SUBJECT:

EagleCare, Inc., d/b/a/ Beech Grove Meadows,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

This matter is before me on the Centers for Medicare & Medicaid Services (CMS's) Motion to Dismiss, or, in the Alternative, for Partial Summary Judgment (Motion to Dismiss). ⁽¹⁾ I have determined that Beech Grove Meadows (Petitioner) is not entitled to a hearing in this case and, therefore, I grant the Motion and dismiss Petitioner's request for hearing.

My decision is based on the memoranda and other pleadings filed by both parties, and on the documents attached to those memoranda which I have admitted, in the absence of objection from either party, to the record. Petitioner submitted three proposed exhibits with its Opposition Memorandum (P. Memo) on April 30, 2001, and I have admitted them as Petitioner's Exhibits (P. Exs.) 1-3. Although I have read and considered them, I have not admitted the three printed decisions also attached to that pleading, as I do not regard them as evidence proper. I have also admitted to the record the five attachments CMS submitted with its Memorandum (CMS Memo) on March 16, 2001. CMS designated these items as Attachments A-E, and I have admitted them as CMS Exhibits (CMS Exs.) A-E, rather than remarking them with numbers to conform to normal practice in this forum.

I. BACKGROUND

Petitioner is a skilled nursing facility located in central Indiana. During the summer of 2000, the facility was the subject of an investigation and annual survey by the Indiana State Department of Health (ISDH). On August 3, 2000, the ISDH completed its survey, and reported several violations of regulatory standards required of the facility by reason of its participation in the Medicare and Medicaid programs. The violations were set forth in detail in a standard survey report Form 2567-L (2567), which in the instant case was 58 pages in length (CMS Ex. B), and in a document entitled "OSCAR REPORT 30," which was two pages long. CMS Ex. C.

As is usual in such survey reports, the deficiencies were organized by "F-Tags," with each F-Tag relating to the violation of a particular regulatory standard, and each assessed as to the scope and severity of the regulatory infraction. The F-Tags and deficiencies alleged by ISDH at Petitioner's facility are set out here in summary, together with the final revised assessment of each deficiency's level of scope and severity (ss):

1. F-314: violation of 42 C.F.R. § 483.25(c) - development of pressure sores in at least six residents (ss=H). CMS Ex. B, at 2-21;

2. F-323: violation of 42 C.F.R. § 483.25(h)(1) - failure to keep environment free of accident hazards (ss=E). Id., at 21-22;

3. F-324: violation of 42 C.F.R. § 483.25(h)(2) - failure to provide adequate supervision and assistance devices to prevent accidents (ss=E). Id., at 22-26;

4. F-325: violation of 42 C.F.R. § 483.25(i)(1) - failure to maintain acceptable parameters of nutritional status for residents (ss=G). Id., at 26-31;

5. F-326: violation of 42 C.F.R. § 483.25(i)(2) - failure to provide therapeutic diet based upon residents' comprehensive assessments (ss=E). Id., at 31-36;

6. F-364: violation of 42 C.F.R. § 483.25(d)(1) and (2) - failure to provide food in a manner that is both appealing and that conserves the food's nutritive value (ss=F). Id., at 36-37;

7. F-368: violation of 42 C.F.R. § 483.35(f)(1)-(3) - failure to ensure that the facility provides and each resident receives at least three meals daily at regular times comparable to normal mealtimes in the community (ss=C). Id., at 37-40;

8. F-371: violation of 42 C.F.R. § 483.35(h)(2) - failure to store, prepare, and serve food under sanitary conditions (ss=F). Id., at 40-48;

9. F-465: violation of 42 C.F.R. § 483.70(h) - failure to provide a safe, functional, sanitary, and comfortable environment (ss=E). Id., at 48-55;

10. F-498: violation of 42 C.F.R. § 483.75(f) - failure to ensure that nurse aides are able to demonstrate competency (ss=D). Id., at 55-58; and

11. K-0076: violation of 42 C.F.R. § 483.70(a)(1)(a) - Life Safety Code deficiency as to the medical gas system (ss=D). CMS Ex. C, at 2.

There are two points to be emphasized about this summary. First, the scope and severity assessments set out above are at the revised levels announced in ISDH's September 18, 2000 letter to Petitioner. CMS Ex. A. Second, although both parties to this litigation repeatedly refer to 10 reported deficiencies (e.g. CMS Memo, at 2-3; P. Memo, at 2-3), there were and are in fact 11 reported deficiencies. The parties' enumeration of the F-Tags and their discussions of them in general seem to have overlooked the seventh deficiency tag stated above, F-368. CMS Ex. B, at 37-40.

On September 8, 2000, CMS notified Petitioner of its intention to act on the survey report by imposing certain penalties on Petitioner, including a civil money penalty (CMP) of $200 per day beginning on August 3, 2000 until the facility's deficiencies were corrected, and a denial of payment for new Medicare admissions (DPNA) effective November 3, 2000. P. Ex. 1. CMS's September 8, 2000 letter also informed Petitioner that its Nurse Aide Training and/or Competency Evaluation Program (NATCEP) would be suspended for two years from August 3, 2000. Id., at 2-3. Although this letter set out a variety of potential statutory and regulatory bases for such an action, including the case of an institution that "has been assessed a total civil money penalty of not less than $5,000.00," the reason stated on September 8, 2000, for CMS's suspension of Petitioner's

NATCEP program was Petitioner's having been subject to "an extended survey" based on "a finding of substandard care." Id., at 3.

On September 20, 2000, however, ISDH conducted a second, "revisit" survey of Petitioner's facility and found that all deficiencies had been corrected and that Petitioner had been in substantial compliance with all Medicare and Medicaid requirements as of September 2, 2000. CMS notified Petitioner on October 6, 2000, that it would not impose the DPNA, but would impose the CMP of $200 per day for the 30 days from August 3, 2000 through September 1, 2000. CMS's notice explicitly set the CMP amount at $6,000. CMS's October 6, 2000 notice contained no explicit reference to the NATCEP suspension. CMS Ex. D; P. Ex. 2.

Petitioner timely filed its hearing request on or about November 7, 2000, and attached to it CMS's September 8, 2000 letter. P. Ex. 3. The hearing request is a detailed document of five pages' length, but it neither refers to nor incorporates by attachment CMS's October 6, 2000 letter, and it expressly notes Petitioner's objection to the DPNA that CMS had decided against imposing in its October 6, 2000 letter. Petitioner's detailed recitation of the object and substance of its appeal is limited to the deficiency charged in F-314; a close reading of Petitioner's hearing request reveals a direct correlation among the residents' identities, dates and times of observed deficiencies, and details of the surveyors' observations set out at F-314 in the 2567 (CMS Ex. B, at 2-21) and Petitioner's responses in its hearing request. P. Ex. 3, at 2-4.

CMS filed its Notice of Issues for Which a Dismissal for Cause, or in the Alternative, Summary Judgment Will Be Requested (CMS Notice) on January 31, 2001. That Notice explained CMS's theory, to which it still adheres:

It is (CMS's) position (1) that all the unappealed deficiencies (some 9 deficiency tags) from the same survey provide a fully adequate basis for all the remedies imposed, (2) that a hearing on the single deficiency for which (Petitioner) seeks a hearing would not result in any changes in the remedies imposed, and (3) that in such a case, in accordance with The Lutheran Home - Caledonia v. HCFA, CR674 (ALJ Decision), affirmed by Decision No. 1753 (DAB Appellate Division Decision), this tribunal would not have jurisdiction to hear such a matter.

CMS Notice, at 1-2.

CMS filed its Motion to Dismiss on or about March 16, 2001. During the period established for the exchange of memoranda on the issues raised in that Motion, this case was reassigned to me.

II. ISSUE

There is a single legal issue before me, and I believe that it is a question of first impression. The issue is: Whether Petitioner has a right to a hearing on the one deficiency tag it has appealed, when the ten unappealed deficiency tags arising from the same survey are sufficient to support the remedy imposed, without reliance on the appealed deficiency tag?

III. CONTROLLING STATUTES AND REGULATIONS

CMS's authority to impose penalties against non-compliant facilities derives from both statute and regulation. When CMS proposes to impose a CMP, it relies on section 1819(h)(2)(B) of the Social Security Act (Act) and the grant of authority conveyed to it by 42 C.F.R. § 488.406(a)(3), which states:

(a) General. In addition to the remedy of termination of the provider agreement, the following remedies are available:

(3) Civil Money Penalties.

When CMS proposes to prohibit approval of a facility's NATCEP, it relies on statutory language found at section 1819(f)(2)(B)(iii)(I) of the Act. The specific provisions that bear on this discussion are set out below, and they require that the Secretary of the Department of Health and Human Services (Secretary) "shall prohibit approval" of any NATCEP program if it is:

(I) offered by or in a skilled nursing facility which, within the previous 2 years -

(b) has been subject to an extended survey (or partial extended survey) under subsection (g)(2)(B)(i) . . . ; or

(c) has been assessed a civil money penalty . . . of not less than $5,000.00 . . .

Subsection (b) above refers to extended surveys or partial extended surveys prompted by a "substandard quality of care" finding, while subsection (c) comprehends any CMP imposed for whatever reasons based on deficiencies. CMS's September 8, 2000 letter to Petitioner purported to rely on the language found in subsection (b), but cited language found both in subsection (b) and in subsection (c).

The range of CMP which may be imposed is based upon the scope and severity of the deficiency or deficiencies encountered. One alternative, not at issue here, is a "per instance" CMP that can range from $1,000 to $10,000 per instance of noncompliance. 42 C.F.R. § 488.408(d)(iv). The alternative chosen by CMS in the instant case is set out at 42 C.F.R. § 488.408(d)(1)(iii), which authorizes the imposition of "[c]ivil money penalties of $50-3,000 per day" in situations of "[w]idespread deficiencies that constitute no actual harm with a potential for more than minimal harm but not immediate jeopardy; or . . . [o]ne or more deficiencies that constitute actual harm that is not immediate jeopardy." 42 C.F.R. §§ 488.408(d)(2)(i), (ii). Such CMPs are defined as falling in the lower range of available penalties, both by reference to the upper and lower limits of the penalty amount and the severity of the deficiency for which they are imposed. 42 C.F.R. § 488.438(a)(ii).

Appeals from the imposition of remedies are permitted under the circumstances set out in 42 C.F.R. §§ 498.3 and 498.5. A facility may appeal an initial determination of noncompliance if it results in the imposition of a penalty such as a CMP, DPNA, or disapproval of a NATCEP, but it may not appeal deficiency findings that do not form the basis for a remedy actually imposed by CMS. A facility may appeal the level at which CMS assesses the noncompliance only if a successful appeal would affect the range of CMP imposed, or would eliminate a finding of substandard quality of care which had resulted in the loss of NATCEP approval. 42 C.F.R. §§ 498.3(b)(13), (14).

Appeals are perfected according to the terms of 42 C.F.R. § 498.40. The requirements are relatively straightforward on their face: within 60 days of its receipt of notice of the initial determination of deficiency (42 C.F.R. § 498.40(a)(2)), the facility must file a request for hearing which 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).

The terms of 42 C.F.R. § 498.40 are controlling on the question of whether potential issues have been preserved for appeal. A facility affected by a final determination, and seeking review of that determination on appeal, must invoke jurisdiction in its hearing request. Otherwise, those determinations and the findings on which they are based become final, non-reviewable, and binding on the affected facility by operation of law. 42 C.F.R. §§ 498.20(b), 498.70(a).

IV. FINDINGS OF FACT AND CONCLUSIONS OF LAW

I find and conclude as follows:

1. Petitioner is a skilled nursing facility, and was the subject of an investigation and survey completed by the ISDH on August 3, 2000.

2. The survey resulted in 11 reported deficiencies, which were designated in the 2567 under the following F-Tags: F-314, F-323, F-324, F-325, F-326, F-364, F-368, F-371, F-465, F-498, and K-0076. CMS Ex. B.

3. Based on these deficiency findings, CMS determined to impose the following remedies: (a) a CMP of $200 per day beginning on August 3, 2000 and ending on September 1, 2000, for a total CMP of $6,000; and (b) a denial of approval of Petitioner's NATCEP for a period of two years beginning on August 3, 2000. P. Exs. 1, 2; CMS Ex. D.

4. CMS first gave Petitioner notice of its intention to impose remedies on September 8, 2000, and gave notice of the final amount of the CMP on October 6, 2000. P. Exs. 1, 2; CMS Ex. D.

5. Petitioner timely filed its hearing request on November 7, 2000, but limited its appeal to the deficiency findings alleged in F-314. P. Ex. 3; CMS Ex. E.

6. Petitioner's hearing request did not seek review of any of the other 10 reported deficiencies, and they have now become final. 42 C.F.R. § 498.20(b).

7. The remedies imposed on Petitioner by CMS, the CMP of $6,000 and the loss of NATCEP approval for two years, are fully supported by the 10 unappealed deficiencies, without reliance on the appealed deficiency findings alleged in F-314. 42 C.F.R. §§ 408(d)(1)(iii), 408.438(a)(ii), 488.438(f)(1).

8. There is no reason to invoke my discretionary authority to allow Petitioner to amend its hearing request, or to add new issues to those already before me in this case. 42 C.F.R. §§ 498.40(c)(2), 498.56(a).

9. On the facts of this case, where there is no remedy to affirm or reverse, Petitioner has no right to a hearing, and its request for hearing must be dismissed. 42 C.F.R. §§ 498.3, 498.5.

V. DISCUSSION

I begin this discussion by pointing out what matters are not before me in this case. CMS has asked that I grant partial summary judgment in its favor on the unappealed determinations of deficiency. See CMS Memo, at 1, 5, 9; CMS Reply Memorandum (CMS Reply), at 10. Petitioner, conceding that it did not appeal any of the determinations other than those set out in F-314, asserts that "[t]he other . . . alleged deficiencies not included in the scope of Petitioner's request for hearing are not before the ALJ and, therefore, the ALJ does not have jurisdiction to grant partial summary judgment as to those alleged deficiencies." P. Memo, at 2, 13-14. On this point Petitioner is correct.

The simple fact is that, whether the unappealed determinations of deficiency number nine or 10, they are precisely that: unappealed determinations. By operation of law through the application of 42 C.F.R. § 498.20(b), those determinations are now final, non-reviewable, and binding, and I may neither affirm nor disturb them. Orchard Grove Extended Care Center, DAB CR541 (1998). CMS's suggestion that I enjoy jurisdiction to affirm by summary judgment those unappealed determinations overlooks the fact that they are not before me in this case, and that I cannot rule on matters not properly before me. The only determinations of deficiency comprehended by Petitioner's appeal are those set out in F-314.

But if the unappealed determinations are not before me for review, then it follows that the penalties which they have invoked are likewise beyond review here. Insofar as the now-final determinations of deficiency, taken together, constitute a sufficient predicate for the CMP and NATCEP-loss imposed against Petitioner, then the CMP and NATCEP-loss are not within my power to reduce, amend, or set aside in this appeal. The unappealed determinations of deficiency are, in this context, the equivalent of the non-inclusive but sufficient number of deficiencies held to sustain penalties in Lakeland Continuing Care Center, DAB CR683 (2000), and Kelsey Memorial Hospital, DAB CR583 (1999). Here, as in those cases, it is not necessary that every deficiency charged against Petitioner be sustained, as long as those actually sustained are sufficient to establish a reasonable basis for the CMP actually imposed. Since the unappealed deficiencies are now final, they have been sustained ipso jure. And as sustained, they establish an entirely sufficient basis for the imposition of a $200 per day CMP, the extension of that CMP over a 30-day period for a total CMP of $6,000, and the denial-of-NATCEP penalty based on the $6,000 CMP.

This point is central to the discussion that follows, so it may be well to pause briefly to re-examine the exact character of the now-final deficiencies as they relate to the scope and severity standards required to support a CMP of $200 per day. As noted above, 42 C.F.R. § 488.408 classifies the remedies available into three Categories "according to how serious the noncompliance is," and classifies CMPs of between $50 and $3,000 per day as Category 2 remedies. 42 C.F.R. § 488.408(d)(1)(iii). The level of seriousness at which Category 2 remedies must be imposed is demonstrated "when there are - (i) [w]idespread deficiencies that constitute no actual harm with a potential for more than minimal harm but not immediate jeopardy; or (ii) [o]ne or more deficiencies that constitute actual harm that is not immediate jeopardy." 42 C.F.R. §§ 488.408(d)(2)(i), (ii). Those standards, converted into the standard notation employed in compliance surveys, mean that any deficiencies established at scope and severity (ss) levels F and above can invoke Category 2 CMPs. The now-final deficiencies include two at ss level F and one at ss level G.

F-364 is one of the now-final deficiencies. This deficiency establishes non-compliance with 42 C.F.R. §§ 483.25(d)(1), (2) at ss level F which indicates there were "widespread deficiencies" with a potential for actual harm short of immediate jeopardy. F-371 is another now-final deficiency. This deficiency establishes non-compliance with 42 C.F.R. § 483.35(h)(2), also at ss level F. And the now-final Tag F-325 establishes non-compliance with 42 C.F.R. § 483.25(i)(1) at ss level G, which means it is a deficiency in which "actual harm" short of immediate jeopardy resulted. These three deficiencies, all of which are now final by operation of 42 C.F.R. § 498.20(b), are sufficient to support CMS's imposition of Category 2 penalties on Petitioner. I need not consider CMS's present assertion that the four E-level deficiencies based on F-323, F-324, F-326, and F-465 also warrant Category 2 classification; the one G-level citation and the two F-level citations, all three of which are now final, fully support the imposition of a Category 2 CMP of between $50 and $3,000 per day for 30 days. The two F-level deficiencies would have supported a Category 2 classification even before the deficiency based on Tag F-325 was enhanced from ss level D to ss level G on September 18, 2000. CMS Ex. A. It is equally significant that the Category 2 classification was at no time dependent on F-314, either in terms of its having been assessed at ss level H or in terms of its having been cited as a deficiency at all. If no pressure sores had been observed at Petitioner's facility, and no F-314 deficiency had been charged, the predicate for a Category 2 CMP would still have existed, and would still be final, non-reviewable, and binding. No ruling I could conceivably enter in this case addressing F-314 could disturb that predicate.

But what of CMS's specific determination to set the CMP at $200 per day? That amount is, of course, well within the Category 2 "lower range" established by 42 C.F.R. §§ 488.408(d)(1)(iii) and 488.438(a)(ii). In fact, it represents only one-fifteenth of the upper limit of the range, and falls at roughly the eighth percentile above the minimum mandatory imposition. The short answer is that, notwithstanding ISDH's recommendation that the amount be set at $100 per day, there is nothing unreasonable about the $200 figure CMS chose, since it had Petitioner's history before it, and that history reflected G-level and other violations in the immediate past. P. Ex. 1; CMS Ex. C. The facility's history is explicitly included in the factors CMS was obliged to consider in setting the CMP amount. 42 C.F.R. § 488.438(f)(1). Were I called upon to decide whether the $200 per day figure is reasonable, I would declare that it is. But the short answer overlooks the stubborn fact that CMS's determination to set the CMP at that level was made in the context of the unappealed, final, and non-reviewable deficiency determinations set out in F-323, F-324, F-325, F-326, F-364, F-368, F-371, F-465, F-498, and K-0076. By operation of 42 C.F.R. § 498.20(b), the violations, their 30-days' duration, and CMS's determination to assess the CMP at $200 per day, are now absolutely binding. No ruling I might properly enter in this case concerning F-314 could disturb them.

With the establishment of the CMP at $6,000, certain consequences follow. There are several closely-defined events which require the denial of NATCEP approval, and one of them is set out in section 1819(f)(2)(B)(iii)(I)(c) of the Act. It declares that the Secretary "(I) shall prohibit approval of such a (NATCEP) program . . . offered by or in a skilled nursing facility which, within the previous 2 years . . . (c) has been assessed a civil money penalty . . . of not less than $5,000 . . . ." Petitioner has addressed this provision by suggesting that because it was not expressly relied on in CMS's letter of September 8, 2000, its application is in some measure discretionary. CMS has responded by arguing that the September 8^th letter clearly cited and quoted the provision; that as of September 8^th, the duration of Petitioner's period of noncompliance was still uncertain and that, once the duration had reached a length which would support a CMP of $6,000, imposition of the NATCEP-denial penalty was the Secretary's mandatory obligation.

CMS is correct. The statutory language is the classic formulation of an expression of mandatory obligation in its employment of the words "shall prohibit." Thus, once the "revisit" survey on September 20, 2000 established that Petitioner had returned to substantial compliance with all program requirements as of September 2, 2000, the total amount of the CMP could be calculated at $6,000, and that amount placed the Secretary under the mandatory, non-discretionary obligation to deny approval of Petitioner's NATCEP program. Even had the separate and independent basis for NATCEP-denial based on F-314 not existed, or had the citation based on F-314 been completely withdrawn, the final, binding, and non-reviewable CMP of $6,000 would have led ineluctably to the denial of approval of Petitioner's NATCEP under the requirement of section 1819(f)(2)(B)(iii)(I)(c) of the Act. No ruling that I might contemplate within my jurisdiction could deflect or defer the operation of the Secretary's mandatory obligation.

Petitioner argues that its November 7, 2000 hearing request (P. Ex. 3; CMS Ex. E) is fully compliant with 42 C.F.R. § 498.40 in seeking review of the deficiency cited in F-314 (P. Memo, at 1, 5-6), and that its hearing request is therefore adequate to challenge the NATCEP-denial imposed as the result of the survey (Id., at 2, 7-10). Petitioner is correct in its argument concerning the content and completeness of its hearing request, but it incorrectly assumes a link between the adequacy of the language in its November 7, 2000 letter and the broader question of its right to a hearing in this unusual jurisdictional context.

If the only question before me were whether Petitioner's hearing request satisfies the terms of 42 C.F.R. § 498.40, I should not hesitate to rule in Petitioner's favor. The letter by which it sought to perfect its appeal is detailed and precise, and fully compliant with the requirements that it identify the issues, facts, and legal conclusions it contests and explain why it contests them. P. Ex. 3; CMS Ex. E. It is more than adequate to meet the standard that has evolved recently in Fairview Nursing Plaza, Inc., DAB No. 1715 (2000) and Alden-Princeton Rehabilitation and Health Care Center, Inc., DAB No. 1709 (1999), even when that standard is read rigorously.

It does not follow, however, that exemplary compliance with 42 C.F.R. § 498.40 is enough to defeat CMS's Motion to Dismiss. Indeed, Petitioner's careful limitation of its appeal to F-314 has had the effect I have explained above, that of leaving in place and beyond the reach of this appeal all the other deficiency citations and remedies CMS imposed. In spite of Petitioner's argument to the contrary (see P. Memo, at 2, 8), the ultimate resolution of the F-314 debate could have no effect whatsoever on the extant combination of penalties it faces. The heart of Petitioner's argument deserves to be set out in full here, because it illuminates so concisely Petitioner's incorrect assumption of a link between the adequacy of its hearing request and the preservation of a justiciable issue in this case. At page 8 of its Memorandum, Petitioner asserts:

Therefore, even assuming the range of the CMP imposed may not be affected by a successful appeal of F314, [CMS] cannot contend that a successful appeal would not affect the imposition of the NATCEP ban. Contrary to [CMS]'s assertion, if a violation of F314 is determined not to exist or a violation is determined to exist but the violation did not constitute substandard quality of care (Level H), the stated basis for [CMS]'s imposition of the NATCEP ban would be removed.

The discussion thus far shows that the precise opposite is in fact the case: not only the range of the CMP, but the actual final amount of the CMP itself, is final and cannot be affected by "a successful appeal of F314" based on Petitioner's hearing request. The statutory imposition of a mandatory disapproval of Petitioner's NATCEP is not subject to modification or reversal even if Petitioner were to prevail here and the violation of F-314 were "determined not to exist or . . . not constitute substandard quality of care."

By looking at Petitioner's argument from a slightly different hypothetical perspective, it is possible to test its soundness: assuming arguendo that CMS were for whatever reason simply to revisit the facts underlying F-314 and decide to reduce the level of severity or scope at which the violation is cited, or to rescind the citation completely, what would be the result? Petitioner's argument would require the conclusion that the CMP would be subject to reduction and the NATCEP penalty would be subject to reversal. But as long as the unappealed deficiencies remain undisturbed, the CMP imposed thereon remains in effect as originally assessed, and the NATCEP action remains mandated by the level of the CMP. Even CMS's unilateral decision to rescind the F-314 citation could not reduce the remedies imposed in this case. In short, no matter how an appeal of the F-314 citation might conclude, it could not in any way reduce the penalty already imposed, and it obviously could not enhance it. With respect to the penalty assessed against Petitioner,

F-314 is a nullity and its effect on the remedy completely nugatory.

Since the effect of F-314 is neither to enhance nor reduce the penalty already imposed, then there is no practical difference between the present facts and a case in which CMS might decide to rescind entirely, or reduce to zero, a CMP. In such a case, there simply remains nothing to litigate since it is the remedy, and not the citation of a deficiency, that generates the right to a hearing. Schowalter Villa, DAB No. 1688 (1999); Arcadia Acres, Inc., DAB No. 1607 (1997). In fact, the situation would be comparable to those in The Lutheran Home-Caledonia, DAB No. 1753 (2000), Walker Methodist Health Center, DAB CR869 (2002), Charlesgate Nursing Center, DAB CR868 (2002), D.C. Association for Retarded Citizens, DAB CR776 (2001), Alpine Inn Care, Inc., DAB CR728 (2000), Woodland Care Center, DAB CR659 (2000), and Fort Tryon Nursing Home, DAB CR425 (1996), and the result would be the same. Petitioner would no longer have a right to a hearing on the issues set out in its hearing request.

The Lutheran Home-Caledonia, Walker, Charlesgate, D.C. Association, and Alpine decisions stand as the culmination of a series of cases that have examined the nature of the right to a hearing pursuant to 42 C.F.R. §§ 498.3 and 498.5. These cases, and the discussion of the Lutheran Home-Caldonia issues at the administrative law judge (ALJ) level as well (Lutheran Home-Caledonia, DAB CR674 (2000)), all distinguish between the sufficiency of a hearing request when measured against 42 C.F.R. § 498.40, and the necessity that the hearing request preserve or present a genuinely justiciable issue in the context of 42 C.F.R. §§ 498.3 and 498.5. In each of these cases, the failure or inability of the petitioner to demonstrate that the appealed survey findings and deficiency determinations had resulted in a remedy actually in effect was fatal to its appeal: in each case, an appellate panel of the Departmental Appeals Board (Board) or the ALJ reminded the petitioner that penalty, not citation, is the source of the appeal right, and dismissed the appeal. These cases have uniformly adhered to the doctrine that a citation of deficiency which does not result in the imposition of a remedy, or which results in the imposition of a remedy later rescinded or reduced to zero, does not create the right to appeal. And a careful reading of the regulatory language now set out at 42 C.F.R. §§ 498.3(b)(13) and (14) makes the application of that doctrine to this case patent.

By its terms, the regulation confers appeal rights in the case of " . . . a finding of noncompliance that results in the imposition of a remedy specified in [42 C.F.R.] § 488.406 of this chapter, except the State monitoring remedy." 42 C.F.R. § 498.3(b)(13).

The regulation confers appeal rights on a skilled nursing facility, such as Petitioner, when the issue is "[t]he level of noncompliance found by [CMS] . . . but only if a successful challenge on this issue would affect . . . (i) [t]he range of civil money penalty amounts that [CMS] could collect . . . or (ii) [a] finding of substandard quality of care that results in the loss of approval for a . . . nurse aide training program," or NATCEP. 42 C.F.R. §§ 498.3(b)(14)(i), (ii). In the instant case, the finding of noncompliance represented by F-314 has not resulted in the imposition of a remedy not already final and binding, and the level of noncompliance noted in F-314 has not resulted in the loss of NATCEP approval. Those results have come about through the operation of distinct determinations and remedies, are independent of F-314 in their legal and regulatory support, and remain unaffected by the litigative fate of F-314. Thus the regulations and the decisions cited above are in perfect accord when they say: on the facts of this case, where there is no remedy to affirm or reverse, there is no right to appeal under 42 C.F.R. §§ 498.3 and 498.5.

In reaching this conclusion, I am mindful that it leaves Petitioner without an avenue to seek appellate review of circumstances by which it alleges itself to be aggrieved, and I do not reach my conclusion lightly. Lakewood Plaza Nursing Center, DAB CR691 (2000), aff'd, DAB No. 1767 (2001); Fairview Nursing Plaza, supra; Alden-Princeton Rehabilitation and Health Care Center, supra. I have considered whether I might properly exercise my discretion under 42 C.F.R. § 498.40(c)(2) to allow Petitioner to amend its hearing request to include objections to some or all of the other F-Tag citations, or whether I might through a similar exercise of discretion add additional issues to this case pursuant to 42 C.F.R. § 498.56(a). For the reasons I shall summarize next, I decline to exercise my discretion in either manner.

First, it will be recalled that Petitioner's hearing request was not filed until November 7, 2000. P. Ex 3. By that time it had received all of CMS's communications: the first notice letter of September 8, 2000 (P. Ex. 1); the September 18, 2000 letter notifying Petitioner that some of the deficiencies' scope and severity levels had been revised upward (CMS Ex. A), and CMS's final letter of October 6, 2000, in which it declared that the originally-announced remedies of DPNA and Medicare/Medicaid agreement termination would not be imposed, and that the CMP would total $6,000 (CMS Ex. D; P. Ex. 2). These documents were all in Petitioner's hands with ample time for review and analysis.

Petitioner has characterized CMS's position in this litigation as "seeking to change the basis for the NATCEP ban" from reliance on the substandard quality of care basis set out in F-314 to the CMP-based theory it now espouses. It is true that the language cited in CMS's September 8, 2000 letter does rely on terms involving an extended survey, but the paragraph immediately preceding the language in question recites all the potential grounds for a denial-of-NATCEP remedy, and explicitly notes that "[f]ederal law . . . prohibits approval of (NATCEP) . . . in a facility which . . . has been assessed a total civil money penalty of not less than $5,000." P. Ex. 1, at 2-3. That letter also points out that the CMP of $200 per day had begun to run on August 3, 2000 " . . . and would continue to accrue at the amount of $200 per day until you have made the necessary correction . . ." Id., at 1. There can be no claim now by Petitioner that it was unaware of the accruing CMP's potential for exceeding $5,000, and there can be no credible assertion now by Petitioner that it was unaware, at any time after October 6, 2000, that the CMP had reached an amount sufficient to trigger the NATCEP-loss remedy of which it had been warned. Petitioner's hearing request was neither rushed nor casually drafted: as I have noted above it is, with one exception, careful, detailed, and crafted with consummate skill - and its entire thrust is directed at limiting the appeal to a review of F-314's allegations. The only anomaly in the hearing request is its reference to the withdrawn DPNA remedy. Otherwise, P. Ex. 3 is every bit a thoughtful and deliberate choice of tactic, made at a time when it knew - because it had been warned - that the CMP would trigger a NATCEP remedy.

Nor did Petitioner act to invoke 42 C.F.R. §§ 498.40(c)(2) or 498.56(a) once CMS filed its Notice on January 31, 2001, announcing its intention to raise the jurisdictional issue dispositive of this appeal. Whether an action of that sort would have been timely or allowed at that point need not be decided here, but the opportunity passed without apparent effort by Petitioner to redraw its position.

VI. CONCLUSION

For the reasons set forth above, I grant CMS's Motion to Dismiss. The hearing request filed by Petitioner on November 7, 2000 must be, and is, dismissed.

Richard J. Smith

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Financing Administration (HCFA) was renamed the Centers for Medicare & Medicaid Services (CMS). 66 Fed. Reg. 35,437 (2001). Although the agency's name change became effective subsequent to the events at issue in this case, it will simplify matters if I refer to the agency as CMS when discussing proceedings in this forum.