SUBJECT:

Hillcrest Healthcare, LLC,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION DISMISSING
REQUEST FOR HEARING

I dismiss the hearing request of Petitioner, Hillcrest Healthcare, LLC, as it relates to surveys that were completed of its facility on May 1, 2002 and May 30, 2002. I find that Petitioner expressly waived its right to a hearing as to the May 30, 2002 survey findings. I find that Petitioner did not request a hearing timely concerning the May 1, 2002 survey findings and has not made a showing of good cause for its failure to do so.

I. Background and undisputed material facts

The facts of this case are not disputed. For purposes of this decision I am accepting as true Petitioner's explanation for its failure to file a hearing request that timely contests CMS's remedy determinations based on the May 1, 2002 survey.

Petitioner is a skilled nursing facility that is located in Ashland City, Tennessee. It participates in the Medicare program and its participation is subject to regulations which govern the participation of skilled nursing facilities in Medicare at 42 C.F.R. Parts 483, 488, and 498. Surveys were conducted of Petitioner's facility in 2002 by the Tennessee Department of Health in order to determine whether Petitioner was complying substantially with Medicare participation requirements. At surveys completed on May 1, 2002 (May 1 survey) and on May 30, 2002 (May 30 survey), it was determined that Petitioner was not complying substantially with participation requirements. CMS determined to impose remedies against Petitioner which, among other things, included civil money penalties of $3,450 per day based on the findings that were made at the May 1 survey and civil money penalties of $100 per day based on the findings that were made at the May 30 survey.

The regulations provide that a facility that is affected by a remedy determination, as was Petitioner, has a right to contest that determination at a hearing before an administrative law judge, provided that the request is made timely. CMS sent a series of notices to Petitioner in which it informed Petitioner of its hearing rights. Petitioner sent several responses to CMS. The notices and responses are set forth in CMS Ex. 1 - CMS Ex. 11 which CMS attached to its motion to dismiss. Petitioner has not objected to my receiving these exhibits into the record of this case for purposes of deciding CMS's motion and I am receiving them.

On May 7, 2002, CMS faxed a notice to Petitioner in which CMS informed Petitioner that, based on the results of the May 1 survey, it had determined to impose civil money penalties of $3,450 against Petitioner and other remedies, including denial of payments for new admissions effective May 9, 2002. CMS Ex. 2. Petitioner's administrator, David E. Miller, signed a receipt for this fax on May 8, 2002. Id. at 1. The notice advised Petitioner of its appeal rights, telling it that, if it disagreed with CMS's determination, it could request a hearing. It specifically told Petitioner that:

A written request for a hearing must be filed no later than sixty days from the date of this letter.

Id. at 4 (emphasis in original). The notice also advised Petitioner that, if it wished to waive its right to a hearing, it must do so within 60 calendar days of Petitioner's receipt of the notice. Id. at 3. Petitioner was told that, if it waived its right to a hearing, the amount of civil money penalties that were imposed against it would be reduced by 35 percent. Id.

On June 7, 2002, CMS sent a second notice to Petitioner. CMS Ex. 3. This notice advised Petitioner that, based on the results of the May 30 survey, CMS was imposing "revised" remedies against Petitioner. CMS asserted that, based on the findings of the May 30 survey, civil money penalties would continue to accrue, but at a reduced rate of $100 per day effective May 24, 2002. Id. at 2. CMS also told Petitioner that the denial of payment for new admissions that was imposed after the May 1 survey would remain in effect. Id. Additionally, CMS told Petitioner that if it wished to waive its hearing rights "in regard to CMS' determinations based on the May 30, 2002 revisit," it must do so within 60 days from the date of its receipt of the notice. Id. Finally, the notice told Petitioner that it had a right to request a hearing to challenge:

CMS's determinations that are based on [the] May 30, 2002 Revisit, as reflected in this Notice . . . .

Id. (emphasis added). As with the previous notice, this notice told Petitioner, in emphasized language, that it must file its written request for a hearing no later than 60 days from the date of the notice. Id.

CMS sent a third notice to Petitioner on July 16, 2002. CMS Ex. 4. This notice told Petitioner that it had adjusted from May 24, 2002 to May 16, 2002 as the beginning date for lowering civil money penalty amounts accruing against Petitioner from $3,450 per day to $100 per day. Id. at 2. It advised Petitioner that the appeal deadlines stated previously in the May 7 and June 7, 2002 notices were unchanged. Id.

CMS sent a fourth notice to Petitioner on August 22, 2002. CMS Ex. 5. In this notice it advised Petitioner that CMS had determined that Petitioner attained substantial compliance with participation requirements effective May 17, 2002. Therefore, all remedies that were imposed against Petitioner would terminate as of that date.

On July 15, 2002, Petitioner's parent, Healthmark Services, sent a letter to the Civil Remedies Division on behalf of Petitioner. CMS Ex. 6. In its first sentence, the letter characterizes its contents as a "formal request for the 60 day waiver of Appeal Rights for both surveys conducted on May 1, 2002 and revisit on May 30, 2002." Id. It asserts that Petitioner awaited the results of the May 30 survey to determine the duration of civil money penalties prior to waiving its appeal rights. Id. It then discusses a disagreement that Petitioner had with the State of Tennessee concerning the dates when the findings of noncompliance made at the May 1 survey should have been abated. According to the letter, at the end of the "60 days," Petitioner was still attempting to have the end accrual date of the original civil money penalty amounts changed from May 24, 2002 to May 10, 2002. Id. It concludes by stating that Petitioner wishes to "Waive their right to appeal once the correct stop date has been granted by the State of Tennessee." Id.

On August 7, 2002, Petitioner sent a fax to the Civil Remedies Division. CMS Ex. 7. In that document, Petitioner asserted that it was waiving its right to a hearing concerning the June 7, 2002 notice letter:

in accordance with the requirements specified at 42 CFR 488.486 and have CMP reduced by th[i]rty-five (35%). This waiver is in response to Notification of Change in LTC Enforcement Remedies dated June 7, 2002.

Id.

On August 22, 2002, CMS sent a letter to Petitioner in which it acknowledged receipt of Petitioner's written request to waive its right to a hearing for the "enforcement action imposed as a result of the May 30, 2002 revisit survey." CMS Ex. 8, at 2. CMS advised Petitioner that it was reducing the civil money penalty against Petitioner by 35 percent for the time period that commenced with May 16, 2002. Id.

Petitioner then faxed a letter to Maxine Winerman at the Civil Remedies Division on August 26, 2002. CMS Ex. 9. Petitioner described this letter as written confirmation of its intent to proceed to hearing on issues raised by the May 1 survey. It asserts that its August 7, 2002 "waiver letter" was a waiver of Petitioner's hearing rights concerning the May 30 survey. Id.

Petitioner wrote again to Ms. Winerman on August 30, 2002. CMS Ex. 10. In this letter Petitioner asserted that it understood that counsel for CMS was preparing to move to dismiss Petitioner's hearing request. It conceded that it had failed to file a timely hearing request from CMS's May 7, 2002 notice. Id. at 1. Petitioner explained that, during the 60-day period following its receipt of the notice, it was in the process of working with an official from the Tennessee Department of Health to correct several "issues" addressing both the findings of noncompliance that were made at the May 1 survey and the effective dates of civil money penalties. Petitioner cited financial losses experienced by it as a result of denial of payments for new admissions and cash expenses resulting from its need to contract staff from an outside agency. Id. It asserted that its:

initial responsibility is to its residents and their families, and as such we dedicated 100 % of our efforts at clearing all cited deficiencies and reviewing every resident record . . . [W]e are confident that given an opportunity to present our case we can show that the citations for immediate jeopardy and Sub Standard care are excessive and should be lowered to an appropriate level.

Id.

CMS filed its motion to dismiss dated September 13, 2002. Petitioner did not file a timely response to the motion, so I sent an order to show cause to it in which I asked that it respond. On November 7, 2002, I received Petitioner's response to my order. It asserted that it had good cause for its failure to request a hearing timely to challenge the results of the May 1 survey. I discuss Petitioner's arguments below in the body of this decision at Finding 3.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. Petitioner waived its right to a hearing to challenge the noncompliance findings that were made at the May 30 survey;

2. Petitioner is entitled to a hearing to challenge the noncompliance findings that were made at the May 1 survey;

3. The term "good cause" in 42 C.F.R. § 498.40(c)(2) means either a circumstance which is beyond a petitioner's ability to control which prevents the petitioner from filing its hearing request timely, or an action by CMS which misleads a petitioner into not filing its hearing request timely; and

4. Petitioner has established good cause for its failure to challenge timely the noncompliance findings that were made at the May 1 survey.

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. Petitioner waived its right to a hearing to challenge the noncompliance findings that were made at the May 30 survey.

Petitioner made it clear in its August 7, 2002 fax to the Civil Remedies Division that it was waiving its right to a hearing as to those remedies that were imposed by CMS as a consequence of the May 30 survey, and as were stated in CMS's June 7, 2002 notice to Petitioner and modified in CMS's July 16, 2002 notice. CMS Ex. 7. Petitioner reiterated its intent to waive its hearing rights as to the May 30 survey in its August 26, 2002 letter to Ms. Winerman. CMS Ex. 9. I find from these letters that Petitioner waived any right that it had to a hearing concerning the findings made at the May 30 survey and any remedies that were imposed based on those survey findings.

2. Petitioner is not entitled to a hearing to challenge the noncompliance findings that were made at the May 1 survey.

Regulations governing administrative hearings in cases involving CMS provide that a provider against which a remedy has been imposed is entitled to a hearing before an administrative law judge if the provider requests a hearing within 60 days of its receipt of notice of the remedy determination from CMS. 42 C.F.R. § 498.40(a)(2). Petitioner is not entitled to a hearing concerning the noncompliance findings made at the May 1 survey because it did not file a hearing request within the 60-day period.

CMS sent its notice of remedy determination to Petitioner concerning the May 1 survey by fax on May 7, 2002 and Petitioner acknowledged receiving that fax on May 8, 2002. CMS Ex. 2. Petitioner would have been entitled to a hearing concerning the May 1 survey findings had it requested a hearing by July 8, 2002. However, Petitioner did not request a hearing within 60 days. The first letter sent by Petitioner in which it even arguably discusses its hearing rights was the July 15, 2002 letter that Petitioner's parent sent to the Civil Remedies Division. CMS Ex. 6. That letter was sent beyond the 60-day period.

3. The term "good cause" in 42 C.F.R. § 498.40(c)(2) means either a circumstance which is beyond a petitioner's ability to control which prevents the petitioner from filing its hearing request timely, or an action by CMS which misleads a petitioner into not filing its hearing request timely.

An administrative law judge may extend the time for filing a hearing request where the petitioner establishes good cause for not filing a request timely. 42 C.F.R. § 498.40(c)(2). An administrative law judge has discretion to dismiss a hearing request that is untimely filed and where the deadline for filing the request has not been extended by the judge. 42 C.F.R. § 498.70(c). In this case there is no dispute that Petitioner did not file a timely request to challenge the noncompliance findings that were made at the May 1 survey. Therefore, the question that I must decide is whether Petitioner established good cause for its failure to file a hearing request.

In order to answer that question, one must first understand the meaning of the term "good cause." The term is not defined at 42 C.F.R. § 498.40 or elsewhere in the 42 C.F.R. Part 498 regulations governing hearings involving determinations made by CMS. However, the absence of a definition in the 42 C.F.R. Part 498 regulations does not make the term meaningless. In publishing the regulations the Secretary must have intended to establish criteria for deciding when good cause exists because, absent criteria for deciding what is and what is not good cause, a decision to dismiss an untimely hearing request would be merely an expression of whim.

Guidance as to the meaning of the term "good cause" in the context of cases involving CMS exists elsewhere in federal regulations. The Part 498 regulations closely resemble regulations at 20 C.F.R. Parts 404 and 416 that govern hearings before administrative law judges at the Social Security Administration in cases involving Social Security benefits claims (Part 404) and cases involving Supplemental Security Income (SSI) (Part 416). The 20 C.F.R. Parts 404 and 416 regulations and the 42 C.F.R. Part 498 regulations emerge from common roots. At the time that the 20 C.F.R. Parts 404 and 416 regulations were first published, the Social Security Administration was a part of the United States Department of Health and Human Services, and the 20 C.F.R. Part 404 and 416 and the 42 C.F.R. Part 498 regulations were published under the same Secretarial authority. Prior to 1994, cases involving CMS were heard by Social Security Administration administrative law judges who also heard Social Security cases and cases involving SSI determinations. These three collections of regulations thus are hearings and appeals regulations that originally were administered by a single corps of administrative law judges and which were applied in harmony with each other.

The 20 C.F.R. Part 404 regulations contain a definition of good cause for failure to file a hearing request timely. 20 C.F.R. § 404.911. An identical definition of good cause is also contained in regulations governing hearings involving SSI at 20 C.F.R. § 416.1411. Some of this definition is written to address the unique circumstances of Social Security benefits and SSI claimants. The vast majority of Social Security benefits and SSI hearing requests are brought by individuals who allege that they are entitled to benefits by reason of physical or mental disability, and the good cause definition in 20 C.F.R. § 404.911 and 20 C.F.R. § 416.1411 encompasses detailed and highly specific circumstances that apply uniquely to Social Security benefits and SSI claimants. For that reason, this definition is not verbatim transferable to cases brought under the 42 C.F.R. Part 498 regulations. Indeed, the unique features of the Social Security and SSI definition of good cause probably explain why it was not simply engrafted into 42 C.F.R. § 498.40.

But, it is also apparent that the definition of good cause in the Social Security and SSI regulations establishes principles that logically apply to cases brought under the 42 C.F.R. Part 498 regulations. The definition of good cause at 20 C.F.R. § 404.911 and at 20 C.F.R. § 416.1411 encompasses two types of circumstances that would provide a claimant a legitimate reason for not filing a hearing request timely: (1) events that are beyond the claimant's ability to control that prevented the claimant from filing his or her request timely (20 C.F.R. §§ 404.911 and 416.1411(a)(1), (3), and (4), and 20 C.F.R. §§ 404.911and 416.1411(b)(1) - (5), (7) - (9)); and, (2) actions taken by the Social Security Administration that misled the claimant into not filing his or her request timely (20 C.F.R. §§ 404.911 and 416.1411(a)(2), and 20 C.F.R. §§ 404.911 and 416.1411(b)(6)).

The common principle which underlies both of these broader categories of good cause is that it separates acts which are knowing acts or within a petitioner's ability to control from those acts which are taken in good faith but which are influenced by outside forces that cause a petitioner to miss a filing deadline.

4. Petitioner has not established good cause for its failure to challenge timely the noncompliance findings that were made at the May 1 survey.

Petitioner gives the following reasons for not filing its request timely:

• Petitioner lacked the resources that were necessary to meet the needs of its residents and also to file a hearing request. Petitioner's Response to CMS's Motion to Dismiss (Response) at 2. According to Petitioner, in the period of time that followed the May 1 survey, it was concentrating all of its efforts on insuring the safety of its residents. In support of this allegation, Petitioner recites the various efforts it made after the May 1 survey to prepare a plan of correction and to implement that plan. Petitioner asserts that these actions involved all of its staff and outside consultants as well.

• Petitioner did not know prior to completion of the survey process what the outcome of that process would be and would not have been able to contest the duration of the civil money penalty that was imposed based on the May 1 survey if it had filed its hearing request within the 60-day period that followed CMS's May 7, 2002 notice. Response at 2.

Both of these assertions reduce to allegations that Petitioner was prevented from filing its hearing request timely by circumstances that were beyond its ability to control. I find Petitioner's arguments not to be persuasive.

Petitioner has not provided any persuasive proof that its staff was so busy - as Petitioner claims - as to be unable to set aside the time required to prepare and file a hearing request. I find Petitioner's argument to be a conclusion without any foundation in fact. ⁽¹⁾

The 60-day requirement for filing a hearing request operates as a presumption that every petitioner should be able to find sufficient time to prepare and file a hearing request within the 60-day period. I am not saying that it is inconceivable that exigencies that are beyond a facility's ability to control might prevent its staff from meeting this requirement and so might justify an extension of time. But the burden falls squarely on the facility to show what those exigencies are and how they operate to prevent it from filing a timely request. Here, Petitioner has done nothing other than make unsupported allegations. That does not overcome the presumption.

Petitioner's argument that it could not meaningfully challenge the noncompliance findings that were made at the May 1 survey until it knew the duration of the remedies that were based on those findings is incorrect. Petitioner knew as of the date that it received CMS's June 7, 2002 notice that the civil money penalties that were imposed as a consequence of the May 1 survey ended on May 24, 2002, having been revised to accrue at a reduced rate. CMS Ex. 3. Thus, well within the 60-day request period, Petitioner knew that CMS had established an end-point of May 24, 2002, for the penalties that were imposed based on the May 1 survey (this end-point was later adjusted by CMS in favor of Petitioner; see CMS Ex. 4).

More important, Petitioner did not need to know the details pertaining to remedy duration in order to be able to file timely a hearing request challenging the noncompliance findings that were made at the May 1 survey. Petitioner was notified of those findings of noncompliance on May 7, 2002, less than a week after completion of the survey. It also knew by May 7, 2002 that the penalty amount that would be imposed against it based on those survey findings was $3,450 per day. That was more than sufficient information for Petitioner to prepare and file a hearing request.

Petitioner has not alleged that it was misled by CMS into believing that it should delay filing a hearing request to challenge the noncompliance findings that were made at the May 1 survey. However, in order to be fair to Petitioner, I have examined closely the notices that CMS sent to Petitioner. There is nothing in those documents that would suggest that Petitioner should delay filing its request. To the contrary, the May 7, 2002 notice to Petitioner explicitly tells it that it had 60 days from receipt of that notice within which to file a hearing request in order to challenge the noncompliance findings that were made at the May 1 survey. CMS Ex. 2. And, the June 7, 2002 notice to Petitioner is equally explicit in telling Petitioner that the noncompliance findings that were made at the May 30 survey constitute separate findings that Petitioner should challenge separately if it wished to do so. CMS Ex. 3. There is nothing in the June 7, 2002 notice which suggests that the deadline for filing a hearing request to challenge the May 1 survey findings was extended by virtue of subsequent action by CMS. Id.

Steven T. Kessel

Administrative Law Judge

1. I note, moreover, that Petitioner has not even at this late date filed a hearing request in this case. Petitioner has said only that it wants to challenge the noncompliance findings that were made at the May 1 survey. But, it has not filed anything that remotely complies with the requirements at 42 C.F.R. § 498.40(b) governing the contents of hearing requests.