SUBJECT:

Lakeland Lodge Nursing Center,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

Petitioner's request for hearing is dismissed pursuant to 42 C.F.R. § 498.70(b) because Petitioner has no right to a hearing on the facts of this case.

I. PROCEDURAL HISTORY AND UNDISPUTED FACTS

Petitioner is licensed to operate and operates a long-term care facility in Heber Springs, Arkansas. At all relevant times, Petitioner has been certified to participate in the Medicare and Medicaid programs.

The Arkansas Department of Human Services (ADHS) completed a survey of Petitioner on September 10, 1999, finding several deficiencies. By letter dated October 19, 1999, ADHS advised Petitioner that its plan of correction was acceptable and that substantial compliance was presumed as of November 10, 1999. During a revisit on November 11, 1999, ADHS found Petitioner was in fact in substantial compliance with Medicare and Medicaid program requirements and a new certification was issued effective January 1, 2000. Petitioner's Statement of Undisputed Facts; P. Exs. C, D, and E. ⁽²⁾

On January 4, 2000, ADHS conducted a survey of Petitioner based upon a complaint. ADHS found that Petitioner was not in compliance with 42 C.F.R. § 483.13(c)(1)(i) as indicated in the survey document (Statement of Deficiencies (SOD), dated January 4, 2000) with regard to Resident 1. P. Ex. A; R .Ex. 1. By letter dated February 17, 2000, CMS notified Petitioner that it accepted the findings of ADHS and imposed a civil money penalty (CMP) of $4,900. The CMS notice of February 17 specified that the ADHS "identified a situation indicating past noncompliance (which existed on November 13, 1999, but had already been corrected by the time of that survey)." P. Ex. B; R. Ex. 2.

On April 17, 2000, Petitioner filed its request for hearing. The case was assigned to Administrative Law Judge (ALJ) Alfonso J. Montano on May 3, 2000. Judge Montano conducted a telephonic prehearing conference on August 23, 2000, the substance of which is memorialized in his Order of August 31, 2000. ⁽³⁾ The Order indicates that Petitioner intended to file a motion for summary judgment by September 18, 2000, and Respondent was to respond not later than October 16, 2000. The briefing schedule was subsequently modified to require Petitioner to file not later than October 18, 2000, with a response by Respondent on or before November 17, 2000.

II. ISSUE PRESENTED

Whether Petitioner has a right to a hearing when Respondent has rescinded all enforcement remedies?

III. FINDINGS OF FACT, CONCLUSIONS OF LAW AND ANALYSIS

A. Findings of Fact

1. CMS imposed a CMP in this case on February 17, 2000, based upon findings of noncompliance by the State agency in a survey that ended on January 4, 2000.

2. CMS rescinded the CMP imposed in this case on November 13, 2000, based upon "administrative review."

3. On November 28, 2000, CMS notified HIPDB that it had rescinded the CMP against Petitioner based on administrative review and that enforcement was complete.

B. Conclusions of Law

1. CMS may rescind any CMP it imposes and end collection and enforcement efforts by reopening and revising its initial decision or through compromise and settlement.

2. Petitioner has no right to a hearing in this case as the only remedy imposed was rescinded by CMS.

3. I have no jurisdiction to proceed in a case where Petitioner has no right to a hearing.

4. Dismissal is required when Petitioner has no right to a hearing and I have no jurisdiction to proceed.

C. Analysis

I note at the outset that both parties have taken great risks in this proceeding based upon possibly faulty assumptions. Petitioner encourages me to retain jurisdiction with the assumption that it will prevail on its motion for summary judgment either because Respondent defaulted by not responding to the summary judgment motion or because there are truly no disputed facts and Petitioner is entitled to judgment as a matter of law. ⁽⁵⁾ Respondent risked defaulting by not responding and contesting the motion for summary judgment, choosing instead to remove this case from the administrative appeals process by eliminating the CMP and depriving me of jurisdiction. ⁽⁶⁾ If the law was less clear in this area, I might be inclined to deny both motions and put the parties to their proof. However, that would be inconsistent with notions of judicial economy and the law applicable in this case.

Petitioner makes three arguments for why I should retain jurisdiction to either grant the motion for summary judgment or proceed to a full hearing of this case: (1) CMS' action to rescind the CMP is invalid as a matter of law, leaving the initial determination intact and subject to review; (2) CMS' notice to the HIPDB is a remedy which triggers the right to a hearing as an initial determination; and (3) the right to a hearing attaches when a timely request is made by one with the right to a hearing and the right is not extinguished simply because CMS later rescinds the remedy.

Petitioner argues, regarding its theory that the CMS action to rescind the CMP was invalid as a matter of law, that there are only two methods by which CMS can alter an initial determination - reconsideration or reopening and revision. Petitioner argues that CMS' action does not meet the legal requirements for a reconsidered determination because reconsideration was not requested by Petitioner as required by 42 C.F.R. § 498.22. Petitioner correctly notes that the cited section really has no application to this case.

In fact, the cited section accords prospective providers and suppliers or hospitals a limited right to request reconsideration by CMS and specifies the procedures CMS is to follow in such a case. In this case, Petitioner is not a "prospective" provider, supplier, or hospital, and there is no right to request reconsideration.

Petitioner incorrectly argues that the regulatory criteria for a reopened and revised determination have been met. Petitioner acknowledges, while not conceding the point, that "it may be reasonable to consider that with its November 13, 2000 letter (CMS) gave Petitioner notice of a revision of the reopened determination." However, Petitioner argues that CMS did not give any "notice of the reopening." Petitioner's Motion for Action, at 6. 42 C.F.R. § 498.32(a)(1) only requires that CMS "give the affected party notice of reopening and of any revision of the reopened determination." 42 C.F.R. § 498.32(a)(1). The regulation does not require two separate notices, i.e., notice of intent to reopen with a second notice of revision. The regulation does not require that CMS give an opportunity for comment or a hearing except in the case of a supplier or prospective supplier. 42 C.F.R. § 498.32(a)(3). Petitioner is a provider, not a supplier or prospective supplier. The regulation provides that a revised determination is binding unless the determination is further revised or the affected party requests a hearing before an ALJ - the latter being subject to the party's right to a hearing as provided by regulation. 42 C.F.R. § 498.32(b); see Lakewood Plaza Nursing Center, DAB No. 1767 (2001). My interpretation of CMS's letter of November 13, 2000 is that CMS administratively reviewed its prior decision, i.e., a reopening, and then revised that prior decision by rescinding the CMP. The reopening and revision was within 12 months, a limit imposed by 42 C.F.R. § 498.30. The only "due process" required by the regulation for reopening and revision is notice and notice was provided in this case. Thus, CMS's action in this case is correctly characterized as a reopening and revision and the revised decision included no remedy, a necessary predicate to finding that appeal rights attach. 42 C.F.R. §§ 488.330(e)(3); 488.408(g); and 498.3(b)(13).

I also note that pursuant to 42 C.F.R. § 488.444, CMS has the authority to compromise and settle cases at any time prior to a final administrative decision. The regulation does not prevent CMS from unilaterally reducing or eliminating a CMP when it is deemed appropriate. In this case, however, CMS's letter of November 13 specifies that an "administrative review" was done which seems more consistent with a reopening of a prior decision than an action to compromise a claim.

Petitioner's second theory is that the notice to HIPDB is a remedy that amounts to an initial determination that triggers the right to a hearing, i.e., if it is found that CMS lawfully eliminated the CMP, a remedy was nevertheless imposed that triggers a right to a hearing. This theory is both factually and legally unsupported. Petitioner argues in numbered paragraph 11 of its Motion for Action, that CMS caused "an adverse action report . . . to be submitted to the [HIPDB]." However, my review of the document Petitioner attached to its pleading indicates that CMS gave notice to HIPDB that it had rescinded its CMP related to the survey completed on January 4, 2000; that no attempt would be made to collect the CMP; and that enforcement action was complete. Contrary to Petitioner's argument, the notice to the HIPDB is not adverse, but rather gives notice that CMS is removing the CMP initially imposed based upon administrative review. ⁽⁷⁾

Petitioner's argument that the notice to HIPDB is an appealable remedy is also not legally supportable. 42 C.F.R. § 488.406 specifies the remedies that are available to CMS, and the notice to the HIPDB is not listed as a remedy. Furthermore, creation of the HIPDB and reporting are mandated by Congress in section 1128E of the Social Security Act (42 U.S.C. § 1320a-7e). Reporting or corrections or changes in adverse action is not discretionary but is mandated by the statute. See also, 45 C.F.R. § 61.6 and 61.11 (the federal regulations implementing the statutory requirements). Petitioner points to no authority for the proposition that Congress or the Secretary of the United States Department of Health and Human Services (Secretary) intends that reporting to HIPDB be a punitive or an alternative remedy for resolving nursing facility compliance issues. I also note that the Secretary has provided a specific procedure for a provider to challenge reports to the HIPDB, a procedure which does not involve a hearing before an ALJ. 45 C.F.R. § 61.15. The existence of a specific procedure for disputing notice to HIPDB, particularly one that does not involve a hearing before an ALJ, militates against my assuming jurisdiction based on the fact that such a report may have been made.

Finally, I cannot accept Petitioner's third argument that once jurisdiction attaches with the filing of a timely request for hearing, jurisdiction may not be extinguished or removed by CMS action to rescind the remedy. Petitioner acknowledges that the weight of the authority is against its position. Indeed, Petitioner specifically disagrees with the "current interpretation of the Departmental Appeals Board . . . " and then engages in a strained effort of regulatory interpretation "to preserve the argument for appeal." Petitioner's Brief in Support of Motion for Action on Petitioner's Motion for Summary Judgment, at 13; Petitioner's Reply, at 5. Petitioner cites no authority that supports its position or its interpretation of the regulations. The Departmental Appeals Board (DAB), the ultimate authority within the United States Department of Health and Human Services for interpretation of the Secretary's regulations, has specifically addressed the issue and concluded that a petitioner loses its right to pursue a hearing when CMS rescinds previously imposed remedies and no right to hearing survives to challenge findings of noncompliance. Lakewood Plaza Nursing Center, DAB No. 1767 (2001).

Black's Law Dictionary (6th ed. 1991) provides many definitions for the term "jurisdiction," but all may be summarized as the authority by which a court or judge takes cognizance of and decides a case. The jurisdiction of an ALJ appointed pursuant to 5 U.S.C. § 3105 to conduct proceedings in accordance with 5 U.S.C. §§ 556 and 557, is circumscribed by the appointing agency's enabling statutes and its regulations. 5 U.S.C. § 556(c). In other words, I have no more jurisdiction or authority to hear and decide a case than the Secretary has under his enabling statutes and my jurisdiction is further subject to limits imposed by the Secretary's regulations. In this case, Petitioner had a right to a hearing pursuant to 42 C.F.R. §§ 488.330(e)(3), 488.408(g), and 498.3(b)(13) based upon CMS' finding of noncompliance and the imposition of a remedy listed in 42 C.F.R. § 488.406, and I had jurisdiction to hear the appeal. Each of the three sections clearly specifies that there must be both a finding of noncompliance and an enforcement remedy to trigger the right to a hearing. When CMS rescinded the only remedy imposed, thereby taking away one of the two necessary elements for the right to a hearing, my jurisdiction was eliminated. Neither Congress nor the Secretary provided a right to a hearing or appeal when there is only a finding of noncompliance and no remedy is imposed. I have no jurisdiction to resolve such cases.

IV. Conclusion

For the foregoing reasons, Petitioner's request for a hearing is dismissed.

Keith W. Sickendick

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Financing Administration (known as HCFA) was renamed the Centers for Medicare & Medicaid Services (CMS). 66 Fed. Reg. 35,437 (2001).

2. Petitioner offered exhibits A through J with its motion for summary judgment. Respondent offered exhibits 1 through 3 with its motion to dismiss. I have not admitted any exhibits because I have dismissed Petitioner's request for hearing. Respondent's exhibits are referred to as "R. Ex." and Petitioner's exhibits are referred to as "P. Ex."

3. Petitioner requested clarification during the prehearing conference as to which F Tags CMS was proceeding on. According to Judge Montano's Order of August 31, 2000, n.2, counsel for CMS advised on August 25, 2000, that CMS elected to proceed only on F Tag 698/224, which the SOD from January 4, 2000 indicates relates to Resident 1.

4. It is not clear or undisputed that CMS's notice of February 17, 2000, alleges that the abuse occurred on November 13, 1999. In fact, the language of the notice, "[t]he [ADHS] identified a situation indicating past noncompliance (which existed on November 13, 1999, . . . )," is susceptible to many different constructions, including that the abuse might have occurred at any time after the last survey was completed on September 10, 1999, but before transfer from Petitioner on October 27, 1999, when signs of abuse were discovered upon admission to the hospital and evidence of abuse was more fully developed upon autopsy at the resident's death on November 13.

5. Petitioner's substantive argument turns on whether CMS improperly cited Petitioner for a violation occurring on November 13, 1999, the date of Resident 1's death and more than two weeks after she last resided in Petitioner's facility. Petitioner argues that Respondent cannot make a prima facie showing of a deficiency attributable to Petitioner on November 13, 1999, because Resident 1 was long gone from the facility. Even if Respondent made a prima facie showing, Petitioner alludes to the defense of impossibility with respect to the November 13, date. Petitioner's theory is only as good as the assumption that the CMS notice letter of February 17, 2000, cites Petitioner for a deficiency which occurred on November 13, 1999. However, another plausible construction of the letter is that CMS gave notice of "past noncompliance" indicating prior to November 13, 1999 there was evidence of noncompliance which continued to exist on November 13, 1999. In fact, such construction is consistent with the first sentence of the letter which indicates Petitioner is being cited for "previous noncompliance with Medicare/Medicaid Requirements (identified in the survey on January 4, 2000) . . . ." Arguably, the survey results set forth in the SOD dated January 4, 2000 and offered by Petitioner as P. Ex. 1, are incorporated by reference in the notice of February 17, 2000. It does not appear from the SOD that the surveyors were confused about the date of noncompliance. While the surveyors may not have identified a specific date of noncompliance, the SOD indicates that Resident 1 arrived at the hospital from Petitioner's facility on October 27, 1999, with signs consistent with possible physical abuse. Thus, had Respondent chosen to contest the motion for summary judgment rather than attempt to remove the case from the administrative appeals process, it appears the material facts would be disputed. Of course, this approach to the facts may be considered as speculative as Petitioner's approach. But, the need to speculate is generally eliminated by conducting a hearing with fact and expert testimony and the production of documentary evidence.

6. Ignoring the Order of a judge, even an ALJ, is generally not a prudent course. Respondent lifted the CMP prior to the date the response to the motion for summary judgment was due and may have considered that act both a suitable response and a satisfactory result. However, I see nothing in the file to indicate that Judge Montano was advised of the action or that Respondent intended no further response. A more prudent course would have been for Respondent to file a pleading within the time allowed, responding to the motion and setting forth Respondent's position that dismissal was appropriate. I am at a loss to understand how counsel for Respondent rationalized doing nothing until Petitioner moved for action on its summary judgment motion.

7. The notice leaves open for speculation whether the CMP was removed due to a compromise and settlement, a conclusion that there was no basis for imposing the CMP, or for some other reason.