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CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
IN THE CASE OF  


SUBJECT:

Cary Health and Rehabilitation Center,

Petitioner,

DATE: March 15, 2001
                                          
             - v -

 

Health Care Financing Administration

 

Civil Remedies CR685 Docket No. A-2000-110
Decision No. 1771
DECISION
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FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Cary Health and Rehabilitation Center (Cary) appealed the decision of Administrative Law Judge (ALJ) Steven T. Kessel dismissing Cary's request for a hearing. Cary Health and Rehabilitation Center, DAB CR685 (July 18, 2000) (ALJ Decision). The ALJ held that Cary failed to file a timely hearing request and did not show good cause for its failure. In his decision, the ALJ also denied Cary's motion for extended time in which to file a hearing request. For the reasons explained below, we uphold the ALJ decision.

Factual Background

With one exception, the pertinent facts are not in dispute. Cary is a long-term care facility located in Cary, North Carolina that underwent a series of survey visits by the State survey agency. The survey visits in turn resulted in a series of communications from both the State survey agency and HCFA to Cary informing Cary of the consequences of the survey findings. The issues before us center on the effect of these communications on determining the period(s) during which Cary had a right to appeal HCFA's actions, so we provide some detail about the timing and contents of these communications.

The initial survey was both a standard (routine) survey and a response to a complaint and ended on January 7, 1999. The surveyors found that Cary was not in substantial compliance with several participation requirements. Five deficiencies were cited, the most serious being rated at what HCFA terms level G, which is shorthand for an assessment that the deficiency is isolated but has caused actual harm (short of immediate jeopardy). See generally Section 7400 of HCFA's State Operations Manual. This survey resulted in a State agency letter dated January 22, 1999, conveying the surveyors' report and notifying Cary that the State agency would recommend to HCFA that a civil money penalty (CMP) be imposed beginning on January 7th, unless Cary achieved substantial compliance by February 11th.(1) The State's January 22nd letter also advised Cary that it must file a plan of correction (PoC) within ten days and warned that, unless substantial compliance was achieved, a denial of payment for new admissions (DPNA) must be imposed after three months and Cary's provider agreement must be terminated after six months.

Cary submitted a PoC and a credible allegation that it had achieved compliance by February 11th. The State performed its first revisit (combined with a complaint investigation and follow up of the January complaint investigation results) on March 5th. The surveyors found continued noncompliance, with six deficiencies, the most serious again at the G level. The State sent another letter dated March 19, 1999 reporting these results and explaining that the State would now impose the remedy of directed in-service training effective April 8, 1999. Cary Ex. 1, at 1. In addition, the March 19th letter stated that, if Cary did not achieve substantial compliance by April 4, 1999, the State would recommend that HCFA impose a CMP of $100 per day beginning March 5, 1999. The letter also reiterated that if Cary did not achieve substantial compliance within three months after the last day of the survey identifying noncompliance, then HCFA would have to deny payments for new admissions. Id.(2)

A letter from HCFA followed, dated March 24, 1999. HCFA Ex. A. Much of the dispute before us centers on the significance to be given to the content of this notice. The letter recited the history above of a survey on January 7th, a State letter of January 22nd setting out remedies to be recommended if compliance was still not attained by February 11th, and a revisit on March 5th finding continued noncompliance. The salient text then reads as follows:

Recommended Remedies

  • Civil monetary penalty of $100.00 - $3,000.00 per day effective January 7, 1999.

Mandatory Remedies

If you do not achieve substantial compliance within 3 months after the last day of the survey which identified noncompliance, January 7, 1999, the remedy of denial of payment for new admissions must be imposed. Furthermore, if you do not achieve substantial compliance within 6 months after the last day of the survey, your Medicare and Medicaid provider agreements must be terminated.

* * *

Remedies Imposed

Because you did not correct deficiencies as you alleged, the following remedies will be imposed, effective on the dates indicated:

  • Directed in-service training effective April 8, 1999;


  • Denial of payment for new admissions, effective April 8, 1999.

Id. at 1-2 (underlining in original; bold emphasis added). HCFA's letter informed Cary that, if it disagreed with the determination, it had a right to request an ALJ hearing, and instructed Cary that such a request must be filed in writing "no later than sixty days of receipt of this letter." Id. at 3.

There ensued two more revisits in late April and late June, each finding that Cary had not yet achieved substantial compliance. HCFA sent a letter dated June 14th, relating to the April 26-27 revisit. HCFA Ex. B, at 2. The corresponding section on mandatory remedies states that termination will be mandatory if substantial compliance is not achieved within six months of the original survey. Id. at 2. The section on "remedies imposed" states that the "remedies imposed in the enclosed letter of March 24, 1999 continue." In addition, a CMP of $100 per day would now be imposed effective January 7, 1999, to be collected after compliance or termination and after any requested hearing. Id. at 2-3. HCFA informed Cary that it could appeal this determination within 60 days of the June 14th letter. Id. at 3. A third HCFA letter, dated June 30, 1999, following the June 27th revisit survey, stated that the CMP continues to accrue and Cary's provider agreement will terminate on July 18, 1999, since Cary had not achieved substantial compliance. HCFA Ex. C.

Finally, a fourth revisit on July 16, 1999 found substantial compliance had been achieved as of June 30th. As a consequence, HCFA notified Cary that its provider agreement would be continued, the termination would be canceled, the DPNA which took effect April 8, 1999 was lifted, and a collection letter for the final total CMP would be issued shortly. HCFA Ex. D. The letter imposed no new remedies and contained no new statement of appeal rights.

Cary participated in an informal dispute resolution (IDR) process provided by the State survey agency to challenge the factual findings resulting from the April 26-27 revisit. Cary Ex. 10. That IDR resulted in a conclusion letter dated July 13, 1999, recommending deletion of one deficiency and upholding of three others at the cited level of scope and severity, but deletion of some supporting findings. Id.

On August 31, 1999, Cary filed a request for an ALJ hearing. HCFA Ex. E. Cary stated that it took issue with three deficiency findings (out of six) from the March 5th survey, three (originally four, but one deficiency finding was deleted during the IDR process) from the April 27th revisit, and three (out of five) from the June 29th revisit. Id. at 1-2. As to each of these, Cary complained that the findings and the scope and severity assessments were wrong and unsupported and that the survey team did not follow proper procedures. Id. Cary asserted that the CMP and DPNA are not supported because Cary was in substantial compliance as of each of the three revisits. Id. The request makes no statement about the deficiency findings of January 7th, but during the proceedings below counsel for Cary asserted that it intended to challenge those findings as well. See Petitioner's Readiness Report, dated March 16, 2000, and amendment thereto, dated June 5, 2000; HCFA Br. at 6.

Applicable Law

The survey and enforcement scheme for long-term care facilities is set forth in Sections 1819(g) and (h) of the Social Security Act (Act), and makes states responsible for conducting surveys of facilities and certifying compliance with the participation requirements. Act, § 1819(g). If a state finds that a facility is not in compliance, the state may recommend that the Secretary impose a remedy. Act, § 1819(h)(1). In the case of immediate jeopardy, the law requires the Secretary to take immediate action to remove the jeopardy or to terminate the facility's participation. Act, § 1819(h)(2)(A)(i). In cases which do not constitute immediate jeopardy, the Act provides that the Secretary may choose to impose alternative remedies short of termination to assure compliance. Act, §§ 1819(h)(2)(A)(ii) and 1819(h)(2)(B). Among the remedies which the Secretary may impose are denial of payment (either as to all beneficiaries in the facility or as to those admitted after the date of the noncompliance findings) and CMPs. Id. However, regardless of the remedies initially imposed, if compliance is not achieved within three months, the Secretary must impose a DPNA. Act, § 1819(h)(2)(D). Furthermore, the Secretary may not continue any payments to a facility for more than six months after findings of noncompliance unless substantial compliance is demonstrated. Act, § 1819(h)(2)(C).

The Secretary's regulations implementing the survey and enforcement provisions provide that when a facility is not in substantial compliance but its deficiencies do not constitute immediate jeopardy, HCFA "may terminate the facility's provider agreement or may allow the facility to continue to participate" for up to six months (if required conditions are met). 42 C.F.R. Part 488, Subparts E and F; see also 59 Fed. Reg. 56,115 (Nov. 10, 1994). The regulations set out alternative remedies which may be imposed, instead of or in addition to termination, and provide criteria for their application depending on the seriousness of the noncompliance.

The Act provides a right to a hearing for providers dissatisfied with the Secretary's determination to terminate a provider agreement for failure to comply substantially with applicable requirements after reasonable notice "to the same extent as is provided in section 205(b)". Section 1866(h)(1) of the Act; see sections 1866(b)(2), 1861, and 1819(a) of the Act. Section 205(b) of the Act, referenced in section 1866(h)(1), describes appeal rights for on-the-record hearings on adverse disability determinations. Among other things, it states that the Secretary must provide reasonable notice of the decision and an opportunity for a hearing, which must be requested "within sixty days after notice of such decision is received by the individual making such request." Section 205(b).

HCFA's regulations provide, in pertinent part, that "[a]n affected party entitled to a hearing under § 498.5 may file a request for hearing with HCFA . . . ." 42 C.F.R. § 498.40(a)(1). Further, the affected party "must file the request in writing within 60 days from receipt of the notice of initial, reconsidered, or revised determination unless that period is extended in accordance with paragraph (c) of this section." Id. at 498.40(a)(2). Paragraph (c) provides that an affected party that has not filed its request within the 60-day period may seek an extension from the ALJ, who may extend the time for "good cause shown." The date of receipt of the notice triggering the 60-day period is determined in accordance with § 498.22(b)(3), which provides that the "date of receipt will be presumed to be five days after the date on the notice unless there is a showing that it was, in fact, received earlier or later." 42 C.F.R. § 498.40(a)(2), incorporating 42 C.F.R. § 498.22(b)(3).

Section 498.5, in turn, sets out appeal rights applicable to various kinds of affected parties. Specifically, among the affected parties is a provider "dissatisfied with an initial determination to terminate its provider agreement . . . ." 42 C.F.R. § 498.5(b). The right to appeal noncompliance findings leading to the imposition of a DPNA is not expressly set out in either the Act or the regulation at section 498.5. However, section 498.3 provides that certain initial determinations also lead to hearing rights under section 498.5, including "a finding of noncompliance . . . that results in the imposition of a remedy specified in § 488.406 . . . ." 42 C.F.R. § 498.3(b)(12). A DPNA is among the remedies specified in section 488.406. 42 C.F.R. § 488.406(a)(2)(i)(A). A further provision in the regulation on HCFA's selection of remedies states that a facility "may appeal a certification of noncompliance leading to an enforcement remedy," but "may not appeal the choice of remedy . . . ." 42 C.F.R. § 488.408(g).

Cary's Arguments

Cary asked us to reverse the ALJ's dismissal and instead enter summary disposition in Cary's favor. Cary argued specifically that the dismissal should be reversed because Cary's appeal was not untimely. In support, Cary contended that the requirement to request a hearing within 60 days of receipt of the determination does not apply to initial determinations to impose DPNAs.

In addition, Cary contended that it was entitled to summary disposition because the determination imposing a DPNA was void, due to three alleged inadequacies in the March 24, 1999 letter imposing it. Cary Br. at 1-2. First, Cary argued that the letter failed to provide 15 days' notice in advance of the effective date, as required by section 488.402(f)(4). Id. The foreshortened notice period, according to Cary, must be treated as invalidating any effect from the determination or at least tolling the appeal period. Second, Cary interpreted the regulations to require the 15 days' notice to be provided only after the "triggering event," which Cary defined as a finding of failure to achieve substantial compliance made three months after the last day of a survey originally finding noncompliance. Id. at 2. On that basis, Cary argued, the purported notification in the letter was ineffective because it was premature. Id. Third, Cary argued that the letter did not contain all necessary elements under section 488.402(f)(1) and was merely "conditional" in its phrasing, and so again was ineffective to actually impose a remedy. Id.

Finally, Cary contended that, even if we were to find that the 60-day appeal period applied to DPNAs and even if the notice was not defective enough to void HCFA's determination or toll the appeal period, Cary showed good cause to justify permitting it to file late. Cary argued the ALJ abused his discretion in denying that request. As evidence of good cause for its late filing, Cary repeated much of its argument about defects in the March 24th notice, this time from the viewpoint that Cary was, even if wrong, understandably misled or confused.

Standard of Review

Our standard of review on appeal of a disputed issue of law from an ALJ decision is whether the initial decision is erroneous. See, e.g., Lake Cook Terrace Nursing Center, DAB No. 1745 (2000). The standard of appellate review of an ALJ's exercise of discretion to dismiss a hearing request, where such dismissal is authorized by law, is whether the discretion has been abused. Osceola Nursing and Rehabilitation Center, DAB No. 1708, at 2 (1999); cf. Rulings on Request for Removal of Hearing to Board, Rehabilitation & Healthcare Center of Tampa, Appellate Division Docket No. A-99-95 (August 16, 1999) and Four States Care Center, Appellate Division Docket No. A-99-66 (June 7, 1999) (regulation specifying that an ALJ "may" dismiss means ALJ has discretion to determine whether dismissal is appropriate based on the circumstances of the case) attached to Lakewood Plaza Nursing Center, DAB No. 1767 (2001).

ANALYSIS
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1. An appeal from a HCFA determination imposing a DPNA must be filed within 60 days of receipt of the determination.

Cary argued that the 60-day period for requesting a hearing set out in 42 C.F.R. § 498.40(a)(2) does not apply to appeal of a determination resulting in a DPNA. Since section 498.40(a)(2) states that it applies to requests filed by "[a]n affected party entitled to a hearing under § 498.5", Cary reasoned that it did not apply to initial determinations to impose DPNAs, because those arise under section 488.408(g)(1), not under section 498.5. Cary Br. at 17-20.

The ALJ rejected Cary's position and concluded that the 60-day time limit applied to its hearing request. ALJ Decision at 7-8. He based this conclusion on section 498.3 which states, in relevant part, that "this part [i.e., Part 498] sets forth procedures for reviewing initial determinations which HCFA makes with respect to matters specified in paragraph (b)," including "[w]ith respect to a SNF or NF, a finding of noncompliance that results in the imposition of a remedy specified in § 488.406" which, in turn, includes DPNAs. 42 C.F.R. § 498.3(a); 42 C.F.R. § 498.3(b)(11). The ALJ found it evident that this regulation creates appeal rights under section 498.5 for appeals of initial determinations to impose a DPNA. ALJ Decision at 8. Reading these provisions together, along with the structure of Part 498 as a whole establishing a full set of procedures for hearings on HCFA determinations, the ALJ determined that the Secretary intended all hearing requests made by facilities challenging deficiency findings to be made pursuant to Part 498 procedures, necessarily including the 60-day time limit of section 498.40. ALJ Decision at 8, citing 42 C.F.R. § 498.1.

We agree, and find that this result is further supported by statutory analysis and policy considerations. Cary's position ignores the statutory context (set out in more detail above). While the Act does not expressly define the scope of appeal rights from alternative remedies short of termination, HCFA has treated providers dissatisfied with determinations of noncompliance that result in imposition of such alternative remedies (such as DPNAs) as affected parties entitled to appeal rights consistent with those set out in sections 1866(b)(2) and 1866(h) of the Act. The statutory hearing rights thus extended by HCFA to facilities affected by initial determinations resulting in the imposition of alternative remedies provide for following the administrative process described in section 205(b) of the Act, as applied to Medicare providers through section 1866(h) of the Act. In other words, if Cary has a hearing right, it is a hearing right ultimately available to the extent provided in section 205(b), and that section provides only for hearings requested within 60 days of receipt of the decision appealed. Hence, the 60-day time limit is a statutory, not merely a regulatory, creature.

Furthermore, the interpretation suggested by Cary would lead to the absurd policy result that no time limit at all applies to appeals of DPNAs (or other alternative remedies other than CMPs), whereas the time for appealing the more drastic action of termination is limited to 60 days from notification.(3) Given the implausibility of such an intention on the part of the Secretary, we would be reluctant to read it into the regulations absent a clear and express provision to that effect. We find no such provision and much to the contrary, as discussed above.

Therefore, we find no error in the ALJ's conclusion that Cary was required to request a hearing within 60 days of its receipt of HCFA's notice that a DPNA was being imposed.

2. Cary failed to prove that the notice it received was so defective as to toll the time for filing a hearing request or to void the determination made by HCFA.

a. The ALJ finding that Cary received the notice by fax on March 24, 1999 is not supported by substantial evidence.

Cary argued that the 60-day appeal period, even if applicable, could not have been started by HCFA's March 24, 1999 letter, because that notice was made null and void by HCFA's failure to perfect delivery 15 days before the scheduled effective date. The regulation on which Cary relied provides that, with exceptions not relevant to this issue, "notice must be given at least 15 calendar days before the effective date of the enforcement action in situations in which there is no immediate jeopardy." 42 C.F.R. § 498.402(f)(4). The ALJ rejected the factual premise of Cary's argument (i.e., that the notice was not received 15 days before the stated effective date), and hence did not reach the legal issue of the effect of receipt of notice less than 15 days before the asserted effective date of a remedy. We discuss here why we conclude that receipt must be presumed to have occurred on March 29th, which is only ten days before the effective date for the DPNA set in the letter at April 8th. We discuss later the legal effect of the five-day difference.

HCFA asserted that a copy of the March 24th notice letter was faxed to and received by Cary the same day that it was issued, and thus the DPNA was properly imposed effective April 8th, providing 15 days notice. HCFA Br. at 11. The ALJ stated that Cary "does not deny that it received the fax on that date," and therefore found that Cary received full notice. ALJ Decision at 6. Before us, Cary challenged the factual basis of this finding, and insisted that it had indeed disputed receipt of the fax. Cary Br. at 22. We find that the record below does not contain substantial evidence to support the ALJ's finding that Cary did not challenge HCFA's assertion about fax delivery.(4)

Cary asserted, on page five of its brief for summary disposition before the ALJ, that the March 24th notice letter "was sent by regular mail," and that Cary "did not receive this letter until a few days following March 24th." Cary also argued there that, based on the regulatory presumption of five days for mail delivery, it received notice only 10 rather than 15 days before the DPNA went into effect. Cary submitted in support a declaration from its administrator stating that her files contained a copy of the March 24th letter sent by regular mail, which had "no fax markings" and no indication "on the letter that it was faxed." Cary Ex. 4, at 1. She further averred that "Cary Health has no other copies of this letter indicating that it was faxed to Cary Health by HCFA." Id. On appeal, Cary asserted that it "absolutely denies" receiving a copy by fax on March 24, 1999. Cary Br. at 22 (emphasis in original). HCFA submitted a fax cover sheet addressed to Cary and showing a date of March 24, 1999 and a time of 4:55 p.m. HCFA Ex. F. HCFA acknowledged that it could not find any record confirming Cary's receipt of the fax. HCFA Br. at 12, n.4. HCFA argued that Cary had not "explicitly" denied fax receipt, but had merely "asserted that its records lacked evidence of receipt." HCFA Br. at 12. The ALJ apparently shared this interpretation of Cary's declaration and concluded that Cary did not proffer evidence that the fax was not received. ALJ Decision at 6.

We conclude, however, that section 498.22(b)(3) has the effect of placing the burden of proof on whichever party asserts actual receipt before or after the presumed date to make a showing to support that assertion. On its face, the regulation presumes delivery five days after the date on the notice "unless there is a showing that it was, in fact, received earlier or later." 42 C.F.R. § 498.22(b)(3) (emphasis added). We read the representations made by Cary below as asserting that it received only a mailed copy and not a faxed copy of the notice letter, but even accepting the narrower reading so that, in effect, neither party was able to locate records sufficient to establish a definite receipt date, HCFA would not prevail. The legal effect dictated by the regulation is that the five-day presumption controls, unless a contrary showing of actual delivery is made. We thus reverse the finding that HCFA's notice was actually received by Cary on March 24, 1999 and find that, as a matter of law, it was received on March 29, 1999.

b. Any objections to the content of the notice had to be raised in a timely appeal.

Here, we consider whether Cary was entitled to seek review of the adequacy of the HCFA notice, despite waiting until long past the 60-day appeal period to raise its concerns. The ALJ concluded that any objection Cary had to the adequacy of the notice should have been raised in a timely request for a hearing. ALJ Decision at 7. We agree. Under the circumstances here, Cary's opportunity to exercise its appeal rights was not prejudiced by the miscalculation of the receipt date. In that situation, we see no basis to relieve Cary of the responsibility of raising any objections to the determination within the established appeal process, including those that go to the content of the notice or the timing of the effective date.

Cary has shown no reason why the alleged inadequacy in the timing of the effective date interfered with its ability to file a timely appeal of the imposition of the remedy. At most, Cary would have been justified in presuming that it had 60 days from March 29th rather than from March 24th in which to file its request for hearing. Yet, Cary made no such request until August 31, 1999. Hence, the five-day differential in calculating the date of receipt of the notice (whatever its impact on the proper effective date of the remedy) was irrelevant to the untimeliness of Cary's appeal.

Notably, the Act and regulations do not provide for a hearing prior to the effective date of remedies (other than CMPs), a policy which has long been upheld as promoting the overriding importance of protecting residents. See Hillman Rehabilitation Center, DAB No. 1611, at 20- 22 (1997), and cases cited therein, aff'd Hillman Rehabilitation Center v. U.S. Dep't of Health and Human Services, No. 98-3789 (D.N.J. May 13, 1999). Consequently, the timing of a hearing is unrelated to the effective date of the DPNA, but depends only on the date of receipt of notice of HCFA's determination imposing the remedy.

Cary objected, however, that this conclusion amounted to holding providers strictly to a 60-day time period to appeal a HCFA action while allowing HCFA free rein to violate its own regulations at will. Cary Br. at 12-13; Cary Reply Br. at 3-4. We find no error in the ALJ's conclusion, especially since here the notice set out accurately the timing and nature of Cary's appeal rights.

We note first that, in point of fact, the 60-day filing deadline is not a "strict" one, in the sense that explicit provision is made to permit out-of-time filing of requests for review by affected parties who demonstrate good cause for their lateness. 42 C.F.R. § 498.40(c). As discussed later, Cary simply failed to make any such showing. Instead, in essence, Cary unilaterally decided that it could ignore a notice which plainly set out how to file an appeal, so long as Cary believed that the notice was objectionable in some way. This approach rejects precisely the process provided to raise and resolve objections in a fair and timely fashion. Only months later, finding other approaches unavailing, did Cary put forward its arguments about the inadequacy of the notice it received. We conclude that the ALJ did not err in rejecting Cary's effort to "restart the clock" without explaining persuasively what prevented it from presenting its arguments in a timely fashion.

Since Cary also argued that the notice was so defective as to be void (and hence should have no effect in triggering the appeal period), we go on to consider what defects Cary has proven in the notice and whether any defect shown would suffice to toll the appeal period.

c. The properly calculated receipt date requires a later effective date but does not void the underlying determination.

In this section, we consider the legal impact of the foreshortened notice of the effective date of the DPNA. Cary contended that the notice was defective, among other reasons, because it did not include the effective date of the remedy as required by 42 C.F.R. § 488.402(f)(iii). Cary Br. at 11. Further, Cary argued that HCFA had no authority to retroactively correct the effective date. Id. Cary also relied on the argument that HCFA's actions violated its own regulations, and hence the notice should be without any legal effect.

i. The DPNA may not be put in effect earlier than 15 days after Cary received the notice.

The ALJ considered these issues to be moot, since he believed that Cary did not dispute actual receipt on March 24th, so that HCFA did give 15 days' notice. ALJ Decision at 6. Since we found above that the legal receipt date was March 29th, we must next consider Cary's argument that the determination should be therefore treated as void. We reject Cary's position and conclude that correcting the effective date to reflect the regulatory period is the appropriate response in the circumstances of the present case, rather than treating the underlying determination as somehow invalid or illegal.

Despite its position that Cary received the March 24th notice letter by fax, HCFA stated in its briefs, both before the ALJ and on appeal, that it would "voluntarily set back the effective date of the DPNA by five days" and would so advise the fiscal intermediary (hence, authorizing payment for new admissions during the period in which the notice would be presumed en route to Cary by mail). HCFA Reply Br. to Cary's Opposition to HCFA's Motion to Dismiss Before the ALJ, at 2; HCFA Br. at 12, n.4. Thus, the remedy would not be implemented (that is, payments would be made) for the period during which the notice was presumed to be still in transit.

This delay in the DPNA taking effect is not so much retroactive "action" by HCFA, as a legal result of the regulation barring putting a remedy into effect before the 15-day notice period, plus 5 days for receipt, have expired. We reject Cary's characterization of this legal effect as HCFA as making a DPNA "retroactively effective" a year after it was "allegedly issued." Cary Br. at 23. A fairer characterization of HCFA's action is, at most, that it has acknowledged that a portion of a DPNA that was issued and went into effect cannot be enforced. Moreover, the only action even arguably taken by HCFA here, postponing the effective date, is a change in Cary's favor, reducing the period during which payment cannot be made for any new admissions. Either way, since no adverse action occurred as a result of this change in the effective date, Cary had no basis to appeal that change.

ii. HCFA did not act in disregard of its own regulations to deprive Cary of adequate notice.

We turn next to Cary's assertion that HCFA acted illegally and that its notice should be treated as void. In support of the first point, Cary cited case law for the proposition that agency action "taken in contravention of its own regulations is illegal and of no effect." Cary Reply Br. at 4. In support of the second point, Cary cited a variety of Board and Circuit Court decisions as supporting a rule that notices that are "inadequate" cannot trigger an enforceable review period. Id. at 6. While the general principles expressed in those cases are unexceptionable, we do not find them applicable here.

We find first that Cary failed to prove that HCFA took an illegal action in violation of its own regulations. This claim was based on Cary's broad attack on the content and timing of the notice it was given and its position that HCFA was not authorized to impose a DPNA on Cary until a survey demonstrated that Cary was not in substantial compliance after 90 days from the end of the first survey. We explain in succeeding sections why we reject Cary's claims that no valid notice imposing a DPNA could be sent before April 8th had passed or without conducting another revisit on or after April 8th to establish continued noncompliance. We also explain elsewhere why we do not agree with Cary that the notice letter was conditional or too ambiguous to effectively impose a remedy. Hence, we reject Cary's attempt to premise a charge of illegal conduct by HCFA on those points.

We have, however, concluded that the effective date of the DPNA cannot be less than 15 days from the date of receipt of the notice, and that HCFA cannot rely to establish the receipt date on a fax delivery which HCFA is now unable to adequately document. We must therefore consider whether this miscalculation of the receipt date constituted a breach of regulations by HCFA such that the remedy could not thereafter be enforced at all. Cary argued that it did, because HCFA denied Cary the minimum notice required by law and therefore its action imposing the DPNA is illegal and without effect. Cary Br. at 13. HCFA argued that the 15-day notice requirement is not a prerequisite to HCFA's authority to issue a valid determination but merely defines the earliest date at which remedies in that determination may take effect. HCFA Br. at 11.

We agree with HCFA that the notice requirement is not a jurisdictional prerequisite to HCFA's authority to act. The authority to impose a remedy is based on noncompliance found during surveys for which HCFA may apply one or more remedies. 42 C.F.R. § 488.402(b) and (c). The regulations state that the 15-day notice period begins "when the facility receives the notice, but in no event will the effective date be later than 20 calendar days after the notice is sent." 42 C.F.R. § 488.402(f)(5). We conclude that the effect of delay in receiving a notice is to alter the effective date to at most 20 days after the notice was first sent. We therefore do not find that HCFA violated its own regulations.

Furthermore, the cases cited by Cary do not support its thesis that every administrative glitch invalidates agency action. Instead, those decisions addressed substantive breaches of regulatory guarantees which presented serious due process concerns. For example, an (admittedly deportable) alien complained that the Board of Immigration Appeals (BIA), which had full delegated discretion under immigration regulations to decide whether to grant a suspension of deportation in certain cases, had improperly prejudged his case because the Attorney General issued a secret list of "unsavory characters" which included the alien's name. U.S. ex rel Accardi v. Shaughnessy, 347 U.S. 260, 262 (1954); see also Service v. Dulles, 354 U.S. 363 (1957). The Court remanded the case to determine if the Attorney General had, in effect, dictated the BIA decision, and, if so, to provide a hearing in which the BIA would exercise its own discretion independently. 347 U.S. at 268. In Vitarelli v. Seaton, 359 U.S. 535 (1959), an employee of the Department of Interior was fired for reasons of "national security" after a hearing that the Court found had degenerated into "a wide-ranging inquisition" based on secret information. 359 U.S. at 540-46. That the Vitarelli case is distinguishable from the matter before us is highlighted by the Court's own evaluation of the substantive nature of the fairness concerns presented: "Preliminarily, it should be said that departures from departmental regulations in matters of this kind involve more than mere consideration of procedural irregularities." 359 U.S. at 540.

We conclude that what confronts us here is, at most, a mere procedural irregularity which could be, and in fact has been, cured during this administrative process by altering the effective date of the DPNA. Cary had been given multiple reminders, in virtually every piece of correspondence it received from the State and the HCFA Regional Office during this survey cycle, that a DPNA would be statutorily required on April 8th and that termination of its provider agreement would be mandatory three months later, unless Cary achieved substantial compliance before those dates. The notice sent on March 24 actually imposing the DPNA effective on April 8th was essentially a confirmation to Cary that HCFA was indeed going forward with the statutory remedy. It is difficult in that context to envision Cary taking any different steps whether it received the notice by fax on March 24, 1999 or by mail on March 29, 1999.

iii. Miscalculation of the receipt date did not otherwise render the notice to Cary so inadequate as to void it.

We turn next to the case law on which Cary based its argument that an inadequate notice (whether or not it constituted a breach of HCFA's own regulations) should be treated as having no effect at all and not as beginning the running of any appeal period. See Cary Reply Br. at 6-7. Here, Cary relied on prior Board decisions relating to Medicare enforcement, and also cited to three Court of Appeals decisions. Its reliance is misplaced.

Cary emphasized that, in another case, ALJ Kessel held that a DPNA imposed by HCFA, which was imposed effective on a date certain in the future, but which could be lifted if substantial compliance were achieved, was unauthorized, because it failed to provide adequate notice of actual imposition. The ALJ went on to conclude that imposing a DPNA "without satisfying the notice requirements . . . becomes a punishment that is inconsistent with the Act's remedial purpose." Cary Br. at 17, quoting Desert Hospital, DAB CR448 (1996). Cary objected that the ALJ's action here directly contradicted his determination in Desert Hospital. Cary Br. at 24. Cary ignores the fact that the ALJ Decision in Desert Hospital was overturned on appeal. Desert Hospital, DAB No. 1623 (1997), decision on remand at Desert Hospital, DAB CR567 (1999). The Board found that the notice in that case did satisfy notice requirements. Id. Our decision here, and that of the ALJ below in the present case, are entirely consistent with the precedent established in Desert Hospital.

Cary also argued that the Board has held in the past that defective requests for review were ineffective, and that, by analogy, a defective notice sent by HCFA (as Cary portrayed HCFA's notice here) should be equally ineffective against a recipient. Cary Reply Br. at 6, citing Birchwood Manor Nursing Center, DAB No. 1669 (1998), aff'd sub nom. Birchwood Manor Nursing Center v. Dept. of Health and Human Services, Civ. No. 9860695 (5th Cir., June 29, 1999); and Care Inn of Gladewater, DAB No. 1680 (1999). In those cases, the Board explained that a request for hearing that did not meet the requirement of stating what findings of fact or issues of law were in dispute was subject to dismissal as not timely and sufficient under 42 C.F.R. § 498.40(b). However, the Board has also held that the decision to dismiss such a request (or to permit the appellant to cure the defects) is in the ALJ's discretion. Alden-Princeton Rehabilitation and Health Care Center, DAB No. 1709 (1999). To the extent that HCFA's notice here set an erroneous effective date based on the assumption that receipt would occur immediately by fax, rather than requiring a 5-day mailing period, we see nothing inconsistent about permitting cure of the error and setting the effective date on the day provided by the regulations. Since we do not find merit to Cary's other allegation of substantive defects in the notice (as discussed elsewhere), we do not address what defects might indeed be so substantive as to void a notice.

iv. The time to file an appeal was not tolled because HCFA miscalculated the effective date here.

The cases on which Cary relied for the proposition that the time limit in which to file an appeal does not start running when the notice letter is inadequate involved appeals of benefit terminations under ERISA (the popular name for the Employee Retirement Income Security Act, 29 U.S.C. sec. 1001 et seq.). Cary Reply Br. at 6, citing Counts v. American General Life and Acc. Ins. Co., 111 F.3d 105 (11th Cir. 1997); Epright v. Environmental Resources Management, Inc. Health and Welfare Plan, 81 F.3d 335 (3d. Cir. 1996); and White v. Jacobs Engineering Group Long Term Disability Benefit Plan, 896 F.2d 344 (9th Cir. 1990). Upon examination, these cases, read together, provide no support to Cary's claim that the time limit for appeal here should be waived because of any defects in HCFA's determination letter. On the contrary, they establish that a recipient must challenge the adequacy of a notice letter within the regulatory time frame where the notice substantially meets the need to provide the information necessary to permit effective review.

Cary quoted from Counts only the statement that "[t]he consequence of an inadequate benefits termination letter is that the normal time limits for administrative appeal may not be enforced against the claimant." 111 F.3d at 108 (citing Epright and others). However, the court went on to affirm the district court's grant of summary judgment against Counts. Counts had received a notice terminating his benefits based on a medical finding that he was not totally disabled and informing him that he had 60 days to appeal. 111 F.3d at 107. The district court agreed with Counts that the termination notice was "technically deficient," but found that Counts waited four months after the end of the appeal period to even initiate correspondence with the insurance plan about the decision. The Court of Appeals concluded (even without resolving whether the termination letter was in substantial compliance with regulatory notice requirements) that Counts had "waived any entitlement he may have had to the remedy for deficient notice" by his failure to file a timely challenge. 111 F.3d at 108.

The decision in White found the notice defective enough to toll the appeal period, not for any technical irregularity, but based on such major flaws as failure to cite any plan provision on which the denial was based, failure to explain the reason for the conclusion that the claimant was ineligible, and failure to explain what to do to perfect an appeal. The court held that such basic inadequacies make it unfair to treat the notice as triggering the start of the time for appeal. The court reasoned that, were the rule otherwise, "Plan boards could with impunity deter claimants from timely appealing by sending vague and inadequate appeal notices, withholding information claimants need to appeal effectively." White at 350; see also White v. Aetna Life Ins. Co., 210 F.3d 412 (D.C. Cir. 2000) (whether late appeal by ERISA participant is acceptable depends on whether flaws in a notice were serious enough to undermine the purpose of the regulatory requirements involved). In Epright, the plan did not contest the claimant's charge that the notice sent failed to meet three out of four applicable regulatory requirements, but contended that the claimant's lawyer had a copy of the plan itself. 81 F.3d at 342. The court held that an appeal was not untimely where the notice letter failed to indicate a right to review or where and how to file an appeal request. Id.

The case before us does not present the situation of a notice with defects so egregious as to effectively undercut a claimant's ability to exercise its appeal rights.(5) The instructions in the notice letter clearly set out the steps to follow in order to appeal the HCFA determination imposing the remedy. The full explanation of the regulatory violations and factual findings on which the determination was based was cited by reference to the survey results, set out in a statement of deficiencies which Cary had already received. Thus, we confront a claimant seeking to parlay an arguable technical defect (setting the effective date only 15 days forward of the notice without retaining any proof of service of the notice on the same date) into a reason for simply taking no action to follow the appeal instructions in the notice.

We conclude that the period in which to appeal the HCFA determination was not tolled as a result of any defect in the notice.

d. The ALJ properly rejected Cary's other attacks on the adequacy of the notice.

i. HCFA properly sent the March 24th notice in advance of the date when a DPNA would become mandatory.

Cary contended that no notice received prior to April 8th could be effective to impose a DPNA because the "triggering event" had not yet occurred, i.e., the passage of the 90th day. Cary Br. at 14-16. The premises on which Cary's argument rests are: (1) that HCFA "could not impose the mandatory DPNA before the occurrence of the three-month triggering event for this remedy had even occurred;" (2) that this triggering event was a finding of substantial noncompliance made on April 7th at the earliest; (3) that, without a survey to determine the state of Cary's compliance on or after April 7th, no notice from HCFA could meet the regulatory requirements in 42 C.F.R. § 488.402(f)(1) of stating the "nature of the noncompliance" and "which remedy is imposed"; (4) that, in fact, before April 7th, Cary had submitted a PoC and "was presumed to be in compliance with the conditions of participation at that time; and (5) finally, that HCFA had no authority to impose a DPNA in the March 24th notice letter. See Cary Br. at 16. We conclude that each of these assumptions is legally incorrect, and hence Cary's position is without merit.

To begin with, we find that HCFA had authority under the Act and regulations to impose a DPNA remedy once Cary was certified not to be in compliance with the conditions of participation. Act, §§ 1819(h)(2)(A)(ii) and 1819(h)(2)(B). HCFA was required to put a DPNA into effect if Cary remained out of compliance for 90 days. Act, § 1819(h)(2)(D). It follows that, in effect, passing the 90th day did not endow HCFA with the authority to impose a DPNA, but rather removed from HCFA the authority to decline to impose it.

Hence, the "triggering event" for a mandate to impose a DPNA is not a new determination of noncompliance on or after the 90th day, but the failure by the facility to demonstrate achievement of substantial compliance on or before the requisite date.(6) See Act, § 1819(h)(2)(D); 42 C.F.R. § 488.417(b)(1). In other words, HCFA did not have to take some new action or await another survey to "trigger" a basis for imposing the DPNA, but rather Cary had to act to avert it, by affirmatively showing that it had achieved compliance. Cary cited no basis for its bald claim that it should be presumed to have done so because it submitted a plan to show how it intended to accomplish that goal.(7) Submitting a PoC alone is not sufficient to demonstrate substantial compliance, but rather sets out how and when the facility expects to achieve it. 42 C.F.R. § 488.401. A DPNA, once imposed, continues until substantial compliance is achieved "as determined by HCFA or the State based on a revisit or after an examination of credible written evidence that it can verify without an on-site visit," or until the provider agreement terminates. 42 C.F.R. § 488.454(a).

We conclude that HCFA had authority based on the survey results to impose the DPNA (subject to a successful challenge to the findings of noncompliance made by Cary during a timely appeal), unless Cary demonstrated that it had achieved substantial compliance before the effective date. The notice to that effect sent by HCFA on March 24th was not premature because no further step was required to perfect HCFA's basis for imposing the remedy. The 90th day of noncompliance did not trigger HCFA's authority to impose the remedy but rather the date on which it must be put into effect.

This conclusion is further supported by HCFA's explanation that the only rational way in which it could meet both the regulatory requirement to provide 15 days' notice before imposing a remedy in a case not involving immediate jeopardy and its statutory responsibility to cease paying for any new admissions after the 90th day of noncompliance was to provide notice imposing the remedy at least 15 days before the mandatory deadline. HCFA Br. at 13. We agree that any other interpretation would create an unnecessary conflict between these two legal provisions.

ii. The March 24th notice imposed the DPNA remedy and was not merely conditional in any sense that would excuse Cary's inaction.

Cary further asserted the March 24th notice should be read as merely contingent, pointing to the section stating that a DPNA must be imposed "[i]f you do not achieve substantial compliance within three months" of the January 7, 1999 survey. HCFA Ex. F. We conclude that Cary misunderstood the enforcement process and ignored the plain language of the notice letter in arriving at this interpretation.

The imposition of the DPNA was, as the letter stated, based on the survey findings of January 7, 1999. HCFA Ex. A, at 1. Once found not to be in substantial compliance, the facility had a duty to correct its deficiencies and achieve substantial compliance. Cary clearly understood at that point that the onus was on it to take action, because it repeatedly submitted allegations that it had achieved compliance. The revisits took place in response to these claims, but found in all but the last instance that the noncompliance had not been eliminated. Each revisit offered Cary an opportunity to show that its noncompliance was at an end, not a clean slate from which the earlier noncompliance was erased. Put simply, Cary was continuously out of substantial compliance from the time the State survey agency so certified after the January 7th survey, until Cary demonstrated that it had regained substantial compliance in July.

During the time a facility is found to be out of substantial compliance, as we have noted, HCFA seeks to motivate prompt corrections by tailoring and gradually escalating its enforcement efforts to persuade the recalcitrant facility to act quickly to fix problems. The ALJ concluded that HCFA may, "consistent with the remedial purpose of inducing compliance," choose to impose a remedy on a date certain in the future, if the noncompliance is not eliminated before that date arrives. ALJ Decision at 7. Both the Act and the regulations, as noted, explicitly provide that once a DPNA has been imposed (regardless of when it is to go into effect), it will be lifted upon the achievement of substantial compliance. Act, § 1819(h)(3); see also 42 C.F.R. §488.417(a)(1) and (d); 42 C.F.R. § 488.454(a). A facility thus may have the remedy lifted before it actually goes into effect by taking swift corrective action and demonstrating substantial compliance. However, the remedy simply goes into effect as imposed without requiring additional steps from HCFA unless the facility affirmatively acts to avert it.(8)

Cary insisted that the March 24th notice was merely a conditional statement about possible or intended consequences that would occur if noncompliance was still found at a specific later date, or at least that it was legitimately misled into thinking that was the gravamen of the letter. See Cary Reply Br. at 10-13. We find that the notice letter does not support such a reading. The Board has specifically rejected an ALJ's reading of very similar language in a HCFA notice letter as stating merely an intent to impose a remedy depending on future events rather than imposing a remedy which is set to go into effect on a future date and advising how to have that remedy lifted.

The language in the letter consistently represents that an action is being taken, not that it will be taken in the future. The remedy is being imposed and "will" take effect on a date certain, not if an uncertain event occurs. The achievement of compliance is represented as a condition subsequent that could end the effective period of the remedy prior to the termination, not as a condition precedent to the imposition of the remedy.

Desert Hospital, DAB No. 1623, at 13 (1997). The additional statement in the HCFA notice at issue here, that a DPNA would be mandatory if substantial compliance were not achieved within three months, simply advises Cary of that legal requirement but does not take away at all from the straightforward statement that, among the "Remedies Imposed" because Cary "did not correct deficiencies" as it claimed it had, is a DPNA "effective April 8, 1999." HCFA Ex. A. at 2.

In summary, proof of continued noncompliance on the 90th day after noncompliance was first certified is not, as Cary contemplated, a condition precedent to the imposition of the DPNA here, nor did HCFA's letter suggest that it was. The letter was not conditional in this sense. Proof of the achievement of substantial compliance before the 90th day, instead, was a condition subsequent which would avert the action that would otherwise go into effect. Cary failed to meet this condition and the DPNA was effective as imposed.

Thus, we find no error in the ALJ's conclusion that HCFA's notice was not void and did not toll the period in which to appeal the determination, and that any objections Cary had to the determination had to have been raised in a timely appeal.

3. The ALJ did not abuse his discretion by finding that good cause was not shown to extend the filing period.

Cary further argued that, even were the 60-day filing deadline applicable to it and even if the notice was effective to trigger the appeal period, the ALJ should have found good cause to accept its late filing. Much of Cary's argument on this score simply restated its position on the inadequacy of HCFA's March 24th notice letter. Essentially, Cary reframed the argument here to contend that, even if the defects it alleged in the notice did not render it void, they should be considered sufficient reason to explain the delay in appealing the determination. At the least, according to Cary, the notice along with the surrounding circumstances were ambiguous enough to have in fact confused or misled Cary and its counsel. Cary Br. at 25-26. Also, Cary asserted that it was distracted by the more urgent concern about threatened termination and that it was awaiting final results from its participation in the State's informal dispute resolution process which it expected might undo the basis for the DPNA and end the CMP. Cary Br. at 32-33. These arguments are unpersuasive.

a. Cary had no reasonable basis for inaction based on the notices it received from HCFA.

We have addressed many of Cary's complaints about the March 24th HCFA notice above and will not repeat that analysis here. In brief, Cary asserted that it mistakenly viewed the notice as merely announcing a future intention to impose a DPNA which could only be imposed after a "triggering event," and claimed to expect a further notice, based on a further survey on or after April 6th, before any DPNA would be imposed on it. Cary Br. at 28. We have concluded that Cary's interpretation was inconsistent with the language of the notice and with the applicable legal provisions. Cary argued further, however, that its expectation that it could await further notice before acting and the surrounding circumstances should at least suffice to show good cause to extend the appeal period, even if insufficient to render the notice ineffective.

In that regard, Cary pointed to a letter it received dated March 19th from the State survey agency containing the following statement:

If you do not achieve substantial compliance within three (3) months after the last day of the survey identifying non-compliance, the HCFA regional office must deny payments for new admissions. April 6, 1999 is three months from the last date of survey identifying non-compliance. HCFA will notify you of this action.

Cary Ex. 1, at 1, quoted in Cary Br. at 28.(9) Counsel for Cary, Daryl R. Griswold, submitted a declaration stating that he understood this to mean that Cary would receive notice of the DPNA from HCFA after April 6, 1999 if it had not achieved substantial compliance by that date, but that Cary "received no notification from HCFA after April 6, 1999 imposing the penalty of [DPNA]. The first correspondence received by Cary Health from HCFA after April 6th was a letter of June 14, 1999, which made no mention of the [DPNA]." Cary Ex. 5, at 2.

The confusion which Cary attributed to these communications did not justify the inaction of Cary and its counsel. Even if Mr. Griswold somehow believed that the March 24th letter from HCFA concerning the DPNA was not the notice which the State survey agency's March 19th letter informed him to expect, receipt of the HCFA letter should have alerted him that some appealable action had been taken given that Cary's appeal rights are spelled out in detail in the HCFA letter. If Mr. Griswold was uncertain of the significance of the letter, the letter provided the name of an individual at HCFA Cary could contact with any questions. HCFA Ex. A. Cary made no representation that its staff or counsel made any attempt to seek clarification.

We find no error in the ALJ's conclusion that Cary could not reasonably have been misled into believing that it could appeal the determinations made in the March 24th notice without filing a timely request for review. See ALJ Decision at 10.

b. The approach of the involuntary termination date did not justify Cary's failure to appeal the March 24th determination.

Mr. Griswold also asserted that, in addition to not understanding that a deadline existed to appeal a DPNA, his client was "very preoccupied with notification received from HCFA in June of 1999 that HCFA would be terminating" its provider agreement. Cary Ex. 5, at 3-4; Cary Br. at 31-32. The HCFA notification imposing the termination was dated June 30, 1999 (see factual summary above). HCFA Ex. C. By the time Cary even received this notice, more than 90 days had elapsed since the March 24th notice imposing the DPNA. We agree with the ALJ that Cary did not point to anything in the June 30th notice that could have led a reasonable person to believe that the filing periods for earlier determinations imposing other remedies had been tolled. ALJ Decision at 10. Therefore, the ALJ did not err in disregarding Cary's claim that distraction caused by the later notification somehow justified Cary's failure to timely seek review of the earlier notice.

c. Participation in a State informal dispute resolution (IDR) does not toll the federal appeal process.

Cary sought IDR to contest four deficiency findings made during the April 26-27, 1999 revisit. Cary Exs. 7 and 8. Had it prevailed in that process, Cary asserted, the statement of deficiencies would have been replaced, and substantial compliance might have been found as of March 29, 1999. Cary Br. at 32; Cary Ex. 11. In that case, the DPNA would not have gone into effect and the need for any appeal would have been obviated. Cary Br. at 32-33. By letter dated July 13, 1999, the State survey agency upheld all but one of the challenged deficiencies. Neither before the ALJ nor on appeal did Cary explain what relevance its unsuccessful effort to challenge these deficiency findings at a State IDR had to its failure to request a federal hearing.

As the ALJ pointed out, the State IDR process is separate from and in addition to the appeal rights provided to facilities under federal regulations. ALJ Decision at 10. The ALJ hence was not persuaded that Cary had any reason to believe that the State IDR process somehow tolled the requirement to file a timely federal hearing request. Id. at 10-11. We find no error in the ALJ's reasoning.

d. Cary did not show good cause for untimely appeal of the CMP.

Although the bulk of the parties' arguments addressed the DPNA remedy imposed in the March 24th notice, Cary also sought to appeal the CMP penalty imposed on it by HCFA's notice dated June 14, 1999. The ALJ found that Cary's request for review of this determination was filed on August 31, 1999, 78 days after HCFA's notice was sent. ALJ Decision at 4. Hence, the request for review was at least 13 days late (allowing 5 days for receipt). The ALJ found that Cary failed to show good cause for its untimely filing of its request for review of the June 14th determination. Id. at 10.

In this connection, Cary again alluded to the upset occasioned by the termination letter and the ongoing IDR efforts. In virtually any case where a remedy is imposed in an effort to motivate compliance, repeated failures to demonstrate substantial compliance may occasion imposition of additional remedies. By law, any such facility that is nearing six months since it was found not to be in substantial compliance will have had a DPNA imposed and in effect, and will be facing termination. Facilities have the opportunity to seek IDR at the State level to try to resolve adverse findings during the course of enforcement efforts. If approaching the deadline for termination to go into effect and/or choosing to participate in an IDR process were sufficient to excuse the failure to file a timely request for a federal hearing, the time frame for such appeals would become almost meaningless.

Cary also asserted that "inconsistencies" among communications to it from HCFA about the imposition of the CMP "understandably confused" Cary "regarding its obligation to file a request for a hearing by a date certain." Cary Br. at 29. However, the only inconsistency Cary suggested was over whether the actual imposition of the CMP was effected by the March 24th notice or the June 14th notice. Id. Since Cary did not request review until after the period for appealing either determination had passed, it hardly serves as good cause for an extension if Cary was uncertain which of the two notice letters included imposition of the CMP remedy.

In any case, the letters are clear on the face of their text that the DPNA was imposed March 24th effective April 8th and the CMP was imposed June 14th effective January 7, 1999, each to run until Cary achieved compliance or was terminated. HCFA Exs. A and B. The only source of possible inconsistency alleged by Cary is that the June 30th termination notice also reminds Cary that its CMP, imposed "per our March 24, 1999 letter," was still accruing. Cary Ex. 9, at 1. In context, the reference simply means that the CMP that was imposed (on June 14th) as Cary had been told it would be in the March 24th letter was not stopped by the imposition of the termination and would keep accruing until termination actually went into effect.

We conclude that the ALJ did not abuse his discretion in finding no good cause to extend the filing deadline for Cary's appeal of the CMP.

CONCLUSION

We uphold the ALJ's dismissal of Cary's hearing request as untimely filed and find no abuse of discretion in the ALJ's decision to deny Cary's request to extend the time in which to file its request because good cause was not shown.

JUDGE
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Donald F. Garrett

M. Terry Johnson

Marc R. Hillson
Presiding Board Member

FOOTNOTES
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1. This letter is not in the record but was summarized in later HCFA letters and briefs and Cary has not disputed the characterizations of its content. HCFA Br. at 2; HCFA Ex. A, at 1.

2. This letter stated that the relevant date would be April 6th, but HCFA actually imposed the remedy with an effective date of April 8th. Since HCFA has now changed the effective date to April 13th, we see no need to address this further.

3. Apparently recognizing this problem, Cary suggested that "perhaps" the potential financial loss to the facility may have been considered sufficient incentive to appeal without a need for any appeal deadline. Cary Reply Br. at 3. This makes little sense, since the financial impact of termination of payments is plainly more severe than a refusal to pay for services to only certain residents (new admissions), and yet the appeal deadline indisputably applies to post-termination appeals.

4. We observe that Cary perhaps did not make as clear as it might have below that it did deny receiving any fax. For example, some confusion may have resulted from Cary not listing the date of its receipt of the March 24th letter as a factual issue in its amended readiness report below, but yet listing the failure to provide 15 days' notice as a legal issue. Nevertheless, the briefs and declarations submitted by Cary below did indicate that the absence of evidence of fax receipt was a premise on which its inadequate notice argument was based.

5. It is instructive to recall that the party in the role of "claimant" here is not an individual insurance recipient or program beneficiary but a provider that has executed a contract to receive federal funds for services that it provides on condition that it adheres to regulatory conditions of participation. Hence, considerably more justification is present in this situation for holding the provider to some responsibility for being familiar with the rules on survey and enforcement and on the appeal process. Correspondingly, as reflected in the discussion of the absence of good cause for late filing, there is considerably less justification for such a party and its counsel to respond to federal notices with inaction.

6. Cary cited an ALJ decision in support of its argument that HCFA could not impose a DPNA before the "triggering event." Cary Br. at 15. In that case the ALJ dismissed an appeal for failure to prosecute and also stated that the hearing request was premature because it predated the notice letter actually imposing the remedy. Osceola Nursing and Rehabilitation Center, DAB CR595 (1999). Not only is the situation completely unrelated, but the ALJ decision on which Cary relied was reversed on appeal. Osceola Nursing and Rehabilitation Center, DAB No. 1708 (1999).

7. Cary did cite, in support of its claim that it "was presumed to be in compliance with the conditions of participation," a paragraph in its own lawyer's declaration to the effect that Cary could not be sure that its IDR challenge to the April 26 - 27 survey findings would fail and a cover letter submitting a PoC dated March 25, 1999. Cary Br. at 16, citing Cary Exs. 5, at ¶11, and 6. The lawyer reasoned that, since Cary's PoC alleged compliance as of March 29th, if Cary prevailed in challenging the deficiencies found in the April survey, the DPNA would not have gone into effect because compliance would have been found as of March 29th. The simple answer is that Cary's premises are contrary to fact. The State survey agency did accept the PoC as credible enough to make another visit to verify substantial compliance, but in fact found that Cary had failed to achieve it even as of the survey date.

8. Cary read some of the ALJ's phrasing as accepting its concept that no remedy was actually imposed in the March 24th notice letter, but rather that HCFA merely threatened to impose a remedy if the condition of future noncompliance was met. Cary Reply Br. at 10-13. Specifically, Cary quoted from the ALJ Decision describing the March 24th notice letter as "not ambiguous in announcing the remedy HCFA intended to impose and the circumstances under which that remedy would be imposed." Cary Reply Br. at 10, quoting ALJ Decision at 7. Cary argued that this meant the notice was merely a threat. Cary Reply Br. at 10. We find, as stated in the text, that the March 24th letter clearly imposes a remedy on a date certain in the future, while allowing for lifting the imposition if substantial compliance is demonstrated before that date. To the extent the ALJ's wording found otherwise, we disagree. However, in context, it does not appear that the ALJ intended to make any contrary finding, since the decision plainly states that the ALJ is "not persuaded" by Cary's argument that HCFA's notice was conditional and "merely told Petitioner that it might be imposing a remedy and did not tell Petitioner that it was imposing a remedy." ALJ Decision at 6-7 (emphasis in original).

9. This letter from the State survey reported that the March 5th revisit, which had been conducted after Cary alleged substantial compliance, had found deficiencies at the G level (isolated, causing actual harm, but not immediate jeopardy). Cary Ex. 1. As a consequence, the State imposed one remedy (directed in-service), stated that it would recommend that HCFA impose a CMP if Cary did not come into compliance by April 4, 1999, contained the statement quoted about a mandatory DPNA being imposed by April 6, 1999, and reminded Cary that the State had recommended termination on July 6, 1999 absent prior substantial compliance. Cary was instructed again to submit a PoC by April 1st and a written allegation of compliance when it believed the deficiencies were corrected. Reading the letter as a whole, it is inescapably clear that the State has taken an action, made recommendations to HCFA as to other actions to be taken, and called for corrective action from Cary.

 

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES