide during their settlement discussions.

Even though I do not criticize Petitioner for its intent and will address the merits of its legal conclusions as presented, I take notice that we have never considered a rescission of the noncompliance findings to be a prerequisite for granting a motion to dismiss by reason of 42 C.F.R. § 498.3(b)(12). In fact, as is clear from the decisions in cases such as Arcadia Acres and Schowalter Villa, supra, that the facilities opposed HCFA's motion to dismiss because HCFA did not withdraw the citations of noncompliance. There would have been no purpose to the facilities' maintaining their request for hearing if HCFA had withdrawn the enforcement remedies as well as the underlying findings of noncompliance. In these and like cases, HCFA prevailed on its motions to dismiss after rescinding only the enforcement remedies. Thus, whether HCFA has rescinded the noncompliance citations by implication or otherwise is immaterial to the issue of whether Petitioner has lost its hearing rights under 42 C.F.R. § 498.3(b)(12).

Additionally, it is not uncommon for parties in litigation to indicate that, even though they believe they will be able to prevail on the evidence, they have decided to waive certain rights after having taken other factors into consideration. Sometimes such a representation appears to voluntarily withdraw hearing requests. At other times, unopposed or joint motions to dismiss cases are filed without any explanation. We have adopted no practice of construing any party's voluntary waiver of rights as an admission that it lacks adequate factual support for its position.

Even standing alone, Petitioner's arguments concerning HCFA's implied admissions are flawed. They assume incorrectly that HCFA must seek to collect a CMP if it believes that the noncompliance findings are well-founded. In fact, the regulation states only that "HCFA . . . may impose civil money penalty for the number of days a facility is [found] not in substantial compliance with one or more participation requirements . . ." 42 C.F.R. § 488.430(a) (emphasis added). No law or regulation requires HCFA to impose a CMP whenever it issues a finding of noncompliance. Instead, if HCFA finds noncompliance, HCFA must apply certain criteria to determine whether the CMP remedy should be imposed, and, if so, in what amount. 42 C.F.R. §§ 488.404 and 488.438(f). Such criteria include the facility's financial condition, its compliance history, and the degree of its culpability.

According to HCFA's May 18, 1999 notice of revised determination, HCFA applied those factors and came to the conclusion that no amount should be assessed against Petitioner. HCFA's determination to revise the previously imposed remedy is not appealable to an administrative law judge. See 42 C.F.R. § 498.3(a) and (d). Because administrative law judges are specifically prohibited from reviewing "the exercise of discretion by HCFA . . . to impose a civil money penalty . . ." (42 C.F.R. § 488.438(e)(2)⁽⁷⁾), I find no basis for concluding that administrative law judges have been vested with the authority to review HCFA's exercise of discretion to collect no money from the facility. Even where hearing requests have been filed in response to the imposition of a CMP remedy by HCFA, HCFA has the authority to settle such cases before a final administrative decision is issued. 42 C.F.R. § 488.444(a). Petitioner herein does not disagree with HCFA's representations that settlement discussions had been held prior to the issuance of HCFA's revised determination dated May 18, 1999. HCFA's apparent decision to alter its position during litigation also is a matter that is beyond an administrative law judge's authority to review. See 42 C.F.R. § 498.3(b) and (d).

For these reasons, I reject Petitioner's argument that HCFA's motion to dismiss should be denied because HCFA's reduction of the CMP to zero should be viewed as its admission that the noncompliance findings are without sufficient factual support. See P. Brief at 13.

I also reject Petitioner's argument that it is inconsistent for HCFA to reduce the amount of the CMP to zero while maintaining that a factual basis for imposing the CMP exists. Id. According to Petitioner, its argument is supported by 42 C.F.R. § 488.438(e)(1), which precludes the administrative law judge from "zeroing out a CMP if 'a basis for imposing the CMP exist[s]'." Id. The regulatory provision relied upon by Petitioner has no applicability to the situation here, which involves HCFA's own changes to the CMP remedy it had previously imposed. The provision is subsumed under the heading of "Review of the penalty" and refers specifically to a limitation in the administrative law judge's authority. 42 C.F.R. § 488.438(e) (emphasis added). For 42 C.F.R. § 488.438(e)(1) to apply at all, there must be an outstanding determination by HCFA to impose the CMP of $50 or more before the administrative law judge for review. Consistent with the prohibition against an administrative law judge's reviewing HCFA's exercise of discretion to impose a CMP (42 C.F.R. § 488.438(e)(2)), the administrative law judge is prohibited also from setting the CMP remedy already imposed by HCFA at "zero" if he or she finds that there existed a basis⁽⁸⁾ for HCFA's imposition of the CMP remedy. 42 C.F.R. § 488.438(e)(1). Nothing in the regulation cited by Petitioner limits HCFA's actions. Contrary to the arguments presented by Petitioner, the words contained in 42 C.F.R. § 488.438(e)(1) do not mean that HCFA is prohibited from reducing a previously imposed CMP remedy to "zero" if it finds that the facility was out of substantial compliance with one or more participation requirements.

As noted earlier also, HCFA had reviewable authority to settle CMP cases during litigation, and HCFA has unreviewable discretion to determine (either initially or pursuant to the revision process) whether a CMP should be imposed at all to remedy the noncompliance found during survey. Therefore, by issuing the revised determination stating that the CMP has been reduced to zero, HCFA has not "usurped authority not even granted to the Administrative Law Judge" as argued by Petitioner. P. Brief at 13. I find no inconsistency between any assertion by HCFA that a factual basis exists for the imposition of a CMP remedy, and HCFA's reduction of the CMP to "zero." See 42 C.F.R. §§ 488.430(a), 488.438(e)(2) and (f), 488.404, and 488.444(a).

C. It was not necessary for HCFA to use the word "rescind" in its May 18, 1999 letter.

Case law is clear that when HCFA rescinds all outstanding remedies against a facility, the rescission determination has the effect of eliminating any hearing rights the facility may have had under 42 C.F.R. § 498.3(b)(12).⁽⁹⁾ Schowalter Villa, CR568 at 2. However, Petitioner contends that "HCFA has refused to rescind the CMP." P. Brief at 14. HCFA did not specifically state in its May 18, 1999 letter that the CMP remedy was being "rescinded."

I conclude that HCFA need not have stated affirmatively in its May 18, 1999 letter that it had "rescinded" the CMP remedy.

"Rescind" is the term reflective of the legal conclusion that the DAB's administrative law judges and appellate judges have drawn from those revisions issued by HCFA pursuant to 42 C.F.R. §§ 498.30 and 498.32 which have had the effect of nullifying the previously imposed remedies. "Rescind" summarized and described the actions taken by HCFA in those cases. The fact that we have said "rescind" in our decisions does not signify that the identical word had been used by HCFA in its revised notice letters to the facilities. For example, I described the content of one revised notice as, "HCFA had determined that the remedies of DPNA and termination of Arcadia's participation agreement would not be imposed." Arcadia Acres, CR424 at 6 (emphasis added). Similarly, in summarizing the procedural background, the Appellate Panel of the DAB noted also that "HCFA notified Petitioner that no remedies would be imposed." Arcadia Acres, DAB No. 1607 at 2 (emphasis added). In another decision, I noted that, after the facility submitted its hearing request, "HCFA decided not to impose the two remedies specified in its earlier letter . . . prior to the dates they would have become effective." Country Club Center, DAB CR433 at 7 (1996) (emphasis added).

The analysis used by Administrative Law Judge Steven T. Kessel in one of his decisions further reinforces the conclusion that it is not the use of the word "rescission" by HCFA or the judges which controls the outcome of a motion to dismiss under 42 C.F.R. § 498.3(b)(12). He noted that HCFA, having advised the facility that certain remedies would be imposed and that it had a right to request a hearing, later notified the facility that those remedies would not be imposed. Fort Tryon Nursing Home, DAB CR425 at 3 (1996). Judge Kessel did not characterize HCFA's later action as a "rescission" of the earlier determination. Instead, he reasoned that "Petitioner does not have a right to a hearing inasmuch as HCFA never imposed the remedies that were described in the notice." Id. at 9. As for the fact that hearing rights were set forth in HCFA's earlier notice letter and had been requested by the facility, he concluded that "HCFA cannot confer a right to a hearing on a provider where the provider has no right to a hearing under applicable regulations." Id.

In some instances, the judges of the DAB have used the term "rescind" because both parties were in agreement with that characterization of HCFA's actions, and because the disputes did not concern HCFA's choice of words. See, e.g., Schowalter Villa, CR568 at 1, 3, and DAB No. 1688 at 1-2; University Towers Medical Pavilion, DAB CR436 at 2 (1996). The hearing requests in these and like cases were dismissed because HCFA's actions had the effect of nullifying the previously imposed enforcement remedies. Nothing in these decisions suggests that the use of the term "rescind" in HCFA's revised notice letters was a prerequisite to divesting us of jurisdiction under 42 C.F.R. § 498.3(b)(12). Moreover, inasmuch as the regulations authorize revisions (42 C.F.R. §§ 498.30 and 498.32), it was not improper for HCFA to describe its actions in its May 18, 1999 letter to Petitioner herein with these words:

The CMP has been reduced to $0.00 per day, a significant revision from the total $127,450.00 previously imposed for the period July 20, 1998 through August 20, 1998.

Attachment 4 of HCFA Brief.

D. As a matter of law, there no longer exists a CMP remedy when HCFA has reduced the amount to "zero."

As is clear from the administrative decisions cited by HCFA and the regulations at 42 C.F.R. § 498.3(b)(12), a facility does not have a right to correct its compliance record by use of the hearing process at 42 C.F.R. § 498.5 if HCFA, after having imposed one of the remedies which triggered appeal rights, withdraws the remedy before its effectuation. In this case, HCFA does not dispute that, when Petitioner filed its request for hearing, there was an outstanding appealable determination by HCFA to impose a CMP remedy set at the designated per diem rates. Petitioner does not contend that HCFA had effectuated collection of the previously assessed CMP amount. The parties before me disagree on the issue of whether any CMP remedy remained in existence after HCFA had reduced the amount to zero on May 18, 1999.

To accept Petitioner's position that a CMP remains in existence even though it is without any corresponding dollar amount, I would first have to disregard the fact that "money" is an integral part of the term "civil money penalty." To accept Petitioner's equation of zero with an outstanding CMP remedy, I would need to also disregard the fact that all of the other alternative remedies listed in 42 C.F.R. § 488.406(a) would require the affected facility to do something affirmative, to relinquish some identifiable authority, or to undergo some tangible detriment. Here, in contrast, the action alleged by Petitioner to be an enforcement remedy consists of paying no money to HCFA.

I take notice that 42 C.F.R. § 488.406(a) contains no definition of a CMP. No regulation or statute states specifically that, to be considered a CMP remedy, HCFA must assess and seek to collect some amount of money. However, I take notice also that the regulation at 42 C.F.R. § 488.438 contains all of the possible amounts for the CMP remedy. A CMP must be at least $50 per day, and no more than $10,000 per day, set in increments of $50. 42 C.F.R. § 488.438(a). Moreover, any notice issued by HCFA to impose the CMP remedy must state "[t]he amount of penalty per day[,]" "[t]he date on which the penalty begins to accrue[,]" "when the penalty stops accruing[,]" and "when the penalty is collected[.]" 42 C.F.R. § 488.434(a)(2)(iii), (v)-(vii).

Other regulatory requirements further support the conclusion that a CMP remedy must have a corresponding dollar amount which is being sought from the facility. For example, there are specific instructions on calculating the due date to be used for the collection of CMPs. 42 C.F.R. § 488.442(a). There are also instructions on how to collect the CMP, such as "deduction of the penalty from amount owed" by HCFA to the facility. 42 C.F.R. § 488.442(c). Similarly, there are very detailed directives for calculating the rates of interest "assessed on the unpaid balance of the penalty, beginning on the due date." 42 C.F.R. § 488.442(d). Additionally, there exists the requirements about where the CMP and corresponding interests collected by HCFA are to be deposited. If the CMP and corresponding interests are collected from a Medicare-participating facility, the amount must be deposited as "miscellaneous receipts of the United States Treasury;" if collected from a Medicaid-participating facility, then the CMP and corresponding interests must be "returned to the State." 42 C.F.R. § 488.442(e). If collected by HCFA from a dually participating facility, then the CMP with corresponding interests must be:

deposited as miscellaneous receipts of the United States Treasury and returned to the State in proportion commensurate with the relative proportion of Medicare and Medicaid beds at the facility actually in use by residents covered by the respective programs on the date the civil money penalty begins to accrue.

42 C.F.R. § 488.442(f).

Considering all of the foregoing regulatory requirements together makes obvious that, as a matter of law, there is no such thing as a CMP remedy with a zero (0) dollar value. What constitutes a CMP has been established by published regulations. The meaning of these regulations cannot be changed by drawing a contrary interpretation from the words used in HCFA's revised notice letter dated May 18, 1999.

It is true that HCFA has repeatedly used the term "reduce" in its May 18, 1999 letter to inform Petitioner that the agency no longer seeks any amount of the previously imposed CMP of $127,450. However, once a CMP remedy has been reduced to zero, the zero dollar amount no longer constitutes a CMP remedy. If HCFA wishes to impose a CMP, the amount must be set at a rate of at least $50 per day. No matter what words were used by HCFA, neither party may view zero as a CMP remedy within the meaning of the published regulations. In this case, HCFA had "reduced" the previously imposed CMP remedy out of existence.

HCFA appears to recognize that its choice of words has generated unnecessary controversy. In its brief to me, HCFA now explains its May 18, 1999 determination as a complete rescission of the CMP remedy. HCFA Brief at 6. I agree with HCFA's implicit argument that a "reduction" to zero results in nullification of the CMP remedy. HCFA's interpretation is consistent with the regulations noted above, whereas Petitioner's interpretation is not.

For these reasons, I conclude as a matter of law that no CMP remedy remains against Petitioner.

E. HCFA's acknowledgment of a pending hearing request in its revised notice letter does not preclude dismissal of this case.

In opposing HCFA's motion to dismiss, Petitioner noted the following statement in HCFA's May 18, 1999 letter:

While we have reduced the CMP, the hearing on the prior imposition of remedies is pending.

P. Brief at 3.

I do not interpret HCFA's words as meaning that litigation cannot be brought to a closure. Having reduced the CMP to "$0.00 per day" in the preceding sentence (Attachment 4 of HCFA's Brief), HCFA has stated the irrefutable fact that Petitioner's earlier filed request for hearing was still before me.

Both parties should know that it is the administrative law judge who has the authority to decide whether any on-merit hearing will be held pursuant to the outstanding request for hearing. See 42 C.F.R. § 498.70. It goes without saying that, even if HCFA had indicated a preference for letting the case continue under Petitioner's hearing request, HCFA's preference is not binding on me. A motion to dismiss for cause may be initiated by any party to the proceeding, or by the presiding administrative law judge. 42 C.F.R. § 498.70. Accordingly, Petitioner could not have concluded reasonably from the above quoted sentence that its hearing rights would remain unaffected by HCFA's revised decision.

At bottom, Petitioner opposes dismissal of this action because it wishes an opportunity to test the merits of those findings of noncompliance issued by HCFA, which HCFA has declined to rescind or otherwise eliminate. For the reasons set forth above, I am unable to provide the relief sought by Petitioner. However, Petitioner may use this Decision to show that, by HCFA's choice, the citations of noncompliance issued against Petitioner remain unproven allegations.

IV. Conclusion

I grant HCFA's motion to dismiss Petitioner's hearing request.

Mimi Hwang Leahy

1. In this Decision, I will discuss only the CMP remedy even though other enforcement actions had also been mentioned in HCFA's notice letters. There is no dispute that HCFA had rescinded an earlier determination to deny Petitioner payments for new Medicare admission. See Attachments 1 and 3 of HCFA Brief. Nor has either party relied on the imposition of a State monitoring remedy, which was discontinued by HCFA effective August 4, 1998. Id. No appeal rights had arisen from HCFA's imposition of the State monitoring remedy. 42 C.F.R. § 498.3(b)(12).

2. Although Petitioner goes on to explain certain inaccuracies it has noted on HCFA's website regarding survey dates, there is no further discussion in the record regarding any negative impact resulting from the public record on this matter.

3. While 42 C.F.R. § 498.3(b) specifically lists "initial determinations" that are appealable in this forum, other regulations also provide that a request for hearing may be filed by those affected by HCFA's "reconsidered determinations" or "revised determinations." 42 C.F.R. § 498.40(a); 42 C.F.R. § 498.2 (definition of "affected party"); 42 C.F.R. § 498.32(b)(1) (a revised determination is binding unless the affected party requests a hearing before an ALJ). Therefore, I consider the terms "initial," "reconsidered," and "revised," as denoting the sequence in which HCFA issued certain of its determinations. This sequence does not, by itself, attain hearing rights for the recipients of HCFA's determinations. Instead, the substance of any "initial," "reconsidered," or "revised," determination must be compared against the matters listed in 42 C.F.R. § 498.3(b).

4. IDR is a process made available by the state surveying agency. Attachment 1 of HCFA Brief at 4. Unlike the processing in this forum, IDR is not authorized by or conducted under the provisions of 42 C.F.R. Part 498. Among Petitioner's complaints is that:

[i]n Minnesota, the IDR process for Petitioner Lutheran Home was not a meaningful dialogue. It was no different than yelling into a canyon and hearing an echo. No one completed any review, and no one informed Petitioner Lutheran Home of the results of any review.

P. Brief at 10.

5. I take notice that the regulations regarding the nurse's aide training and competency evaluation program were amended effective July 23, 1999, permitting appeals of HCFA determinations made on or after that date. See 42 C.F.R. § 498.3(b)(15). However, these regulatory amendments do not apply to this case, where HCFA issued its determinations of record on August 21, 1998 and May 18, 1999.

6. Upon HCFA's issuance of an enforcement remedy that entitles the facility to request a hearing, the facility acquires the right to challenge the merits of the survey findings that have resulted in the remedy. 42 C.F.R. § 498.3(b)(12). The facility may not challenge HCFA's choice of alternative remedies (e.g., imposing a CMP instead of a directed plan of correction). 42 C.F.R. § 498.3(d)(11). However, a facility cannot be subjected to the consequences of any remedy imposed by HCFA unless the facility has been out of substantial compliance with one or more program requirements. See generally, 42 C.F.R. § 488.400. Therefore, assuming that the facility has exercised its rights to challenge the merit of survey findings as provided by 42 C.F.R. § 498.3(b)(12), the remedy chosen and imposed by HCFA will be set aside as a matter of law if the evidence received at the hearing establishes that the facility was not out of substantial compliance with any participation requirement.

7. I interpret this provision to mean the discretion of HCFA to impose a CMP, as opposed to one of the other available remedies.

8. "Basis" means a facility's failure to be in substantial compliance with one or more participation requirements. 42 C.F.R. § 488.430(a).

9. In urging me to hear the merits of the July 28, 1998 survey findings, Petitioner has quoted some legal analysis from my December 11, 1996 ruling in Baltic Country Manor, Docket No. C-96-281. P. Brief at 5. Neither the ruling nor the quoted passages supports the outcome urged by Petitioner herein. In Baltic Country Manor, I was denying the facility's request to adjudicate certain noncompliance findings made in 1994 and 1995 after a survey conducted in 1996 led HCFA to impose a CMP remedy. I rejected the facility's overly broad interpretation of 42 C.F.R. § 498.3(b)(12) by pointing out that the 1994 and 1995 survey results were not legally relevant to the case because the CMP remedy imposed by HCFA corresponded only to dates and findings of the 1996 survey. My analysis and conclusions in Baltic Country Manor are consistent with the Schowalter Villa line of cases.