SUBJECT:

Attalla Health Care,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

On April 2, 2002, the Centers for Medicare and Medicaid Services (CMS) ⁽¹⁾ filed a motion to dismiss Petitioner's July 25, 2000 hearing request for untimeliness, accompanied by a brief (CMS Br.) and five proposed exhibits (CMS Exs. 1-5). ⁽²⁾ I am admitting these exhibits into evidence as CMS Exs. 1-5. On November 29, 2000, Petitioner filed a brief in opposition (P. Br.) and seven proposed exhibits (P. Exs. 1-7). ⁽³⁾ I am admitting these exhibits into evidence as P. Exs. 1-7.

After consideration of the written arguments and documentary evidence submitted by the parties, I grant CMS's motion to dismiss. In doing so, I find that Petitioner's hearing request was untimely filed and that the time for filing a request for hearing should not be extended, as Petitioner has not shown good cause for its failure to file a timely hearing request.

I. Undisputed facts

Petitioner is a skilled nursing facility, located in Attalla, Alabama, participating in the Medicare and Medicaid programs. On March 10, 2000 the State of Alabama Department of Public Health (State agency) informed Petitioner that an inspection of its facility conducted from March 7 through March 9, 2000 revealed that it was not in compliance with federal requirements for nursing homes participating in the Medicare and Medicaid programs, including noncompliance constituting immediate jeopardy to residents of Petitioner's facility. P. Ex. 1. Consistent with these findings, the State agency notified Petitioner that it was recommending to CMS the imposition of a $10,000 per day civil money penalty (CMP) for the period of immediate jeopardy (March 7 and 8, 2000) a $500 per day CMP until Petitioner achieved substantial compliance and termination of Petitioner's provider agreement, effective September 5, 2000. CMS concurred with the State agency's findings and notified Petitioner on March 16, 2000 that it was imposing the following remedies:

•Termination of the provider agreement on September 5, 2000.

•Denial of payment for new admissions (DPNA), effective June 7, 2000.

•Immediate jeopardy CMP of $10,000 per day, effective March 7, 2000.

•A CMP of $500 per day beginning March 9, 2000 remaining in effect until Petitioner achieved substantial compliance.

Subsequently, on April 5, 2000 the State agency sent Petitioner a letter stating that based on Petitioner's acceptable plan of correction, and the assumption that the facility would return to compliance by April 23, 2000 it was not forwarding to CMS the recommendation for the imposition of remedies contained in the State agency's letter of March 10, 2000. ⁽⁴⁾ P. Ex. 3. Substantial compliance was verified by the State agency on April 12, 2000 and the State agency certified Petitioner's return to compliance as of that date. P. Ex. 4. Based on the revisit survey of April 12, 2000 CMS concurred with the State agency determination that the facility returned to substantial compliance as of that date. In a letter dated April 27, 2000 CMS rescinded the DPNA and termination actions.

II. Issues

The issues in this case are:

1. Whether Petitioner filed a timely request for hearing; and,

2. Whether Petitioner has shown good cause for extending the time period within which it should be allowed to file a request for hearing.

III. Applicable Law and Regulations

In cases involving CMS, a party is entitled to a hearing only if that party files its request for hearing within the time limits established by 42 C.F.R. § 498.40(a)(2), unless the time period for filing is extended. In order to be entitled to a hearing, a party must file its request within 60 days from its receipt of a notice of a determination by CMS imposing a remedy. 42 C.F.R. § 498.40(a)(2). The date of receipt of a notice is presumed to be five days after the date on the notice, unless there is a showing of actual receipt on an earlier or later date. Id.; 42 C.F.R. § 498.22(b)(3). An Administrative Law Judge (ALJ) may extend the time within which a hearing request may be filed based on a showing of good cause justifying an extension of time. 42 C.F.R. § 498.40(c)(2). An ALJ may dismiss a request for hearing which is not timely filed. 42 C.F.R. § 498.70(c).

IV. Findings and Discussion

I make findings of fact and conclusions of law (Findings) to support my decision to dismiss. Each Finding is noted below, in bold face and italics, followed by a discussion of the Finding.

1. Petitioner did not file a timely request for hearing.

CMS sent Petitioner the notice of deficiencies on March 16, 2000. P. Ex. 2. The regulatory presumption is that Petitioner received the notice not later than March 21, 2000. 42 C.F.R. § 498.22(b)(3). Petitioner does not dispute receipt of CMS's notice of imposition of remedies. In fact, Petitioner admits having received CMS's letter imposing the remedies. P. Br. at 2. Nonetheless, it was not until July 25, 2000 more than 120 days after its receipt of CMS's determination, that Petitioner filed a request for hearing before an ALJ.

The regulation at 42 C.F.R. § 498.40(a)(2) expressly provides that:

[an] affected party or its legal representative or other authorized official must file the request for hearing in writing within 60 days from the receipt of the notice of initial, reconsidered, or revised determination unless that period is extended . . . .

The filing of Petitioner's request was clearly beyond the 60 days stipulated in the regulations. Also, 42 C.F.R. § 498.22(b)(3) provides that the "receipt of the notice of [an] initial determination . . . will be presumed to be 5 days after the date on the notice unless there is a showing that it was, in fact, received earlier or later." As stated above, the regulatory presumption is that Petitioner received CMS's notice on March 21, 2000. Thus, the time for seeking a hearing expired on May 20, 2000.

2. Petitioner has failed to establish good cause justifying an extension of time to file its request for hearing.

Petitioner requested an extension of time to file its request for hearing. Such a request is permissible pursuant to 42 C.F.R. § 498.40(c)(1). However, I have discretion to grant Petitioner's application for leave to file untimely only upon a showing of good cause. 42 C.F.R. § 498.40(c)(2). For the reasons set forth below, I find that Petitioner has failed to establish good cause for late filing. 42 C.F.R. § 498.40(c)(2).

Petitioner contends that there is good cause for its delay in requesting a hearing. Petitioner asserts that in view of the State agency's letter of April 5, 2000 stating that it would not recommend the imposition of remedies, it had no right to appeal. Thus, states Petitioner, it "relied on the State agency's representation in not appealing the contested CMP's by the 60 day deadline." ⁽⁵⁾ Furthermore, adds Petitioner, CMS admits that the April 5, 2000 letter from the State agency would provide some evidence that [Petitioner] may have been confused about the enforcement situation." P. Br. at 4.

Petitioner places reliance on the holding in Hillcrest Health Facility, DAB CR489 (1997). Petitioner argues that the standard under Hillcrest is whether "any communications to Petitioner, either from the State survey agency or from HCFA were so deficient and misleading as to cause Petitioner not to file a hearing request timely." Consequently, Petitioner posits that CMS ignores its own policies when it argues that while Petitioner may have been confused by the State agency's letter, it could not reasonably rely on those representations. Petitioner derives this reasoning from CMS's established practice of accepting the agency's recommendation for the imposition of CMPs unless extraordinary circumstances are present. P. Br. at 4, 5.

CMS contends that Petitioner did not file a timely request for hearing and that no good cause exists for an extension of time. CMS Br. at 4. It specifically opposes Petitioner's position that there were circumstances present beyond the facility's ability to control which prevented it from making a timely hearing request. Moreover, claims CMS, the April 5, 2000 letter did not state that the remedies were being rescinded nor did it contain a claim that the State agency had authority to impose or not impose any remedy. CMS Br. at 5. All that the April 5 letter indicated was that no recommendation was being forwarded to CMS, an assertion that Petitioner knew was incorrect because the facility had already received a notice of imposition of remedies from CMS dated March 16, 2000. CMS Br. at 4, 5.

The fundamental issue to be decided here is whether Petitioner has shown good cause to extend the time period in which it should be allowed it to file a request for hearing beyond the 60 days provided in the regulations. 42 C.F.R. § 498.40(c)(1) and (2). Inasmuch as what constitutes good cause is not defined in the regulations, I must look to case law for guidance in pursuit of a definition. Appellate panels of the Departmental Appeals Board have held that "good cause" means circumstances beyond an entity's ability to control which prevented it from making a timely request for hearing. Hospicio San Martín, DAB No. 1554 (1996).

In view of the foregoing, I examine the facts of this case to determine what circumstances, if any, beyond Petitioner's control prevented it from filing a timely hearing request. The thrust of Petitioner's argument in addressing this issue is two pronged:

•The State agency letter of April 5, 2000 was so misleading that it caused Petitioner not to file a hearing request because it did not believe that there was anything to appeal at that time.

•CMS cannot fault Petitioner for relying on the State agency's letter of April 5, 2000 because of its established practice of accepting a State agency's recommendations for the imposition of CMPs unless extraordinary circumstances are present.

The facts of this case reveal that on March 10, 2000, the State agency sent Petitioner a notice and statement of deficiencies, pursuant to a March 9, 2000 inspection, which found that the facility was not in substantial compliance with federal participation requirements. P. Ex. 1. That notice informed Petitioner that a CMP was being recommended to CMS at the rate of $10,000 per day for March 7 and 8, 2000 and $500 per day thereafter until the facility returned to substantial compliance. Based on that recommendation, CMS imposed the suggested remedies in its own notice of March 16, 2000.

Subsequently, the State agency sent Petitioner another notice, dated April 5, 2000 acknowledging receipt and acceptance of Petitioner's plan of correction, with the indication that it was presuming that the facility would achieve substantial compliance by April 23, 2000. Based on that presumption, the State agency informed Petitioner that the remedies noted in the letter of March 10, 2000 would not be forwarded to CMS. That information, of course, was incorrect, because the State agency had already forwarded the recommendation to CMS for the imposition of remedies, and, acting on such recommendation, CMS did in fact send Petitioner a notice on March 16, 2000 indicating that the remedies suggested by the State agency were being imposed.

Petitioner's contention that reliance on the State agency's notice of April 5 justified its inaction lacks merit. It should have been obvious to Petitioner that such notice was sent in error because it was previously informed that a recommendation had already been made to CMS for the imposition of sanctions. It also knew from the letter of March 16, 2000 that CMS had concurred with the State agency's recommended remedies. Once CMS concurs with a State agency's recommendation to impose remedies, and so notifies a facility, the State is without authority to unilaterally alter CMS's determination. That authority rests with the Secretary of Health and Human Services by virtue of Congressional delegation. Sections 1819(h), 1919(h) of the Social Security Act. Nothing in the law or regulations suggests that a State agency may ignore prerogatives delegated to CMS or override its legally exercised mandate.

Contrary to Petitioner's reasoning, the Hillcrest case, supra, does not lend support to its contention. Petitioner cites this case for the proposition that "what is at issue is whether any communications to Petitioner from the State survey agency or from HCFA, were so misleading as to cause Petitioner not to file a hearing request timely." However, Petitioner overlooks the ALJ's finding wherein he states:

I do not find that Petitioner had good cause for not requesting a hearing timely from HCFA's July 19, 1996 determination to impose a civil money penalty against Petitioner even assuming that representatives of the Mississippi State survey agency told Petitioner that a civil money penalty would not be imposed against it.

Hillcrest, at 6.

Like the judge in the Hillcrest case, I am not persuaded by Petitioner's argument that it would not have abandoned the pursuit of its rights but for its being misled by representatives of the State agency. It is evident to me that Petitioner committed a judgment error in not requesting a hearing timely from CMS's March 16, 2000 determination.

The language in the State Operations Manual (SOM) cited by Petitioner to the effect that "except in extraordinary circumstances, the [Regional Office] and/or the [State Medical Agency] accepts the [State Agency's] recommendation on the choice of remedy and the amount of the CMP" does no more than restate a process that is stated in the regulations, whereby a State survey agency makes a recommendation to CMS concerning whether to impose a CMP against a long-term care facility. P. Br. at 4, 5; 42 C.F.R. §§ 488.400, et seq. The SOM simply states that CMS will act on a recommendation by a State survey agency and will defer to that recommendation except in the most extraordinary circumstances. In this case, the State agency made a recommendation on March 10, 2000 and CMS adopted that recommendation on March 16, 2000. That is consistent with the regulation and the SOM. It is evident that the State agency's letter of April 5, 2000 was sent in error and did not have the effect of making a nullity of CMS's determination to impose the previously recommended remedies. Petitioner had no reason to believe that the State agency had such authority nor that it could ignore the unequivocal language of CMS's March 16, 2000 notice granting it 60 days within which to request a hearing regarding that initial determination. If Petitioner was in any way confused by the State agency's letter of April 5, 2000 it did not communicate such concerns to CMS. It chose instead, to its detriment, to ignore CMS's clearly articulated imposition of remedies.

CMS is also correct in pointing out that any doubt harbored by Petitioner should have been dispelled when it received CMS's notice of April 27, 2000. In that notice, Petitioner was advised that, in view of its facility's return to compliance as of April 12, 2000 it was rescinding two remedies that had been scheduled by the March 16, 2000 imposition notice, but which had not gone into effect. These were the DPNA and the termination of the facility's provider agreement. The letter from CMS made no mention of rescission of the CMPs, which had already taken effect. That meant, of course, that they were still in force. Petitioner fails to understand what is underscored by CMS's letter of April 27, 2000 and incorrectly assumes that CMS should have refuted the State agency's assertion that "no remedies would be imposed," ⁽⁶⁾ and it should have addressed the CMPs. Inexplicably, Petitioner allowed well over 60 days to elapse from receipt of CMS's April 27, 2000 notice until it filed a hearing request on July 25, 2000. ⁽⁷⁾

In conclusion, I find that Petitioner has advanced no cogent reason to justify inaction. In this regard, it had no reason to believe that CMS's March 16, 2000 notice could be ignored or that it was superseded by the State agency's notice of April 5, 2000. CMS's March 16, 2000 notice letter told Petitioner unambiguously that it had 60 days from the date of its receipt of the notice to file a written request for a hearing. I am not persuaded that Petitioner was driven to ignore CMS's admonishment that it had 60 days to seek a hearing due to its improper interpretation of the State agency's obvious mistake in stating in its April 5, 2000 notice, that no remedies would be recommended to CMS at that time. Petitioner knew that the remedies had already been recommended and imposed. Such error in judgment is not a matter beyond Petitioner's control which prevented it from filing a timely request for hearing.

V. Conclusion

Based on the applicable law and undisputed facts, I conclude that Petitioner's hearing request was untimely filed and that good cause does not exist to extend the time period for filing. CMS's motion to dismiss is granted.

Jose A. Anglada

Administrative Law Judge

1. When this action arose, CMS was known as the Health Care Financing Administration (HCFA). Reference to either shall apply to both names.

2. CMS labeled these exhibits "A" through "E." I have re-labeled them exhibits 1-5 to conform to Civil Remedies Division procedures.

3. Petitioner labeled its exhibits "A" through "G." I have re-labeled them exhibits 1-7 to conform to Civil Remedies Division procedures.

4. This appears to be a mistake because the State agency had already forwarded its recommendation to CMS. That recommendation was the basis for the notice of remedies sent by CMS to Petitioner on March 16, 2000.

5. Petitioner did not contest the remedy based on the immediate jeopardy finding. P. Ex. 7, at 2.

6. Petitioner is not correct in asserting that the State agency stated the remedies would not be imposed. It only stated (and incorrectly so) that it would not recommend the imposition of remedies.

7. Petitioner's posture in contesting only the non-immediate jeopardy is inconsistent, inasmuch as the $10,000 per day and the $500 per day CMPs had both gone into effect prior to the State agency's letter of April 5, 2000.