Shuksan Healthcare Center, 2026-7 (HHS-CRD January 26, 2026)

ORDER OF DISMISSAL

After careful review of the record, I find that Petitioner, Shuksan Healthcare Center (Petitioner or facility), did not file its hearing request on time and there is no good cause to extend the deadline.  Furthermore, I do not have the authority to review the sole issue that the appeal raises.  Therefore, I dismiss Petitioner’s hearing request pursuant to 42 C.F.R. § 498.70(b) and (c). 

I. Background

Petitioner is a skilled nursing facility located in Bellingham, Washington.  In 2017, 2018, 2019, and 2020, the State of Washington’s Department of Social and Health Services (state agency) completed multiple recertification and complaint investigation surveys.  Based on the survey findings, the Centers for Medicare & Medicaid Services (CMS) determined that the facility was not in substantial compliance with Medicare participation requirements, and that some of the deficiencies posed immediate jeopardy to resident health and safety.  Pertinent here, CMS issued the following: 

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• August 2, 2017 notice advising Petitioner that because of the deficiencies found during the February 21, 2017 recertification survey, CMS was imposing a $9,104 per-day civil money penalty (CMP) for 16 days of substantial noncompliance that posed immediate jeopardy to resident health and safety, and a $505 per-day CMP for 62 days of substantial noncompliance that did not pose immediate jeopardy, for a total of $176,974.  CMS Ex. 1 at 1-2.
• January 30, 2019 notice letter advising Petitioner that because of the deficiencies found during the October 15, 2018 complaint investigation survey, CMS was imposing a $930 per-day CMP for 35 days of substantial noncompliance, for a total of $32,550.  CMS Ex. 2 at 2.  
• February 6, 2019 notice letter advising Petitioner that because of the deficiencies found during the December 19, 2018 complaint investigation survey, CMS was imposing a $725 per-day CMP for 23 days of substantial noncompliance, for a total of $16,675.  Id. at 7.  
• September 12, 2019 notice letter advising Petitioner that because of the deficiencies found during the June 27, 2019 survey, CMS was imposing a $1,240 per-day CMP for 63 days of substantial noncompliance, for a total of $78,120.  Id. at 12.1

Regarding the August 2017 notice, the facility waived its right to a hearing, and the CMP was reduced by 35%.  CMS Ex. 1 at 35.  The facility took no action between 2019 and 2021 in response to the remaining notice letters. 

At the time the surveys were conducted, the facility was owned and/or operated by WAATU, Inc.  P. Ex. 3 ¶ 2.  However, on or about September 1, 2019, Avventura Senior Living, Inc. assumed management of the facility on an emergency basis until December 1, 2019.  P. Ex. 3 at ¶¶ 3-4.  On February 24, 2020, Soundview Rehabilitation and Health Care Inc. d/b/a Shuksan Rehabilitation and Health Care filed a Medicare Enrollment Application, Form CMS-855A.  CMS Ex. 36.  The application indicated a change of ownership (CHOW), and, in response to the question, “Will the new owner be accepting assignment of the current ‘Provider Agreement?’”, Soundview, the new owner, answered “Yes.”  Id. at 7, 14.  The CHOW and application for participation as a nursing facility in the Medicare program was accepted by CMS, and “the effective date of the change of ownership [was] August 31, 2019.”  P. Ex. 1 at 1. 

On August 31, 2022, CMS contacted the facility’s administrator by email, advising the facility of its intent to reduce Medicare payments to the facility to recover the CMP imposed in relation to the deficiencies found during the 2017 survey.  CMS Ex. 4 at 2 

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(Offset Notice); see also RFH Appendix A.  The facility responded that it was “not aware of any payments made toward CMPs incurred by the previous operating entity.”  CMS Ex. 4 at 2.  CMS replied that “[w]hen a CHOW takes place the new owner takes on the assets and liabilities of the old owner.”  Id. at 1.  CMS subsequently notified the facility’s administrator about the three additional CMPs that had previously been imposed.  Id. 

On September 21, 2022, Petitioner filed a request for hearing.  RFH.  Petitioner states its request for hearing is timely because it was filed within 60 days of its receipt of the Offset Notice.  Id. at 1. 

This matter was originally assigned to Administrative Law Judge (ALJ) Jacinta L. Alves but reassigned to the undersigned upon ALJ Alves’s announced retirement.  Pursuant to ALJ Alves’s Standing Prehearing Order, CMS filed a Motion for Summary Judgment (CMS Motion) along with nine exhibits.  Petitioner filed its Response to CMS’s Motion (P. Response), its own Motion for Summary Judgment (P. Motion for Summary Judgment) and six exhibits.  CMS filed a Response to Petitioner’s Motion for Summary Judgment (CMS Response), along with three supporting exhibits. 

There were several other filings including an untimely prehearing exchange filed by CMS, to which Petitioner objected.  CMS also sought leave to file a corrected exhibit and exhibit list, which Petitioner opposed. 

On February 23, 2023, ALJ Alves issued an order staying the remaining filing requirements pending ruling on the parties’ motions for summary judgment.  The stay is hereby lifted. 

Although CMS labels its motion as one for summary judgment, that characterization is not entirely accurate.  In substance, CMS is asking me to dismiss Petitioner’s hearing request as untimely.  CMS proffers that, because the hearing request is untimely and Petitioner has not proffered good cause to extend the filing deadlines, Petitioner does not have a right to a hearing under the regulations.  CMS Motion. 

Therefore, I consider CMS’s motion to be a motion to dismiss rather than a motion for summary judgment.  I acknowledge that ALJ Alves’s Standing Prehearing Order sets deadlines for filing motions to dismiss.  Standing Prehearing Order ¶ 8a.  However, consistent with my usual practice of not imposing time limits on motions to dismiss on jurisdictional grounds, I will consider CMS’s motion.  See 42 C.F.R. § 498.70 (“On his or her own motion . . . the ALJ may dismiss a hearing request . . . under [the specified] circumstances”).  There is no prejudice to Petitioner.  CMS put Petitioner on notice of its arguments, and Petitioner had an opportunity to, and did, fully respond to them. 

As explained below, Petitioner’s hearing request is untimely and Petitioner has not shown good cause to extend the filing deadline.  Moreover, Petitioner does not have a right to a 

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hearing on the issue it raises.  Therefore, the hearing request is dismissed, and the remaining motions are moot. 

II. Discussion

1. A. Petitioner is not entitled to a hearing because it did not file a timely hearing request, and no good cause justifies extending the time for filing. Regardless, I lack the authority to review the issue raised by the appeal. 

Section 1866(h) of the Social Security Act (Act) authorizes administrative review of determinations that a provider fails to comply substantially with Medicare program requirements “to the same extent as is provided in section 205(b) [of the Act].”  42 U.S.C. § 1395cc(h)(1).  Under the Act, the Secretary of Health and Human Services must provide reasonable notice and opportunity for a hearing “upon request by [the affected party] who makes a showing in writing that his or her rights may be prejudiced” by the Secretary’s decision.  Act § 205(b), 42 U.S.C. § 405(b)(1).  The hearing request “must be filed within sixty days” after receipt of the notice of CMS’s determination.  Id. (emphasis added).  The 60-day time limit is thus a statutory requirement.  Cary Health & Rehab. Ctr., DAB No. 1771 at 8-9 (2001). 

Similarly, the regulations require that the affected party “file the request in writing within 60 days from receipt of the notice . . . unless that period is extended . . . .”  42 C.F.R. § 498.40(a).  On motion of a party, or on his/her own motion, an ALJ may dismiss a hearing request where that request was not timely filed and the time for filing was not extended.  42 C.F.R. § 498.70(c).  

Petitioner contends that its hearing request was timely filed because it was filed within 60 days of the new owner’s receipt of the Offset Notice, which is the first time it became aware of the CMPs imposed on the facility while under the prior owner’s management.  RFH at 1; P. Response at 3.  This is incorrect.  

The hearing rights of a skilled nursing facility are established by federal regulations at 42 C.F.R. Part 498.  A facility dissatisfied with an initial determination is entitled to further review, but administrative actions that are not initial determinations are not subject to appeal.  42 C.F.R. § 498.3(a), (b), (d).  The regulations specify which actions are “initial determinations” and set forth examples of actions that are not.  A finding of substantial noncompliance that leads to CMS imposing a remedy is an initial determination.  42 C.F.R. § 498.3(b)(13).  On the other hand, an offset notice is not an initial determination.  42 C.F.R. § 498.3(b). 

Thus, in this matter, CMS’s notice letters dated August 2, 2017, January 30, 2019, February 6, 2019, and September 12, 2019, are the initial determinations that triggered the facility’s time-limited rights to request an ALJ hearing.  42 C.F.R. § 498.3(a), (b)(13).  

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The record evidence shows that each of the notice letters were timely delivered to the facility’s administrator.  CMS Exs. 1-2; CMS Ex. 8 ¶¶ 7-11.  Petitioner does not contend otherwise.  In fact, in response to the August 2, 2017 notice letter, the facility waived its appeals rights, and the CMP was accordingly reduced by 35% to $115,033.10.  CMS Ex. 1 at 35.  As to the remaining initial determinations, the filing deadlines were April 1, 2019, April 8, 2019, and November 11, 2019, but Petitioner’s request for hearing was filed on September 21, 2022.  Act § 216(j), 42 U.S.C. § 416(j) (extending deadlines that fall on a non-workday to the next Federal workday).  Therefore, Petitioner’s September 21, 2022 hearing request was untimely. 

And although Petitioner does not explicitly request an extension, I nevertheless consider all of Petitioner’s filings, including its request for hearing, response to CMS’s motion for summary judgment and its own motion for summary judgment, to determine if good cause exists to extend the filing deadlines.  The regulations do not define “good cause” but leave that determination to the discretion of the ALJ.  Looking to regulations governing certain Social Security benefit appeals (which also derive from § 205(b) of the Act), many ALJs have long ruled, and the Board has consistently agreed, that “good cause” means circumstances beyond a party’s ability to control.  See, e.g., The Brightpointe, DAB No. 3157 (2024); Illini Heritage Rehab & Health Care, DAB No. 3125 (2023); Rutland Nursing Home, DAB No. 2582 at 5 (2014); see also 20 C.F.R. § 404.933(c).  I find no such circumstances here. 

Petitioner contends that the new owner of the facility did not receive the previously issued notices.  Petitioner goes on to argue that as the new owner of the facility, it is entitled to its own notice, and one that complies with the requirements of 42 C.F.R. § 488.434, because CMS is attempting to collect the prior owner’s liabilities from it.  Petitioner fails to cite to any authority (and I am aware of none) that supports its position that as the new owner, it is entitled to receive a separate notice of CMPs that were previously imposed.  

Instead, the regulation at 42 C.F.R. § 498.20(a) requires CMS to send notice of an initial determination to “the affected party.”  Similarly, when CMS decides to impose a CMP, CMS must send a “written notice of the penalty to the facility . . . .”  42 C.F.R. § 488.434(a) (emphasis added).  The “affected party” or “the facility” in this case is Shuksan Healthcare Center because it is a skilled nursing facility providing services under the Medicare program with its own Medicare provider number.  42 C.F.R. § 498.2 (see definitions of affected party and provider).  Thus, CMS was obligated to send, and Shuksan Healthcare Center was entitled to receive CMS’s notice letters, which is what occurred here. 

As already explained, the evidence supports that the initial determinations were timely delivered to the facility’s administrator.  Each of the notice letters complied with the requirements set forth in 42 C.F.R. § 488.434(a), setting forth, inter alia, the nature of 

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noncompliance, the statutory basis for the penalty, the amount of the penalty, etc.  CMS Ex. 1 at 1-3; CMS Ex. 2 at 2-4, 7-9, 12-14.  Each notice contained a section, prominently captioned “Appeal Rights,” advising the facility of its right to request a hearing before an administrative law judge, setting forth the procedures for filing an appeal, citing the regulations that govern such appeals and advising the facility of filing deadlines, “A hearing request must be filed no later than 60 days from the date of this letter.” See, e.g., CMS Ex. 1 at 3; CMS Ex. 2 at 3, 8, 13.  The notice letter also advised the facility that it could waive its right to a hearing, reducing the amount of the CMP by 35%.  CMS Ex. 1 at 3.  And, again as stated above, the facility waived its right to a hearing in relation to the August 2, 2017 notice letter and the CMP was accordingly reduced.  CMS Ex. 1 at 35.  The facility under its previous ownership did not take any action following the other notices.  The facility’s new owner may not agree with previous waiver or failures to appeal, but disagreement with the actions (or inactions) of the prior owner does not constitute good cause. 

The regulations provide that, when there is a change of ownership, the facility’s Medicare provider agreement is automatically assigned to the new owner, and the assigned agreement is subject to all applicable statutes and regulations and to the terms and conditions under which the agreement was originally issued.  42 C.F.R. § 489.18(c), (d).  Those terms and conditions include, but are not limited to, any existing plan of correction and compliance with applicable health and safety standards.  A facility’s new owner necessarily “acquires the relevant compliance history/issues of the facility if it undertakes to assume the facility’s provider number.”  Kenton Healthcare, LLC, DAB No. 2186 at 31 (2008).  Thus, while the actions of the prior owner are outside the new owner’s control, the new owner could either accept assignment of the existing provider agreement or enter a new one.  See Deerbrook Pavilion v. Shalala, 235 F.3d 1100, 1104-05 (8th Cir. 2000) (explaining that new operators are free to apply for a new provider agreement for a facility to not be liable for the prior owner’s CMPs and also noting that surveys of facilities are a matter of public record and checking a facility’s regulatory history is an important due diligence task). 

I acknowledge that the question of facility ownership is central to Petitioner’s appeal; however, this is not an issue over which I have jurisdiction, which provides an alternative basis to dismiss.  Petitioner “is not challenging the actions of CMS in assessing the CMPs on WAATU, Inc. when it was operating Shuksan in 2017, 2018 and 2019” but is instead “challeng[ing] the authority of CMS to impose liability of WAATU, Inc. on Soundview and to withhold payment to Soundview for Medicare services . . . .”  P. Response at 1-2.  In support of its request, Petitioner proffers that, contrary to CMS’s assertions, it entered into a new provider agreement with CMS and did not assume the prior owner’s provider agreement.  Thus, Petitioner argues that CMS cannot hold it liable for CMPs allegedly incurred by the prior owners and asks that I “reverse the CMPs as they pertain to [Soundview] . . . .”  P. Motion for Summary Judgment at 6. 

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Again, the hearing rights of a skilled nursing facility are established by federal regulations at 42 C.F.R. Part 498.  A request that an ALJ decide whether a CHOW occurred and who is liable for CMPs, is an ownership/liability dispute and not an initial determination and is thus outside Part 498 jurisdiction.  42 C.F.R. § 498.3(b).  In other words, this is not the appropriate forum in which to sort out the facility’s purported ownership and liability issues. 

III. Conclusion

For the reasons set forth above, I dismiss Petitioner’s request for hearing pursuant to 42 C.F.R. § 498.70(b) and (c).