CASE | DECISION | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Meadowbrook Manor,

Petitioner,

DATE: April 25, 2001
                                          
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Health Care Financing Administration

 

Docket No.C-00-647
Decision No. CR764
DECISION
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DECISION

On October 30, 2000, the Health Care Financing Administration (HCFA) filed a motion to dismiss Petitioner's June 30, 2000 hearing request for untimeliness, accompanied by a brief (HCFA Br.) and six proposed exhibits (HCFA Exs. 1-6.). I am admitting these exhibits into evidence as HCFA Exs. 1-6. On November 29, 2000, Petitioner filed a brief in opposition (P. Br.) and six proposed exhibits (P. Exs 1-5 and 10). I am admitting these exhibits into evidence as P. Exs. 1-5 and 10. On December 20, 2000, HCFA submitted a reply brief (HCFA R. Br.), accompanied by the affidavit of Lesley Stevens, which I am admitting into evidence as HCFA Exhibit 7.(1) On January 4, 2001, Petitioner responded to HCFA's reply (P. R. Br.), and submitted two additional exhibits, which I am admitting into evidence as P. Exs. 11 and 12. P. Ex. 11 is the affidavit of Petitioner's counsel, Matthew J. Murer.(2)

After consideration of the written arguments and documentary evidence submitted by the parties, I grant HCFA's motion to dismiss. In doing so, I find that the hearing request was untimely filed and that the time for filing a request for hearing should not be extended, as Petitioner has not shown good cause for its failure to file a timely hearing request.(3)

Undisputed Facts

Petitioner is a skilled nursing facility, located in Bolingbrook, Illinois, which participates in the Medicare and Medicaid programs. On February 4, 2000, the Illinois Department of Public Health (IDPH) informed Petitioner that an inspection of its facility on January 27, 2000, revealed that it was not in compliance with federal requirements for nursing homes participating in the Medicare and Medicaid programs. P. Ex. 1. Consistent with those findings, IDPH notified Petitioner that a civil money penalty (CMP) and other remedies were being imposed, as authorized by HCFA. The IDPH letter stated on page 3 (P. Ex. 1, at 3) that a CMP was being imposed, wheras at page 4 (P. Ex. 1, at 4) it indicated that a CMP was being recommended for imposition by HCFA. Subsequently, on March 7, 2000, IDPH sent Petitioner an amendment to the February 4, 2000 notice. P. Ex. 3. The March 7, 2000 notice was identical to the February 4, 2000 notice in all respects, except that it listed the CMP as a remedy recommended to HCFA for imposition, as opposed to saying IDPH itself was imposing the remedy. P. Ex. 3, at 3. However, on March 2, 2000, HCFA had notified Petitioner, by facsimile and by mail, that it concurred with IDPH's recommendations and was imposing the CMP and other remedies. P. Ex. 2. HCFA further informed Petitioner that if it disagreed with that determination it could request a hearing before an administrative law judge (ALJ) within 60 days of receipt of the notice, pursuant to 42 C.F.R. § 498.40. Id. at 3. Petitioner filed a request for hearing on June 30, 2000. P. Ex. 5.

Issues

The issues in this case are:

1. Whether Petitioner filed a timely request for hearing; and

2. Whether Petitioner has shown good cause for extending the time period within which it should be allowed to file a request for hearing.

Applicable Law and Regulations

In cases involving HCFA, a party is entitled to a hearing only if that party files its request for hearing within the time limits established by 42 C.F.R. § 498.40(a)(2), unless the time period for filing is extended. In order to be entitled to a hearing, a party must file its request within 60 days from its receipt of a notice of a determination by HCFA imposing a remedy. Id. The date of receipt of a notice is presumed to be five days after the date on the notice, unless there is a showing of actual receipt on an earlier or later date. Id.; 42 C.F.R. § 498.22(b)(3). An ALJ may extend the time within which a hearing request may be filed based on a showing of good cause justifying an extension of time. 42 C.F.R. § 498.40(c)(2). An ALJ may dismiss a request for hearing which is not timely filed. 42 C.F.R. § 498.70(c).

Findings and Discussion

I make findings of fact and conclusions of law (Findings) to support my decision to dismiss. Each Finding is noted below, in bold face and italics, followed by a discussion of the Finding.

1. Petitioner did not file a timely request for hearing.

HCFA sent Petitioner the notice of deficiencies by facsimile on March 2, 2000, as well as by mail. P. Ex. 2. The regulatory presumption is that Petitioner received the notice not later than March 7, 2000. 42 C.F.R. § 498.22(b)(3). Petitioner does not dispute receipt of HCFA's notice of imposition of remedies. In fact, Petitioner admits having received HCFA's letter imposing sanctions on March 2, 2000. P. Ex. 11, at 1, paragraph 4. Nonetheless, it was not until June 30, 2000, more than 110 days after receipt of HCFA's determination, that Petitioner filed a request for hearing before an ALJ.

42 C.F.R. § 498.40(a)(2) expressly provides that:

[An] affected party or its legal representative or other authorized official must file the request for hearing in writing within 60 days from the receipt of the notice of initial, reconsidered, or revised determination unless that period is extended . . . .

The filing of Petitioner's request was clearly beyond the 60 days stipulated in the regulations. Also, 42 C.F.R. § 498.22(b)(3) provides that the "receipt of the notice of [an] initial determination . . . will be presumed to be 5 days after the date on the notice unless there is a showing that it was, in fact, received earlier or later." As stated above, Petitioner received HCFA's notice on March 2, 2000. Thus, the time for seeking a hearing expired on May 1, 2000.

2. Petitioner has failed to establish good cause justifying an extension of time to file its request for hearing.

Petitioner has requested an extension of time to file its request for hearing. Such request is permissible pursuant to 42 C.F.R. § 498.40(c)(1). However, I have discretion to grant Petitioner's application for leave to file untimely only upon a showing of good cause. 42 C.F.R. § 498.40(c)(2). For the reasons set forth below, I find that Petitioner has failed to establish good cause for late filing. 42 C.F.R. § 498.40(c)(2).

Petitioner's Arguments

Petitioner contends that there was good cause for its delay in requesting a hearing. Petitioner asserts that IDPH misled it by providing the amended notice, which notice stated that it replaced the previous notice of February 4, 2000 and indicated that the CMP "should only be listed under the remedies recommended to HCFA for imposition." P. Br. at 4. Petitioner goes on to say that IDPH confirmed that no remedy existed when its representative was telephonically informed by IDPH on March 23, 2000 that no remedies were being imposed. Id. In support of its contention Petitioner offered an affidavit by one of the attorneys representing the facility in this matter, Mr. Murer. P. Ex. 11. The thrust of this sworn statement by Mr. Murer is that on or about March 23, 2000, he contacted Lesley Stevens by telephone at IDPH and, in response to his inquiry, Ms. Stevens informed him that the February 4, 2000 notice had been amended to indicate that IDPH was only recommending that a CMP be imposed. Id. According to Mr. Murer, Ms. Stevens also stated that at that time no CMP was being imposed. Id. Thus, Petitioner concludes that its failure to request a hearing within the required 60 days was caused by the written and verbal representations made by IDPH that no remedies were being imposed. P. Br. at 4-8.

Petitioner places reliance on the holding in the case of Hospicio San Martin, DAB CR387, at 21 (1995), aff'd, DAB No. 1554 (1996), insofar as it defines good cause for late filing as including circumstances beyond a party's ability to control. Petitioner reasons that the misleading amended notice issued by IDPH on March 7, 2000, together with the telephonic representations of Ms. Stevens, constituted circumstances beyond the facility's control causing it to make an untimely filing of its request for hearing. P. Br. at 4. Petitioner further argues that its attorneys' familiarity with the Departmental Appeals Board's rulings led them to conclude that, in the absence of an imposed remedy, a provider has no appeal right. P. Br. at 5-6.

Petitioner argues also that dismissal of the case is inappropriate, because such a sanction is not reasonably related to its alleged misconduct. P. Br. at 9. Petitioner relies on the cases of Osceola Nursing and Rehabilitation Center, DAB No. 1708 (1999) and Rodgers v. Curators of the University of Missouri, 135 F.3d 1216 (8th Cir. 1998), to support its view that "dismissal with prejudice is an extreme sanction and should only be used in cases of willful disobedience of a court order . . . or persistent failure to prosecute a claim." Rodgers, 135 F.3d, at 1219; P. Br. at 9. Petitioner suggests that the conclusion reached by the appellate panel of the Departmental Appeals Board in Osceola, to the effect that dismissal should be a remedy of last resort, is binding here. Petitioner suggests that the case of Stough v. Mayville Community Schools,138 F.3d 612 (6th Cir. 1998), cited with approval by the appellate panel in Osceola, adopted a four-prong test that makes dismissal here an inappropriate sanction. That test requires the judge to address the following factors:

(1) whether the party's failure is due to willfulness, bad faith, or fault;

(2) whether the adversary was prejudiced by the dismissed party's conduct;

(3) whether the dismissed party was warned that the failure to cooperate could lead to dismissal; and,

(4) whether less dramatic sanctions were imposed or considered before dismissal was ordered.

Stough, 138 F.3d, at 615.

HCFA's Arguments

HCFA contends that Petitioner did not file a timely request for hearing and that no good cause exists for an extension of time. It specifically opposes Petitioner's position that there were circumstances present beyond the facility's ability to control which prevented it from making a timely hearing request. HCFA Br. at 6; Hospicio San Martin, DAB CR387 (1995), aff'd, DAB No. 1554 (1996); Mathis Nursing Home, DAB CR436 (1997); Wellington Oaks Care Center, DAB CR456 (1997), aff'd, DAB No. 1626 (1997). In the present case, HCFA asserts that Petitioner made an error in judgment in choosing to believe that the CMP imposed by HCFA in its March 2, 2000 letter had been rescinded. The logic of HCFA's reasoning is that such mistaken belief does not amount to circumstances beyond the facility's ability to control.

As an additional argument, HCFA asserts that there is an absence of evidence that it authorized IDPH to either impose or rescind the CMP. HCFA Br. at 7.

Discussion

The fundamental issue to be decided here is whether Petitioner has shown good cause to extend the time period in which it should be allowed it to file a request for hearing beyond the 60 days provided in the regulations. 42 C.F.R. § 498.40(c)(1) and (2). Inasmuch as what constitutes good cause is not defined in the regulations, I must look to case law for guidance in pursuit of a definition. Appellate panels of the Departmental Appeals Board have held that "good cause" means circumstances beyond an entity's ability to control which prevented it from making a timely request for hearing. Hospicio San Martín, DAB No. 1554 (1996).

In view of the foregoing, I examine the facts of this case to determine what circumstances, if any, beyond Petitioner's control prevented it from filing a timely hearing request. The thrust of Petitioner's argument in addressing this issue is two pronged:

  • The IDPH amended notice of March 7, 2000, together with Ms. Stevens' assurance that no CMP was being imposed, was so misleading that it caused Petitioner not to file a hearing request because it did not believe that there was anything to appeal at that time.

  • Dismissal should be used only as a remedy of last resort.

The facts of this case reveal that on February 4, 2000, IDPH sent Petitioner a notice and statement of deficiencies, pursuant to a January 27, 2000 inspection, which found that the facility was not in substantial compliance with federal participation requirements. P. Ex. 1. At page 3 of that notice, IDPH informed Petitioner that a CMP was being imposed. However, that same notice, at page 4, informed Petitioner that the CMP was being recommended for imposition by HCFA. IDPH corrected the contradictory information provided to Petitioner by letter of March 7, 2000. IDPH noted that the February 4, 2000 notice was being amended to show that the CMP should have been listed only as a remedy recommended to HCFA for imposition. P. Ex. 3, at 3. More specifically, the affidavit of Ms. Stevens refers to the above incident as being an inadvertent typographical error that was corrected by the letter dated March 7, 2000. She added that the amended letter served as clarification that the CMP was a remedy that was being recommended to HCFA for imposition, but was not being imposed by IDPH. HCFA Ex. 7, at 2.

Ms. Stevens' statement is supported by the affidavit of Petitioner's counsel, Mr. Murer. At page one of his sworn statement, Mr. Murer says that: "Ms. Stevens stated that it amended the February 4, 2000 correspondence and that the Department was only recommending that a CMP be imposed." P. Ex. 11, at 1, paragraph 6. Petitioner claims that its attorneys were knowledgeable regarding Departmental Appeals Board rulings. P. Br. at 5. Consequently, neither the amendment nor its import should have been surprising to Petitioner. Thus, when Ms. Stevens informed Mr. Murer that "at this time" (id.) no CMP was being imposed, Petitioner knew or should have known that such statement could only be taken to mean that at that point in time IDPH was not imposing a CMP inasmuch as that was only within HCFA's province. Ms. Stevens is unequivocal in her affidavit to the effect that at no time did she tell Mr. Murer that a CMP was not being imposed by HCFA. HCFA Ex. 7, at 3, paragraph 7. Mr. Murer candidly admits as much in his own statement when he asserts that he did not ask Ms. Stevens specifically whether HCFA was imposing a CMP, but only whether any CMPs were being imposed. P. Ex. 11, at 2, paragraph 7. At that point in time, Ms. Stevens was unaware that HCFA had adopted its determination of February 4, 2000. HCFA Ex. 7, at 3, paragraph 6. It is understandable, therefore, that when she told Mr. Murer that no CMP was being imposed she meant that IDPH was not imposing a CMP at that time. Such imposition would have to come from HCFA. In view of the foregoing, I cannot agree with Mr. Murer that as a result of his discussion with Ms. Stevens on March 23, 2000, he had reason to understand that no CMP was being imposed by either IDPH or HCFA. See Hillcrest Health Facility, Inc., DAB CR489 (1997).

The above conclusion is further reinforced by the fact that on March 2, 2000, Petitioner received HCFA's notice of imposition of remedies indicating concurrence with the determination by IDPH to assess a CMP and faxed that notice to Mr. Murer. P. Ex. 11, at 1, paragraph 4. This was a fact known to him on March 23, 2000, when he spoke with Ms. Stevens over the telephone. On the other hand, Ms. Stevens was unaware of the HCFA notice, and, thus, her dialog with Mr. Murer must be viewed in the context of her lack of knowledge that HCFA had already chosen to impose a CMP. HCFA Ex. 7, at 3, paragraph 6. I find Mr. Murer's silence as to his knowledge that HCFA had already notified Petitioner that it had imposed a CMP at the time he spoke with Ms. Stevens to be puzzling. Moreover, Mr. Murer could have contacted HCFA on Petitioner's behalf and sought clarification of the March 2, 2000 notice. Petitioner's attorneys were or should have been aware that HCFA's authority as to the imposition of a CMP is preponderant.

In conclusion, I find that Petitioner has advanced no cogent reason to justify inaction. In this regard, it had no reason to believe that HCFA's March 2, 2000 notice could be ignored or that it was superseded by the IDPH notice of March 7, 2000. HCFA's March 2, 2000 notice letter told Petitioner unambiguously that it had 60 days from the date of its receipt of the notice to file a written request for a hearing. P. Ex. 2, at 3. It strains credulity that Petitioner was driven to ignore HCFA's admonishment that it had 60 days to seek a hearing due to its tortured interpretation of IDPH's simple correction of its obvious mistake in referencing the CMP as being actually imposed rather than recommended. Such error in judgment is not a matter beyond Petitioner's control which prevented it from filing a timely request for hearing. Finally, Petitioner's interpretation is inconsistent with the language of the pertinent notices in this case as well as with the regulatory criteria.

Petitioner's second point of contention derives mainly from its reading of the holding in Osceola. Except to the extent that Osceola states that in dismissing a hearing request an ALJ may not abuse his or her discretion, that decision is inapplicable here. In Osceola, the ALJ dismissed a request for hearing pursuant to 42 C.F.R. § 498.69 due to abandonment. The ALJ's dismissal was a sanction against Petitioner based on a perceived disregard for the judge's orders.

In this case I am not imposing a sanction, but merely concluding that Petitioner does not have a right to a hearing. Petitioner cites authorities treating the subject of dismissal as a sanction for a party's misconduct. For example, it places reliance on the appellate panel's reference to the four-prong test in Stough. Such reliance is misplaced. In reviewing ALJ dismissals for untimeliness, appellate panels of the Departmental Appeals Board have never weighed matters such as the dismissed party's willfulness or bad faith. Also, it is ludicrous to require a judge to forewarn a party that it faces dismissal if it files a request for hearing untimely.

Appellate panels of the Departmental Appeals Board have unequivocally stated that the panels' standard of review for ALJ decisions is whether an ALJ abused his or her discretion in finding no good cause to extend a filing deadline. See Cary Health and Rehabilitation Center, DAB No. 1771 (2001). The regulatory criteria applicable to the cases cited by Petitioner are set forth at 42 C.F.R. § 498.69. What I consider here instead is whether a party that has missed the 60-day deadline for requesting a hearing is deserving of an extension of time to file its hearing request for good cause shown, pursuant to 42 C.F.R. § 498.40(c)(2). If an ALJ was required to carry the burden set forth in Stough when considering dismissal, where, as here, a party is not entitled to a hearing, it would render meaningless the 60-day statutory limit to file a request for hearing.

Conclusion

Based on the applicable law and undisputed facts, I conclude that Petitioner's hearing request was untimely filed and that good cause does not exist to extend the time period for filing. HCFA's motion to dismiss is granted.

JUDGE
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José A. Anglada

Administrative Law Judge

 

FOOTNOTES
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1. HCFA labeled this exhibit as HCFA Ex. A. I have redesignated this document as HCFA Ex. 7 in order to better conform to the Civil Remedies Division's procedures. I have also redesignated the attachments to HCFA Ex. 7 as HCFA Ex. 7 attachments A and B.

2. P. Ex. 10 is also an affidavit by Mr. Murer.

3. On October 2, 2000, I issued an Order directing Petitioner to show cause why it had not submitted certain documents within 60 days of my initial Order in this case dated July 13, 2000, which failure suggested that Petitioner had abandoned its request for a hearing. Petitioner's response was sufficient to show that it had not abandoned its hearing request.

CASE | DECISION | JUDGE | FOOTNOTES