Excelsior Health Care Services, Inc., DAB No. 1529 (1995)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division


In the Case of:

Excelsior Health Care Services, Inc.,

Petitioner,
- v. -
Health Care Financing Administration

DATE: August 2, 1995
Docket No. C-94-009
Decision No. 1529


FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Excelsior Health Care Services, Inc. (Petitioner)
appealed a January 17, 1995 decision by Administrative
Law Judge (ALJ) Steven T. Kessel. See Excelsior Health
Care Services, Inc., DAB CR352 (1995) (ALJ Decision).
There, the ALJ sustained a determination by the Health
Care Financing Administration (HCFA) terminating
Petitioner's participation in Medicare. HCFA's decision
to terminate Petitioner was based on a District of
Columbia survey agency finding that Petitioner had failed
to comply with a condition of participation in Medicare,
as well as Petitioner's historical failure to comply with
federal Medicare requirements.

We have reviewed the law, the record before the ALJ, the
ALJ Decision and the parties' briefs on appeal. Based on
the following analysis, we sustain the ALJ Decision.

Background

A. Law

Certification requirements for a Home Health Agency (HHA)
wishing to serve as a Medicare provider are found at
sections 1861(o) and 1891 of the Social Security Act
(Act). The Department of Health and Human Services
(Secretary) is authorized to establish additional
participation requirements. See section 1861(o)(6) of
the Act. All these requirements are established in
regulations found at 42 C.F.R. Part 484. Petitioner has
been certified to participate in Medicare since June 1,
1989. 1/ Petitioner has acted as a provider "primarily
engaged in providing skilled nursing services and other
therapeutic services" to Medicare beneficiaries in their
homes. Section 1861(o)(1) of the Act.

The Act contains safeguards designed to protect and
promote patients' rights. See section 1891(a)(1)(A)-(G)
of the Act. Generally, patients are entitled to be fully
informed, in advance, regarding their care and treatment
as well as changes to that care and treatment. Section
1891(a)(1)(A). If mentally competent, patients are
entitled to participate in planning their care and
treatment. Id. Patients are entitled to have their
property treated with care and respect. Section
1891(a)(1)(D). Prior to coming under an HHA's care,
patients are entitled to be fully informed, both orally
and in writing, of: (i) all items and services furnished
by (or under arrangements with) the HHA for which payment
may be made under Medicare; (ii) the coverage available
under Medicare, Medicaid, or any other federal program of
which the HHA is reasonably aware; (iii) the HHA's
charges for any items or services which it provides which
are not covered under Medicare, and any charges that
patients may have to pay to the HHA for items or services
furnished to them by the HHA; and (iv) any changes in the
charges or items and services provided by the HHA.
Section 1891(a)(1)(E).

Section 1891(b) of the Act imposes on the Secretary the
duty and responsibility to enforce conditions of
participation applicable to HHAs. This authority is
implemented by regulations found at 42 C.F.R. Part 484.

Section 1864 of the Act authorizes the use of state
agencies to determine a provider's compliance with
conditions of participation. Medicare regulations
provide that the state agency will determine if a
provider meets the Medicare conditions of participation;
will resurvey providers as frequently as necessary to
ascertain compliance and the correction of deficiencies;
and will take actions appropriate to achieve compliance
or certify noncompliance. 42 C.F.R.  488.10(a)(1) and
488.20(b)(1) and (4). The decision whether there is
compliance with a particular condition of participation
will depend on the manner and degree to which the
provider satisfies the various standards within each
condition. 42 C.F.R.  488.26. State agency surveyors
use their judgment, in conjunction with federal forms and
procedures, to determine compliance. 42 C.F.R.
 488.26(b)(3). If a state agency certifies that a
provider is not in compliance, HCFA then determines
whether the provider remains eligible to participate in
Medicare. 42 C.F.R.  488.12.

B. Facts

The following facts are undisputed. Prior to the events
leading to Petitioner's termination from participation in
Medicare, the annual surveys conducted by the District of
Columbia (D.C. Survey Agency) had found Petitioner out of
compliance with Medicare conditions of participation in
1991, 1992 and 1993. In each instance, Petitioner came
into compliance when threatened with termination. ALJ
Decision at 4.

Petitioner's 1993 annual certification survey was
conducted by the D.C. Survey Agency between April 13-19,
1993. On April 22, 1993, an employee of the D.C. Adult
Protective Services filed a complaint with the D.C.
Survey Agency alleging inappropriate actions by
Petitioner relative to patient E.R. 2/ The survey and
complaint were processed separately. On May 12, 1993,
the D.C. Survey Agency notified Petitioner that, based on
the certification survey, it was recommending that HCFA
terminate Petitioner's provider agreement. The D.C.
Survey Agency indicated that Petitioner had violated six
conditions of participation. Petitioner was given until
June 2 to correct the deficiencies in order to halt the
termination process. Petitioner submitted a plan of
correction on June 1.

From April 23 to June 2, Ms. Ellen Yung-Fatah, from the
D.C. Survey Agency, investigated the complaint filed by
the D.C. Adult Protective Services. On June 2, 1993, Ms.
Yung-Fatah notified Ms. Graham that Petitioner was not in
compliance with the Patient Rights condition of
participation.

On June 14, the D.C. Survey Agency conducted a follow-up
visit to determine if Petitioner had corrected the
deficiencies cited in the certification survey. Although
the D.C. Survey Agency continued to find deficiencies, it
determined that those remaining did not constitute
"condition-level" deficiencies. Thus, the termination
action based on the certification survey was halted. The
complaint investigation remained pending, however.

On July 9, 1993, the D.C. Survey Agency issued a letter
advising Petitioner that, based on its complaint
investigation, it was recommending that HCFA terminate
Petitioner's provider agreement. 3/ On July 16, HCFA
issued its determination finding Petitioner out of
compliance with the Patient Rights condition of
participation. HCFA indicated that, given the facts
surrounding the complaint and Petitioner's prior history,
it was terminating Petitioner's provider agreement. ALJ
Decision at 7-8.

Analysis

The ALJ Decision sustaining Petitioner's termination
identified three central issues with supporting findings
of fact and conclusions of law (FFCLs) for each.
Petitioner challenged each FFCL. In large part,
Petitioner's arguments on appeal repeat those presented
to the ALJ. Our analysis addresses Petitioner's
arguments on an issue-by-issue basis. The relevant FFCLs
are quoted after the statement of each issue.

A. Did Petitioner fail to comply with a Medicare
condition of participation?

1. As a condition of participation in
Medicare, Petitioner was obligated to inform
patients of their rights and to protect and
promote the exercise of those rights.

2. Petitioner failed to comply with this
condition in that it failed to inform a
patient, E.R., of her rights, failed to protect
her rights, and failed to document the manner
in which her rights were being protected.

ALJ Decision at 2-3 (citations omitted).

The ALJ found ample, unrebutted evidence to support a
finding that Petitioner's failures to respect E.R.'s
rights constituted violations of the standards of care
established by section 1891(a)(1) of the Act and
implemented by 42 C.F.R.  484.10. The ALJ concluded
that, when considered individually and collectively,
those violations were so serious as to constitute a
violation of the condition of participation requiring
that an HHA protect and promote a patient's rights. ALJ
Decision at 7-8.

HCFA's principal witness before the ALJ was Ellen Yung-
Fatah from the D.C. Survey Agency who, as previously
noted, investigated the complaint involving Petitioner
and patient E.R. She testified as to the individuals,
records and other factual evidence examined during her
investigation. The unrebutted testimony shows that
Petitioner actively engaged in (or acquiesced in) a
variety of actions which, while ostensibly taken with the
aim of helping the patient, failed to either protect or
promote the patient's rights. Specifically --

o Petitioner's employee accepted numerous
checks from E.R. and did not maintain records
documenting the purpose of those checks.
Although Petitioner fired the employee upon
learning of the situation, Petitioner did not
reimburse E.R. for those checks.

o Petitioner arranged for several different
individuals to live with E.R. over a six-month
period presumably to care for her, but did not
obtain E.R.'s written permission for any of
these arrangements. Petitioner did not obtain
a physician's instructions for these persons to
follow in caring for E.R., nor did Petitioner
supervise these individuals.

o Petitioner's President would occasionally
bring E.R. to her home on weekends without ever
obtaining E.R.'s written permission.

o Petitioner failed to investigate a complaint
by E.R. to one of its employees that other
employees were eating E.R.'s food.

o Over the 17 months in which E.R. was in
Petitioner's care, Petitioner failed to provide
E.R. with any written notice of changes in
care, to consult with her on changes in care or
to timely inform her of the cost of the care
being provided to her.

ALJ Decision at 10-11.

Generally, Petitioner argued before the ALJ and the Board
that it had acted in E.R.'s best interest at all times.
However, as the ALJ noted, Petitioner's actions were more
akin to those taken to look after an aged relative, than
to actions expected in the professional HHA-patient
relationship mandated by law. ALJ Decision at 11-12.
The Act and implementing regulations spell out the steps
which must be taken to protect and promote a patient's
rights. Petitioner did not document that it followed
those steps.

Further, Petitioner challenged Ms. Yung-Fatah's
credibility, asserting that she was biased and had
perjured herself. The ALJ determined that Ms. Yung-Fatah
testified credibly and that her testimony was supported
by evidence in the record. Petitioner offered no
testimony or evidence to rebut Ms. Yung-Fatah's
testimony. Moreover, Petitioner offered no evidence
before the ALJ to support its allegation of bias.
Similarly, the record does not support Petitioner's
allegation of perjury by Ms. Yung-Fatah.

Thus, the ALJ's finding that Petitioner violated the
condition of participation requiring it to protect and
promote a patient's rights is supported by substantial
evidence.

B. Was HCFA authorized to terminate Petitioner's
participation in Medicare based on Petitioner's failure
to comply with the condition of participation concerning
patient rights?

3. HCFA may terminate a provider's
participation in Medicare where that provider
fails to comply with a condition of
participation.

4. HCFA is not required to afford a provider
the opportunity to correct its failure to
comply with a condition of participation before
terminating that provider.

5. HCFA was authorized to terminate
Petitioner's participation in Medicare based on
Petitioner's failure to comply with the
condition of participation concerning patient
rights.

ALJ Decision at 3 (citations omitted).

Petitioner asserted that HCFA acted improperly in that it
did not provide Petitioner with an opportunity to come
into compliance before termination. Petitioner's
argument on this point is largely repetitive of that
presented before the ALJ.

The ALJ looked first to the Act, which plainly permits
HCFA to terminate a provider from Medicare where there is
a finding that the provider has violated a condition of
participation and that such a failure poses immediate
jeopardy to patients' health and safety. He also stated
that the Act was not so clear where there was not a
finding that such a failure posed immediate jeopardy to
patients. ALJ Decision at 6. However, as the ALJ noted,
HCFA had interpreted the statutory language by
regulation. The implementing regulation at 42 C.F.R.
 489.53(a)(1) authorizes HCFA to terminate a provider's
participation in Medicare based on HCFA's determination
that the provider is not complying with the participation
requirements in the Act and regulations. Thus, HCFA's
authority to terminate is not contingent on a finding
that the provider's failure to comply with certification
requirements poses immediate jeopardy to the health and
safety of patients. HCFA is not required to impose
intermediate sanctions as a prerequisite to terminating a
provider's Medicare participation. Id. at 7.

It is also clear from the preamble to the regulations
permitting the imposition of intermediate sanctions, as
opposed to simply a termination, that HCFA interpreted
the Act as giving it the option of terminating a provider
or allowing it an opportunity to come into compliance
through intermediate sanctions. The preamble stated
that --

[t]he denial of payment sanction is not a
substitute for terminating a facility's
provider agreement. Rather, the authority to
impose the intermediate sanction is in addition
to the long-standing authority to terminate the
provider agreement of a noncomplying facility.

Therefore, a provider agreement may be
terminated at any time, including during the
period of intermediate sanction, if HCFA . . .
determines that such action is necessary.

51 Fed. Reg. 24484 (July 3, 1986) (emphasis added). 4/

Thus, contrary to Petitioner's assertions, HCFA clearly
had the discretion under the applicable regulations
either to impose intermediate sanctions or to terminate
Petitioner's participation in Medicare. Petitioner
presented no evidence upon which the ALJ could conclude
that HCFA's decision to terminate constituted an abuse of
discretion.

HCFA's regulation is consistent with the Act, read as a
whole. In specifying that the Secretary may impose an
intermediate sanction in lieu of termination, subsection
1891(e)(2) of the Act clearly implies that the Secretary
has discretion to terminate instead. This reading is
supported by subparagraph 1891(f)(2)(B), which states
that the intermediate sanctions specified in subparagraph
1891(f)(2)(B) "are in addition to sanctions otherwise
available under State or Federal law and shall not be
construed as limiting other remedies . . . ."

Termination clearly is a remedy otherwise available.
Under section 1861(o) of the Act, a home health agency
must meet applicable certification requirements,
including the conditions of participation specified in
section 1891(a) and (b), in order to qualify as a home
health agency for purposes of Medicare payment.
Moreover, subsection 1866(b)(2) of the Act specifically
authorizes the Secretary to terminate a Medicare provider
agreement, upon reasonable notice, after the Secretary
has determined "that the provider fails substantially to
meet the applicable provisions of section 1861."

Finally, paragraph 1891(e)(4) specifies the circumstances
under which the Secretary is authorized to continue
Medicare payments to a home health agency which is not in
compliance with the section 1861(o) requirements. One
condition is that "the State or local survey agency finds
that it is more appropriate to take alternative action to
assure compliance of the agency with the requirements
than to terminate the certification of the
agency, . . . ." The clear implication of this provision
is that, where the State or local survey agency finds
that it is not more appropriate to take alternative
action to assure compliance, the Secretary is not
authorized to continue payments.

Thus, the ALJ properly concluded that HCFA was authorized
to terminate Petitioner's participation in Medicare based
on Petitioner's failure to comply with the condition of
participation concerning patient rights.

C. Did HCFA violate its obligation to give
Petitioner notice of its determination to terminate
Petitioner's participation in Medicare?

6. HCFA is required to give a provider 15 days
notice of a determination to terminate that
provider's participation in Medicare.

7. In this case, HCFA gave Petitioner
approximately 30 days notice of its
determination to terminate Petitioner's
participation in Medicare.

8. HCFA did not violate its obligation to give
Petitioner notice of its determination to
terminate Petitioner's participation in
Medicare.

ALJ Decision at 3 (citations omitted).

Petitioner argued that HCFA violated its obligation to
give Petitioner notice of its determination to terminate
Petitioner's participation in Medicare. Generally,
Petitioner asserted that: HCFA was required to provide
more than 15 days notice of termination; contrary to the
ALJ's finding, HCFA did not give Petitioner 30 days
notice of the termination; HCFA was required to provide
Petitioner with an opportunity to correct any
deficiencies prior to terminating based on those
deficiencies; and Petitioner was never made aware of the
deficiencies leading to this termination prior to HCFA's
determination to terminate. These arguments are largely
repetitive of those Petitioner made before the ALJ, as
well as elsewhere in its argument on appeal here.


Upon consideration of the law and the facts, the ALJ
found that --

The regulation which governs termination of a
provider's participation in Medicare imposes no
obligation on HCFA to discuss investigative
findings with a provider before communicating
to the provider its determination to terminate
that provider's participation in Medicare. The
regulation states only that HCFA must give a
provider at least 15 days' notice before
terminating its participation in Medicare. 42
C.F.R.  489.53(c)(1). The notice of
termination which HCFA sent to Petitioner on
July 16, 1993 advised Petitioner that its
participation in Medicare would terminate on
August 15, 1993, 30 days from the date of the
notice. . . . Thus, Petitioner received the
notice to which it was entitled under the
regulation.

ALJ Decision at 15 (footnotes and citation to record
before the ALJ omitted).

The ALJ's factual findings on this issue are supported by
substantial evidence. Moreover, Petitioner has not
demonstrated that the ALJ's legal conclusions concerning
the applicable regulatory requirements are erroneous.
Consequently, we sustain the ALJ's determination that
HCFA provided Petitioner with adequate notice of its
determination to terminate Petitioner's participation in
Medicare.

Conclusion

The ALJ's factual findings in this case are supported by
substantial evidence in the record. Further, Petitioner
has not demonstrated that the ALJ's legal conclusions are

erroneous. Consequently, we sustain the ALJ's Decision
upholding HCFA's termination of this provider from
participation in Medicare.


_________________________
Judith A. Ballard


_________________________
Cecilia Sparks Ford


_________________________
M. Terry Johnson
Presiding Board Member

1. This certification included HCFA's acceptance of a
provider agreement executed by Petitioner's President,
Jane Graham, R.N. Ms. Graham and another individual
represented Petitioner in the hearing before the ALJ.
Ms. Graham appealed the ALJ Decision to this Panel.
Thus, Petitioner's arguments before this Panel are those
advanced by Ms. Graham.

2. E.R. was admitted to Petitioner's care on November
15, 1991 and remained under Petitioner's care through
April 23, 1993. ALJ Decision at 8. It is Board practice
to identify patients by their initials in order to
protect their privacy.

3. The letter was sent by certified mail, but
Excelsior did not pick it up from the Post Office. ALJ
Decision at 15, n.11.

4. Moreover, the Notice of Proposed Rulemaking
emphasized the discretion retained by HCFA and State
Medicaid agencies to either terminate providers or impose
intermediate sanctions. 50 Fed. Reg. 7191-7195
(February 21, 1985).