SUBJECT:

NHC Healthcare - Moulton,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

I enter summary disposition in favor of Petitioner, NHC Health Care-Moulton. The undisputed material facts show that no basis exists in this case for me to sustain the imposition of civil money penalties against Petitioner. I summarize my decision as follows:

• The Centers for Medicare & Medicaid Services (CMS, then known as the Health Care Financing Administration, or HCFA) made its determination to impose civil money penalties against Petitioner based entirely on a recommendation by the State of Alabama Department of Public Health (Alabama Department of Public Health) that Petitioner be found not to have complied substantially with a federal participation requirement governing long-term care facilities that participate in Medicare.

• The Alabama Department of Public Health subsequently rescinded its own findings of non-compliance that were the basis for its recommendation to CMS. As a consequence of this rescission, and as a matter of law, all references to the original deficiency finding were deleted from the Alabama Department of Public Health's documentation of its survey of Petitioner's compliance with participation requirements.

• Also as a consequence of this rescission, the Alabama Department of Public Health's recommendation to CMS that civil money penalties be imposed against Petitioner was withdrawn.

• CMS has the authority to make a finding that Petitioner failed to comply substantially with participation requirements and to impose remedies against Petitioner even if the Alabama Department of Public Health rescinds its initial findings and its recommendation to CMS based on those initial findings. But, CMS has not asserted any facts to show that it did so here.

• There is no basis to impose remedies against Petitioner because there are no extant findings by CMS that Petitioner failed to comply substantially with a participation requirement.

I. Background and undisputed material facts

The material facts of this case are not in dispute. In part I base my recitation of the undisputed facts on documents that the parties exchanged as proposed exhibits and which are cited by Petitioner in its motion for summary disposition. The exhibits cited by Petitioner are: P. Ex. 1; P. Ex. 3; P. Ex. 8; P. Ex. 9; CMS Ex. 4; and, CMS Ex. 6.

Petitioner is a long term care facility located in Moulton, Alabama. It participates in the Medicare program and is subject to regulations at 42 C.F.R. Part 483 that govern the participation in Medicare of nursing facilities and skilled nursing facilities.

Petitioner was surveyed on October 17 - 20, 2000 (October survey) by surveyors employed by the Alabama Department of Public Health. The purpose of the survey was to determine whether Petitioner was complying substantially with Medicare participation requirements. The surveyors concluded that Petitioner was not complying substantially with participation requirements in several respects. Their findings included an allegation at Tag 312 of the report of the October survey that Petitioner was not complying substantially with the quality of care requirements that are set forth at 42 C.F.R. § 483.25(a)(3). P. Ex. 8 at 5 - 11.

On November 9, 2000, CMS sent a notice to Petitioner. CMS Ex. 4. CMS advised Petitioner that it concurred with the noncompliance findings and remedy recommendations made by the Alabama Department of Public Health. CMS told Petitioner that it would impose remedies against Petitioner consisting of: denial of payment for new admissions effective January 19, 2001; civil money penalties effective October 19, 2001; and, termination of Petitioner's Medicare provider agreement effective April 19, 2001. Specifically, CMS told Petitioner that it was:

imposing a civil monetary penalty in the amount of $50.00 per day, for [the deficiency finding that is stated at Tag] F312-G [of the October survey report], effective January 19, 2001, until substantial compliance has been achieved.

Id. at 2.

The only remedy that CMS ultimately determined to impose against Petitioner was the $50 per day civil money penalties. The other remedies were not imposed evidently because Petitioner attained substantial compliance with participation requirements prior to the dates when those remedies were to have gone into effect.

Petitioner requested a hearing to contest CMS's determination to impose civil money penalties and the case was assigned to me for a hearing and a decision. Additionally, Petitioner requested an opportunity to participate in informal dispute resolution (IDR) at the State level, in order to contest the deficiency findings that were made in the report of the October survey. See 42 C.F.R. § 488.331.

On June 15, 2001, and after completion of the IDR process, the Alabama Department of Public Health notified Petitioner of its findings. CMS Ex. 6 at 1. It advised Petitioner that it had determine to delete from the report of the October survey the deficiency finding that was made at Tag 312. Id. Subsequently, the Alabama Department of Public Health issued a revised report for the October survey. P. Ex. 3. The revised report deleted all reference to a deficiency at Tag 312. Id.

CMS has not averred that it considered and rejected the findings that were made at IDR. Nor has it asserted that it made an independent determination to find that Petitioner was deficient under Tag 312 after the Alabama Department of Public Health rescinded its deficiency finding.

II. Issue, findings of fact and conclusions of law

A. Issue

The issue in this case is whether any basis exists to impose civil money penalties against Petitioner in light of the Alabama Department of Public Health's determination to rescind its finding that Petitioner failed to comply with quality of care requirements stated at 42 C.F.R. § 483.25(a)(3) and also in light of CMS' failure to aver that it subsequently made an independent determination that Petitioner was deficient in complying with these requirements.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below, as a separate heading. I discuss each Finding in detail.

1. CMS made its determination to impose civil money penalties against Petitioner based entirely on a recommendation by the Alabama Department of Public Health that Petitioner be found not to have complied substantially with a federal participation requirement governing long-term care facilities that participate in Medicare.

The undisputed material facts of this case establish that the Alabama Department of Public Health made a recommendation to CMS that it impose civil money penalties of $50 per day against Petitioner based on a finding at Tag 312 of the report of the October survey that Petitioner failed to comply substantially with a participation requirement governing quality of care. The undisputed facts establish also that CMS made its determination to impose civil money penalties against Petitioner in amounts of $50 per day based solely on the finding of noncompliance at Tag 312.

That determination is expressed explicitly in CMS's notice letter of November 9, 2000 to Petitioner. The letter tells Petitioner that the civil money penalty determination is based on the finding of deficiency that is made at Tag 312. CMS Ex. 4 at 2. The notice's announcement to Petitioner that the remedy is being imposed "for the deficiency" that is stated at Tag 312 clearly expresses CMS's intent to impose the remedy based only on the presence of that deficiency. That intent is reinforced by the fact that the letter refers to no other deficiency finding as a basis for the remedy.

CMS has not asserted that it took other deficiency findings into consideration in determining to impose civil money penalties against Petitioner. I note that the report of the October survey alleges deficiencies in addition to that which was alleged at Tag 312. See P. Ex. 8. CMS might have determined to impose remedies based on these other alleged deficiencies, either in and of themselves, or in conjunction with the allegations that were made at Tag 312. However, CMS has not contended that it based its remedy determination on any of these additional alleged deficiencies.

 

2. After CMS made its remedy determination the Alabama Department of Public Health rescinded the allegations of non-compliance at Tag 312 that were the basis for its remedy recommendation to CMS. As a consequence of this rescission, and as a matter of law, all references to the original deficiency finding were deleted from the report of the October survey.

On November 17, 2000, Petitioner requested to make an IDR presentation before the Alabama Department of Public Health. P. Ex. 9 at 1. The Alabama Department of Public Health issued its IDR determination on June 15, 2001. CMS Ex. 6. That determination included a finding that the deficiency alleged at Tag 312 of the report of the October survey was not substantiated and should be deleted.

The consequence of the IDR determination was that all references to the original deficiency finding at Tag 312 were deleted from the report of the October survey. This result is in accord with regulatory requirements:

If a provider is subsequently successful during the informal dispute resolution process, at demonstrating that deficiencies should not have been cited, the deficiencies are removed from the statement of deficiencies and any enforcement actions imposed solely as a result of those cited deficiencies are rescinded.

42 C.F.R. § 488.331(c). The Alabama Department of Public Health reissued its survey report for the October survey deleting all reference to an alleged deficiency at Tag 312.

The consequence of the IDR determination was not only to expunge the deficiency determination but to withdraw the Alabama Department of Public Health's recommendation to CMS that civil money penalties be imposed against Petitioner. That is because 42 C.F.R. § 488.331(c) provides for rescission of enforcement actions as well as expungement of deficiency findings in cases where a facility is successful at IDR.

3. CMS has the authority to make a finding that Petitioner failed to comply substantially with participation requirements and to impose remedies against Petitioner even if the Alabama Department of Public Health rescinds its initial findings and its recommendation to CMS based on those initial findings.

Petitioner argues that, as a matter of law, summary disposition should be entered in its favor as a consequence of its successful IDR contest of Tag 312. As support for this argument Petitioner relies on the letter of 42 C.F.R. § 488.331(c), which I have discussed above, at Finding 2.

Read in isolation the regulation certainly supports Petitioner's argument. Literally, it provides for not only expungement of any deficiency finding that is withdrawn as a result of IDR but it also provides for rescission of any enforcement action that is based on such a finding. However, the text of 42 C.F.R. § 488.331(c) is not the only regulatory language that must be considered in deciding whether this case ended with Petitioner's successful IDR presentation. As CMS points out, there is another regulation that potentially impacts on this case. That is 42 C.F.R. § 448.452. This regulation applies when "CMS and the State disagree over findings of noncompliance or application of remedies . . . ." The regulation provides that CMS' findings of noncompliance take precedence over those of a State agency in a case involving a Medicare-participating facility when:

(i) CMS finds that a . . . facility has not achieved substantial compliance; and

(ii) The State finds that . . . [the same] facility is in substantial compliance with the participation requirements.

42 C.F.R. § 488.452(a)(2)(i), (ii).

CMS's findings take precedence where CMS and a State agency disagree. In that circumstance, CMS is free to impose a remedy and to proceed to enforce its remedy regardless whether the State concludes that no deficiency is present. It, therefore, cannot be concluded as a matter of law that Petitioner must prevail based on its successful IDR presentation. In theory, CMS could disagree with the outcome and determine independently from the Alabama Department of Public Health to impose remedies against Petitioner even though the Alabama Department of Public Health concluded that no deficiency existed at Tag 312 of the October survey report.

4. CMS asserted no facts to show that it disagreed with the Alabama Department of Public Health's IDR findings.

When read together, the texts of 42 C.F.R. §§ 488.331(c) and 488.425(a)(2)(i), (ii) stand for the conclusion of law that a successful IDR presentation by a facility concerning an alleged deficiency will end any enforcement action, State or federal, that is based on the alleged deficiency unless CMS subsequently makes an independent determination to disagree with the outcome of IDR.

However, disagreement should not be found where there is no showing that there was disagreement. A primary purpose of IDR is to allow a facility an opportunity to expunge adverse deficiency findings without having to incur the additional expense of an administrative hearing or possible court proceedings. The IDR process would be meaningless if CMS could simply disregard it without making an independent finding that it disagreed with its outcome in a particular case.

CMS has made no showing here that it independently determined to proceed against Petitioner notwithstanding Petitioner's success at having the deficiency findings that were made at Tag 312 rescinded at the State level. It has advocated no facts to show that its staff independently reviewed the original deficiency findings after the completion of IDR and determined to proceed against Petitioner despite Petitioner's success. I cannot conclude that CMS made such a determination absent any assertions by it that it did so.

5. There is no basis to impose a remedy against Petitioner absent any showing that there is a disagreement between CMS and the Alabama Department of Public Health.

The undisputed material facts of this case show only that CMS concurred with a recommendation by the Alabama Department of Public Health to impose a remedy against Petitioner that was subsequently rescinded. CMS has not advocated facts to show that it disagreed with the rescission of that recommendation. Therefore, there is no basis for me to conclude that there is a present disagreement between CMS and the Alabama Department of Public Health and no basis to impose a remedy against Petitioner.

Steven T. Kessel

Administrative Law Judge