Oklahoma Department of Institutions, DAB No. 318 (1982)

GAB Decision 318

June 28, 1982 Oklahoma Department of Institutions; Docket No.
81-114-OK-HC Ford, Cecilia; Settle, Norval Teitz, Alexander


The Oklahoma Department of Institutions (State) appealed from a
determination by the Administrator of the Health Care Financing
Administration (Agency) disallowing $181,991.68 pursuant to section
1903(g) of the Social Security Act (Act). The disallowance was based on
an on-site survey conducted by the Agency as part of the validation
procedures under section 1903(g)(2) of the Act. The Agency found that
the requirements for physician certification, recertification, and
establishment and updating of plans of care in sections 1903(g)(1)(A)
and (B) of the Act were not met with respect to a total of 46 patients
in eight intermediate care facilites (ICF's) in the State for the
quarter ended September 30, 1980. The Agency subsequently reduced the
disallowance to $164,417.53 in order to reflect only long-stay services.
It later indicated that it had accepted actual patient figures and
long-stay patient data submitted by the State, which further reduced the
disallowance to $39,529.21. For the reasons discussed in this decision,
we sustain the disallowance in the reduced amount.

Pertinent Statutes and Regulations

Section 1903(g) of the Act requires that the State agency responsible
for the administration of the State's Medicaid plan under Title XIX of
the Act show to the satisfaction of the Secretary that the State has an
"effective program of control over utilization of" long-term inpatient
services in certain facilites, including ICF's. This showing must be
made for each quarter that the federal medical assistance percentage
(FMAP) is requested with respect to amounts paid for such services for
patients who have received care for 60 days in ICF's, or the FMAP will
be decreased according to the forumla set out in section 1903(g)(5).
Specifically, section 1903(g)(1)(A) and (B) provide that the State
"must" show that --

(A) in each case for which payment is made under the State plan, a
physician certifies . . . (and recertifies, where such services are
furnished over a period of time, in such cases, at least every 60 days,
. . .) that such services are or were required to be given on an
inpatient basis because the individual needs or needed such services;
and

(2) (B) in each case, such services were furnished under a plan
established and periodically reviewed and evaluated by a physician.

This statutory requirement is implemented for ICF's at 42 CFR 456.360
and 456.380, effective September 29, 1978. Section 456.360(c) requires
that recertification be made" . . . at least every 60 days after
certification." Section 456.380(c) requires that an interdisciplinary
team of health professionals" . . . review each plan of care at least
every 90 days."

The Agency also issued an "action transmittal," SRS-AT-75-122, dated
November 13, 1975, to State Medicaid administrators to clarify" . . .
what is required in order for States to be considered in adherence with
the statute and regulation." The action transmittal stated that in order
for a recertification to be valid, it must, among other things, be in
writing and be signed by a physician using his/her signature or
initials. It also specifically stated that "(a) rubber stamp is not
acceptable."

A disallowance in accordance with section 1903(g) takes the form of a
reduction of a state's FMAP. Section 1903(g)(5) specifies that the
percent amount of the reduction --

. . . is equal to 33 1/3 percentum multiplied by a faction, the
denominator of which is equal to the total number of patients receiving
that type of services in that quarter under the State plan in facilities
or institutions for which a showing was required to be made under this
subsection, and the numerator of which is equal to the number of such
patients receiving such type of services on that quarter in those
facilities or institutions for which a satisfactory and valid showing
was not made for that calendar quarter.

Statement of the Case

The Agency found one or more of the following violations in the case
of 46 patients in eight facilities: untimely certification; untimely
recertification (including failure to recertify within the quarter);
invalid certification; invalid recertification; untimely establishment
of plan of care; untimely update of plan of care; invalid plan of care;
and invalid update of plan of care. (Letter dated June 30, 1981,
Attachment) The Agency subsequently withdrew its findings of violations
with respect to a number of patients and also found violations with
respect to additional patients who were not listed on the notification
of disallowance. The Agency indicated, however, that (3) since there
were other violations in all of the facilities involved, the amount of
the disallowance would not be affected by its new findings. (Agency's
Supplemental Memorandum, dated May 3, 1982, pp. 7-8, 12-13, 15-19)

The State argued on appeal that there were in fact no violations in
the case of any of the 46 patients. It also argued that the entire
disallowance should be reversed because of defects in the validation
survey and because many violations were de minimis. Finally, it argued
that, even assuming that there were some violations, the disallowance
was not calculated in accordance with the statute. The State's
arguments are addressed below. It is noted, however, that the State
made several arguments pertaining to specific patients which we do not
find it necessary to address, since we uphold the Agency's finding of a
violation for at least one patient in each facility on other grounds.
This Board has previously noted, that, under the formula in section
1903(g)(5) for computing a disallowance, the amount of the disallowance
remains the same regardless of the number of violations in a particular
facility, as long as there is at least one violation. Hawaii Department
of Social Services and Housing, Decision No. 295, May 7, 1982, p. 5, and
decisions cited therein; Utah Department of Health, Decision No. 304,
May 28, 1982, pp. 4-5. The Board stated in Decision No. 295 that it
would not evaluate all of the documentation provided by the State since
the amount of the disallowance would not be affected. Similarly, we do
not consider all of the State's arguments here except to the extent that
they affect the amount disallowed.

Defects in the Validation Survey

The State asserted that the validation survey was defective in that
the Agency failed to look for documentation in any State Offices and in
some county offices. The State further asserted that the Agency was
informed prior to the validation survey that copies of patient documents
were kept on file at State and county offices. It contended that the
entire disallowance should be reversed on the ground that it did not
have an" . . . unlimited burden to produce documentation satisfactory to
HCFA," or ". . . an affirmative burden of disproving unsubstantiated
noncompliance charges. ,. ." (Memorandum for the State of Oklahoma,
dated May 3, 1982, pp. 13-14) It asserted that Congress did not intend
that such a burden rest on the states, citing S. Rep. No. 453, 95th
Cong., 1st Sess. 40-42 (1977). (State's Reply Memorandum dated June 8,
1982, p. 9) The State did not assert that any documentation allegedly
not reviewed by the Agency would establish the timeliness or validity of
any certification, recertification, plan of care, or plan of care update
noted in the disallowance.

(4) The Agency took the position that since it is willing to review
any additional documentation presented by the State, ". . . any alleged
failure by federal reviewers to examine relevant documents may always be
cured and should not serve as the basis for reversing the disallowance."
(Agency's memorandum dated November 24, 1981, p. 35)

Even assuming that the Agency did not review all of the pertinent
documentation of which it was on notice, we find that this is not a
sufficient basis for reversing the disallowance. In a prior decision
the Board noted that, under section 1903(g)(1), the State must show that
it has complied with the requirements with respect to certifications,
recertifications, plans of care, and plan of care updates, and that the
validation survey conducted pursuant to section 1903(g)(2) is intended
only to verify the accuracy of the State's showing. The Board therefore
held that even if the Agency failed to follow its own procedures for
conducting validation surveys, this did". . . not act to relieve the
State of the burden of demonstrating its compliance with the applicable
requirements." Hawaii Department of Social Services and Housing,
Decision No. 295, May 7, 1982, p. 5. Since the State thus has the burden
of showing compliance in the first instance, it is irrelevant that in
the instant case the Agency may not have consulted all available
records. The legislative history cited by the State does not alter our
conclusion in this respect. S. Rep. No. 453 states, in pertinent part,
that ". . . HEW has an obligation to the States, to the Congress, and to
institutional care recipients to undertake validations in a timely
fashion . . . ." (at p. 41-42) There is no indication that Congress
intended the Agency's obligation to make the validation surveys to
obviate the State's statutory rsponsibility to provide evidence of
compliance, however.

Signature by Third Person for Physician on Recertifications

In seven of the eight facilities included in the disallowance, the
physician's name appearing on recertifications for one or more patients
had been signed for him by "medical social analysts." /1/ This was
generaly indicated by use of the medical social analyst's initials next
to the physician's hand-written name. The physician, Dr. Pfundt, was
the head of the State's Medical Evaluation Unit, and the medical social
analysts were college graduates with medical training employed on his
staff. The Agency took the position that the documents (5) in question
did not constitute recertifications "by" the physician within the
meaning of sections 1903(g)(1)(A) and (B) of the Social Security Act.
(Agency's Supplemental Memorandum, dated May 3, 1982, pp. 4-5) The State
contended, however, that the medical social analysts ". . . exercised
no medical judgment, but rather engaged in the purely ministerial act of
applying Dr. Pfundt's clearly-defined review criteria to the State's
recertification forms." It further stated that "(every) case not
governed by Dr. Pfundt's explicit review criteria was referred to him .
. ." for his personal signature. (Memorandum for the State of Oklahoma,
dated May 3, 1982, p. 6) The State contended that, under Oklahoma law,
the signature of the medical social analyst under such circumstances
constituted the physician's signature, citing State of Oklahoma ex rel.
Nesbitt v. Liberty National Bank and Trust Co., 414 P. 2d 281 (Okla.
1966). (State's letter dated October 5, 1981, p.6) That case held that
the signature of the payee's name on a state warrant by someone other
than the payee did not constitute a forgery where the signature was made
with express authorization of the payee. The Agency argued in response
that the case cited by the State had little precedential value here
because it did not concern physician recertification. (Agency's
Memorandum, dated November 24, 1981, p. 23) The Agency also contended
that since no agency was authorized under section 1903(g), Oklahoma law
with respect to agency was irrelevent. (Agency's Supplemental
Memorandum, dated May 3, 1982, p. 5)


The State's argument that the signature of medical social analysts
for Dr. Pfundt constituted signatures "by" the physician was predicated
on its assertion that the medical social analysts were engaged in a
purely ministerial act. We find that the record does not support that
assertion, however. Instead, it seems clear that, no matter how
explicit the "review criteria" set forth by Dr. Pfundt, the medical
social analysts would have had to exercise some independent judgment in
order to apply the criteria to the facts of a particular case. This is
confirmed by the affidavits of several medical social analysts submitted
by the State, each of which state: "If there is any indication of
improvement to the extent that approval of further nursing care should
not be made, then I request further medical and social information
and/or refer the information to Dr. Pfundt." (Memorandum for the State
of Oklahoma, dated May 3, 1982, Appendix, pp. 66-70) The determination
of the degree of improvement in each case could hardly be considered the
exercise of a ministerial duty. That this was part of the function of
the medical social analysts is not contradicted by the affidavit of the
physician, which states: "The analyst is authorized to sign my name,
but if any question arises, or the recertification decision is not
reasonably obvious the analyst is required to discuss the situation with
me." (Id., (6) p. 64) The phase "reasonably obvious" suggests that some
independent judgment by the medical social analysts was called for.
Since the State specifically indicated that it was not contending that
the signature of a third person acting independently of the physician
was valid, (State's letter dated November 27, 1981, p. 2), the State has
filed to show a basis for accepting the signatures in question here.

The Oklahoma case cited by the State does not persuade us otherwise.
While that case does allude to" . . . the fundamental rule that when an
agent, acting within the scope of his authority, affixes the name of his
principal to a writing, it is, in law, equivalent to an actual signing
by the principal" (414 P.2d. 281, 286-287), the court's actual holding
that an authorized agent's signature on a nonnegotiable instrument was
not a forgery does not have any precedential value here.

The State also asserted, however, that the Agency had previously
approved recertification forms bearing signatures of medical social
analysts on behalf of Dr. Pfundt, and was thus precluded from finding
the recertifications in question here invalid. The State further
asserted that "(had) federal reviewers notified the State that its
procedure was unacceptable, the State could have, and undoubtedly would
have, adopted a different procedure." (Memorandum for the State of
Oklahoma, dated May 3, 1982, p. 8) It cited in this respect a Board
decision which suggested that, in order to prove estoppel, a state must
point to statements by the Agency which could reasonably have misled the
state, and must show that it relied on such statements to its
detriment.Colorado Department of Social Services, Decision No. 218,
September 30, 1981, p. 16. The State also claimed that the Agency had
violated ". . . the requirements of notice and consistency referred to .
. ." in Virginia Department of Health, Decision No. 208, August 28,
1981. (Memorandum for the State of Oklahoma, dated May 3, 1982, pp.
8-9) Decision No. 208 upheld the Agency's strict enforcement of the
statutory 60-day recertification requirement, and stated that the Board
could not ". . . conclude that the Agency has acted in an arbitrary and
capricious manner by consistently enforcing the plain language of the
statute, implemented by equally clear language in regulations, and
interpreted in an Agency Action Transmittal." (at p. 5)

The Agency disputed the State's claim that it had accepted signatures
of the type in question here, noting that the affidavits submitted by
the State in support of its claim referred to reviewers from the
"Federal Health Standards and Quality Bureau," which is responsible for
surveys to determine whether a facility should be certified for (7)
Medicaid participation, rather than to reviewers from the Bureau of
Quality Control, which is responsible for conducting validation surveys
under section 1903(g)(2). (Agency's Supplemental Memorandum, dated June
2, 1982, pp. 15-16)

Even if the affidavits meant to refer to the Bureau of Quality
Control, we find that there is no evidence of statements by the Agency
which could reasonably have misled the State under the principles of
estoppel noted above. The affidavits state only that patient records
containing recertification forms signed by "medical review team members
of the Medical Evaluation Unit" (which included medical social analysts)
were reviewed, and that "(the) federal reviewers never raised a question
of improper recertifications." (Memorandum for the State of Oklahoma,
dated May 3, 1982, Appendix, pp. 70a and 71) Thus, the State alleged no
more than that similar recertifications went unchallenged by the Agency
in previous quarters. In a letter dated April 7, 1982, the Board
specifically asked on what basis the State concluded that the Agency's
"acceptance" of recertifications signed by someone other than a
physician was attributable to an affirmative decision by the Agency
rather than to oversight or other error. (p. 2) The State responded
only indirectly, stating: "HCFA cites no authority for its suggestion
that an agency has unlimited freedom to escape responsibility for its
past positions simply by labelling them 'errors,' regardless of a
party's reasonable reliance on them (citation omitted)." (Memorandum for
the State of Oklahoma, dated May 3, 1982, p. 9, footnote 6) This
response begs the question, since the State must first show that the
Agency's "past position" was to accept recertifications signed by
medical social analysts on behalf of a physician. Since it has not made
such s showing, we find that further consideration of the State's
estoppel argument is unnecessary. The State's argument regarding
consistency is defective for the same reason. Accordingly, we conclude
that seven of the eight facilities were properly included in the
disallowance because one or more patients in each facility lacked
recertifications signed "by" a physician.

Use by Physician of Signature Stamp on Recertification

In Heritage House Nursing Home, the eighth facility included in the
disallowance, the Agency found a violation-untimely physician's
recertification -- for only one patient. (Notification of disallowance
dated June 30, 1981, Attachment) The State asserted, however, and the
Agency did not dispute, that the basis for the violation in the case of
this patient was the physician's failure to initial his stamped
signature on a recertification dated July 1, 1980. (Memorandum for the
State of Oklahoma, dated May 3, 1982, p. 10) SRS-AT-75-122 (8)
specifically bars the use of a physician's signature stamp on
certifications and recertifications. The State argued, however, that
the action transmittal was invalid because it was contrary to section
1903(g)(1)(A), asserting that the sole intent of that section was to
assure that the states had effective programs to control the
utilitzation of services. The State also contended that the action
transmittal could not be used as the basis for the imposition of a
disallowance since it was not promulgated in compliance with the
Administrative Procedure Act (APA). Section 553 of the APA requires
publication pursuant to notice and comment procedures of certain
substantive rules. The State also noted that , as of the quarter in
question, no decision or action of the Agency had reaffirmed that the
action transmittal, which was promulgated in 1975, was still applicable.
The State argued further that enforcement of the action transmittal
would impose an undue hardship on the State. (Memorandum for the State
of Oklahoma, dated May 3, 1982, pp. 10-11) An additional argument made
by the State was that stamped signatures are valid signatures under
Oklahoma law. (State's letter dated October 5, 1981, p. 8, fn. 3) It
cited in this respect State of Oklahoma ex rel. Independent School
District No. 1 v. Williamson, 352 P.2d 394 (Okla. 1960). That case
held that the Oklahoma Uniform Facsimile Signature of Public Officials
Act, which authorized the use of signature stamps by public officials
whose manual signatures were filed with the Secretary of State, did not
conflict with the provision of the Oklahoma Constitution requiring that
a bond be signed by the appropriate official.

We are not persuaded by the State's argument that the bar on the use
of signature stamps on recertifications is a substantive rule which
should have been promulgated in accordance with the APA. Subtantive
rules have been defined as ". . . those which create law, usually
implementary to an existing law;" interpretative rules as ". . .
statements as to what the administrative officer thinks the statute or
regulation means . . ." which are ". . . in the form of an explanation
of particular terms in an Act." Gibson Wine Co. v. Snyder, 194 F.2d 329,
331 (D.D.C. 1952). Accord, National Association of Insurance Agents,
Inc. v. Board of Governors of the Federal Reserve System, 489 F.2d 1268,
1270 (D.D.C. 1974); Batterton v. Marshall, 648 F.2d 694, 705 (D.D.C.
1980). In the instant case, the requirement in SRS-AT-75-122 that a
recertification be signed manually rather than with a signature stamp
amounts to a definition of what constitutes a recertification, and is
therefore an interpretative rule.

The Agency argued that the Board had in a previous decision already
upheld the validity of the action transmittal as an interpretative rule,
and urged the Board to reaffirm the analysis and conclusions it
previously adopted. (Agency's Supplemental Memorandum, dated June 1,
(9) 1982, pp. 13-14) The decision in question, Social Service Board of
North Dakota, Decision No. 166, April 30, 1981, held that the
requirements in SRS-AT-75-122 that certifications be in writing and
signed on or before the date of admission were merely interpretations of
the terms of the statute, "certification . . . by a physician" and "at
the time of admission." It concluded that publication of these
requirements pursuant to notice and comment procedures was thus
unnecessary under the APA and also under common law conceptions of
fairness, since the requirements were merely a "logical extension" of
the statutory and regulatory requirements and therefore did not have a
substantial impact on the State. Contrary to the Agency's
understanding, Decision No. 166 did not specifically address the
question of the use of a signature stamp as a writing. It is clear,
however, that if the requirement for a writing is a logical extension of
the requirement for a certification (or recertification), then the
requirement for a manual signature rather than a signature stamp is a
further extension of the original requirement, and not a new,
substantive rule.

The instant case is distinguishable from Decision No. 166 in that the
requirement for a manual signature is arguably not the only reasonable
interpretation of the statute, whereas the Board in Decision No. 166
considered the requirement for a writing to be implicit in the statute.
The fact that the requirement for a manual signature is not the only
reasonable interpretation does not render it a substantive rather than
an interpretative rule, however, since the necessity for interpretative
rules often arises precisely because there exists more than one
reasonable interpretation of a statute or regulation. Moreover, even if
there was more than one reasonable interpretation, we do not believe
that the action transmittal's requirement for a manual signature had a
substantial impact on the State, requiring notice and comment
procedures, since it involved a small detail with which the State should
have been able to comply immediately upon notice of the action
transmittal.

We also reject the State's argument that it was not bound by
SRS-AT-75-122 on the ground that the Agency had not reaffirmed that the
action transmittal was still applicable during the quarter in question.
The State did not argue that it did not have notice of the action
transmittal. Neither did it argue that it had received any indication
that the action transmittal had been superseded or rescinded prior to
that quarter. Moreover, between 1975 and the quarter ending September
30, 1980, there was no change in the statute which might have affected
the particular rquirements of the action transmittal at issue here.
Under these circumstances, there is no basis for requiring the Agency to
periodically reaffirm the applicability of this document.

(10) The State's argument that the action transmittal was contrary to
the intent of section 1903(g)(1)(A) to require only an effective program
of utilization control also has no merit. Although that section does
require the State to show that it has such a program, it also requires
"evidence" of recertification by a physician " . . . in each case for
which payment is made under the State plan . . . ." The State's argument
ignores the latter requirement.

The State's argument that enforcement of the action transmittal would
impose an undue hardship on the State is also without merit. This Board
cannot consider equitable arguments as excusing a State's Failure to
comply with otherwise valid Agency issuances. Utah Department of Social
Services, Decision No. 178, May 27, 1981.

Finally, we find that the Oklahoma case cited by the State does not
compel the finding that recertifications with an uninitialed physician's
signature stamp are valid. That case dealt specifically with the
interpretation of a provision of the State's Constitution and a State
statute. We fail to see how this has any bearing on the issue whether a
recertification required by the Social Security Act is valid.

Accordingly, we find that the eighth facility was also properly
included in the disallowance on the ground that the July 1, 1980
recertification for the one patient cited in the notification of
disallowance did not comply with the requirement in SRS-AT-75-122 for
the physician's manual signature.

De Minimis Exception

The State also argued, however, that the disallowance ". . . rests on
noncompliance charges that are hypertechnical in nature and bear no
relation to the real objectives of the Medicaid program . . . ," and
asserted that the disallowance should be reversed because the violations
were de minimis. In furtherance of its position, the State asserted
that the Opinion of the Comptroller General which concluded that the
Secretary must consider a state's showing unsatisfactory or invalid if
the requirements of section 1903(g) are not met with respect to each
patient (#B-16431(3).154, March 4, 1980) was not based on a proper
reading of the legislative history, and was contrary to case law
regarding de minimis exceptions generally. (Memorandum for the State of
Oklahoma, dated May 3, 1982, pp. 16-17) It further asserted that the
Agency was not legally bound by the Comptroller's General's opinion,
citing severing Opinions of the U.S. Attorney General. (Reply
Memorandum for the State of Oklahoma, dated June 8, 1982, p. 12)
Finally, the State asserted that the Agency had allowed de minimis
exceptions to the 60-day recertification rule in at least nine
instances, and that ". . . the rule of consistency of Virginia
Department of Health, supra compels reversal." (Memorandum for the State
of Oklahoma, dated May 3, 1982, p. 18)

(11) This Board has considered a de minimis argument in several other
cases involving similar violations of section 1903(g). North Carolina
Department of Human Resources, Decision No. 273, 1982, p. 5 of attached
Order and cases cited therein. In Decision No. 273, the Board stated:

In each case, the Board has concluded that the Agency's position that
the Secretary lacks discretion to waive the penalty for even minor
violations is a reasonable one, and has upheld the disallowance. As
more fully explained in the decisions cited above, the Board's
conclusion rests on the fact that the statutory and regulatory language
is clear, that the legislative history indicates that Congress did not
intend a waiver, that the Agency has consistently interpreted the
statute as not permitting a waiver, and that the Agency's interpretation
must be accorded some deference by the Board.

Although Decision No. 273 cited the Opinion of the Comptroller
General, it did not state that the Board's conclusion was compelled by
that Opinion, but rather that the Opinion supported the Board's
conclusion. Thus, we need not address the State's argument that this
Opinion is not binding. The State implies that this case is different
from the ones previously considered by the Board in that the State has
shown that the Agency has not consistently interpreted the statute as
not permitting a waiver. In response to the State's allegation that the
Agency effectively waived the 60-day recertification requirement for
nine patients, however, the Agency stated that the failure to include
them in the notification of disallowance was due to an error in
calculating the applicable time periods in the case of eight patients
and to administrative oversight in the case of the ninth patient.
(Agency's Supplemental Memorandum, dated May 3, 1982, pp. 7-8) In the
absence of any proof that the nine patients were deliberately excluded
from the notification of disallowance, we cannot find that the Agency
was inconsistent in interpreting the statute as not permitting a waiver.
Accordingly, we reject the State's de minimis argument.

Calculation of Disallowance

The State argued that even if the Board were to uphold the Agency's
finding of violations for every patient, the disallowance should be
further reduced because the numerator of the fraction specified by
section 1903(g)(5) should reflect only those patients with respect to
whom there was a violation. Section 1903(g)(5) states that the
numerator is to be "the number of . . . patients receiving such type of
services in that quarter in those facilities or institutions for (12)
which a satisfactory and valid showing was not made for that calendar
quarter." The State argued that, on its face, this language does not
clearly indicate whether the numerator is to include only the number of
patients with respect to whom violations were found or the total number
of patients in all facilities where there was a finding of violation
with respect to even a single patient. The State contended, however,
that the legislative history of this provision showed that the former
was the proper interpretation. (Memorandum for the State of Oklahoma,
dated May 3, 1982, pp. 25-28) The State asserted, moreover, that even if
the language of section 1903(g)(5) was not ambiguous, the legislative
history must prevail. (Reply Memorandum for the State of Oklahoma,
dated June 1, 1982 p. 13)

The State's position that the language of the statute is ambiguous is
without merit. This Board has previously held that, "(under) common
rules of grammatical construction," the formula in Section 1903(g)(5)
must be read as requiring that the number of patients in those
institutions in which violations were found, and not merely the number
of patients with respect to whom violations were found, be included in
the numerator. Missouri Department of Social Services, Decision No.
214, September 23, 1981, p. 59 Accord, North Carolina Department of
Human Resources, Decision No. 273, March 31, 1981. Furthermore, we do
not agree with the State that it is appropriate to consult the
legislative history where the language of a statute is unambiguous,
particularly in the instant case. Since section 1903(g)(5) was amended
in 1977, other provisions of the utilization control requirements have
been amended and we must presume that Congress would have changed the
relevant language of section 1903(g)(5) if it did not reflect its
intent. Accordingly, the further reduction in the disallowance proposed
by the State is impremissible.

Conclusion

We conclude that the disallowance in the reduced amount of $39,529.21
must be upheld because the State failed to comply with the requirements
of section 1903(g) of the Act with respect to patients in eight ICF's.

(13) DATE: Aug 12, 1982

RULING ON PETITION FOR RECONSIDERATION OF DECISION AND RECONSIDERED
DECISION

The Oklahoma Department of Institutions (State) submitted a Petition
dated July 6, 1982 asking the Board to reconsider Decision No. 318,
issued June 28, 1982. Section 16.13 of Title 45 CFR (1981) provides
that Board members have the power". . . to reconsider a Board decision
where a party promptly alleges a clear error of fact or law. . . ." In
the instant case, the State alleges first that the Board failed to
consider independent grounds for reversal advanced by the State with
respect to three facilities. Secondly, the State alleges that case law
cited by the State is contrary to the Board's conclusion regarding the
Agency's discretion to make de minimis exceptions. We find that the
State has met the standard in Section 16.13 for reconsideration of a
Board decision. On reconsideration, however, we find that reversal or
modification of Decision No. 318 is not warranted.

A. Independent Grounds for Reversal

In Decision No. 318, the Board found that seven facilities were
properly included in the disallowance because one or more patients in
each facility lacked recertifications signed "by" a physician. In
making this finding, the Board relied on an exhibit prepared by the
State which indicated that the physician's name appearing on
recertifications for one or more patients in each facility had been
signed for him by a medical social analyst. (Decision No. 318, p. 4, n.
1) The Board stated that, in view of this conclusion, it need not
consider other arguments advanced by the State which pertained to
specific patients since such arguments would not affect the amount of
the disallowance. The State contends, however, that some of the
arguments which it had advanced could have provided a basis for
reversing the disallowance with respect to three of the seven facilities
(Park Lane Manor, Riverside Nursing Home, and Wood Manor) even given the
Board's conclusion that recertifications signed by medical social
analysts were not recertifications signed "by" a physican. Upon
re-examination of the record for Decision No. 318, we find that the
arguments advanced by (14) the State, if accepted by the Board, could
have provided independent bases for reversal with respect to the three
facilities. However, as discussed below, we also find that these
arguments have no merit.

Park Lane Manor

The State contends that the Board could have found that Park Lane
Manor was not properly included in the disallowance based on the
argument that signed doctor's orders for Patient H. P. /2/ dated June 3,
1980 and July 1, 1980 constituted valid recertifications. According to
the Agency, a recertification dated July 14, 1980 for this patient was
found untimely because 69 days had elapsed since the last valid
recertification. (Agency's Supplemental Memoradum, dated May 3, 1982,
p. 16) If, as the State contends, there was a valid recertification on
June 3, 1980 or July 1, 1980, then the July 14, 1980 recertification
would be timely. (A recertification dated May 28, 1980 signed by a
medical social analyst was, under Decision No. 318, invalid. See
Memorandum for the State of Oklahoma, dated May 3, 1982, Appendix, p.
346.)


The documentation in question consists of doctor's progress notes
with the notations "No complaints" (dated 6/30/80) and "Edema of face
and (illegible), Complains of weakness" (dated 7/1/80). (Memorandum for
the State of Oklahoma, dated May 3, 1982, Appendix, pp. 351-352) The
Agency maintained that such documentation was not valid as a
recertification since it contained no statement of the need for ICF
care. (Agency's Supplemental Memorandum, dated May 3, 1982, p. 16) The
State did not dispute that a statement of the need for continued care at
the ICF level was required, nor did it contend that such a statement
appeared on the documentation submitted. It argued, however, that the
documentation should be accepted as valid since similar progress notes
had been accepted as a valid recertification for Patient H. P. during a
previous quarter. (Memorandum for the State of Oklahoma, dated May 3,
1982, p. 4) The state also pointed out that the survey report on which
the disallowance was based interpreted SRS-AT-75-122 as permitting the
use of doctor's orders and progress notes as certifications or
recertifications, and submitted an affidavit from (15) a State employee
who stated that she had been advised by the survey team during the exit
interview that ". . . this was the last time they could accept doctors
notes and orders for recertification." (Memorandum for the State of
Oklahoma, dated May 3, 1982, p. 4)

We find that neither the June 3, 1980 nor the July 1, 1980 doctor's
orders constituted valid recertifications. This Board has previously
held that, to be considered a recertification, a document must evidence
an actual assessment of the patient's need for continued treatment at
the particular level of care involved. The Board has further found that
such an assessment cannot be implied from brief notes about the
patient's physical and mental state. Hawaii Department of Social
Services and Housing, Decision No. 295, May 7, 1982, pp. 6-7; Idaho
Department of Health and Welfare, Decision No. 250, January 28, 1982, p.
5. The State did not contend that the documentation submitted in this
case contained the required assessment.

That similar documentation may have gone unchallenged in a prior
quarter does not change the result in this case. As we noted in
Decision No. 318, principles of estoppel accepted by the State require
evidence of statements by the Agency which could reasonably have misled
the State. Here, however, even if the reviewers advised the State that
doctor's progress notes were acceptable, its was not reasonable for the
State to rely on such advice. This is apparent from the survey report
which was submitted by the Agency's Regional Office to the Agency's
Division of Quality Control Review, with a copy to the State.
(Memorandum for the State of Oklahoma, dated May 3, 1982, Appendix, pp.
19-26) While that report contains some unqualified statements to the
effect that the requirements of section 1903(g) were met, it also
indicates the reviewers' uncertainty regarding the legal conclusions to
be drawn from other findings. Furthermore, the fact (indicated on the
survey report) that all of the reviewers' worksheets were submitted to
the Division of Quality Control Review clearly shows that further review
was anticipated before a disallowance would be taken.

The State also contends that the Board could have found that Park
Lane Manor was not properly included in the disallowance based on the
argument that a recertification completed after 60 days is timely where
the immediately proceding or following recertification was completed
within slightly less than 60 days. The State had argued that nothing in
the statute or regulations forbids such "slight compensating variances,"
and that the Agency had, moreover, accepted actions of this nature as
timely in nine separate instances. (State's brief dated November 27,
1981, p. 6; Memorandum for the State of Oklahoma, dated May 3, 1982, p.
11) Presumably the State now intends this argument to apply to the July
14, 1980 recertification for Patient (16) H. P., completed 69 days after
the last recertification which the Agency found acceptable. It is not
clear from the record where the "compensating variances" occurred in
this case, however.

Assuming that some other recertification for Patient H. P. was
completed in 51 or less days, we nevertheless find nothing in the
statute or regulations which would permit this to be considered in
determining the timeliness of the July 14, 1980 recertification. Both
the statute and regulations specifically require recertification ". . .
at least every 60 days . . . ." Social Security Act, Section 1903(g)(
1)(A); 42 CFR 456.360.The phase "at least" permits recertifications to
be completed more frequently than every 60 days. However, the Board has
consistently upheld the Agency's strict construction of the statute as
permitting the interval between recertifications to be no more than 60
days. Georgia Department of Health, Decision No. 207, August 28, 1982;
Virginia Department of Health, Decision No. 208, August 28, 1981. /3/


Furthermore, we find no evidence that the Agency accepted
"compensating variances" in the other cases noted by the State. The
survey report stated that it would not find violations for the nine
patients mentioned by the State since the recertifications were
completed every two months, and "(sixty) days commonly translates to two
months. . . ." (Memorandum for the State of Oklahoma, dated May 3, 1982,
Appendix, p. 26) We do not see how this has any bearing on the question
whether offsetting variances in the time of recertification are
acceptable.

Riverside Nursing Home

The Agency found two violations -- invalid recertification and
plan-of-care update -- for one patient in this facility. The Board in
Decision No. 318 sustained the finding of an invalid recertification but
did not consider whether there was a valid plan-of-care update since
that would not have affected the amount of the disallowance.
(Recertifications dated July 21, 1980 and September 9, 1980 were signed
for the physician by a medical social analyst. See Memorandum for the
State of Oklahoma, dated May 3, 1980, Appendix, pp. 25, 436, 439.) The
State now contends that the Board could have found that Riverside
Nursing Home was not properly included in the disallowance based on four
separate arguments. However, three of these arguments relate only to
plan-of-care updates. The fourth argument -- that slight compensating
variances in time periods were acceptable -- relates to both
recertifications and plan-of-care updates. It is not clear from the
record where the "compensating variances" occurred with respect to this
patient, however. Moreover, since we have indicated above that we
reject that argument, the disallowance with respect to this facility
must stand.

(17) Wood Manor

Although the notification of disallowance showed violations for eight
patients in this facility, the Agency during the course of proceedings
in Decision No. 318 withdrew its findings except with respect to one
patient (Patient P. H.) whom it found had not been recertified during
the 60-day period within the quarter ending September 30, 1980. The
survey report worksheets showed no recertification for Patient P. H.
after July 29, 1980. (Memorandum for the State of Oklahoma, dated May
3, 1980, Appendix, p. 123) Under Decision No. 318, a recertification
submitted by the State for Patient P. H. dated August 22, 1980 was
invalid because it was signed by a medical social analyst for the
physician. (Id., at p. 577) The State contends, however, that the Board
could have found that Wood Manor was improperly included in the
disallowance if it had considered the argument that doctor's orders
dated September 4, 1980 constituted a valid recertification. The orders
in question stated "Bathe X 2 Weekly." (Id., at p. 578) The State argued
that similar documentation had been accepted by the Agency in the case
of the seven other patients in this facility with respect to whom the
Agency withdrew its findings of a violation. (Memorandum for the State
of Oklahoma, dated May 3, 1982, p. 5) The State also pointed out that
the July 29, 1980 recertification for Patient P. H. which the reviewers
considered valid (as well as a prior recertification dated June 23, 1980
noted on the survey report worksheets) consisted of doctor's orders
similar to the September 4, 1980 doctor's orders in question here.
(Reply Memorandum for the State of Oklahoma, dated June 8, 1982, pp.
3-4, and Ex. C)

As previously indicated, we have held that doctor's orders which do
not evidence an actual assessment of need for continued ICF care do not
constitute a valid recertification. We find, moreover, that the State
has not shown that the Agency was inconsistent in its treatment of
doctor's orders.

The Agency asserted, and the State did not dispute, that it had
withdrawn its findings of violations in the other seven cases without
requesting the underlying documentation, believing that the only defect
in the documentation was the use of a signature stamp by a physician who
had difficulty writing his name due to a condition similar to arthritis.
It further stated that, had it known that the documentation consisted of
doctor's order, it would have maintained its findings of violations for
all eight patients. (Respondent's Supplemental Memorandum, dated June
2, 1982, pp. 8-9) In view of these circumstances, there is no
inconsistency in the Agency's position regarding the acceptability of
doctor's notes.Further more, as previously noted, the State cannot
properly rely on the reviewers' acceptance of certain documentation --
in this case, other doctor's orders for Patient P. H.

(18) B. De Minimis Argument

The State also contends that the Board, in rejecting the State's De
minimis argument, did not address the case law relied upon by the State
for the proposition that a de minimis exception is inherent in section
1903(g) of the Social Security Act. It further contends that the
Board's conclusion upholding as reasonable the Agency's position that
the Secretary lacks discretion to waive the penalty for even minor
violations ". . . cannot be squared with the governing law . . ." set
forth in the cases cited by the State. The fact that Decision No. 318
does not specifically discuss the cases cited by the State is not an
appropriate basis for reconsideration, since the Board nevertheless
considered the briefs citing those cases in reaching its conclusion.
Since it is possible that the Board's conclusion is nevertheless in
conflict with the governing case law, however, we proceed to reconsider
that conclusion.

None of the cases cited by the State /4/ are directly on point.
Nevertheless, Alabama Power Co. v. Costle in particular provides useful
guidance on an Agency's ability to exempt De minimis situations from a
statutory command. That guidance is epitomized in the Court's
statement, quoted by the State, that "(unless) Congress has been
extraordinarily rigid, there is likely a basis for an implication of de
minimis authority to provide exemption when the burdens of regulation
yield a gain of trivial or no value." (Id., at 360-361) In prior Board
decision on which Decision No. 318 relied, however, the Board found in
effect that Congress had been "extraordinarily rigid," so that there was
no basis for implying a de minimis authority. Those decisions noted
that the statute requires a showing of compliance with the requirements
of section 1903(g) "in each case"; that none of the waivers or
exceptions specifically provided in the Act were applicable; and that
Congress had amended the penalty formula to build a sliding scale that
reflected the extent of a state's deviation from the requirements. See,
for example, Tennessee Department of Public Health, Decision No. 167,
April 30, 1981, at p. 4. Thus, we are not persuaded that Decision No.
318 conflicts with the law as enunciated in Alabama Power Co. v. Costle.


(19) The State also noted the principle enunciated in U.s. v.
American Trucking Associations (and cited in Alabama Power co. v.
Costle) that, notwithstanding the plain meaning of a statute, a court
must look beyond the words to the purpose of the act where its literal
terms lead to "absurd or futile results." However, although this Board
has indicated that the application of section 1903(g) without a de
minimis exception may be burdensome to the states, (Virginia Department
of Health, Decision No. 208, August 28, 1981, p. 5), it has never taken
the position that the results are absurd or futile.

The other cases cited by the State do no more to advance its
position. In Industrial Union Department v. American Petroleum
Institute, the Court, striking down a regulation under the Occupational
Safety and Health Act, commented that ((inherent) in this statutory
scheme is authority to refrain from regulation of insignificant or de
minimis risks." That case involved a legislative rule promulgated
pursuant to broad statutory authority, however, whereas we are concerned
with whether the Agency can authorize exemptions from the specific terms
of a statute. In Anderson v. Mt. Clemens Pottery Co., the Court
addressed the question whether time spent by an employee walking from
the time clock to his work bench and back constituted compensable
working time under the Fair Labor Standards Act. Noting that it was not
precluding ". . . the application of a de minimis rule where the minimum
walking time is such as to be negligible," the Court remanded the case
for consideration of the amount of walking time involved. Again, this
case does not involve an exemption from the specific terms of a statute.
In Frank V. Wilson & Co., the Court, relying on Anderson v. Mt. Clemens
Pottery Co., concluded that certain overtime activities were de minimis
and thus not compensable. Thus, this case too has no bearing on the
instant case.

In a Supplement to its Petition for Reconsideration, however, the
State argues that the Board should reverse its holding on the de minimis
issue in light of its decision in California Department of Health
Services, Decision No. 326, June 30, 1982. The State contends that
Decision No. 326 ". . . rests on the basic priniciple that minor
variations from perfect compliance with the 60-and 90-day utilization
control intervals are permissible. . .," and that the holding in
Decision No. 326 is inconsistent with the decision under reconsideration
here. (Supplement to Petition for Reconsideration, dated August 2,
1982, pp. 2, 5) We disagree. Decision No. 326 involved a situation
where California had, prior to the quarter in question, obtained a
waiver pursuant to Section 1903(i)(4) of the Social Security Act which
permitted it to use its own utilization review procedures. The Board
found that California's system of utilization review also constituted
the utilization control procedures by which the State intended to comply
(20) with Section 1903(g)(1)(A) of the Act. It further found that the
Agency was aware that the State had one program for both utilization
review and utilization control and that the State therefore had a
reasonable basis to believe that it was in compliance with Section
1903(g)(1)(A) of the Act. Thus, contrary to the State's contention,
Decision No. 326 rests on the Board's finding that California reasonably
relied on the Agency's "knowledge of the interaction of utilization
review and utilzation control as . . . (California's) system
implemented them." (Decision No. 326, p. 11)

In the instant case, the State does not contend that it had obtained
a waiver under Section 1903(i)(4). Furthermore, it does not contend
that its deviatons from the Agency's strict terms implementing Section
1903(g)(1)(A) were in fact part of an alternative system of utilization
control of which the Agency had knowledge, as in the case of California,
rather than unplanned departures from the system required by
SRS-AT-75-122. The State argues, however, that "California's good faith
belief that it was in compliance with utilization control requirements
is no different from Oklahoma's equally good faith . . . belief that it
had designed and implemented a utilization control program that would
strictly comply with the requirements of Section 1903(g)." (Emphasis in
the original.) (Supplement to Petition for Reconsideration, dated August
2, 1982, pp. 4-5) However, we think that it is clear that Decision No.
326 involved not merely a good faith belief, but reasonable reliance by
the State on the Agency's knowledge of the situation created by the
Section 1903(i)(4) waiver. Since none of the circumstances which were
crucial to the result in Decision No. 326 are present here, we do not
believe that Decision No. 326 is inconsistent with the decision under
reconsideration.

Conclusion

For the foregoing reasons, we conclude, on reconsideration of
Decision No. 318, that reversal or modification of that decision is not
warranted. /1/ The State indicated that such signatures appeared on
recertifications for one or more patients in all facilities included in
the disalloance except Heritage House Nursing Home. (Memorandum for the
State of Oklahoma, dated May 3, 1982, pp. 19-20) /1/ The State
did not specify that this was the patient involved. However, since the
Board in Decision No. 318 upheld the disallowance with respect to Park
Lane Manor on the basis that a recertification for Patient H. P. signed
for the physician by a medical social analyst was not valid, the
disallowance with respect to this facility could be reversed only if the
State showed that there was in fact a timely and valid certification for
this patient. /2/ The State's argument, presented in its August
2, 1982 Supplement to Petition for Reconsideration, that the Board's
Decision No. 326 holds to the contrary, is discussed later. /3/
Alabama Power Co. v. Costle, 636 F.2d 323, 360 (D.C. Cir. 1980);
Industrial Union Department v. American Petroleum Institute, 448 U.S.
607, 663-64 (1980) (Burger, C. J., concurring); United States v.
American Trucking Associates, 310 U. S. 534, 543 (1939); Anderson v.
Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946); Frank v. Wilson &
Co., 172 F.2d 712, 716 (7th Cir.), cert. denied, 337 U.S. 918 (1949).

OCTOBER 22, 1983