SUBJECT:

St. Lawrence of Dimondale,

Petitioner,

Health Care Financing Administration

Employees of the Michigan Department of Consumer and Industry Services (MDCIS) visited St. Lawrence of Dimondale (Petitioner) on October 2, 1998, in order to conduct an abbreviated complaint survey. The surveyors cited Petitioner at the "D" and "G" levels of non-compliance.

MDCIS reported these findings to Petitioner by letter dated October 12, 1998. In that letter, MDCIS informed Petitioner that State monitoring would be immediately imposed, and that additional remedies might be recommended to and/or imposed by the Health Care Financing Administration (HCFA) in the future, if substantial compliance with federal requirements for nursing homes participating in the Medicare/Medicaid programs was not achieved.⁽¹⁾

A revisit survey by MDCIS on December 9, 1998, found the facility to be in substantial compliance with federal requirements. Consequently, no recommendation was made to HCFA for imposition of remedies against Petitioner. As a result, HCFA did not impose any remedies.

Notwithstanding the above, on February 11, 1999, Petitioner filed a request for hearing pursuant to 42 C.F.R. § 498.40.

On July 13, 1999, HCFA moved for dismissal of this case, claiming that Petitioner has no right to a hearing. HCFA contends that administrative review is reserved only for those HCFA actions that constitute "initial determinations," as defined in 42 C.F.R. § 498.3(b).

It is my decision that Petitioner has received no initial determination which is subject to the hearing procedures of 42 C.F.R. Part 498. There exists no regulatory or statutory authority which permits administrative review of a State survey action resulting only in State monitoring. Thus, Petitioner does not have a right to a hearing in this matter. Dismissal of this action is appropriate pursuant to 42 C.F.R. § 498.70(b).

The sole issue before me is whether Petitioner has a right to a hearing as a matter of law.

1. On October 2, 1998, MDCIS surveyors found Petitioner to be in noncompliance with federal requirements for participation in the Medicare/Medicaid programs.

2. On December 9, 1998, MDCIS surveyors found Petitioner to be in substantial compliance with federal requirements, and made no recommendation to HCFA for imposition of remedies.

3. State monitoring was the only remedy imposed. HCFA did not impose any remedies against Petitioner.

4. Part 498 of Title 42 of the Code of Federal Regulations specifies the appeals procedures for determinations that affect providers' participation in the Medicare and Medicaid programs. 42 C.F.R. Part 498.

5. Unless a disputed administrative action taken by HCFA is among those listed in 42 C.F.R. § 498.3(b), the action cannot be considered an "initial determination" by HCFA and is not subject to the appeals process of 42 C.F.R. Part 498. 42 C.F.R. § 498.3(d).

6. The imposition of State monitoring is specifically listed as not constituting an initial determination at 42 C.F.R. § 498.3(d)(10)(iii).

7. There is no legal authority for adjudication of a facility's objections to a State agency's survey findings where HCFA did not make an initial determination in accordance with 42 C.F.R. § 498.3(b).

8. Petitioner is not entitled to a hearing pursuant to 42 C.F.R. Part 498.

9. Dismissal of Petitioner's hearing request is appropriate under 42 C.F.R. § 498.70(b).

Petitioner does not dispute that in this case there is no "initial determination" within the meaning of 42 C.F.R. § 498.3(b). Petitioner concedes that the imposition of the State monitoring remedy does not constitute an initial determination under 42 C.F.R. § 498.3(b)(12). Petitioner acknowledges further that the fact that an adverse finding creates a compliance record which could negatively impact future HCFA penalty/remedy decisions "does not change that outcome."⁽²⁾ P. Br. at 2.

The case at hand, according to Petitioner, presents a unique situation not present in the cases relied upon by HCFA. In those cases, the facilities "suffered only a slight chance that past findings of noncompliance would contribute in some imprecise way to an enhancement of some remedy which those facilities might suffer in the future." P. Br. at 3. However, Petitioner points out that, effective April 1, 1999, HCFA announced a change in the mandatory criteria used to make a "poor performing facility" determination.⁽³⁾ In Petitioner's words, "HCFA decreed that it would impose remedies . . . without a grace period of an opportunity to correct the alleged deficiency whenever the facility's last regular survey contained one or more "G" level citations" (as in the present situation). Id. Thus, Petitioner finds it critical to have the opportunity "to contest this one-time citation, in order . . . to avoid the automatic imposition of fines or other remedies in case of a subsequent citation." Id.

There is no provision in the regulations for the remedy sought by Petitioner. The regulations make a hearing available exclusively for those HCFA actions that constitute "initial determinations" listed in 42 C.F.R. § 498.3(b). Furthermore, 42 C.F.R. § 498.3(d)(10)(iii) specifically states that the imposition of State monitoring is an administrative action that is not an initial determination.

Petitioner seeks in vain to distance the facts in this case from those in the cases relied upon by HCFA in its brief. One such case cited by HCFA is Schowalter Villa, DAB CR568 (1999), aff'd DAB No. 1688 (1999). The petitioner in that case sought to pursue a request for hearing previously filed, even after HCFA rescinded the imposition of two enforcement remedies listed in 42 C.F.R. § 488.406. The petitioner wished to continue the action since it remained subject to a ban on nurse-aide training and was concerned about its compliance record. The administrative law judge stated that, under the regulations, the loss of the approval for a nurse-aide training program was not an "initial determination" subject to administrative review.⁽⁴⁾ The ALJ held that she was without the authority to review or redress Petitioner's objections to having been banned from providing a nurse-aide training program. The ALJ held also that she was without the authority to review or redress Petitioner's objection to having been left with a bad compliance record even after HCFA had rescinded the imposition of all enforcement remedies under 42 C.F.R. § 488.406. Schowalter Villa, DAB CR568, at 1.

Similarly, in the case before me, the only remedy imposed by HCFA was State monitoring, and Petitioner seeks to avoid an adverse compliance history. I find that the analysis of Schowalter Villa and its conclusions concerning an administrative law judge's reviewing authority pursuant to 42 C.F.R., Subpart A, Part 498, are applicable here. If anything, the Petitioner in this case has a weaker argument inasmuch as no recommendation to impose a remedy was made to HCFA by the State survey agency, and HCFA did not impose any such remedy.

Petitioner further argues that HCFA has put a rule into effect without properly going through the public notice requirements. P. Br. at 5-7. Consideration of that issue is also beyond the reach of my adjudicatory prerogatives. Additionally, I am prohibited from issuing what would amount to a declaratory judgment.

For the reasons stated above, I grant HCFA's Motion to Dismiss. Accordingly, this case, including all issues Petitioner has attempted to raise, is hereby dismissed pursuant to 42 C.F.R. § 498.70(b).

Jose A. Anglada

Administrative Law Judge

1. HCFA attached to its brief a copy of the October 12, 1998 Notice of Imposition of Remedies from MDCIS. I have identified this letter as HCFA Ex. 1 and admit it into evidence.

2. In a letter dated March 19, 1999 sent to our office, Petitioner stated, among other things, that it had received an acknowledgment from HCFA that its hearing request had been forwarded to our office. I have identified Petitioner's March 19, 1999 letter as ALJ Ex. 1 and admit it into evidence. In the letter, Petitioner stated that our office had asked Petitioner for a copy of HCFA's Notice of Initial Determination in this matter, i.e., Notice of Imposition of Remedy. Petitioner stated that because it had submitted a plan of correction to MDCIS to remedy the deficiency cited in the October 2, 1998 survey, "and because no remedies were imposed other than the state monitoring remedy, HCFA never made an initial determination in this case." ALJ Ex. 1, at 1.

3. Petitioner refers to a HCFA memorandum dated September 22, 1998, which it attached to its brief. I have identified this HCFA memorandum as P. Ex. 1 and admit it into evidence. The subject of this memorandum is "Change in Mandatory Criteria used to Make 'Poor Performing Facility' Determination." The memorandum states, among other things, the following:

To strengthen enforcement, the mandatory "poor performing facility" criteria are being revised. Under the revised criteria, if a facility is found out of compliance with any deficiency with a Scope and Severity (S/S) at the level of actual harm or higher (boxes G, H, I, J, K, L) on the current survey AND the facility had a deficiency at the level of actual harm or higher at the previous standard survey or any intervening survey (i.e., any survey between the last standard survey and the current one), the facility will be considered a poor performing facility and will not be given an opportunity to correct deficiencies prior to the imposition of remedies.

P. Ex. 1, at 1.

I note that Petitioner's brief states that the effective date for HCFA's new policy was April 1, 1999. However, in reviewing this memorandum, I could not find any reference to the effective date of HCFA's new policy. At page 2 of the memorandum, there is mention of a phase-in period, but no effective date is given. Thus, there is no official verification of the April 1, 1999 effective date in the record before me. Verification of when the new policy went into effect, however, is not essential to the conclusion I reach in this case.

4. In the current version of the regulations, the loss of the approval for a nurse-aide training program is no longer mentioned as being an administrative action that is not an initial determination.