SUBJECT:

Danville HealthCare Surgery Center,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

Both parties in the above captioned case filed motions for summary disposition. On September 29, 2000, Danville HealthCare, L.L.C, (Petitioner) filed its Motion for summary judgment and the Centers for Medicare & Medicaid Services (CMS) filed its motion and memorandum in support of its motion for summary affirmance. On October 31, 2000, the parties filed their responsive briefs. Both parties filed further responses on November 16, 2000. Petitioner submitted its exhibits (P. Exs.) 1 -7. CMS submitted its exhibits (CMS Exs.) 1-11 ⁽¹⁾. After carefully reviewing both parties' briefs and exhibits, I find the effective date for Petitioner's Medicare participation agreement was correctly determined by CMS to be March 29, 2000, and I grant summary judgment to CMS.

I. Background

The Illinois Department of Health (State Agency) issued a state license to Petitioner as an ambulatory surgical treatment center to be effective January 12, 2000. P. Ex. 1. On January 18, 2000, Petitioner sent a document to CMS entitled "Health Insurance Benefits Agreement" and subtitled "Agreement with Ambulatory Surgical Center Pursuant to Section 1832(a)(2)(F) of the Social Security Act." The document is identified as Form HCFA-370. Thomas J. Pliura, M.D., J.D., signed for the ambulatory surgical center. Dr. Pliura dated his signature and added, as the effective date of the agreement, January 18, 2000. This form document states inter alia the following:

This agreement, upon submission by the Ambulatory Surgical Center and upon acceptance for filing by the Secretary of Health and Human Services, shall be binding on the Ambulatory Surgical Center and the Secretary. . . .

***

The agreement shall become effective on the date specified below by the Secretary or his Delegate, and shall remain in effect unless terminated. . . .

P. Ex. 2.

The Health Insurance Benefits Agreement was stamped as having been received by the State Agency or CMS on January 25, 2000. Sometime in January 2000, Petitioner contacted Wisconsin Physician's Services (WPS), the Medicare Part B contractor assigned for Petitioner's claims, and was told by an employee of WPS that the effective date of the Health Insurance Benefits Agreement would be retroactive to the date the application was submitted. Petitioner began providing services to Medicare beneficiaries on January 25, 2000.

On March 29, 2000, a survey of Petitioner was completed by the State Agency and the Agency reported to CMS that no deficiencies were found. On March 31, 2000, Theodore Feast signed the Health Insurance Benefits Agreement, described above, as accepting the agreement for the Secretary of Health and Human Services. The effective date of January 18, 2000 as set forth by Dr. Pliura was crossed out and initialed by "TF," presumably Theodore Feast who had accepted the agreement for the Secretary. P. Ex. 2.

Thereafter, on April 4, 2000, an official with the State Agency sent a letter to Petitioner, advising Petitioner that the letter was the, "official notification that the [CMS] has accepted your request for approval as a supplier of ambulatory surgical services under the Medicare program . . . . your effective date of coverage is March 29, 1999." P. Ex. 3. On April 13, 2000, the same official sent a corrected copy of the April 4, 2000 notice. It states Petitioner's effective date of coverage was March 29, 2000.

On April 19, 2000, WPS, the intermediary, sent Petitioner a letter welcoming Petitioner as a Medicare provider and advising Petitioner what its Provider Identification Number (PIN) was for the submission of claims. WPS stated the effective date of the PIN number was January 12, 2000.

Petitioner claims it provided, "many expensive services and supplies" to Medicare beneficiaries between January 25, 2000 and March 29, 2000, the date that the State Agency surveyed Petitioner for certification. ⁽²⁾ On May 13, 2000, Petitioner filed a request for hearing to challenge CMS' setting the effective date for Petitioner's certification for Medicare participation as March 29, 2000, rather than earlier.

II. Issues

The issues are whether CMS accurately determined the effective date of Petitioner's Medicare certification and, even if it was correctly determined, whether Petitioner can be paid for Medicare services performed between January 25, 2000, when Petitioner allegedly began providing Medicare services, and March 29, 2000, which CMS determined to be the effective date of the parties' participation agreement.

III. Findings and Conclusions

I set forth below my findings. I explain each one below the finding.

A. Summary judgment is appropriate in this case.

Summary disposition is appropriate where there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts or, where the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. Both parties filed motions for summary disposition in this case indicating both felt there were no material facts at issue ⁽³⁾. After reviewing the briefs and exhibits in this case, I agree. No one is disputing what actually occurred in this case. The parties disagree on the legal import of the facts. Thus, summary disposition is appropriate.

B. The correct effective date for Petitioner's Medicare participation is March 29, 2000.

1. The Health Insurance Benefits Agreement is not a contract binding either party until it is accepted by CMS.

Petitioner argues that because it added an "effective date" to the agreement form that it sent as an application to CMS, that CMS was bound as of that date to the terms of the agreement. Petitioner also argued later, and quoted from the agreement form as support, that CMS was bound on January 25, 2000, the date of receipt, because the agreement form, as quoted above, states, "this agreement, upon submission by the Ambulatory Surgical Center (ASC) and upon acceptance for filing by the Secretary of Health and Human Services (Secretary), shall be binding on the ASC and the Secretary." Petitioner claims the receipt stamp date signifies acceptance for filing. Petitioner's argument is misplaced. The agreement form also states clearly that the agreement, "shall become effective on the date specified below by the Secretary or his Delegate." Simply because the Petitioner added an "effective date" does not change the plain meaning of the agreement form that it is the Secretary or his delegate that determines the effective date and not the supplier sending in the agreement form. A contract requires an offer and an acceptance. This agreement form, regardless of the date it was received, was not a contract until it was accepted by the Secretary or his delegate. Moreover, per the express terms of the agreement, it is the Secretary or his delegate who determines the effective date of the agreement.

2. The first letter sent to Petitioner on April 4, 2000 advising Petitioner of the effective date of its Medicare participation agreement contained a typographical error, i.e., March 29, 1999 instead of March 29, 2000. This typographical error was corrected in CMS' letter of April 13, 2000.

It would stretch credulity to accept that Petitioner actually thought March 29, 1999, was the effective date of its Medicare participation agreement when Petitioner was not even in business as of that date and did not apply for Medicare participation until January 2000. Moreover, Petitioner was well aware that it had been surveyed on March 29, 2000 and CMS likely meant the effective date was March 29, 2000. Additionally, within ten days, CMS sent a corrected notice to Petitioner advising of the effective date of March 29, 2000. Petitioner now claims that because of this typographical error, CMS is bound to the terms of the agreement as of March 29, 1999. I do not accept that conclusion. CMS cannot set an effective date for Medicare participation prior to the time a supplier meets all of the applicable federal requirements. 42 C.F.R. § 489.13 ⁽⁴⁾. Petitioner could not have met federal requirements as far back as March 29, 1999 because Petitioner had not been surveyed for any purpose prior to January 2000.

Similarly, I find that the WPS notice sent to Petitioner on April 19, 2000 regarding the correct PIN number to use for Petitioner's Medicare claims has absolutely nothing to do with the effective date of Petitioner's Medicare participation agreement. Although the April 19^th letter said the PIN number was effective January 12, 2000, this in no way binds CMS with respect to the Medicare participation agreement.

3. In addition to the plain words on the agreement form, the regulations relating to ambulatory surgical centers also indicate that, as between the parties, it is CMS who determines the effective date of the agreement.

Petitioner argues that 42 C.F.R. § 489.13 (b) does not apply to it because it is not a supplier specifically identified in that section ⁽⁵⁾. Petitioner further argues that only the section of the regulations, 42 C.F.R. § 416 concerning ambulatory surgical centers applies to it. In fact, 42 C.F.R. § 416.26 (e) provides that there is a participation agreement if CMS accepts the agreement filed by the ASC, returns to the ASC one copy of the agreement, with a notice of acceptance specifying the effective date. There is no part of this regulation from which an ASC could assume that it sets the effective date of the agreement. 42 C.F.R. § 416.26 also specifies that, unless CMS deems the ASC to be in compliance, the state survey agency must survey the facility to ascertain compliance with those conditions, and report its findings to CMS. The "deeming" provisions in section 416.26 did not apply in Petitioner's case. Moreover, there is no indication in any of the communications between the parties between January and April, 2000, that would suggest to Petitioner that the "deeming" provisions in the regulations would apply to it.

4. A state agency's survey for state licensing is not determinative of, or equal to, a survey to certify a supplier for Medicare participation.

Section 416.26 of 42 C.F.R. sets forth the survey requirements for ASCs who have applied for Medicare participation. In order for CMS to "deem" an ASC to be in compliance, it must be licensed by a state agency that CMS has previously determined provides reasonable assurance that the conditions of participation are met. CMS simply has not included the Illinois Department of Health in the group of entities whose licensing obviates the need for a certification survey under section 416.26. Moreover, if an ASC were in a situation where CMS has accepted licensing by the state agency as providing reasonable assurance, the ASC must also release to CMS the findings of the accreditation survey to come under the "deemed" compliance provisions. There is no evidence, nor has Petitioner claimed, that CMS indicated to Petitioner that its state was part of the "deeming" program. Nor is there any evidence that Petitioner ever authorized the release to CMS of the results of the state licencing survey. As noted above, 42 C.F.R. § 416.26 also states clearly that unless CMS has deemed the ASC to be in compliance, the state agency must survey the facility to ascertain compliance. By reading the applicable regulations for ASCs, Petitioners should have been on notice that a survey in addition to its state licensing survey was necessary for its Medicare participation.

5. ASCs are suppliers for purposes of section 489.13 (b) of 42 C.F.R.

Petitioner argues that 42 C.F.R. § 489.13(b), which provides that a provider agreement is effective on the date the initial certification survey is completed, does not apply to it because ASCs are not specifically one of the listed providers in section 489.2 (b) who are subject to the provisions of section 489. Although, Section 1866 of the Social Security Act which is the basis for section 489 in the regulations, refers only to providers or provider agreements, these regulations are also applicable to the approval of suppliers. ASCs are specifically considered suppliers for purposes of their appeal rights under section 498 of 42 C.F.R. If they are suppliers in the context of appeal rights, ASCs are surely suppliers in terms of section 489 and are, thus, subject to section 489 requirements.

As stated by Administrative Law Judge (ALJ) Leahy in Surgery Center of Southwest Kansas, DAB CR619 (1999), an ASC applying for Medicare participation is considered a "prospective supplier." The Petitioner cannot adequately distinguish the Surgery Center of Southwest Kansas case, as it attempted to do here, by simply saying the ASC in that case did not contest its classification as a supplier and the assumption that section 489.13 applied to it. According to both sections 416 and 489 of 42 C.F.R., the effective date of Petitioner's Medicare participation agreement must be the date Petitioner was surveyed for certification and had no deficiencies, that is in this case, March 29, 2000.

C. I have no authority, under grounds of equitable estoppel, to require CMS to reimburse Petitioner for services provided by Petitioner before the effective date of its contract with CMS.

1. Incorrect statements made by employees of intermediaries to the Petitioner are not binding on CMS.

Petitioner argues that because an employee of WPS, a Medicare Part B contractor, erroneously told Petitioner its agreement would be retroactive to the date it submitted its application, Medicare should be held to this certification date. Petitioner makes a further estoppel argument asserting that, because it provided services to Medicare patients between January 25, 2000 and March 29, 2000, it should be reimbursed for those services. Petitioner's arguments are without merit. Estoppel simply does not lie against the government in these types of cases. As ALJ Leahy stated in Surgery Center of Southwest Kansas "[i]t is well settled that erroneous information from government employees does not rise to estoppel against the government or entitle the recipient of the incorrect information to monetary payments not otherwise permitted by law."

I find the Supreme Court's decision in Office of Personnel Management (OPM) v. Richmond, 496 U.S. 414 (1990), cited by ALJ Leahy as support, to be applicable in this case as well because the decision in OPM v. Richmond is based on the Court's inability to require the treasury to make monetary payments unless Congress has authorized the payments regardless of what a citizen has been told by a government employee. The case cited by Petitioner for support, Brandt v. Hickel, 427 F.2d 53 (9^th Cir. 1970), is not applicable because it does not refer to a request for money payments not authorized by law. In Brandt, the issue was the plaintiff's place in line for an oil lease.

Other Departmental Appeals Board cases are in accord with the principle that an ALJ has no authority to consider appeals based on equitable estoppel or, stated another way, no authority to require CMS to make payments to a supplier or provider for services provided prior to the effective date of the supplier's or provider's Medicare participation agreement. Tenet HealthSystem Philadelphia, Inc., DAB CR773 (2000); Opthalmology Ltd. Eye Surgery, DAB CR658 (2000); New Life Plus Center, CMHC, DAB CR700 (2000).

Even when CMS was found to have contributed to the delay in a certification process, an ALJ does not have the authority to give an effective date to a Medicare participation agreement prior to a state agency finding that the facility was in compliance with all applicable federal requirements. GranCare Home Health Service & Hospice, DAB CR464 (1997).

2. There is absolutely no evidence, as alleged by Petitioner, that agents, employees and representatives of CMS, "participated in a repeated pattern of dishonesty specifically designed to conceal the truth and cover up errors that were made in this case."

Petitioner argues that CMS, the State Agency, and the Medicare Part B contractor were engaged in a conspiracy designed to hide their blunders. This is a desperation argument, the outcome of which is not relevant to my decision. Nonetheless, I will point out that, while Petitioner asked for an opportunity to examine these alleged conspirators, CMS has readily admitted these mistakes. Thus, I cannot see how cross examination would elicit any relevant evidence, even if I had the authority to apply equitable estoppel for their actions. As noted above, I do not have the authority to consider equitable estoppel. Therefore, even if Petitioner were able to establish at a hearing that employees and agents of CMS had been engaged in affirmative misconduct, I could not do anything about it in this forum. Petitioner's request for an oral hearing in its October 31, 2000 brief did not suggest any material facts at issue that would prevent summary disposition of this case.

IV. Conclusion

Having determined that, as a matter of law, Petitioner is without a right to the relief it seeks, I enter summary judgment for CMS and against Petitioner on the dispositive issue of the correct effective date of Petitioner's Medicare certification and participation agreement of March 29, 2000.

Anne E. Blair

Administrative Law Judge

1. As there were no objections, I admit proposed exhibits in the record.

2. Whether and the extent to which Petitioner provided services to Medicare beneficiaries in this two-month period has not been proven. Nonetheless, accepting as true all of Petitioner's allegations regarding unpaid claims would not affect my decision in this case.

3. I note that, after filing its initial motion for summary judgment, Petitioner, in its reply brief filed on October 31, 2000, states, "[t]here are a variety of genuine issues of material fact that warrant a full hearing in this case." The Petitioner refers to its argument that CMS employees and agents were engaged in affirmative misconduct. As I explain in section III.C.2 of this decision, misconduct on the part of CMS employees or agents is not relevant in this case. Moreover, in its final brief of November 16, 2000, Petitioner concludes by saying, "[t]his tribunal should find that there are no genuine issues of material fact . . . ."

4. Section 489 does provide for retroactive participation agreements, but only in the case of those providers or suppliers who have been previously accredited by a national accrediting organization whose program has CMS approval at the time of the accreditation survey and had "deemed" the provider or supplier to meet federal requirements. 42 C.F.R. § 489.13 (d). As noted previously, there is no evidence in the record that Petitioner was accredited by such an organization.

5. This argument is discussed below in Section III. B. 5.