SUBJECT:

Hearthstone of Mesa,

Petitioner,

Health Care Financing Administration

Petitioner, Hearthstone of Mesa (hereafter "Petitioner" or "facility"), is a nursing facility certified to participate in the Medicare and Medicaid programs as a provider of services. The Arizona Department of Health Services completed a Medicare certification survey of the facility on May 14, 1999, and a revisit survey on July 11, 1999. Based on its review of the survey findings, the Health Care Financing Administration (HCFA) determined that the facility was not in substantial compliance with the Medicare participation requirements, and, in a letter dated September 1, 1999, advised the facility that it was imposing the following remedies: (1) denial of payment for new admissions; and, (2) a civil money penalty (CMP) in the amount of $250 per day, effective May 14, 1999. The letter also advised Petitioner of its right to request a hearing before an administrative law judge, and explained that:

[a] request for a hearing should identify the specific issues, and the findings of fact and conclusions of law with which you disagree. It should also specify the basis for contending that the findings and conclusions are incorrect.

By letter dated October 6, 1999, HCFA referred to its earlier September 1, 1999 letter and further advised the facility that, based on a second revisit survey which was completed on August 31, 1999, the facility was found to be in substantial compliance with applicable federal requirements, effective August 23, 1999. HCFA stated that, as a result, the remedy of denial of payment for new admissions was not imposed, and the CMP of $250 per day, which began accruing on May 14, 1999, stopped accruing on August 23, 1999.

In a letter dated October 26, 1999, Petitioner requested an "appeal of the findings of non-compliance."

On February 24, 2000, HCFA submitted its "Motion for Summary Judgment and Motion for Further Development." Although considerable time has passed, Petitioner has not responded to HCFA's motion. Under the regulations, a party has 20 days from the date of mailing or personal service to submit any rebuttal statement (42 C.F.R. § 498.17), and, in a letter dated January 8, 2001, I advised the parties that I would, within 30 days, rule on HCFA's motion. I therefore issue this ruling.⁽¹⁾

For the reasons set forth below, I grant HCFA's motion. I dismiss Petitioner's October 26, 1999 request pursuant to 42 C.F.R. § 498.70(c).⁽²⁾

HCFA argues that Petitioner's hearing request should be dismissed because it fails to satisfy the requirements of 42 C.F.R. § 498.40(b) that the hearing request: (1) identify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees; and, (2) specify the basis for contending that the findings and conclusions are incorrect. In the alternative, HCFA asks for further development of the case to satisfy the specificity requirements of the regulations.

As appellate panels of the Department Appeals Board (Board) have emphasized, this tribunal should not lightly conclude that a petitioner has, contrary to clear requirements, failed to take advantage of its opportunity for hearing. See Fairview Nursing Plaza, Inc., DAB No. 1715 (2000) at 5. On the other hand, the Board's decisions mandate "strict adherence by petitioners to the regulations' requirements when filing hearing requests." Care Inn of Gladewater, Inc., DAB No. 1680 (1999); Birchwood Manor Nursing Center, DAB No. 1669 (1998), aff'd Birchwood Manor Nursing Center v. DHHS, No. 98-60695 (5^th Cir. June 29, 1999).

In Alden-Princeton Rehabilitation and Health Care Center, Inc., DAB No. 1709 (1999) and Fairview, the Board set forth the process for assessing the sufficiency of a hearing request and the suitability of dismissal for failure to satisfy regulatory requirements. First, I must determine whether the language of Petitioner's hearing request, when read in the context of HCFA's notice, meets the requirements set forth in the plain language of 42 C.F.R. § 498.40(b). If it fails to meet one or both of the regulatory requirements, I should consider whether to exercise my discretion not to dismiss the case.

I consider first whether Petitioner's request meets the requirements of 42 C.F.R. § 498.40(b). HCFA does not dispute the sufficiency of Petitioner's request in identifying the specific issues and findings with which it disagrees, as required by 42 C.F.R. § 498.40(b)(1). In this regard, the request -- which "disputes the factual allegations contained in the various HCFA forms 2567L," and "disputes the determinations that the . . . facility was not in substantial compliance," and specifically lists the contested deficiencies by citation to regulatory requirements -- is broad and inclusive but probably within the parameters set forth by the Board in Fairview.

HCFA challenges the adequacy of Petitioner's request under 42 C.F.R. § 498.40(b)(2), which requires that a petitioner articulate a specific basis for contending that HCFA's findings and conclusions are incorrect. The purported request sets forth the bases for Petitioner's appeal as follows:

[t]he bases for Hearthstone's disagreement with the determinations listed above may include, but are not limited to, observations of Hearthstone's employees and consultants, documentation maintained by Hearthstone or other health care providers, documentation maintained or created by HCFA, the Arizona state survey agency or other governmental entities and the opinions of expert witnesses.

Petitioner's October 26, 1999 letter, at 2.

In Fairview, the Board sustained as adequate under 42 C.F.R. § 498.40(b)(2) a hearing request that "unambiguously stated that [the petitioner] intended to challenge HCFA's action on factual grounds - by showing that each of the findings of fact in the examples supporting the deficiencies was inaccurate and that there were additional facts that would negate the conclusions that deficiencies existed." Fairview, at 12. The Board did not nullify the regulation, however, nor, as it was careful to point out, did it depart from its decisions in Birchwood Manor Nursing Center, Regency Manor Healthcare Center, et al., DAB No. 1672 (1998), and Care Inn of Gladewater, Inc. Hearing requests in those cases, the Board reasoned, were appropriately dismissed because each "failed to identify the specific issues or the findings of fact and conclusions of law with which the petitioners disagreed, as required by 42 C.F.R. § 498.40(b)(1), and/or to specify the basis for contending that the findings and conclusions were incorrect, as required by section 498.40(b)(2)." Fairview, at 4.

The request in Birchwood, for example, mentioned generally that it contested "remedies," "certification issues," and "adverse actions," without specifying any in particular, nor exactly the basis for its contest. In Alden-Princeton, the Board found inadequate a letter whose "imprecise language . . . failed to make clear whether Alden-Princeton intended to challenge each and every factual finding and legal conclusion potentially at issue." Alden-Princeton, at 10. Specifically with respect to the requirements of 42 C.F.R. § 498.40(b)(2), the Board held that the purported request's generalized allegations did not provide any specific grounds for contesting HCFA's findings and conclusions, as required by the regulations:

Alden-Princeton did not state, for example, whether particular violations cited in the surveys were "improperly found" because they were factually erroneous or because HCFA had erroneously interpreted program requirements in reaching its conclusions.

Alden-Princeton, at 10 - 11. The Board noted that requiring specificity ensures that the appellant "has reviewed the particular facts and law and determined whether it has any bases for raising any legitimate disputes." Id. at 10.

In Birchwood, the Board also pointed to the "compelling reasons" for adherence to the "clear requirements of the regulations." These include assuring HCFA the opportunity to prepare adequately, allowing an administrative law judge (ALJ) to rule correctly on relevance of evidence sought to be introduced at the hearing, and to determine whether a hearing is required. Perhaps most significant, these requirements help prevent substantial delay in the resolution of the case:

[c]ompliance with the requirements of 42 C.F.R. § 498.40 in its entirety inures to the benefit of those parties who are litigating in good faith and who wish to resolve meritorious disputes as expeditiously as possible, without incurring or causing others to incur the unnecessary expenditure of time, litigation expenses, or other resources. The regulation is grounded on the reasonable expectation that litigation will be initiated and maintained only for legitimate reasons, as demonstrated by, for example, the petitioner's willingness and ability to identify the facts and legal interpretations in controversy.

Birchwood, at 11, quoting December 12, 1997 ruling in Canton Healthcare Center, Docket No. C-96-266, at 35.

Moreover, even if the most blatantly equivocal language ("bases . . . may include, but are not limited to . . ." (emphasis added)) were removed from Petitioner's request, I am not convinced that the document would constitute a legitimate hearing request under 42 C.F.R. § 498.40(b). Petitioner has simply concocted a generic list of the types of evidence that might be used in a Medicare nursing home hearing, but has provided no information unique to this case. Such an approach hardly suggests that Petitioner has "reviewed the particular facts and law and determined whether it has any bases for raising any legitimate disputes." Alden-Princeton, at 10.

For these reasons, I conclude that Petitioner's October 26, 1999 letter does not satisfy the requirements of 42 C.F.R. § 498.40(b) because it does not specify the basis for Petitioner's contending that HCFA's findings and conclusions are incorrect.

I next consider whether I should exercise my discretion not to dismiss this case. 42 C.F.R. § 498.70 confers on ALJs the discretion to consider, when presented with extenuating circumstances in a particular case where the requirements of section 498.40(b) were not met, whether the case should not be dismissed in its entirety or as to any particular issue. Alden-Princeton, at 13. A case should not be dismissed for failure to comply with section 498.40(b) within the required 60-day time period for filing where good cause exists for such failure. A petitioner may file amendments of right within the initial 60-day period, or may move for an extension of the filing period in order to submit amendments. Birchwood, at 20 - 21. Here, as in Birchwood, no request for an extension of time for amending the request was ever filed, even though Petitioner has had ample time to do so. As in Birchwood, "Nothing submitted by any of these Petitioners . . . suggests a willingness or desire to amend the request." Birchwood, at 21. Indeed, Petitioner has not responded in any manner to HCFA's motion, although, again, it has had ample opportunity to do so, including fair warning of my intention to rule.

Circumstances justifying an exercise of discretion not to dismiss may also include HCFA's actual knowledge of what issues a petitioner sought to preserve for hearing, and whether events that took place before or during the proceedings may have led a petitioner to conclude that its hearing request was sufficient in whole or in part. Alden-Princeton, at 13. Given the paucity of Petitioner's submissions here, nothing in this record suggests that HCFA could have any knowledge of the issues Petitioner sought to preserve, nor could any evidence in this record have led Petitioner to believe that its hearing request was sufficient.

I therefore grant HCFA's motion and dismiss Petitioner's October 26, 1999 request under my authority granted by 42 C.F.R. § 498.70(c). See Birchwood (42 C.F.R. § 498.70(c) authorizes dismissal where a document filed within the 60-day period provided in 42 C.F.R. § 498.40(a) does not constitute a request for hearing within the meaning of 42 C.F.R. § 498.40(b)). See also, Social Security Act, section 1128A(c)(4).

Carolyn Cozad Hughes

Administrative Law Judge

1. On January 19, 2000, the Mariner group of nursing facilities, Petitioner being one of them, filed a "Notice of Bankruptcy Stay." In this Notice, the facilities stated that Mariner and its subsidiaries had filed for bankruptcy, and, for this reason, all matters against the facilities should be stayed pursuant to 11 U.S.C. § 362. On May 1, 2000, a "Ruling Denying Petitioner's Motion for Automatic Stay" was issued, which denied Petitioner's motion for automatic stay of these proceedings. Petitioner was advised that this case would move forward.

2. Because I am dismissing Petitioner's October 26, 1999 request pursuant to 42 C.F.R. § 498.70(c), I do not consider HCFA's Motion for Further Development.