SUBJECT:

Moran Manor,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

I grant the Centers for Medicare & Medicaid Services' (CMS's) Motion to Dismiss because I find that Petitioner, Moran Manor, does not have a right to a hearing because it failed to challenge any of the findings from the April, 2000 survey and no initial determination was issued regarding the May, 1999 survey.

I. Background

Employees of the Maryland Department of Health and Mental Hygiene (State agency) visited Petitioner on April 16 - 19 and 24, 2000 to determine if the facility was in compliance with federal requirements for nursing homes participating in the Medicare and/or Medicaid programs. The surveyors cited Petitioner at the "G" level of non-compliance.

The State agency reported these findings to Petitioner by letter dated May 2, 2000. In that letter, the State agency informed Petitioner that it was recommending an immediate imposition of a civil money penalty (CMP) based on actual harm deficiencies cited during the April, 2000 survey and an actual harm deficiency that was cited on a previous complaint survey conducted on May 28, 1999, without an "opportunity to correct" prior to the imposition of remedies. The State agency recommended the immediate imposition of a CMP of $400 per day beginning April 24, 2000. The State agency letter stated that the imposition of the CMP arose from the deficiency cited on May 28, 1999, which involved the death of a resident by choking, and the deficiency cited during the annual survey that concluded on April 24, 2000, which involved the hospitalization of a resident due to dehydration.

On May 31, 2000, CMS informed Petitioner that it concurred with the State's recommendation of a CMP based on the April, 2000 survey, but reduced it from $400 to $200 for each day that the facility was not in substantial compliance with participation requirements. The May 31, 2000 CMS letter did not mention the May, 1999 survey but did mention that it had considered the facility's past history including repeat deficiencies, its degree of culpability and its financial condition in determining the amount of the CMP imposed. The facility remained out of compliance until May 31, 2000.

Petitioner filed a request for hearing on July 21, 2000 to contest the imposition of sanction issued by CMS on May 31, 2000. However, Petitioner asserted that the sanction in question was imposed as a result of the survey conducted in May, 1999. Petitioner claims, at the time of the May, 1999 survey, it did not have available the medical information required to defend itself regarding the deficiencies identified as a result of that survey. Specifically, the State agency had identified a "G" level deficiency during the May 28, 1999 survey, but the facility submitted a timely and acceptable plan of correction to the State agency. The State agency never recommended and CMS never imposed a CMP based on the findings of noncompliance identified during the May 28, 1999 complaint survey.

On January 10, 2001, the parties filed a joint statement of undisputed facts to be briefed for summary disposition, which I have marked as ALJ Ex. 1. CMS submitted its brief on February 28, 2001 seeking summary disposition, or, in the alternative, dismissal. CMS offered five exhibits (CMS Exs. 1 - 5). Petitioner offered no documentary evidence. I have admitted into evidence CMS Exs. 1 - 5 and ALJ Ex. 1.

It is my decision that dismissal of this action is appropriate inasmuch as Petitioner has not contested the "G" level deficiency cited during the April, 2000 survey, and no initial determination was issued regarding the May, 1999 survey. Consequently, as to the latter survey, Petitioner received no initial determination which is subject to the hearing procedures of 42 C.F.R. Part 498. Inasmuch as Petitioner is only challenging the May, 1999 deficiencies, and it does not have a right to a hearing on that matter, dismissal of this action is appropriate pursuant to 42 C.F.R. § 498.70(b).

II. Applicable Law

The Social Security Act (Act) sets forth requirements for nursing facility participation in the Medicare and Medicaid programs, and authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations implementing the statutory provisions. Act, sections 1819 and 1919.

Generally, States conduct surveys and certify facility compliance with program participation requirements. Act, sections 1819(g) and (h). If the State finds that a facility is not in compliance, it may recommend that the Secretary impose a remedy. It is up to the Secretary, through CMS, to impose a remedy. One of the remedies that may be imposed is a CMP. 42 C.F.R § 488.404(c) permits, but does not require, CMS to consider, among other factors, the facility's prior history of noncompliance in choosing a remedy within a remedy category. 42 C.F.R § 488.438(f), along with 42 C.F.R § 488.404, identify factors that must be considered in setting the amount of a CMP within a particular range. The lower range of a CMP is from $50 - $3,000 per day. These factors include a facility's prior history of non-compliance.

A facility that is dissatisfied with CMS's determination to impose a remedy may seek administrative review to the extent permitted by the regulations and the Act. A facility may seek review of an "initial determination" defined in 42 C.F.R. § 498.3. Under the regulations, an affected party must file its request in writing within 60 days from receipt of the initial determination unless that period is extended. 42 C.F.R. § 498.40(a). The regulations further require that the request for hearing must: (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. 42 C.F.R § 498.40(b)(1) and (2).

On motion of a party or on his or her own motion, the Administrative Law Judge (ALJ) may dismiss a hearing request where the party requesting the hearing does not have a right to a hearing. 42 C.F.R. § 498.70(b).

III. Issue

The sole issue before me is whether Petitioner has a right to a hearing as a matter of law, based on its challenge of the "G" level deficiency cited by the State agency during the May 28, 1999 survey.

IV. Findings of Fact and Conclusions of Law

1. The State agency found that Petitioner was not in substantial compliance with federal requirements for participation in the Medicare and Medicaid programs based on a complaint survey which ended on May 28, 1999, that identified a "G" level deficiency.

2. Petitioner submitted a timely Plan of Correction as to the deficiencies cited in the May, 1999 survey and no remedies were recommended by the State agency nor imposed by CMS.

3. The State agency notified Petitioner on May 2, 2000, that a standard survey conducted from April 16 - 19 and 24, 2000, found a "G" level deficiency pursuant to 42 C.F.R. § 483.25(j), and recommended a $400 per day CMP. CMS Ex. 2. In view of the "actual harm" cited during that survey as well as in the April, 1999 survey, the facility did not have an "opportunity to correct." Id.

4. By letter dated May 31, 2000, CMS informed Petitioner that it concurred with the State agency's recommendation based on the April, 2000 survey, and was imposing a CMP of $200 per day effective April 24, 2000. CMS Ex. 3.

5. In its request for hearing filed on July 21, 2000, Petitioner did not contest any of the deficiency findings from the April, 2000 survey. ALJ Ex. 1 at 4.

6. 42 C.F.R. Part 498 specifies the appeals procedures for determinations that affect providers' participation in the Medicare and Medicaid programs.

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

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

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

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

V. Discussion

Petitioner does not dispute that it did not challenge any of the deficiency findings pursuant to the April, 2000 survey. ALJ Ex. 1 at 4. It asserts, however, that it has a right to challenge the "findings of noncompliance leading to the imposition of enforcement actions." P. Br. at 5. In this regard, Petitioner relies on the language of CMS's notice of imposition of remedies dated May 31, 2000 (CMS Ex. 3) and the State agency's letter dated May 2, 2000 (CMS Ex. 2). Petitioner argues that the State recommendation with which CMS concurred was based on "both" surveys,⁽¹⁾ and the penalty was determined in contemplation of the facility's compliance history. Consequently, argues Petitioner, since CMS imposed a penalty based on two surveys, Petitioner has the right to challenge the findings of either. P. Br. at 4 - 5.

In support of its position, Petitioner places heavy reliance in the case of Fort Tryon Nursing Home, DAB CR425 (1996). In that case the ALJ dismissed the request for hearing because no remedies were imposed against Petitioner. In what appears to be dicta, the ALJ stated:

Although Petitioner does not now have a right to a hearing, Petitioner would have that right if HCFA ever determined in the future to impose a remedy against Petitioner based on the finding of deficiency that is at issue here . . .

Petitioner would have a right to a hearing from the finding of noncompliance which is at issue here whenever HCFA determines to impose a remedy based on that finding . . .

It is possible that, after a future compliance survey of Petitioner, HCFA might find that Petitioner is not complying substantially with a Medicare participation requirement. If HCFA then determined to impose a remedy based on the finding of a new deficiency coupled with Petitioner's past compliance record, including the finding of deficiency on which Petitioner bases its current hearing request, then Petitioner would have a right to a hearing, both as to the existence of the new deficiency, and as to the existence of the deficiency that is at issue here.

Id. at 7, 8 (italics added).

From the language in Fort Tryon Petitioner reasons that the facility has the right to challenge the May, 1999 findings because these "led to the imposition of an enforcement action." P. Br. at 5. I disagree. Neither the regulatory criteria nor previous Departmental Appeals Board (DAB) decisions provide sustenance to Petitioner's position. The regulation is clear that the May, 1999 survey did not "result in" the imposition of a remedy. An initial determination is not "created" by the mere use of a prior deficiency, from which no remedies flowed, to assess the penalty for a subsequent violation.

In Fort Tryon, the ALJ stated that "Petitioner would have a right to a hearing from the finding of noncompliance . . . whenever HCFA determines to impose a remedy based on that finding." Fort Tryon at 7. That is not what happened here. In the case at hand, CMS imposed a remedy based on a finding of deficiency in April, 2000. Petitioner appears to enmesh the basis for the imposition of the remedy with the criteria for arriving at the appropriate remedy. In the case at issue, the basis for the imposition of a remedy is clearly a finding of actual harm at the "G" level in April, 2000. However, the ingredients that comprise the rationale for the remedy imposed derive from a consideration of the facility's past history including repeat deficiencies, the degree of culpability, and financial condition. See CMS Ex. 3, at 2. Inasmuch as CMS and the State must consider the factors that affect the amount of the penalty imposed, it is not permitted to use this regulatory requirement to invalidate the definition of what constitutes an initial determination under 42 C.F.R. § 498.3(b).

It is also clear that in this case CMS has not "determined to impose a remedy based on the finding of a new deficiency coupled with Petitioner's past compliance record, including the finding of deficiency" on which Petitioner bases its request for hearing.

CMS did not impose a remedy on Petitioner for its prior deficiency, but instead assessed a penalty as a repeat violator for the latest deficiency on the basis of the facility's propensity for noncompliance.⁽²⁾ Id. Therefore, although the imposition of the CMP arose from "both surveys," the foundation upon which such imposition rests is the "actual harm" deficiency cited during the April, 2000 survey.

In conclusion, I find that there is no provision in the regulations for the remedy sought by Petitioner. The regulations make a hearing available exclusively for those CMS actions that constitute "initial determinations" listed in 42 C.F.R. § 498.3(b). The Fort Tryon decision does not stand for the proposition advanced by Petitioner. The line of DAB cases concerning an ALJ's reviewing authority pursuant to 42 C.F.R, Subpart A, Part 498, has consistently held that a deficiency finding that does not result in the imposition of remedies is not an initial determination. St. Lawrence of Dimondale, DAB CR684 (2000).

By order dated May 8, 2001, in the exercise of my discretion, and to better serve the ends of justice, I granted Petitioner 10 days in which to amend its request for hearing. In response, Petitioner submitted a Revised Request for Hearing dated May 22, 2001. Although Petitioner made glancing reference to the April,2000 survey and the May, 2000 imposition of CMP in its Revised Request for Hearing, it reiterated its challenge to the May, 1999 survey. Specifically, Petitioner continued to take issue with the finding that the emergency procedures carried out by the facility staff were in anyway related to the resident's subsequent death. In neither its original nor its revised hearing request did Petitioner challenge the findings from the April, 2000 survey.

In view of Petitioner's failure to challenge any of the findings from the April, 2000 survey, and inasmuch as it does not have a right to a hearing regarding the May, 1999 survey findings, dismissal of the request for hearing is in order.

VI. Conclusion

For the reasons stated above, I grant CMS'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. The April, 1999 survey as well as the May, 2000 survey.

2. I note, however, that in spite of CMS's consideration of Petitioner's past compliance record of repeat deficiencies, it reduced the recommended CMP from $400 per day to $200 per day. That penalty is at the low end of permissible amounts for a CMP imposed for deficiencies at the less than immediate jeopardy level.