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Decision No. 1715
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
IN THE CASE OF  
SUBJECT: Fairview Nursing Plaza, Inc. DATE: January 12, 2000
                                          Petitioner,
             - v -
 
The Health Care Financing Administration. Docket No. A-99-102
DECISION
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FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Fairview Nursing Plaza, Inc. (Fairview) appealed the July 8, 1999 decision by Administrative Law Judge (ALJ) Joseph K. Riotto dismissing the case under 42 C.F.R. §§ 498.40(b) and 498.70(c). Fairview Nursing Plaza, Inc., CR605 (1999) (ALJ Decision). The ALJ found that an April 24, 1998 letter from Fairview seeking a hearing to challenge the Health Care Financing Administration's (HCFA's) imposition of civil money penalties (CMPs) did not meet the requirements of 42 C.F.R. § 498.40(b), governing the content of hearing requests. The ALJ further found that Fairview failed to file a timely hearing request within the meaning of 42 C.F.R. § 498.70(c).

On appeal, Fairview argued that its hearing request met the content requirements of section 498.40. Fairview also contended that HCFA's challenge to the sufficiency of the hearing request was not timely and that HCFA had waived its right to request dismissal for cause under sections 498.40 and 498.70.1

In an appeal of an ALJ decision, our standard of review on a disputed issue of law is whether the decision is erroneous; for a disputed issue of fact, the standard is whether the ALJ decision is supported by substantial evidence in the whole record.

As discussed below, applying the plain language of section 498.40 to the language of Fairview's April 24, 1998 letter, read in context with HCFA's March 12, 1998 determination, we conclude that Fairview filed a legally sufficient and timely hearing request. Further, this case is distinguishable from past cases in part because the requests in past cases made no attempt to meet the requirement of subsection 498.40(b)(2) by stating the basis for contending that HCFA's findings and/or conclusions were incorrect. Accordingly, we reverse the ALJ's dismissal and remand this case for further proceedings.

Applicable Regulatory Provisions and Policies

Pursuant to sections 1819(a)-(d), 1861(l) and 1919(a)-(d) of the Social Security Act, the Secretary’s regulations at 42 C.F.R. Part 483 contain the requirements that an institution must meet in order to qualify to participate as a skilled nursing facility in the Medicare program and as a nursing facility in the Medicaid program. These requirements serve as the basis for survey, certification and enforcement activities, implemented by the regulations at 42 C.F.R. Part 488. The statute and regulations specify remedies that HCFA may impose when a facility is not in compliance with program participation requirements. See Social Security Act, §§ 1819, 1919; 42 C.F.R. Part 488, Subpart F. Under the regulations, a facility may appeal the findings of noncompliance leading to the imposition of an enforcement remedy, but not the choice of remedy. 42 C.F.R. §§ 488.408(g), 498.3(b)(12), 498.3(d)(11). In addition, the facility may appeal the level of noncompliance found by HCFA only if a successful challenge would affect the range of the civil money penalty. 42 C.F.R. §§ 498.3(b)(13), 498.3(d)(10)(ii).

An affected party seeking to challenge a HCFA determination to impose CMPs must file a written request for an ALJ hearing within 60 days from its receipt of the notice of initial, reconsidered, or revised determination. 42 C.F.R. § 498.40(a). Section 498.40(b) specifies that the hearing request must--

Section 498.40(c) provides that the ALJ may extend the time for filing a request for hearing for good cause shown. Under 42 C.F.R. § 498.70(c), the ALJ may dismiss a hearing request entirely or as to any stated issue if the affected party did not timely file a hearing request and the time for filing has not been extended for good cause. Under section 498.71(b), an ALJ dismissal of a hearing request is binding unless it is vacated by the ALJ or the Departmental Appeals Board.

In Birchwood Manor Nursing Center, DAB 1669 (1998), aff’d, Birchwood Manor Nursing Center v. Dep’t of Health and Human Servs., No. 98-60695 (5th Cir. June 29, 1999), Regency Manor Healthcare Center, et al., DAB 1672 (1998), and Care Inn of Gladewater, DAB 1680 (1999), the Board sustained ALJ dismissal orders on the grounds that the petitioners’ letters seeking hearings failed to meet the hearing request content requirements of section 498.40(b). That is, each of the letters failed to identify the specific issues or the findings of fact and conclusions of law with which the petitioners disagreed, as required by 42 C.F.R. § 498.40(b)(1), and/or to specify the basis for contending that the findings and conclusions were incorrect, as required by section 498.40(b)(2). Because section 498.40(b) requires this information, the Board reasoned, it follows that a letter lacking the information does not constitute a request for hearing within the meaning of the regulations. Accordingly, the Board concluded that the petitioners did not file timely hearing requests and dismissal was authorized under 42 C.F.R. § 498.70(c).

Subsequently, in the case of Alden-Princeton Rehabilitation & Health Care Center, Inc., DAB 1709 (1999), the Board determined that while the letter from the appellant facility seeking to challenge a HCFA determination did not meet the content requirements of section 498.40(b), remand of the case was necessary for the ALJ to exercise his discretion whether to dismiss the case under section 498.70(c). Specifically, the Board concluded that the language of section 498.70 gave the ALJ discretion not to dismiss the case based on the particular circumstances surrounding the facially defective hearing request, including whether defects in the request were subsequently remedied by the submission of additional documents, whether HCFA had waived its objection to the request, and whether Alden-Princeton may have reasonably concluded that its request was sufficient based on the course of the proceedings. The Board remanded the case because it appeared that the ALJ did not recognize his discretionary authority.2

The Board’s decision in Alden-Princeton recognized that an ALJ’s review of a request to dismiss a letter as an insufficient hearing request under sections 498.40(b) and 498.70(c) may involve two separate steps. First, it is necessary to determine whether the language of the letter, when read in the context of HCFA’s notice of determination, meets each of the requirements established by the plain language of section 498.40(b). If the letter is timely and both identifies the specific issues and findings of fact and conclusions of law with which the affected party disagrees, and specifies the basis for contending that the findings and conclusions are incorrect, that is the end of the analysis; the request should not be dismissed. If, however, the letter fails to meet one or both criteria of section 498.40(b), it is then necessary for the ALJ to consider whether, based on the particular circumstances presented in the case, he or she should exercise discretion not to dismiss the case in whole or in part under section 498.70(c).

Further, in both Birchwood and Alden-Princeton, the Board noted that it did not conclude lightly that a petitioner has no right to a hearing (that is, that the petitioner was given an opportunity for a hearing and, through its own actions, contrary to clear requirements, failed to take advantage of the opportunity).

ISSUES
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FINDINGS OF FACT AND CONCLUSIONS OF LAW
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Background

By letter dated March 12, 1998, HCFA notified Fairview that it had decided to impose a CMP of $18,200 on the facility based on numerous deficiencies reflected in a series of surveys conducted by the Illinois Department of Public Health (IDPH) on November 18, 1997, 3 December 11, 1997, and January 15, 1998. HCFA's letter assigned the action "Civil Money Penalty Case Number 199805LTC160." Although the notice did not restate all of the deficiencies that supported HCFA's action, it noted that the IDPH had previously advised Fairview of all of the deficiencies and had previously provided Fairview with copies of each survey report (on form HCFA-2567). The notice also stated that revisits to the facility on February 17 and 19, 1998, revealed that Fairview had attained substantial compliance effective February 17, 1998.

HCFA wrote in the March 12, 1998 notice that if Fairview disagreed with the findings of noncompliance resulting in the CMP, it could request a hearing before an ALJ. The procedures governing the process, HCFA noted, were set out at 42 C.F.R. § 498.40, et seq. The notice added that a written request for hearing must be filed within 60 days from Fairview's receipt of the HCFA notice. "A request for hearing," HCFA wrote, "should identify the specific issues and the findings of fact and conclusions of law with which you disagree [and] specify the basis for contending that the findings and conclusions are incorrect." March 12, 1998 HCFA Notice at 3.

On April 24, 1998, Fairview's representative submitted a letter addressed to HCFA which read:

Re: Request for Hearing
Fairview Nursing Plaza
321 Arnold Ave. Rockford, IL
Case No. 1998 05 LTC 160

Dear Ms. Harris:

On behalf of Fairview Nursing Plaza, a hearing is requested in regard to all deficiencies and findings of non-compliance in this matter.

The facility is contesting the findings of fact for each example cited and also the conclusions reached that those findings were a violation of each tag number cited. Scope and Severity are also contested.

The basis for the faFcility's contention is that the findings of fact are inaccurate and that there are additional facts which would negate the conclusions that deficiencies existed.

On May 7, 1998, the ALJ issued a standard order, adopted by all ALJs of the DAB Civil Remedies Division, which set forth additional procedures for the parties to follow. Among other things, the order stated:

2. Within 60 days of this Order, the parties . . . shall confer with one another and file at least one of the following:

A. A joint or unopposed motion to stay proceedings for settlement negotiations . . . or for other good cause shown.

                        OR

B. A notice of issues under 42 C.F.R. § 498.70 ("Dismissal for cause"), 42 C.F.R. § 498.69 ("Dismissal for abandonment"), 42 C.F.R. § 498.78 ("Remand by the administrative law judge"), or any other regulation permitting disposition of the case without reaching the merits of HCFA's determinations.

. . .

                        OR

C. A notice of issues for which summary judgment will be requested

. . .

                        OR

D. A report of the parties' readiness to present evidence for adjudication of the case. . . .

. . .

If the parties have conferred but are unable to agree on the nature or content of the document to be filed within 60 days, then each party shall submit the filing it deems appropriate within the above-specified parameters.

May 7, 1998 ALJ Order at 1-2. Following a stay jointly requested by the parties, HCFA submitted a notice of issues on August 24, 1998, stating that it intended to file a motion and brief for summary judgment on the following two issues: 1) That Fairview "was not in substantial compliance with at least one of the requirements for nursing homes participating in the Medicare program for the 91 day period of November 8, 1997, through February 16, 1998"; and 2) "that Fairview's failure to be in substantial compliance with at least one of the requirements for nursing homes participating in the Medicare program for the 91 day period of November 8, 1997 through February 16, 1998, gave HCFA a basis for imposing a CMP of $18,200 on Fairview and entitles HCFA to summary affirmance of the CMP." HCFA Notice of Issues for Which Summary Judgment Will Be Requested and Statement Opposing Petitioner's Request for Extension of Time at 1.

On November 25, 1998, the ALJ issued an order denying Fairview's motion to strike HCFA's Notice of Issues and denying Fairview's request that the ALJ direct HCFA to respond to Fairview's discovery requests. The ALJ order established a briefing schedule, set forth the allocation of the burden of proof, and stated the issue in the case as follows: "Whether Petitioner was out of compliance with one or more of the requirements for nursing homes participating in the Medicare program during the 91-day period from November 8, 1997 through February 16, 1998." November 25, 1998 ALJ Order at 3.

On December 29, 1998, HCFA submitted a motion to dismiss or, in the alternative, for summary affirmance of the CMP. In its request for dismissal, HCFA argued for the first time that Fairview did not file a legally sufficient and timely hearing request within the meaning of 42 C.F.R. §§ 498.40(b) and 498.70(c).

Responding to HCFA's motion, on January 27, 1999, Fairview argued that its hearing request was sufficient under section 498.40. Fairview also contended that HCFA's challenge to the sufficiency of the request was not timely. Specifically, relying on the sequence of actions set forth in the ALJ's November 25, 1998 order, Fairview submitted that HCFA waived its opportunity to request dismissal under section 498.70(c) once it filed a notice of issues for which it would request summary judgment.

Fairview also filed its own motion for summary judgment on January 27, 1999, in which it contested in detail the factual findings supporting the November 18, 1997 IDPH survey. Fairview argued that if that first survey had not found the facility out of substantial compliance, "there would have been no proposed remedies, . . . no Survey Cycle would have begun at all, and therefore HCFA could not have imposed any CMP." Fairview Motion for Summary Judgment at 8.

ANALYSIS
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Discussion

On July 8, 1999, the ALJ determined that Fairview's April 24, 1998 letter did not meet the requirements of section 498.40(b) on any issue. The ALJ reasoned that the language in Fairview's letter was "too broad to meaningfully put at issue whether it was in substantial compliance with program requirements," and "failed to meaningfully identify in an informative manner the issues it wishe[d] to pursue at hearing." ALJ Decision at 6. The ALJ also concluded that by employing the sweeping language used in its hearing request, Fairview essentially asserted "that HCFA and [the ALJ] should proceed to hearing on the assumption that [Fairview] will litigate every fact concerning all deficiencies and findings of noncompliance on every survey report . . . ." Id. at 7. "Such approach," the ALJ wrote, was neither realistic nor "countenanced by the regulations." Id. The ALJ also wrote that Fairview's motion for summary judgment, which addressed only the deficiencies in the first survey, showed that the request was overly generalized. 4

CONCLUSION
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For the reasons discussed below, we conclude that the ALJ erred in determining that Fairview's April 24, 1998 letter did not constitute a legally sufficient and timely hearing request under the governing regulations. Applying the plain language of 42 C.F.R. § 498.40(b) to the wording of Fairview's April 24, 1998 letter, in context with HCFA's March 12, 1998 notice, we conclude that the letter provided sufficient detail to meet both of the hearing request content requirements set forth in the regulation. That is, Fairview identified the issues, findings and conclusions in HCFA's determination with which it disagreed and it specified the basis for its contentions. Because the letter was filed within 60 days of Fairview's receipt of HCFA's notice of determination, as required by 42 C.F.R. § 498.40(a), Fairview availed itself of the opportunity for an ALJ hearing to challenge HCFA's action.

First, we conclude that Fairview's April 24, 1998 hearing request satisfied the requirement of section 498.40(b)(1) because it identified the specific issues, findings of fact and conclusions of law with which the facility disagreed. Citing the civil money penalty case number assigned by HCFA as the subject of the letter, Fairview wrote that its hearing request involved "all deficiencies and findings of non-compliance in this matter." (Emphasis added.) By referencing the appropriate case number assigned to the CMP determination and using the word "all," Fairview made clear that it intended to contest each and every deficiency and non-compliance finding that HCFA relied on to support its March 12, 1998 action. Those findings were set forth in the series of survey reports that HCFA itself alluded to, but did not individually repeat, in the March 12, 1998 notice of imposition of remedy. Further, while many of the deficiencies cited in the surveys were supported by series of examples and numerous factual allegations, Fairview went on to specify that of those examples and allegations it intended to challenge "the findings of fact for each example cited . . . . " (Emphasis added.) By using the word "each," Fairview sufficiently identified all of the facts in all of the examples supporting the deficiency findings as the subject of its appeal.

Moreover, by stating that it also sought to contest "the conclusions reached that those findings were a violation of each tag number,"5 Fairview adequately identified the conclusions of law with which it disagreed: the determinations reflected in the survey reports that Fairview had violated the regulatory participation requirement corresponding to the tag. Fairview further wrote that it intended to contest HCFA's determination about the scope and severity of the alleged violations. In sum, Fairview's hearing request sufficiently identified the specific findings of fact and conclusions of law underlying HCFA's action with which it disagreed, satisfying the requirement of subsection 498.40(b)(1).

We further conclude that Fairview's April 24, 1998 letter satisfied the requirement of section 498.40(b)(2) because it specified a basis on which Fairview intended to rely to support its contentions. That is, the letter unambiguously stated that Fairview intended to challenge HCFA's action on factual grounds -- by showing that each of the findings of fact in the examples supporting the deficiencies was inaccurate and that there were additional facts which would negate the conclusions that deficiencies existed. Because subsection 498.40(b)(2) states only that a petitioner must specify "the basis" for its contentions, we conclude that the general rationale provided by Fairview met the letter of the Secretary's rule. We recognize that HCFA might have preferred if Fairview had stated, for each finding of fact, exactly how it was inaccurate and what additional facts would negate the conclusion. The wording of the regulation, however, does not give sufficient notice that this is required.

HCFA argued before us that the ALJ correctly determined that Fairview's April 24, 1998 letter "was too 'abbreviated' and 'generalized' to comply with 42 C.F.R. § 498.40(b)," and that the language used by Fairview was "too broad to meaningfully put at issue whether it was in substantial compliance with program requirements." 6 HCFA Response to Petitioner's Notice of Appeal and Brief in Support Thereof at 15, quoting ALJ Decision at 6.

While Fairview indeed used broad terms, "all" and "each," to convey that it intended to challenge the numerous findings and conclusions that HCFA relied on to impose the CMP, those terms were neither ambiguous nor so generalized as to be meaningless, as the ALJ concluded. To the contrary, Fairview made clear by its use of these terms, together with its reference to the CMP case number, that it wished to appeal each factual finding in every example supporting the deficiencies on which HCFA relied. Further, although HCFA indicated that the regulation required Fairview to itemize these findings, refer in detail to HCFA's notice, and describe the surveys and the CMP in its hearing request, the plain language of section 498.40(b)(1) does not mandate such itemization or detail. Rather, stating only that the hearing request must "identify the specific issues and the findings of fact and conclusions of law" with which the facility disagrees, the regulation leaves to the facility the choice of the format and language it may use to satisfy the requirement. While describing the content of HCFA's notice in precise detail, referencing the surveys conducted by date and type, and repeating each and every factual allegation in the survey reports in the hearing request would have satisfied the requirement of section 498.40(b)(1), the regulation does not require such detail and itemization where fewer words effectively convey the same meaning. In this case, itemization of the factual allegations and program participation requirements listed in the surveys would have provided no more meaningful information about the subject of Fairview's appeal than the language actually used in the request.

HCFA also argued that Fairview's April 24, 1998 hearing request was no more specific than the deficient requests submitted in the Birchwood, Regency, Care Inn and Alden-Princeton cases. We disagree. Unlike the requests presented in those cases, Fairview's April 24, 1998 letter unambiguously stated that the facility intended to challenge each and every factual allegation supporting the deficiency findings that HCFA relied on to impose the CMP. Moreover, unlike Fairview's hearing request, the requests in the earlier cases wholly failed to set forth any basis for the facilities' contentions that HCFA's findings and conclusions were incorrect, as required by section 498.40(b)(2).

HCFA further argued, relying on the ALJ Decision, that Fairview's attempt to put into issue all of the deficiencies and findings of noncompliance on which HCFA relied was neither "realistic" nor "countenanced by the regulations." HCFA Response to Petitioner's Notice of Appeal and Brief in Support Thereof at 16, quoting ALJ Decision at 6. Citing the ALJ decision as well as the Board decision in Care Inn, HCFA contended that such a "kitchen sink" approach would have required HCFA and the ALJ to prepare for a hearing involving every deficiency cited on every survey report. Id. Further, HCFA wrote, Fairview's summary judgment motion revealed that the facility did not really intend to put all of the facts in issue since the motion addressed only the noncompliance findings in the first survey report. Id.

We reject these contentions. We find nothing in the language of section 498.40 that would prohibit a facility from challenging all of the factual findings that HCFA itself relied on to calculate and impose the CMP. To the contrary, as noted earlier, while the regulations do not allow a facility to appeal the choice of remedy, they explicitly provide for the facility to appeal the findings of noncompliance leading to the imposition of the remedy. 42 C.F.R. §§ 488.408(g), 498.3(b)(12) and 498.3(d)(11). Moreover, we find it antithetical for HCFA to argue that the Secretary's rules would constrain a facility from defending itself against all of the deficiencies and factual allegations relied on by the agency to impose the remedy where, as here, HCFA itself posited that it was entitled to summary affirmance of the CMP on the ground that the facility failed "to be in substantial compliance with at least one of the requirements" for participating nursing facilities (emphasis added). HCFA Notice of Issues for Which Summary Judgment Will Be Requested at 1. In other words, based on HCFA's own position that any single deficiency cited would have alone supported the imposition of the CMP, it may be necessary for Fairview to challenge each and every noncompliance finding in order to avoid summary affirmance.

Furthermore, while it is true that Fairview's hearing request may have required HCFA and the ALJ to prepare for a hearing involving all of the deficiency findings, we would not label Fairview's challenge a "kitchen sink" approach because the hearing request did narrow the issues. That is, by stating that it was challenging HCFA's action on the basis of factual error, Fairview indicated that it was not raising, for example, an issue about whether HCFA failed to follow proper survey procedures.

The ALJ said that Fairview's letter did not "meaningfully identify in an informative manner the issues it wishe[d] to pursue at a hearing," citing the Board's statement in Birchwood that, if an ALJ "were to accept as a hearing request a document that did not comply with section 498.40(b), this might deprive HCFA of the opportunity to prepare adequately for a hearing [and] the ALJ might not be able to rule correctly on the relevance of evidence . . . ." ALJ Decision at 6, quoting Birchwood at 10-11. In this statement, the Board was describing the effects of a non-complying document, however, not setting out additional requirements that must be met in order for a request to comply with the regulation.7

Finally, we reject HCFA's assertion that because Fairview's motion for summary judgment specifically addressed only the first survey, it showed that Fairview did not truly intend to challenge all of the factual findings supporting the CMP. Fairview argued in its summary judgment motion that if the first survey had not found the facility out of substantial compliance, there would have been no survey cycle and no CMP. Nothing in the motion, however, indicated that Fairview intended to abandon its opportunity to contest the remaining surveys in further proceedings if the ALJ rejected the summary judgment motion.

JUDGE
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/S/ Donald F. Garrett

/S/ Judith A. Ballard

/S/ Cecilia Sparks Ford
Presiding Board Member



FOOTNOTES
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1 Fairview requested the opportunity to present oral argument in this appeal, while HCFA argued, at the time it filed its Response brief, that it did not consider oral argument necessary. Although oral argument was tentatively scheduled to take place during the week of January 17th, 2000, the Board has determined that oral argument is not necessary, since the requesting party has prevailed on the written submissions.

2 The Board issued the Alden-Princeton decision after Fairview had filed its request for review of the ALJ's dismissal. The Presiding Board Member in this case sent copies of the Alden-Princeton decision to the parties on November 8, 1999, and directed them to provide comments to the Board on its applicability in their subsequent submissions. In light of our conclusion that Fairview's hearing request was legally sufficient under section 498.40, we need not reach the question whether, as in Alden-Princeton, the ALJ erred in failing to consider if the particular circumstances in this case warranted a determination not to dismiss the request for hearing.

3 While the first survey was conducted on November 18, 1997, the Notice of Imposition of Remedies included typographical errors stating that HCFA was imposing the CMP effective November 8. HCFA's subsequent submissions below at times repeated the erroneous date, as did the ALJ's November 25, 1998 Order.

4 Notwithstanding this statement, the ALJ concluded that he need not rule on Fairview's summary judgment motion, having determined that the case should be dismissed under sections 498.40(b) and 498.70(c). Fairview argued on appeal that the ALJ should have granted its request for summary judgment. Because we determine that remand is necessary, the ALJ may consider Fairview's summary judgment motion in the course of further proceedings below.

5 Deficiencies are listed in survey reports under headings designated as "tags," each of which corresponds to a requirement of participation in the regulations.

6 HCFA also contended that the ALJ correctly right to file a motion to dismiss. Because we conclude that Fairview's April 24, 1998 letter constituted a legally sufficient request for hearing under section 498.40(b), we need not reach the question whether HCFA waived its opportunity to contest the sufficiency of the hearing request and the effect of any such waiver.

7 We do not, however, mean to imply that an ALJ may not order further development of the case prior to hearing, as is provided for under 42 C.F.R. §§ 498.47, 498.48, 498.49, 498.58 and 498.60(b)(2). In fact, subsection D of the ALJ's May 7, 1998 Order, at least in part, advances this purpose.



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