SUBJECT:

The Lutheran Home - Caledonia,

Petitioner,

Health Care Financing Administration

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

The Lutheran Home - Caledonia (Lutheran Home) appealed a June 1, 2000 decision by Administrative Law Judge (ALJ) Mimi Hwang Leahy to dismiss its request for hearing based on her determination that Lutheran Home had no right to a hearing under the applicable regulations at 42 C.F.R. Part 498. See Lutheran Home - Caledonia, DAB CR674 (2000) (ALJ Decision). Lutheran Home had requested an evidentiary hearing before the ALJ to challenge the survey findings that led the Health Care Financing Administration (HCFA) to impose the remedy of a civil money penalty (CMP) of $127,450. While the case was pending before the ALJ, HCFA reduced the CMP to zero. HCFA then submitted a motion to dismiss Lutheran Home's appeal, asserting that the reduction of the CMP to zero resulted in no money being sought from Lutheran Home, leaving Lutheran Home with no appealable remedy of any kind.

In granting HCFA's motion, the ALJ made 10 findings of fact and conclusions of law (FFCLs). The ALJ found that HCFA's reduction of the CMP to zero was tantamount to the recission of the CMP remedy, with the result that Lutheran Home no longer had any right to an administrative hearing under 42 C.F.R. § 498.3(b)(12) or (13).

The ALJ Decision contains a full discussion of the background, which we summarize here. ALJ Decision at 1 - 3. By letter dated August 21, 1998, HCFA notified Lutheran Home that, as a result of a survey which found a pattern of deficiencies at the facility that constituted immediate jeopardy, it was imposing remedies against Lutheran Home that included a denial of payment for new admissions and a CMP of $5,000 per day from July 20, 1998 through August 13, 1998, and $350 per day from August 14, 1998 until the facility attained substantial compliance. HCFA Attachment (Att.) 1. On October 23, 1998, Lutheran Home appealed HCFA's determination and requested a hearing before an ALJ. HCFA Att. 2. On December 8, 1998, HCFA notified Lutheran Home that a revisit of the facility by Minnesota Department of Health (Department) on September 2, 1998, found that Lutheran Home was in substantial compliance with participation requirements effective August 21, 1998, with the result that the remedy of denial of payment for new admissions was rescinded and that no CMP would be imposed after August 20, 1998. HCFA Att. 3. After the Department had requested a review of the imposition of CMPs in cases related to restraint usage, HCFA informed Lutheran Home on May 18, 1999, that it was reducing the CMP to "$0.00 per day." HCFA Att. 4.

Lutheran Home took exception to the following FFCLs made by the ALJ:

8. As a matter of law, HCFA's reduction of the CMP to zero nullified the existence of a CMP remedy.

9. As a matter of law, HCFA's reduction of the CMP to zero has the same effect as a decision to rescind a previously imposed CMP enforcement remedy.

10. Petitioner no longer has any right to an administrative hearing under 42 C.F.R. § 498.3(b)(12) or (13).

The record here includes the record before the ALJ, the ALJ Decision, and the parties' briefs on appeal. Our standard of review on a disputed conclusion of law is whether the ALJ Decision is erroneous. Our standard of review on a disputed finding of fact is whether the ALJ Decision is supported by substantial evidence on the record as a whole. Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs; see also Hillman Rehabilitation Center, DAB No. 1611 at 6 (1997), aff'd, Hillman Rehabilitation Center v. U.S. Dept. of Health and Human Services, No. 98-3789 at 21-38 (D.N.J. May 13, 1999).

On appeal, Lutheran Home maintained that the ALJ erred in equating the reduction of its CMP to a rescission. We find that all the arguments advanced by Lutheran Home, save one discussed immediately below, were addressed by the ALJ in her decision. We conclude that the ALJ's conclusions are not erroneous and previous Board decisions support the ALJ's conclusion that there is a right to a hearing before an ALJ as specified in 42 C.F.R. Part 498 only for remedies specified in 42 C.F.R. § 488.406. See, e.g., Schowalter Villa, DAB No. 1688 (1999) (rescission of remedies of a CMP and a denial of payment for new admissions); Country Club Center II, DAB No. 1614 (1997) (loss of nurse aid training); and Arcadia Acres, Inc., DAB No. 1607 (1997) (revocation of a remedy of denial of payment for new admissions).

On appeal, however, Lutheran Home additionally contended that the ALJ Decision failed to address its arguments concerning an April 16, 1999 letter from HCFA to the Department. HCFA Att. 5. In that letter HCFA responded to the Department's request that CMPs imposed for immediate jeopardy situations due to restraint-related deficiencies at 14 skilled nursing facilities be rescinded. HCFA stated its intent to rescind the CMP for nine facilities, but added that it was not appropriate to rescind the CMP for the five remaining facilities, including Lutheran Home, where other deficiencies existed that included other substandard quality of care concerns. HCFA stated in that letter, however, that it would reduce the CMP for Lutheran Home to zero in consideration of its "prior compliance history and its financial condition." Id. at 2.

Lutheran Home argued that the ALJ's finding that there was in effect no difference between a reduction of a CMP to zero and a rescission was refuted by HCFA's own words in the April 16^th letter, which showed that HCFA recognized a distinction between rescission of a CMP and the reduction of a CMP to zero. Thus, Lutheran Home argued, the conclusion to be drawn was that HCFA thought that it still was imposing a remedy against Lutheran Home.

While the ALJ did not specifically address the April 16^th letter in her decision, she nevertheless answered the argument that Lutheran Home advanced here as arising from that letter. The ALJ noted, citing the preamble to the final rule promulgating 42 C.F.R. § 498.3(b)(12), that findings of deficiencies in themselves are not appealable if no remedies are imposed. ALJ Decision at 6. This reading of the regulations is consistent with prior Board decisions. In Schowalter Villa, supra, the Board quoted with approval from the appealed ALJ decision:

[T]here exists no hearing right if HCFA has not imposed one of the remedies specifically listed in 42 C.F.R. § 488.406 . . . a facility does not have a right to correct its compliance record through the hearing process provided by 42 C.F.R. Part 498 if none of the remedies listed in 42 C.F.R. § 488.406 has been imposed by HCFA (or if they had been rescinded by HCFA).

At 2 - 3.

Moreover, the ALJ properly noted that a CMP must have a corresponding dollar amount and that all the regulatory references to the imposition of a CMP refer to various dollar amounts. ALJ Decision at 13. Once HCFA acted to reduce the CMP to "$0.00 per day," there was no longer a CMP imposed on Lutheran Home. Thus, reducing a CMP to zero has the same effect as the rescission of a CMP for purposes of 42 C.F.R. § 498.3(b)(12).

The ALJ rejected any argument that HCFA's failure to "rescind" the CMP in its May 18^th letter reducing the CMP had any significance, noting numerous instances where other words negating the imposition of a remedy had been used. ALJ Decision at 12.

Rather, the ALJ examined the significance of HCFA's action to reduce the CMP amount as bearing on whether an appealable determination continued to exist. We agree that as a matter of law no CMP remedy remained once HCFA had reduced the amount to zero. ALJ Decision at 14.

Based on our review of the record before us, we therefore conclude that there is no error of fact or law in the ALJ Decision. Accordingly, we summarily affirm the ALJ Decision in its entirety. In doing so, we affirm and adopt each FFCL.

Cecilia Sparks Ford

Donald F. Garrett

M. Terry Johnson
Presiding Board Member