Carmel Convalescent Hospital, DAB No. 1584 (1996)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

In the Case of:

Carmel Convalescent Hospital,

Petitioner,

- v. -

Health Care Financing Administration.

Date: June 27, 1996
Docket No. C-95-008
Decision No. 1584

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Carmel Convalescent Hospital (Petitioner) appealed an
August 25, 1995 decision by Administrative Law Judge
(ALJ) Mimi Hwang Leahy. See Carmel Convalescent
Hospital, DAB CR389 (1995) (ALJ Decision). Petitioner, a
skilled nursing facility (SNF), had requested a hearing
before the ALJ on the determination of the Health Care
Financing Administration (HCFA) to terminate Petitioner's
Medicare provider agreement effective June 25, 1994. The
ALJ concluded that HCFA was entitled to summary
disposition of Petitioner's hearing request because the
ALJ found that the uncontested facts established that
Petitioner was out of compliance with the Medicare
condition of participation for physical environment at
the time of the relevant survey of the facility.

The standard for review of an ALJ decision on a disputed
factual issue is whether the decision is supported by
substantial evidence in the record. The standard of
review on a disputed issue of law is whether the ALJ
decision is erroneous. We conclude, as discussed fully
below, that the ALJ was correct in deciding that HCFA was
entitled to summary disposition of Petitioner's appeal in
HCFA's favor. Petitioner failed to contest during
proceedings before the ALJ that it was out of compliance
at the time of the original survey (November 16, 1993) or
the resurvey (June 16, 1994) with four serious Life
Safety Code requirements included under the condition of
participation for physical environment. Petitioner did
not timely offer evidence to the contrary. If anything,
the evidence submitted by Petitioner further
substantiates that Petitioner was not in compliance with
the four requirements on those dates and, indeed, was not
in compliance with three, if not four, of the
requirements on the effective date of the termination.
Therefore, we sustain the ALJ Decision finding that HCFA
was entitled to summary disposition in its favor. We
uphold all the findings of fact and conclusions of law
(FFCLs) except FFCL 10, which we delete as harmless
error.

The record on appeal includes the record before the ALJ,
the parties' briefs on appeal, and the transcript of the
oral argument before the Presiding Board Member. 1/

I. Applicable Authority

To participate in the Medicare program, long-term care
facilities such as skilled nursing facilities (SNFs) must
meet certain requirements which are imposed by statute,
as well as requirements which the Secretary of Health and
Human Services has determined to be necessary for the
health and safety of individuals to whom services are
furnished in the facilities. The survey process is the
means by which HCFA and its agents (including state
survey agencies) assess providers' compliance with
federal health, safety, and quality standards. 42 C.F.R.
. 488.26(b)(1). 2/ Section 488.24(a) of 42 C.F.R.
provided, in relevant part:

The State agency will certify that a provider . . .
is not or is no longer in compliance with the
conditions of participation or level A requirements
(for SNFs and NFs) or conditions for coverage where
the deficiencies are of such a character as to
substantially limit the provider's . . . capacity to
render adequate care or which adversely affect the
health and safety of patients . . . .

Moreover, HCFA may terminate an agreement with any
provider if HCFA finds that the provider no longer meets
the appropriate conditions of participation or
requirements for SNFs. 42 C.F.R. . 489.53(a)(3).

The condition of participation or level A requirement at
issue in this appeal was the requirement concerning
physical environment at 42 C.F.R. . 483.70, which
provides that the facility must be designed, constructed,
equipped and maintained to protect the health and safety
of residents, personnel and the public. 3/ In
particular, section 483.70(a) provided that unless
certain prescribed exceptions applied, a facility must
meet the applicable provisions of the 1985 edition of the
Life Safety Code of the National Fire Protection
Association (henceforth referred to as "LSC"
requirements). 4/

A provider that is found to be deficient with respect to
one or more of the standards in the conditions of
participation or level B requirements may participate in
the Medicare program only if an acceptable plan of
correction is submitted for achieving compliance within a
reasonable period of time. Moreover, the existing
deficiencies noted either individually or in combination
may not jeopardize the health and safety of the patients.
42 C.F.R. . 488.28(a).

HCFA's termination of a provider agreement is defined as
an "initial determination." 42 C.F.R. . 498.3(b)(7). A
provider is not entitled to have HCFA reconsider its
initial determination to end the provider agreement. 42
C.F.R. .. 498.2, 498.22. Under the regulations, HCFA's
initial determination to terminate a provider agreement
remains binding unless (a) the provider obtains a hearing
decision from an ALJ that reverses or modifies the
initial determination, or (b) the initial determination
is revised by HCFA in accordance with 42 C.F.R. .. 498.32
or 498.100. 42 C.F.R. . 498.20(b).

Further, HCFA has the discretion to reopen and revise any
initial determination within 12 months after the date of
the initial determination. 42 C.F.R. .. 498.30, 498.32.
Like an initial determination, HCFA's revised
determination is binding unless the affected party
requests a hearing before an ALJ and obtains a hearing
decision that reverses or modifies the revised
determination, or HCFA further revises the revised
determination on its own initiative. 42 C.F.R.
. 498.32(b).

Additionally, if a provider contests HCFA's
determination, the affected party or its representative
must file a written request for a hearing within 60 days
from receipt of the notice of initial, reconsidered, or
revised determination, unless the 60-day period has been
extended in accordance with applicable requirements. An
ALJ may dismiss a hearing request if: (1) the request
has not been timely filed, or (2) the party requesting a
hearing is not a proper party or "does not otherwise have
a right to a hearing." 42 C.F.R. . 498.70(b).

II. Background

HCFA first began termination proceedings against
Petitioner following a November 16, 1993 survey of
Petitioner by the State Fire Marshal's Office. By letter
dated January 24, 1994, HCFA informed Petitioner that its
provider agreement would be terminated on February 5,
1994, because Petitioner had failed to submit a plan of
correction for deficiencies found during the November 16,
1993 survey. HCFA relied on four LSC violations,
described below, that are the subject of this appeal, as
well as other deficiencies identified during the November
16, 1993 survey. Shortly after receiving HCFA's January
24, 1994 notice, Petitioner submitted to HCFA a plan of
correction for the deficiencies noted in the survey.
(Petitioner's Administrator declared before the ALJ that
Petitioner had filed a plan of correction with the State
Fire Marshal's Office in late December 1993. See
Petitioner's Exhibit (P. Ex.) 1, at . 3.

By letter dated May 25, 1994, HCFA informed Petitioner
that it had reviewed the findings of deficiencies,
reviewed Petitioner's plan of correction, denied
Petitioner's request for waiver of some of the
deficiencies, and concluded that the combined remaining
deficiencies "seriously jeopardize the safety and health
of the patients in your facility." HCFA Ex. 1, at 1.
HCFA then specifically found that the Level A requirement
found at 42 C.F.R. 483.70 concerning the physical
environment of the facility was not met. As a result of
the foregoing, HCFA changed the date for termination of
Petitioner's provider agreement from February 5 to June
25, 1994.

Notwithstanding HCFA's letter dated May 25, 1994, HCFA
subsequently authorized a resurvey of the facility, based
on the representation made by Petitioner's Administrator
on or about June 2, 1994, that all deficiencies would be
corrected before June 25, 1994. See HCFA Exs. 1 and 10.
The resurvey took place on June 16, 1994. By letter
dated July 7, 1994, HCFA informed Petitioner that it had
upheld its May 25, 1994 determination to terminate
Petitioner's provider agreement on June 25, 1994. HCFA
stated that its rationale for upholding its May 25, 1994
determination was based on the same evidence as its
earlier termination decision, as well as additional new
information from the resurvey conducted on June 16, 1994.
HCFA Ex. 5.

The four violations that were identified in both the
November 16, 1993 survey and the June 16, 1994 survey
are:

(1) Failure to meet minimum construction standards
for a two-story structure, in that the facility was
not constructed of two-hour fire resistive
materials. (Survey ID Prefix Tag (ID) K-12, LSC .
1322). 5/

(2) Failure to have one-hour fire resistive walls
in a basement storage room. (ID K-17, LSC . 10-
1331).

(3) Failure to have a smoke barrier on each floor.
(ID K-23, 24, 25, and 26, LSC .. 10-2311, 10-2312,
and 10-2313.)

(4) Failure to have flame retardant curtains in all
patient rooms. (ID K-74, LSC . 17-4151).

See P. Ex. 2 and HCFA Ex. 8.

Petitioner filed a hearing request on August 22, 1994
"based on the fact that all work [to correct
deficiencies] had been completed by 6-25-94." 6/

III. Analysis

The ALJ Decision contained twelve supporting FFCLs.
Petitioner did not contest FFCLs 1 through 4: 7/

1. HCFA's letter of January 24, 1994 was HCFA's
initial determination.

2. HCFA's May 25, 1994 letter was HCFA's revised
determination.

3. HCFA's July 7, 1994 letter was also a revised
determination.

4. Petitioner's hearing request dated August 22,
1994 was timely filed.

Therefore, we adopt and affirm these FFCLs without
further comment.

Petitioner contested FFCLs 5 through 12:

5. In accordance with governing regulations, HCFA
made its decision to terminate Petitioner's provider
agreement on June 25, 1994 based on the results of
surveys conducted on November 16, 1993 and June 16,
1994.

6. In challenging HCFA's determination that
Petitioner's provider agreement should terminate on
June 25, 1994, the only matter raised by Petitioner
in its hearing request is the contention that all
work to correct the deficiencies found during the
November 16, 1993 and June 16, 1994 surveys had been
completed by June 25, 1994.

7. After filing its hearing request, Petitioner
admitted that it had not completed all the remedial
work by June 25, 1994, as alleged in its hearing
request.

8. Even if true, Petitioner's asserted completion
of all remedial work after HCFA's last survey and by
the date of termination does not raise any material
issue for hearing.

9. Even if true, Petitioner's asserted completion
of remedial work after HCFA's last survey and by the
date of termination fails to raise any matter on
which relief may be granted.

10. Based only upon the contents of Petitioner's
hearing request, HCFA's notices attached to the
hearing request, and the relevant regulations, HCFA
is entitled to prevail on its motion to dismiss
Petitioner's hearing request under 42 C.F.R. .
498.70(b).

11. As of the June 16, 1994 survey, and through at
least June 25, 1994, Petitioner was out of
compliance with the condition of participation for
physical environment.

12. Based on the pleadings and the evidence of
record before me, HCFA is entitled to summary
judgment in its favor on the issue of whether the
termination of Petitioner's provider agreement was
proper.

Petitioner made general arguments that encompassed one or
more of the contested FFCLs and specific arguments that
were applicable only to an individual FFCL. We discuss
Petitioner's general arguments first. We then briefly
address Petitioner's arguments that are specific to
individual FFCLs.

A. Petitioner's general arguments

Petitioner here made four general arguments that
encompassed one or more of the ALJ's FFCLs.

o Petitioner argued that the ALJ erred because,
according to Petitioner, the ALJ required strict or full
compliance with each of the LSC requirements at issue
rather than "substantial" compliance.

o Petitioner argued that the ALJ erred in requiring
compliance as of the date of the June 16, 1994 survey
rather than as of the termination date of June 25, 1994.

o Petitioner argued that it was in substantial
compliance with the LSC requirements on June 16, 1994 and
on June 25, 1994.

o Petitioner argued that the ALJ's summary disposition
of Petitioner's hearing request was erroneous.

We address each of these arguments under separate
headings below.

1. The ALJ applied the correct compliance standard.

Petitioner argued that FFCLs 5 through 12 should be
reversed because they were based on an erroneous
interpretation that the law requires strict compliance
with the requirements of Medicare participation.
Petitioner asserted that providers are required only to
"substantially" comply with the requirements of Medicare
participation, and that Petitioner was in substantial
compliance on the date of the relevant survey, June 16,
1994, and on the effective date of the termination, June
25, 1994. Further, Petitioner maintained that prior ALJ
decisions have recognized that failure to strictly comply
with participation requirements is not grounds for
terminating a provider agreement. Petitioner alleged
that Nazareno Medical Hospice Fajardo, Daguas, Cayey, DAB
CR385 (1995), held that when a provider appeals the
termination of the provider agreement, a critical element
of the case is whether the provider was in substantial
compliance with the requirements of participation.
Petitioner's brief (Br.) at 15.

Petitioner's arguments do not persuade us that the ALJ
applied an incorrect compliance standard in this case.

Section 1866(b)(1) of the Social Security Act authorizes
the Secretary to terminate an agreement with a provider
of services after the Secretary:

(A) has determined that the provider fails to comply
substantially with the provisions of the agreement,
with the provisions of [title XVIII] and regulations
thereunder . . . [or]

(B) has determined that the provider fails
substantially to meet the applicable provisions of
section 1861.

During the time period relevant in this case, the
applicable regulations authorized HCFA to terminate a
provider agreement where a skilled nursing facility no
longer complied with a condition of participation (or
level A requirement) which adversely affected the health
or safety of patients. See 42 C.F.R. . 488.24(a) and .
489.53(a)(3). Thus, although the regulation did not use
the term "substantial compliance" as such, it implemented
that standard by authorizing terminations where there
were violations of the most significant requirements
applicable to SNFs, the conditions of participation or
level A requirements, and where those violations
adversely affect the health and safety of patients. 8/
This is precisely the standard that the ALJ applied in
her Decision. Moreover, as we discuss at length below,
the record in this appeal establishes that Petitioner was
in violation of a condition of participation involving
the life safety of its patients both at the time of the
original survey and the June 16, 1994 resurvey and on the
June 25, 1994 effective date of the termination.

The term "substantial compliance" as such was first
incorporated in the regulations by amendments effective
July 1, 1995. See 59 Fed. Reg. 56,116 (Nov. 10, 1994).
The definition section at 42 C.F.R. . 488.301 defines
"substantial compliance" as follows:

a level of compliance with the requirements of
participation such that any identified deficiencies
pose no greater risk to resident health or safety
than the potential for causing minimal harm.

The same section defines "noncompliance" as:

any deficiency that causes a facility to not be in
substantial compliance.

The preamble to the July 1, 1995 amendments stated, in
relevant part:

We reconfigured the criteria used to determine
enforcement remedies when facilities are out of
compliance with Federal requirements, so that there
is a clearer correlation between levels of
noncompliance and types of remedies imposed. . . .
We provide that remedies may cease when substantial
compliance is achieved, and define substantial
compliance as "a measure of compliance with the
participation requirements such that no deficiencies
exist which pose actual harm or have the potential
for more than minimal harm."

59 Fed. Reg. 56,116, at 56,126 (Nov. 10, 1994). This
explanation indicates that under the regulations that
expressly refer to "substantial compliance," a provider
may not have achieved "substantial compliance" even where
a deficiency is not causing actual harm to patients if
that deficiency has the potential for harm, and if the
potential for harm is for more than minimal harm.

It is by no means clear that the addition of the
definition of "substantial compliance" to the regulations
after the time period at issue here was intended to make
a substantive change in the standards for terminating
providers from the Medicare program. Nevertheless, as we
discuss below, even if we were to apply this definition
to the violations at issue here, rather than the
regulatory interpretation actually in effect during the
time in question, there is absolutely no basis for
concluding that the violations did not have the potential
for harming Petitioner's patients or that the potential
for harm was only minimal, and that Petitioner therefore
was in fact in "substantial compliance."

Throughout its briefs, Petitioner consistently
misconstrued the meaning and effect of the "substantial
compliance" standard as contemplated by statute and
implemented by regulations in 1995. This standard does
not allow the Secretary liberally to disregard violations
that potentially affect the safety of a facility's
patients and to view a provider as in "substantial"
compliance even though the survey findings established
that the violation of safety requirements existed and had
not been remedied. Moreover, the regulations and
preamble make clear that substantial compliance means a
level of compliance of the requirements that protects the
patient population from the possibility of anything more
than minimal harm. The cited violations found during the
June 16, 1994 resurvey unquestionably risked the safety
of Petitioner's patients, and unquestionably had the
potential for far more than minimal harm to the patients.
Thus, even if we were to apply the substantial compliance
standard subsequently implemented in the regulations,
Petitioner unquestionably was not in substantial
compliance at the time of the original survey or the June
16, 1994 resurvey and was not in substantial compliance
on the effective date of the termination.

Accordingly, we conclude that the ALJ applied the correct
interpretation of substantial compliance then in effect
in the regulations. However, even if we were to apply
the definition of substantial compliance that was
implemented after the period at issue, given the nature
of the deficiencies at Petitioner's facility, Petitioner
would clearly not have been in "substantial compliance."

2. The ALJ correctly rejected Petitioner's argument
that the dispositive date for determining whether
the facility was in compliance for purposes of
termination proceedings is the effective date of the
termination.

Petitioner argued that the dispositive date for
determining whether a provider agreement is properly
terminated is the effective date of the termination.
Petitioner reasoned that if the applicable requirements
are met while the provider agreement is in effect, then
HCFA does not have grounds for terminating the provider
agreement. Moreover, Petitioner argued that HCFA is
estopped from arguing that Petitioner's status on June
25, 1994 is irrelevant, since HCFA notified Petitioner on
May 25, 1994 that it could submit materials and/or
discuss the pending termination prior to the effective
date of the termination. Petitioner's Br. at 32.
Further, Petitioner maintained that HCFA's July 7, 1994
letter, which stated, among other things, that the
termination decision was based on the "additional
evidence submitted since [the] initial determination,"
indicated that HCFA could and would consider all evidence
submitted to it between its initial determination and the
effective date of the termination. Id. at 33-34.

We find that the ALJ correctly rejected Petitioner's
argument that the dispositive date for determining
whether the facility was in compliance for purposes of
the termination proceedings is the effective date of the
termination.

The statute and regulations establish that a facility's
participation in the Medicare program is determined by
means of the survey by the State survey agency. See
section 1819(g) of the Social Security Act and 42 C.F.R.
. 488.26. When the facility enters the program, it may
do so no sooner than the date on which an onsite survey
by the survey agency establishes its compliance. 42
C.F.R. . 489.13(a). Likewise, when the facility's
participation is terminated because of alleged non-
compliance, the critical date for establishing compliance
is the survey date, not the subsequent effective date of
the termination. The regulations require HCFA to rely on
the findings of the State survey agency in making its
decision to terminate, and the survey agency's findings
necessarily relate to the status of the facility as of
the date of the survey.

Indeed, to rely possibly on a later date after the survey
as the dispositive date for determining compliance, as
Petitioner argued, could cause a never-ending cycle of
resurveys based on unsubstantiated claims of compliance
by the facility as of the later date. Clearly, as HCFA
argued, no law required HCFA to conduct still another
survey of Petitioner after June 16 and before June 25,
1994, after the resurvey of June 16 found that Petitioner
had four serious continuing violations. Indeed, nothing
in the regulations even required that the June 16
resurvey be conducted prior to termination.

Petitioner's argument, moreover, misconstrues the purpose
and effect of the hearing process. The purpose of the
hearing process, under the circumstances here, is to
provide a review of HCFA's determination, based on the
survey findings. (HCFA's basis for termination was the
finding of four LSC violations in the original November
16, 1993 survey; the June 16, 1994 resurvey simply
confirmed that these violations still existed.) If the
facility was in fact out of compliance, HCFA clearly had
the authority under the statute and regulations to
terminate the provider agreement. Any effort Petitioner
made to bring itself into compliance after the date of
the resurvey, therefore, is completely irrelevant to the
facility's appeal of HCFA's determination to terminate.
9/

We also reject Petitioner's argument that HCFA should be
estopped. We conclude that, even if estoppel could be
asserted against HCFA in the administration of the
Medicare program, Petitioner did not establish the
existence of the basic elements of estoppel under the
circumstances of this case. 10/ Four elements must be
present to establish the defense of estoppel: (1) the
party to be estopped must know the facts; (2) he must
intend that his conduct shall be acted on or must so act
that the party asserting the estoppel has a right to
believe it is so intended; (3) the latter must be
ignorant of the true facts; and (4) he must rely on the
former's conduct to his injury.

Petitioner did not satisfy this burden because Petitioner
did not show that it was ignorant of the true facts or
that HCFA in any way misled Petitioner that it had to
establish compliance as of any date other than the survey
date. HCFA's letter of May 25, 1994 merely notified
Petitioner that it could discuss the pending termination
or submit materials relevant to the pending termination
prior to the effective date. That letter in no way
indicated that the termination would be based on
Petitioner's compliance for a date other than the date of
the survey that found Petitioner to be out of compliance.
Moreover, HCFA's correspondence occurring after the
effective date of the termination could not in any event
be a basis for estoppel under the circumstances here.
Thus, we conclude there is absolutely no basis for a
claim of estoppel in this case.

3. The ALJ correctly concluded that no genuine
issue of material fact existed as to whether
Petitioner met the applicable compliance standards
on June 16, 1994.

Petitioner argued that genuine issues of material fact
existed as to whether Petitioner violated all four LSC
requirements at issue in this appeal and as to whether it
was in substantial compliance with the LSC requirements.

Petitioner maintained first that a genuine issue of fact
existed as to whether it was ever out of compliance with
ID K-12, minimum construction requirements.
Specifically, Petitioner asserted that the facility was
originally built as an acute care hospital in 1929 and
always consisted of two stories. Further, Petitioner
argued that both stories go to grade and allowed egress.
Petitioner Br. at 44. Finally, Petitioner asserted that,
when pictures of the facility were submitted directly to
HCFA and reviewed by the Division Chief of the Coastal
Division of the State Fire Marshal's Office in 1995, the
State Fire Marshal agreed to support a waiver of the LSC
provision. Id.

Next, Petitioner argued that a genuine issue of fact
existed as to whether the basement storage room walls
were in substantial compliance with ID K-17. Petitioner
alleged that those walls were fully repaired as of the
effective date of the termination.

Additionally, Petitioner argued that a genuine issue of
fact existed as to whether it was ever out of compliance
with ID K-23 through ID K-26, which require a smoke
barrier wall on the facility's second floor. Petitioner
asserted that the smoke barrier wall always existed, and
that the Division Chief of the Coastal Division of the
State Fire Marshal's Office visited the facility in March
1995 and personally verified the existence of the smoke
barrier wall. Petitioner's Br. at 45.

Finally, Petitioner argued that a genuine issue of fact
existed as to whether the patient room curtains were in
substantial compliance with ID K-74.

We review below whether Petitioner failed to raise an
issue of fact concerning any of the LSC violations relied
upon by HCFA.

a. Failure to meet minimum construction standards
for a two-story structure, in that the facility was
not constructed of two-hour fire resistive materials
(Id. no. K-12)

The ALJ Decision stated:

I note that with respect to the first of these
deficiencies from the June 16, 1994 survey, evidence
introduced into the record suggests that, in 1995,
the Fire Marshall may have granted a waiver request,
which exempted Petitioner from having to meet the
Code's requirement on the use of two-hour fire
resistive construction materials in two-story
structures. . . . However, there is no evidence or
allegation that Petitioner had been granted such a
waiver when Petitioner was surveyed, when its
provider agreement was terminated, or when it filed
its hearing request. According to other evidence
generated or submitted by Petitioner, Petitioner did
not seek a waiver for this requirement (HCFA Prefix
Tag #K12) until December 26, 1994.

ALJ Decision (Dec.) at 17. Petitioner provided no
persuasive argument why this analysis was incorrect and,
indeed, Petitioner still could not verify on appeal
before us that a waiver from HCFA has been granted. See
Transcript of April 3, 1996 teleconference at 19-20.
Until Petitioner is actually granted a waiver, it remains
out of compliance with this requirement. In the record
before the ALJ, Petitioner never raised a material issue
of fact concerning whether it was in compliance with the
requirement, which, of course, is a different issue from
the issue of whether a waiver had been granted or even
requested and substantiated. The record suggests that
Petitioner first requested a waiver for this requirement
after the effective date of the termination on December
26, 1994.

b. Failure to have one-hour fire resistive walls in
a basement storage room (ID K-17)

The ALJ Decision stated:

At best, Petitioner had completed the work to remedy
only one of the four cited deficiencies by June 25,
1994: the failure to have one-hour fire resistive
walls in a basement storage room. E.g., P. Exs. 1,
5.

ALJ Dec. at 21. Petitioner argued before the ALJ that it
was in full compliance with this requirement as of June
25. Petitioner's Brs. dated April 19, 1995 and June 26,
1995. Petitioner, however, did not allege before the ALJ
that it was in compliance with this requirement as of
June 16, 1994, and the invoice Petitioner submitted to
establish compliance by June 25th states that the repair
work was performed from June 17 through June 20, 1994.
P. Ex. 5. Thus, while Petitioner arguably raised a
genuine issue of material fact concerning its compliance
with this requirement as of June 25, it clearly did not
raise any issue of fact concerning its compliance as of
the determinative date of June 16, 1994. Indeed,
Petitioner's own evidence establishes that Petitioner had
not achieved any form of compliance as of June 16, 1994.

c. Failure to have a smoke barrier on each floor
(ID K-23 through ID K-26)

The ALJ Decision stated:

Petitioner has also argued in its brief that the
Fire Marshall confirmed after a survey that the
facility has always had a smoke barrier in
place. . . . This argument is misleading because
the Fire Marshall stated that, as of March 31, 1995,
he verified that a smoke barrier existed, but that
it showed evidence of recent repair. HCFA Ex. 18.

ALJ Dec. at 17. Contrary to what Petitioner argued, the
Fire Marshal's statement shows only that a wall existed
as of March 31, 1995, not that it existed in a fully
repaired condition as of the date of the survey on June
16, 1994. The Deputy Fire Marshal that conducted the
June 16, 1994 survey stated that she asked the employee
of Petitioner who accompanied her during the survey where
the smoke barrier wall was so she could inspect it and
the employee never told her where it was. HCFA Ex. 12,
at . 5(c). As HCFA argued, Petitioner had the
responsibility to be able to identify where the wall was
located, particularly because the absence of this smoke
barrier wall had already been cited in the survey of
November 16, 1993. Moreover, Petitioner's Administrator
asserted to an employee of HCFA on June 2, 1994 that all
cited violations from the November 16, 1993 survey would
be corrected before the termination date of June 25,
1994, and the Administrator was notified of the
possibility of a resurvey before the termination date.
Any correction efforts for this particular violation
would have required Petitioner at least to have located
where the smoke barrier wall was, and then to verify what
condition it was in and to make any necessary repairs.
Yet, in spite of the foregoing, Petitioner's employee
assigned to accompany the Fire Marshal was unable to even
identify the wall during the June 16, 1994 resurvey.

While subsequent survey evidence suggests the possibility
that the smoke barrier wall did exist at the time of the
June 16, 1994 resurvey, both survey evidence and evidence
from Petitioner also strongly suggest that the barrier
was not in proper repair at that time. See HCFA Exs. 18,
13. Petitioner, moreover, failed to allege or offer any
evidence that the wall was properly repaired as of June
16, 1994. Cf. P. Ex. 1, at . 12. Thus, we conclude that
Petitioner cannot reasonably argue that it raised a
material dispute about its compliance with this
requirement as of June 16, 1994.

Finally, as HCFA argued both before us and the ALJ, a
smoke barrier wall, which prevents smoke going from one
building compartment to another so residents can be
safely moved during a fire, critically cannot have
penetrations in it, because the penetrations would allow
the smoke to get to the other building compartments.
HCFA Br. at 20. This point is obvious, and Petitioner
did not offer any evidence to dispute it.

d. Failure to have flame retardant curtains in all
patient rooms (ID K-74)

The ALJ Decision stated:

Petitioner's owner and operator . . . recently
admitted that, on June 25, 1994, 50 percent of the
patient room curtains were not made of a flame
retardant material and not all of the remaining
curtains had been treated with a flame retardant
substance. . . . Even setting aside Petitioner's
additional admissions that all of its patient rooms
have had the same non-flame retardant curtains for
at least 10 years prior to 1992 and that
Petitioner's owner and operator failed to discover
until after August 22, 1994 that not all patient
room curtains had been made flame retardant as of
June 25, 1994, the fact remains that Petitioner had
not succeeded in making all of its patient room
curtains flame retardant during the seven month
period between being cited for the deficiency in
November of 1993 and having its provider agreement
terminated on June 25, 1994.

ALJ Dec. at 18-19. The survey evidence substantiates
that none of Petitioner's curtains had been made flame
retardant (or replaced with new flame retardant curtains)
as of the determinative date of June 16, 1994, and
Petitioner did not allege or offer evidence otherwise.
HCFA Exs. 8 at 5; 12 at . 5(d). Moreover, Petitioner's
Administrator declared before the ALJ that only 50
percent of the curtains had been made flame retardant by
June 25, 1994. P. Ex. 13, at . 6. Even if the latter
date were the relevant date for our purposes (which it is
not), correction of 50 percent is not compliance with
this requirement under any reasonable interpretation of
the term. A full half of the patient population of the
facility was still at increased risk in case of fire
because the curtains in their rooms were still not flame
retardant by that date. Indeed, to the extent that a
fire started in or passed through any of those rooms, the
entire facility was placed in jeopardy. Of course, the
record would also support a conclusion that none of the
patients' curtains had been made flame retardant by the
date of the June 16, 1994 resurvey, since Petitioner did
not raise a genuine dispute of material fact with respect
to the survey finding to that effect.

Finally, Petitioner argued that the curtain violation was
somehow less hazardous because the same curtains had been
in use in its patients' rooms for over ten years. We
find that argument to be completely without merit.
Petitioner was obligated to meet the LSC requirements at
issue regardless of whether it was specifically cited for
a violation or reprimanded in any given year. (In any
event, we simply do not know whether Petitioner was
previously cited for this or any of the other
requirements at issue in surveys that preceded the
surveys at issue here.) The hazard from the non-flame
retardant curtains did not diminish in any way simply
because it existed well before the surveys at issue here.

Thus, based on the foregoing analysis of each of the four
requirements found out of compliance, we conclude that
the ALJ did not err when she concluded that Petitioner
failed to raise a genuine issue of material fact
concerning its compliance with any of these violations as
of the date of the June 16, 1994 resurvey, and at most
raised an issue concerning its compliance with one item,
ID K-17, as of the effective date of the termination.

4. The ALJ did not err in summarily disposing of
Petitioner's hearing request.

Petitioner argued, without taking exception to a
particular FFCL, that in an action for administrative
review of a termination of a provider agreement, the
burden is not on the provider to prove entitlement to a
benefit. Petitioner's Br. at 45. Rather, Petitioner
asserted, HCFA had the burden of persuasion to show: (1)
the existence of the participation requirements with
which a provider has allegedly not complied; (2) the
facts which establish that the provider failed to comply
with a participation requirement; and (3) that a
provider's failure to comply with a participation
requirement is so substantial as to justify termination.
Id. at 46. Petitioner maintained that, in granting
summary judgment, the ALJ imposed the burden of
persuasion on it instead of HCFA.

Additionally, Petitioner argued that FFCLs 5 through 12
are inconsistent with a decision of the Second Circuit
holding that, despite a SNF's admission that it violated
a LSC requirement and its failure to contest other
outstanding alleged LSC violations, the facility had a
right to a full evidentiary hearing because of the
possibility of a discretionary grant of waiver of non-
compliance. Petitioner maintained that the facts and
issues raised here are "very similar" to those in
discussed in that decision, Case v. Weinberger, 523 F. 2d
602 (2nd Cir. 1975). There, the court stated:

A full hearing, however, will hopefully provide a
record upon which the Secretary can make a
knowledgeable decision with respect to his
discretionary grant or denial of waivers.
Furthermore, that record should also provide the
basis for judicial review of that discretionary
decision should an abuse of discretion be claimed.

Petitioner's Br. at 21, quoting Case at 611.

Petitioner's arguments are without merit. HCFA was
required by law to use the survey process to determine
Petitioner's compliance with the Medicare requirements of
participation. See 42 C.F.R. . 488.26(b)(1). HCFA's
decision to terminate Petitioner's provider agreement was
based on a survey that identified the four violations at
issue, among others, and a resurvey that identified the
same four violations. The survey reports themselves
provide the core evidence to substantiate the existence
and seriousness of the violations, and the record
contains supplemental evidence (discussed above) that
further substantiates HCFA's determination to terminate.

Moreover, contrary to Petitioner's argument, HCFA has
fully substantiated the seriousness and substantiality of
the violations. HCFA provided two affidavits from the
Deputy Fire Marshal that performed the resurvey of June
16, 1994. In the first affidavit, which was executed on
March 30, 1995, she declared that during the resurvey,
she found a number of outstanding deficiencies still not
corrected from the November 1993 survey which "seriously
jeopardized patients' health and safety." HCFA Ex. 7.
In the second affidavit, which was executed on May 5,
1995, she explained the significance and possible
ramifications of each of the cited violations. Thus,
with respect to the deficiency of ID K-17, she stated
that:

if a fire started in the storage room and it did not
have walls with at least a one-hour fire resistance,
i.e., that could withstand a fire for at least one-
hour, it would be a potential fire hazard that could
involve the entire building and seriously jeopardize
the health and safety of the residents and
personnel.

HCFA Ex. 12, at . 5(b). With respect to the deficiency
of ID K-74 involving patient room curtains, she stated:

the reason that it is important to visually verify
through an on-site inspection that this deficiency
(K-74) was corrected is because if there were a fire
in the facility, patient room curtains that are not
flame retardant would ignite quickly and would
endanger the lives of the facility's residents and
personnel.

Id. at . 5(d).

Moreover, as HCFA argued, citing the Nazareno decision,
some of the requirements for participation are so
necessary for the health and safety of patients that a
failure to comply is on its face a substantial deficiency
justifying termination. We conclude that several of the
violations here are absolutely essential on their face
for the safety of the facility's patients and personnel.

Petitioner argued before the ALJ that the violations were
not the equivalent of examples that had been cited in the
Medicare and Medicaid Guide as "immediate and serious
threats." Petitioner's Br. of June 26, 1995 at 8-9. Yet
the list quoted in Petitioner's brief contains a
situation that precisely matches one of the violations
here, the failure to maintain the integrity of a smoke
barrier. Indeed, when the violations cited here are
compared to the items on the list cited by Petitioner,
all of the violations would appear to qualify as
"immediate and serious."

HCFA having provided sufficient evidence concerning the
existence and nature of the violations in question, the
burden then properly shifted to Petitioner to submit
pleading and, as appropriate, documentary evidence and/or
offers of testimony to raise genuine issues of material
fact concerning the existence of the violations of the
four LSC requirements at issue here. As we discussed
above with respect to each of the four violations,
Petitioner simply failed to do so. Nor did Petitioner
allege or proffer evidence that the violations at issue
here either independently or cumulatively did not have
the potential for a serious adverse effect to the safety
of its patients or personnel. 11/

We conclude that the ALJ's summary disposition of this
appeal under these circumstances was clearly authorized
by the regulations and does not conflict with the Case
decision cited by Petitioner. The applicable regulation
at 42 C.F.R. . 488.24(a) authorized termination for SNFs
based on non-compliance with a level A requirement
affecting the health and safety of patients. We conclude
that an evidentiary hearing is not required under the
regulations where, as here, the Petitioner does not raise
in its hearing request or during proceedings before the
ALJ a genuine issue of material fact concerning its
failure to comply with the four LSC requirements in
question incorporated in the level A requirement at the
time of the relevant survey and, indeed, where the
evidence of record establishes Petitioner was out of
compliance at that time and remained out of compliance
with three if not all four of the requirements on the
termination date. Nor did the Petitioner raise a genuine
issue of material fact concerning the seriousness of the
violations either independently or cumulatively.

Moreover, Petitioner was given, and took advantage of,
the opportunity to present its case, including briefs and
supporting documentation during the ALJ proceeding.
Indeed, the ALJ received supplemental briefing
specifically to address the issue of summary disposition.
See ALJ Dec. at 2. Petitioner has thus had the
opportunity to raise disputes regarding all relevant
material issues that the court in Case sought to afford.

Further, this appeal is clearly distinguishable from the
circumstances confronted by the court in Case. HCFA here
gave Petitioner a second survey opportunity to
demonstrate its compliance after having given Petitioner
approximately seven months to bring itself into
compliance with the requirements at issue following an
earlier survey. Petitioner did not argue that it could
not have brought itself into compliance with three of the
four requirements during that time. 12/ These same
options of compliance were not realistically available to
the facility discussed in the Case decision, and the
facility's only hope was to obtain a discretionary waiver
of the applicable requirements from HCFA.

Consequently, we conclude that the ALJ did not err in
granting HCFA's request for summary disposition.

B. Petitioner's exceptions to specific FFCLs

1. Petitioner's exceptions to FFCL 6

FFCL 6 stated:

In challenging HCFA's determination that
Petitioner's provider agreement should terminate on
June 25, 1994, the only matter raised by Petitioner
in its hearing request is the contention that all
work to correct the deficiencies found during the
November 16, 1993 and June 16, 1994 surveys had been
completed by June 25, 1994.

Petitioner argued that this FFCL is incorrect in that
Petitioner alleged that it was in substantial compliance
with the LSC violations on June 16, 1994. Further,
Petitioner maintained that its hearing request referenced
its LSC status on both June 16 and June 25, 1994. The
hearing request stated, in relevant part:

We had a resurvey June 16, 1994, at which time,
Alise [sic] Anderson, D.S.F.M. told Steve Bremner,
Maintenance, that we were back in compliance. . . .
We are asking for an appeals hearing based on the
fact that all work had been completed by 6-25-94.

We conclude that FFCL 6 is not erroneous. Although the
hearing request alleged that Petitioner was advised that
it was "back in compliance," the request was expressly
based "on the fact that all work had been completed by
June 25, 1994." Thus, the request does not allege any
form of compliance as of the date of the June 16, 1994
survey. Moreover, as we discuss repeatedly in this
decision, Petitioner failed to raise a genuine issue of
material fact concerning its compliance with any of the
four LSC requirements as of June 16, 1994, and HCFA made
a prima facie case that Petitioner had not achieved
compliance or substantial compliance with the four
requirements as of that date. At best, the record
suggests that Petitioner may have come into compliance
with only one of the requirements (ID K-17) as of the
effective date of the termination. Thus, we adopt and
affirm FFCL 6.

2. Petitioner's exceptions to FFCL 7

FFCL 7 stated:

After filing its hearing request, Petitioner
admitted that it had not completed all the remedial
work by June 25, 1994, as alleged in its hearing
request.

Petitioner asserted that, contrary to the ALJ Decision,
it did not admit to a violation of the K-23 through K-26
requirement (second floor smoke barrier wall). Further,
Petitioner contested the ALJ's determination that, by
failure to object specifically in the hearing request to
the alleged deficiencies, Petitioner admitted that the
alleged deficiencies existed. See ALJ Dec. at 17.
Finally, Petitioner argued that it has consistently
contended that two of the alleged deficiencies, failure
to meet minimum construction standards (K-12) and failure
to have a smoke barrier on each floor (K-23 through K-
26), never existed, and that the third deficiency,
failure to have one-hour fire resistive walls in a
basement storage room (K-17), was fully corrected before
June 25, 1994.

Regardless of whether Petitioner did or did not admit the
continued existence of other deficiencies as of June 25,
1994 after expressly stating in the hearing request that
"all work had been completed by 6-25-94," Petitioner
unquestionably admitted that "less than all of the
curtains were rendered flame retardant on or before June
25, 1994," as required by ID K-74 (LSC . 17-4151). See
Petitioner's Br. at 26. Further, Petitioner's
administrator directly contradicted the position he took
in the hearing request by filing a declaration which
stated that "as of June 25, 1994, the facility had
completed the process of installing flame retardant
curtains in approximately fifty percent (50%) of the
patient rooms." P. Ex. 13, at . 6.

Accordingly, simply by focusing on Petitioner's change in
position concerning the patient room curtains, we must
affirm and adopt FFCL 7. Moreover, with respect to the
finding that Petitioner's facility did not meet
construction standards for a two-story building,
Petitioner did not allege that it had completed all
repair work on this deficiency or in the alternative that
it had requested and received a waiver as of June 16,
1994, much less by June 25, 1994. Finally, with respect
to the survey findings concerning the need for a second
floor smoke barrier wall, Petitioner did not allege, or
offer evidence to show, that this wall was in proper
repair at the time of the June 16, 1994 survey or the
termination date. Cf. P. Ex. 1, at .. 1, 12. The
affidavit of the Fire Marshal and indeed evidence
supplied by Petitioner strongly suggest that it was not.
HCFA Ex. 18, at . 4; HCFA Ex. 13.

Even if all the deficiencies but the one relating to the
flame retardant curtains were corrected by June 25, that
single deficiency in and of itself would have been
sufficient in our view to justify Petitioner's
termination. More importantly, however, since Petitioner
has never alleged much less offered evidence that all
four violations were corrected by June 16, 1994, the ALJ
did not err in granting summary disposition on behalf of
HCFA.

3. Petitioner's exceptions to FFCL 10

FFCL 10 stated:

Based only upon the contents of Petitioner's hearing
request, HCFA's notices attached to the hearing
request, and the relevant regulations, HCFA is
entitled to prevail on its motion to dismiss
Petitioner's hearing request under 42 C.F.R.
. 498.70.

Petitioner argued that despite any inadequacy in
Petitioner's hearing request, HCFA was given adequate
notice of Petitioner's claim. Hence, Petitioner reasoned
that it did "otherwise have a right to a hearing" under
42 C.F.R. . 498.70(b). Petitioner argued that it is
settled law that administrative pleadings are liberally
and easily amended. Petitioner's Br. at 35. Further,
Petitioner argued that dismissal of the present action
for a failure to follow very technical requirements
violates fundamental notions of justice, as well as
established law. Petitioner argued that the law
recognizes that pleadings of a pro se party are held to
less rigid standards than those drafted by attorneys. 13/
Id. at 36.

The ALJ Decision relied on two alternative grounds for
resolving Petitioner's appeal in HCFA's favor. The ALJ
granted HCFA's motion to dismiss Petitioner's hearing
request under 42 C.F.R. . 498.70(b), because "the request
failed to challenge the deficiencies found during the
June 16, 1994 survey. . . ." The ALJ also concluded that
HCFA was entitled to summary disposition because
Petitioner raised no genuine issue of material fact
requiring an evidentiary hearing and because, even
assuming all of the facts asserted by Petitioner to be
true and construing them in a light most favorable to
Petitioner, HCFA was entitled to summary disposition as a
matter of law.

We agree with Petitioner that the reasons it gave for
contesting HCFA's determination in its request for
hearing cannot be the basis for concluding that
Petitioner "is not a proper party or does not otherwise
have a right to a hearing" under section 498.70(b).
Petitioner has a right to a hearing under 42 C.F.R. Part
498 because it is a provider dissatisfied with an initial
determination to terminate its provider agreement. See
42 C.F.R. .. 498.2, 498.3 and 498.5(b). Petitioner
cannot lose its hearing right based on these factors
merely because of the wording of the reasons it gives for
its appeal in its hearing request. 14/

While we conclude it was error for the ALJ to have
dismissed Petitioner's hearing request under 42 C.F.R. .
498.70(b), we further conclude that the error was
harmless in this instance because the ALJ properly
concluded that even assuming all of the facts asserted by
Petitioner in its pleadings and briefs to be true and
construing them in a light most favorable to Petitioner,
HCFA was entitled to summary disposition of Petitioner's
appeal as a matter of law. This Board has previously
determined, albeit in the context of a different type of
appeal, that a requirement affording an opportunity for
an evidentiary hearing is not contravened by a summary
disposition if there are no genuine issues of material
fact. See, e.g., Campesinos Unidos, Inc., DAB No. 1518
at 10 (1995), citing Travers v. Shalala, 20 F.3d 993, 998
(9th Cir. 1994). 15/

Moreover, the regulations setting out the procedures for
provider appeals place an affirmative responsibility on
the affected provider to identify all disputed issues of
fact (as well as the basis for the disputes in each
instance) at the initiation of the appeal in the request
for hearing. 42 C.F.R. . 498.40(b). Where, as here, a
provider does not raise a genuine issue of material fact
either in its request for hearing, in its documentary
exhibits or in its briefs, including a brief which
specifically addressed issues pertaining to summary
disposition, we conclude the ALJ properly considered
whether summary disposition would be appropriate. See
also Transitional Hospitals Corporation -- Las Vegas, DAB
CR350 (1995).

As we have painstakingly discussed above, Petitioner did
not raise a genuine issue of material fact before the ALJ
concerning its compliance as of the June 16, 1994 survey
with four serious LSC requirements that are incorporated
in a condition of participation (or level A requirement)
for SNFs. (Petitioner, moreover, did not substantiate
before the Board that it could have raised an issue but
simply failed to do so.) The ALJ concluded that the
survey findings adopted by HCFA along with additional
documentary evidence in the record provided a prima facie
case in favor of Petitioner's termination. Where
Petitioner, as here, failed by raising any genuine issue
of material fact to rebut that prima facie case, we
conclude that the ALJ has the authority under the
regulations to summarily dispose of the appeal.

Moreover, Petitioner's arguments concerning its failure
to obtain legal counsel sooner are completely without
merit. Although Petitioner was not represented by
counsel when it filed its hearing request, it was
represented by counsel when it submitted its briefs and
documentary exhibits. As we stated above, the ALJ based
her decision on the entire record, not merely the hearing
request. Furthermore, Petitioner did not provide any
evidence to show how having legal counsel at an earlier
point would have changed the ALJ Decision.

Accordingly, we conclude the ALJ erred in dismissing this
appeal under 42 C.F.R. .498.70(b), and we therefore
delete FFCL 10. We further conclude, however, that this
error was harmless since the ALJ correctly concluded that
summary disposition in favor of HCFA was appropriate.

4. Petitioner's exceptions to FFCL 11

FFCL 11 stated:

As of the June 16, 1994 survey, and through at least
June 25, 1994, Petitioner was out of compliance with
the condition of participation for physical
environment.

Petitioner argued that FFCL 11, although factually
correct, implies an erroneous legal standard. Petitioner
contended that while it has admitted that work on the
basement storage room walls was in process on June 16,
1994, and that all the patient room curtains were not
flame retardant by June 25, 1994, HCFA still may not
terminate the provider agreement unless the provider was
in substantial non-compliance with these requirements of
participation. 16/ Petitioner's Br. at 42.

Since it is undisputed that FFCL 11 is correct,
Petitioner's disagreement regarding the applicable legal
standard is not a basis for reversing the FFCL. In any
event, as previously discussed, Petitioner's arguments
concerning substantial compliance simply miss the point.
Petitioner's violations show that Petitioner was not in
substantial compliance either under the then applicable
regulatory standards or under the subsequently adopted
regulations which include a definition of substantial
compliance. Thus, we adopt and affirm FFCL 11.
.Conclusion

Accordingly, based on the foregoing analysis, we sustain
the ALJ Decision concluding that HCFA was entitled to
summary disposition in its favor on Petitioner's hearing
request. We uphold each and every FFCL except FFCL 10,
which we delete as harmless error.

Judith A. Ballard

M. Terry Johnson

Donald F. Garrett
Presiding Board Member

1. Although Petitioner's request for review was
addressed to the Social Security Administration Appeals
Council, the Board was substituted for the Appeals
Council as the reviewing authority for this type of
appeal in 1993. 58 Fed. Reg. 58,170 (Oct. 29, 1993).

2. Unless otherwise noted, all references to
regulations are to the version in effect during the time
period of the original survey and the resurvey.

3. The preamble to final regulations amending program
requirements for long term care facilities clarified
that:

those requirements that previously were identified
as conditions of participation (appearing as
individual sections within a subpart) are now
designated as level A requirements. Those
requirements that previously were identified as
standards (appearing as individual paragraphs within
a section) are now designated as level B
requirements.

54 Fed. Reg. 5317-5318 (Feb. 2, 1989).

4. In addition to the exceptions specified in
sections 483.70(a)(1) and (a)(3), section 483.70(a)(2)
provides for waiver of specific code requirements by
HCFA. Under that section, HCFA may waive specific
provisions of the LSC "which, if rigidly applied would
result in unreasonable hardship upon the facility, but
only if the waiver does not adversely affect the health
and safety of residents or personnel."

5. The Petitioner identified the deficiencies at
issue by the identification prefix code used in the
survey document. Thus, to avoid confusion, we will use
those identifiers in our discussion. We also note the
Life Safety Code sections.

6. During proceedings before the ALJ, HCFA initially
moved to dismiss Petitioner's hearing request as untimely
because it had not been filed within 60 days of receipt
of HCFA's May 25, 1994 notice. The ALJ concluded in her
decision that Petitioner's hearing request dated August
22, 1994 was timely filed. FFCL 4. When HCFA responded
to Petitioner's appeal on January 12, 1996, HCFA also
cross-appealed that FFCL, stating that it "re-urges"
consideration of whether the hearing request should also
have been dismissed on the basis of untimeliness.

We conclude, however, that HCFA itself has failed to make
a timely request for Board review of the issue it here
argues. The regulation at 42 C.F.R. . 498.82 provides
that any party dissatisfied with an ALJ decision may
request review of the decision and that the requesting
party must file its request within 60 days from receipt
of the notice of decision or dismissal, unless good cause
is shown by the requesting party to extend the time.
Therefore, based on the requirements of section 498.82,
HCFA should have requested review of the ALJ Decision
concerning the issue of timeliness of Petitioner's
hearing request within the 60-day period allowed for such
requests. Even if HCFA intended to request review of
this issue only in the event that Petitioner requested
review on other issues, HCFA could have so notified the
Board. Since no request for review of this issue was
submitted within the prescribed period and since no good
cause for an extension of time was shown by HCFA, we find
that HCFA's cross-appeal was untimely and dismiss it
under 42 C.F.R. . 498.83(a). Additionally, we note that
a comparable request made by the Inspector General for a
review of an ALJ decision was also dismissed as untimely.
See I.G. v. Edward J. Petrus, M.D., Docket No. C-147
(December 12, 1990).

7. Citations to the pages in the ALJ Decision that
discussed the FFCLs have been omitted.

8. Petitioner's reference in this respect to the ALJ
Decision in Nazareno Medical Hospice Fajardo, Daguas,
Cayey, DAB CR385 (1995), is unavailing, since the
decision confirms that substantiality is established by
reference to whether the violations adversely affect the
health and safety of patients. As we discuss in the text
below, the record clearly establishes that the violations
of the LSC requirements at issue here seriously risked
the safety of Petitioner's patients.

9. When a facility is faced with a notice of
termination, it essentially has two options: it may
appeal the termination by contesting that it was in fact
out of compliance as of the date of the survey; or it may
attempt to bring itself into compliance after the survey
in the hope that it will be able to persuade the state
survey agency and HCFA at some future time that the
termination should not be effectuated or that termination
should be of limited duration. Any compliance efforts by
the facility after the date of the survey, however, have
no bearing on whether HCFA's termination determination
was correct.

10. We do not intend by this decision to imply that
estoppel necessarily would lie against the federal
government if the four elements of estoppel had been
established. See, e.g., Office of Personnel Management
v. Richmond, 496 U.S. 414 (1990). But, having concluded
that Petitioner has not satisfied all of the four basic
elements, we do not discuss further considerations
involved in determining whether a federal agency may be
estopped.

11. Nor did Petitioner allege or proffer evidence
that it requested a waiver of any of these requirements
from HCFA before the effective date of the termination.
(While Petitioner did request a waiver of the smoke
barrier requirement, that request apparently pertained to
the first floor of the facility, which is not at issue
here. Petitioner did not argue that it had requested a
waiver of the requirement for the second floor, where a
barrier already existed even though it apparently
required repairs.) Thus, the ALJ was not faced with the
issue of whether a denial of waiver by HCFA for any of
these requirements was an abuse of discretion.

12. Even if a waiver was the only realistic means of
achieving compliance with the remaining requirement that
the building did not meet minimum construction standards
for a two-story building (Deficiency K-12), Petitioner
did not establish that it acted with all due haste to
make its case for a waiver to the Fire Marshal and to
HCFA following the November 16, 1993 survey. The
standard for waiver is identified in footnote 4 above.
It presumably requires an initial review by the State
Fire Marshal and then careful consideration by HCFA to
see whether the prescribed standard in the regulation has
been met. Petitioner had no right to assume it was in
compliance with the requirement merely because the
potential for waiver might have existed or because waiver
may in fact be granted in the future. The record here
suggests that Petitioner first requested a waiver from
HCFA of this requirement on December 26, 1994, which was
well after the effective date of the termination.

13. Petitioner did not hire legal counsel until
October 25, 1994. Prior to that time, the facility's
administrator represented Petitioner.

14. In fact, however, the ALJ did not base her
decision on the hearing request alone, but rather on the
entire record before her, including the briefs and
documentary exhibits submitted by both parties.
Moreover, there is no indication in the record of this
appeal that the ALJ ever precluded Petitioner from
amending the position it took on any issue in the hearing
request.

15. The Travers decision involved a statutory right
to a formal hearing by an administrative law judge under
the Administrative Procedure Act.

16. Petitioner's arguments address only two of the
four violations. Petitioner did not allege, much less
offer evidence to establish, that it either repaired
Deficiency ID K-12 or that it requested and received a
waiver for that deficiency by June 25, 1994, or that even
if a second floor smoke barrier wall cited in Deficiency
ID K-23 through ID K-26 existed on June 25, 1994, it was
in full repair.