SUBJECT:

Four Winds - Syracuse,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

After considering the arguments of the parties, the documentary evidence, and the applicable law and regulations, I sustain the Centers for Medicare & Medicaid Services (CMS') determination that Petitioner's effective date of certification for participation in the Medicare program was June 13, 2001.

I. Background

On May 9, 2000, Arbor Winds, LLC, acquired the Benjamin Rush Center, a psychiatric hospital located in Syracuse, New York, and changed the name to Four Winds - Syracuse. Rather than accept assignment of the Benjamin Rush Center's Medicare provider agreement and provider number, Four Winds decided to apply for a new provider number. Petitioner was required to submit to two surveys before it could be certified to participate in the Medicare program: a survey for the general hospital conditions of participation and a survey for the two special psychiatric hospital conditions.

The hospital conditions of participation survey was conducted on May 11, 2000. Immediately after the survey, a statement of deficiencies was presented to Four Winds, and a plan of correction was filed the same day. The survey for the two special conditions of participation was concluded by CMS contract surveyors on May 12, 2000. No written statement of deficiencies was provided at the time of the exit interview for the two special conditions of participation. The CMS contractors informed the hospital's administrators that Four Winds had passed the survey and that it had met both conditions of that part of the survey. P. Ex. 6 at 2.

On June 8, 2000, CMS forwarded a statement of deficiencies to Petitioner identifying five deficiencies, and Petitioner filed a Plan of Correction on June 13, 2000. On June 22, 2000, CMS notified Petitioner that its agreement for participation as a psychiatric hospital had been accepted, and that its effective date of participation was June 13, 2000.

Petitioner requested Reconsideration on August 17, 2000, which it supplemented on October 13, 2000. CMS denied the request for reconsideration on December 20, 2000, and Petitioner filed a request for a hearing before an administrative law judge on February 15, 2001. Subsequently, this case was assigned to me for hearing and decision.

On May 21, 2001, I adopted the briefing schedule suggested by the parties, which concluded with the parties' response briefs dated June 29, 2001. In the absence of objection, I am admitting into evidence CMS' three proposed exhibits (CMS Exs. 1-3) and Petitioner's 10 proposed exhibits (P. Exs. 1-10). Neither party offered Petitioner's supplemental submission dated October 13, 2000 in support its request for reconsideration. I am, therefore, admitting that four-page document as administrative law judge exhibit 1 (ALJ Ex. 1).

II. Applicable law and regulations

In order to be approved for participation in the Medicare program, a provider must meet the applicable statutory definition and be in compliance with conditions or requirements for participation. 42 C.F.R. § 488.3. 42 C.F.R. Part 488 sets forth the survey and certification process by which CMS and its authorized agents determine whether a provider is complying with the applicable conditions for participation.

Medicare participation requirements for psychiatric hospitals are found in 42 C.F.R. Part 482. These regulatory requirements establish that psychiatric hospitals must meet all conditions of participation applicable generally to hospitals, as well as special certain conditions. See 42 C.F.R. §§ 482.61, 482.62. Conditions of participation are broken down into standards. A provider, or prospective provider, that is found to be deficient with respect to one or more standards in the conditions of participation, may participate in Medicare only if the facility submits an acceptable plan of correction for achieving compliance within a reasonable period of time as required by 42 C.F.R. § 488.28(a).

A Medicare provider agreement is effective on the date the survey is completed, if on that date the provider meets all federal requirements. 42 C.F.R. § 489(13)(b). If on the date the survey is completed the provider fails to meet any of the requirements specified

in 42 C.F.R. Chapter IV the effective date of certification is the earlier of the following:

• the date on which the provider meets all requirements, or
  

• the date on which a provider is found to meet all conditions of participation or coverage, but has lower level deficiencies, and CMS or the State survey agency receives an acceptable plan of correction for the lower level deficiencies.
  

III. Issue

The issue in this case is whether CMS correctly determined that Petitioner's effective date of participation in the Medicare program is June 13, 2000.

IV. Burden of Proof

As an applicant for certification as a participant in the Medicare program, Petitioner has the burden of establishing that it satisfies participation requirements. 42 C.F.R. § 489.10(a). Petitioner also has the ultimate burden of rebutting, by a preponderance of the evidence, any prima facie case of noncompliance established by CMS. Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Center v. U.S. Dep't of Health and Human Services, No. 98-3789 (GEV), at 21-38 (D.N.J., May 13, 1999).

CMS meets its burden to establish a prima facie case merely by establishing that Petitioner has not supplied it with sufficient affirmative evidence that it is complying with participation requirements. As an applicant for certification, Petitioner must show affirmatively that it is complying with such requirements.

V. Findings and Discussion

My findings of fact and conclusions of law are noted and numbered below, in bold and italics, and are followed by a discussion of each finding.

1. CMS correctly certified Petitioner to participate in the Medicare program effective June 13, 2000.

For an applicant to qualify for participation in the Medicare program as a psychiatric hospital, it must satisfy "all applicable Federal requirements as specified in paragraph (b) of 42 C.F.R. § 489.13." CMS contends that whereas Petitioner met all the conditions of participation applicable generally to hospitals, contract surveyors identified five lower level deficiencies at the time of the May 12, 2000 survey. Consequently, argues CMS, Petitioner could not have been certified earlier than the date on which it submitted an acceptable plan of correction on June 13, 2000. CMS Br. at 6, 7.

Petitioner, on the other hand, argues that on May 12, 2000, CMS contract surveyors assured Four Winds that the facility had "passed" and "met both conditions of the survey." As a result of this information, says Petitioner, it began to treat Medicare patients, under the belief that it had met the terms and conditions necessary to provide treatment to such patients. Moreover, Petitioner claims that it would have immediately filed a plan of correction if not for the misleading information provided by the surveyors rather than allow 27 days to lapse while waiting for a statement of deficiencies to arrive. P. Br. at 6.

The second point of contention raised by Petitioner is that CMS is estopped from denying it Medicare certification effective May 12, 2000, in view of the misrepresentation of the contract surveyors. P. Br. at 8.

In support of its claim, Petitioner submitted the affidavits of Robert Greenbaum, Chairman of the Board of Four Winds and Stephen Lawrence, CEO of Four Winds. They both assert that at the conclusion of the survey conducted on May 12, 2000, the surveyors uttered the following expression: "Congratulations, you passed. You have met both conditions of this survey." Consequently, they were left with the impression that "there were no deficiencies identified that required correction before a Medicare provider number could be issued." P. Exs. 6, 7.

CMS does not deny the congratulatory utterance made by one of its surveyors. However, the affidavits of both surveyors go on to explain that at the exit interview of May 12, 2000, they "read aloud" the lower level deficiencies that they identified during the survey. Furthermore, the surveyors stated in their affidavits that they informed Dr. Lawrence both in private and in a group meeting that Petitioner was found to be in compliance with both conditions of participation for psychiatric hospitals, but that under one of the two conditions some standards were not met. Finally, the surveyors assert that although their written report was not submitted to CMS until sometime later, but within the 10-day time frame required, neither of them informed Petitioner that the hospital's date of certification would be the date of the survey, nor that there would be an exemption from submission of a plan of correction upon receipt of an official CMS report. CMS Exs. 2, 3.

While Petitioner acknowledges that the New York State Department of Health surveyors noted certain physical plant deficiencies which warranted correction, it asserts that none of those deficiencies impacted in any significant way on the quality of care or safety of Four Winds patients. ALJ Ex. 1 at 2. The fact that none of the deficiencies impacted on patient care or safety should imply that a plan of correction was not required. In this context, the regulation provides that a facility found to be deficient with respect to one or more of the standards in the conditions of participation may participate in Medicare by submitting an acceptable plan of correction if the deficiencies do not jeopardize the health and safety of patients. 42 C.F.R. § 488.28. Petitioner does not deny that it had deficiencies with respect to one or more of the standards in the conditions of participation, nor that they were informed of their existence, albeit orally. The facility's claim that the surveyors were not emphatic at the exit conference of the importance of submitting a timely plan of correction did nothing to relieve it of the onus of filing an acceptable plan of correction in order to participate in Medicare. That assertion is an implied recognition that Petitioner was put on notice regarding the existence of certain standard deficiencies. However, Petitioner feels justified in assuming that certification was certain as of the date the survey was concluded because the deficiencies noted did not adversely affect patient care or safety nor did the surveyors emphasize the importance of submitting a timely plan of correction. ALJ Ex. 1 at 3. Consequently, Petitioner's decision to begin treating Medicare patients without having been certified, is a risk taken at its own peril.

On a final note, Petitioner complains that CMS did not provide it with a timely Statement of Deficiencies, but fails to advance legal support as to what constitutes a reasonable period of time for such notification.

2. Petitioner's reliance on estoppel is inapplicable here.

It is my finding that there was no misrepresentation on the part of CMS contract surveyors. In its haste to begin treating Medicare patients, Petitioner overlooked the need to be first certified for participation in the program and failed to understand that satisfying the conditions of participation is not the same as meeting all of the Federal requirements for participation in Medicare. Therefore, it is not necessary to discuss Petitioner's estoppel arguments.

VI. Conclusion

Based on the foregoing analysis, I sustain CMS' determination to certify Petitioner, Four Winds, for participation in the Medicare program effective June 13, 2000.

Jose A. Anglada

Administrative Law Judge