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CASE | DECISION | JUDGE | FOOTNOTES

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


SUBJECT: Nursing Inn of Menlo Park,

Petitioner,

DATE: February 4, 2002
     

 

Centers for Medicare and Medicaid Services

 

Docket No. A-01-118
Civil Remedies CR799
Decision No. 1812
DECISION
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FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Nursing Inn of Menlo Park (Nursing Inn) appealed a July 19, 2001 decision by Administrative Law Judge (ALJ) Alfonso J. Montano dismissing a request by Nursing Inn for a hearing on the determination by the Centers for Medicare and Medicaid Services (CMS) to impose various remedies on Nursing Inn.(1) See Nursing Inn of Menlo Park, DAB CR799 (2001) (ALJ Decision). The ALJ determined that Nursing Inn failed to file its hearing request within the 60-day period provided in the applicable appeal procedures set forth in 42 C.F.R. Part 498.

For the reasons discussed below, we sustain the ALJ's dismissal of Nursing Inn's hearing request. In doing so, we uphold his finding that Nursing Inn, although explicitly informed in CMS's determination of the 60-day deadline for filing a hearing request, nevertheless failed to file an appeal until 161 days after it received the determination.

The record here includes the record before the ALJ and the parties' submissions on appeal. Our standard of review on a disputed conclusion of law is whether the ALJ Decision is erroneous. See, e.g., Lake Cook Terrace Nursing Center, DAB No. 1745 (2000). 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. Id.

Factual Background

The following background information is drawn from the ALJ Decision and the record before him. Nursing Inn is a long-term care facility located in Menlo Park, California. On August 13, 1999, the California Department of Health Services, the State survey agency, completed a Medicare certification survey of Nursing Inn and found the facility not in substantial compliance with the requirements for nursing homes participating in the Medicare program set forth at 42 C.F.R. Part 483. The State survey agency issued a Form 2567 statement of deficiencies, which listed 27 separate findings of substantial noncompliance. Summary of Form 2567 in CMS Ex. 4. On September 16, 1999, CMS notified Nursing Inn that, based on the survey, it was imposing the following remedies on Nursing Inn: the denial of payment for new admissions, effective October 1, 1999; a civil money penalty (CMP) of $1,000 per day, effective August 13, 1999; and the denial of nurse aide training. CMS Ex. 1, at 2. The notification informed Nursing Inn that these sanctions would remain in effect until CMS determined that the facility was in substantial compliance or CMS terminated the facility's Medicare provider agreement. The notification further informed Nursing Inn of its appeal rights, stating that any request for a hearing must be filed no later than 60 days from the date of receipt of the notice. Id. at 3.

Nursing Inn then sought to resolve the deficiencies through the State of California's informal dispute resolution (IDR) process on October 6, 1999, with the State survey agency's office at Daly City, California (Daly City). As a result of the IDR, Daly City notified Nursing Inn on October 7, 1999, that it was deleting one deficiency finding and reducing one other deficiency finding in its scope and severity; the original findings of substantial noncompliance with 25 other requirements, however, remained unchanged. CMS Ex. 4; ALJ Decision at 4.

A follow-up survey of Nursing Inn, completed on December 10, 1999, found that the facility still was not in substantial compliance with nursing home participation requirements. On January 7, 2000, CMS notified Nursing Inn that the previously imposed remedies remained in effect.(2) CMS Ex. 2. This notice also informed Nursing Inn that since Nursing Inn did not request an administrative hearing to challenge the September 19, 1999 notice of noncompliance, the CMP of $1,000 per day effective August 13, 1999 through December 9, 1999 (a total of $119,000 for 119 days) was due and payable on January 22, 2000. CMS Ex. 2, at 6.

CMS asserted on appeal, and Nursing Inn did not deny, that on January 13, 2000, the State survey agency notified Nursing Inn that the plan of correction (POC) it had submitted to address the deficiencies found during the December 10, 1999 survey was not acceptable. CMS Br. at 4. Nursing Inn then transferred all of the residents from the facility effective January 19, 2000, and ceased operations. Id. CMS terminated Nursing Inn's Medicare provider agreement on January 19, 2000. Id.

On February 24, 2000, Nursing Inn filed a request for a hearing, in which Nursing Inn contested the findings of both the August 13, 1999 and December 10, 1999 surveys.

Applicable Regulations

For purposes of surveys of long-term care facilities like Nursing Inn, the regulations define "substantial compliance" as "a level of compliance with the requirements of participation such that any identified deficiencies pose no greater risk to resident health or safety than the potential for causing minimal harm." 42 C.F.R. § 488.301.

When a survey of a facility by a State survey agency results in findings that the facility is not in substantial compliance and CMS determines to impose a CMP based on those findings, CMS is required to issue a notice to the facility which must include such information as the nature of the noncompliance, the factors that were considered in determining the amount of the CMP, the date of the instance of the noncompliance, and instructions for responding to the notice, including the facility's right to a hearing. 42 C.F.R. § 488.434.

A facility must be provided an opportunity for informal dispute resolution, at the facility's request, to dispute State survey findings with the State survey agency. Concerning this IDR process, the regulations provide --

(b)(1) Failure of the State or HCFA, as appropriate, to complete informal dispute resolution timely cannot delay the effective date of any enforcement action against the facility.
(2) A facility may not seek a delay of any enforcement action against it on the grounds that informal dispute resolution has not been completed before the effective date of the enforcement action.
(c) If a provider is subsequently successful, during the informal dispute resolution process, at demonstrating that deficiencies should not have been cited, the deficiencies are removed from the statement of deficiencies and enforcement actions imposed solely as a result of those cited deficiencies are rescinded.

42 C.F.R. § 488.331.

Procedures for requesting a hearing to appeal CMS's imposition of remedies are set forth at Subpart D of 42 C.F.R. Part 498. As pertinent to this case, these regulations require that --

The affected party or its legal representative or other authorized official 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.

42 C.F.R. § 498.40(a)(2).

The regulations permit a facility to request an extension:

If the request was not filed within 60 days -
(1) The affected party or its legal representative or other authorized official may file with the ALJ a written request for extension of time stating the reasons why the request was not filed timely.
(2) For good cause shown, the ALJ may extend the time for filing the request for hearing.

42 C.F.R. § 498.40(c).

Discussion

In his decision, the ALJ made three findings of fact and conclusions of law (FFCLs). The ALJ found that Nursing Inn was unambiguously informed in the September 16, 1999 notification of CMS's determination to impose remedies and of its right to request a hearing to challenge that determination. FFCL 1. The ALJ noted that the notification specifically informed Nursing Inn of its appeal rights and that any appeal must be filed no later than 60 days after receipt of the notification. The ALJ found that the language in the notice that CMS was imposing remedies was unconditional and that Nursing Inn made the conscious decision to focus its efforts on preparing a plan of correction rather than on preparing an appeal. ALJ Decision at 6. The ALJ found that, under the regulatory standard set forth at 42 C.F.R. § 498.40(a)(2), Nursing Inn was not entitled to a hearing because it did not file a timely hearing request. FFCL 2. The ALJ further found that Nursing Inn did not establish good cause, as permitted under 42 C.F.R. § 498.40(c), for its failure to file a timely hearing request. FFCL 3.

On appeal, Nursing Inn argued that the ALJ Decision relied on faulty FFCLs unsupported by substantial evidence on the record. Nursing Inn contended that it did not receive formal notice of the remedies arising from the August 13, 1999 survey until after the IDR process was completed and CMS sent its January 7, 2000 notice. Nursing Inn acknowledged that under the pertinent regulation, 42 C.F.R. § 488.331, the IDR process does not toll the time for requesting a hearing, and conceded that the regulation provides that the "effective date of any remedies" is not to be delayed due to a failure by CMS or the State survey agency to complete the IDR process in a timely manner. Nursing Inn nevertheless argued that the regulation suggests that entering the IDR process should not compromise a facility's due process rights. Nursing Inn contended that there is no language or inference in the regulation that CMS is excused from providing proper notice to a facility after an IDR deletes a deficiency or reduces the scope and severity of a deficiency. Nursing Inn maintained that the notice of remedies CMS sends providers is required under 42 C.F.R. § 488.434 to contain various elements of information such as the nature of noncompliance and the factors considered in determining the amount of the CMP. Nursing Inn reasoned that these elements are necessarily modified after a partially successful IDR, requiring a review and amendment of the Form 2567 and any notice of remedies based on it.

Nursing Inn contended that, since the statement of deficiencies set forth in the Form 2567 was modified by the IDR process with Daly City, CMS's September 16, 1999 notice, which was based on the Form 2567, no longer represented proper notice under the requirements set forth at 42 C.F.R. § 488.434, and that therefore it had a reasonable expectation that CMS would provide some notice of how the remedies would be revised after the successful IDR appeal. Nursing Inn argued that it did not receive any further notice until January 7, 2000, and that its deadline for requesting a hearing should accordingly be 60 days from that date. Nursing Inn maintained that the ALJ's failure to consider the success of the IDR process and its effect on the notice requirements constituted an error of law that warranted reversal of the ALJ Decision.

Nursing Inn additionally argued that the ALJ also erred in denying its request for an extension to file its hearing request. Nursing Inn challenged the ALJ's factual finding that CMS's September 16, 1999 notice was unambiguous, alleging that it was confused by what it stated was "a new policy of immediate imposition of remedies." Nursing Inn Br. at 6. Nursing Inn stated that talks with Daly City led Nursing Inn to believe that CMS would review the amended Form 2567 for purposes of the remedies and that a revisit of the facility would be forthcoming. Nursing Inn asserted that when the revisit did not immediately occur, it "speculated" that the reason was that the IDR process had resulted in the elimination or significant reduction of the CMP. Id.

Contrary to Nursing Inn's arguments, we find that there was substantial evidence in the record before the ALJ to support the ALJ's FFCLs. Nursing Inn's position that it did not receive notice of the remedies until the January 7, 2000 notice is flatly contradicted by the record. At the outset, we agree with the ALJ that CMS's September 19, 1999 notice was clear and unambiguous in informing Nursing Inn of its right to request a hearing and the 60-day deadline for making such a request. This information was highlighted in bold print in the notice, under a heading "Appeal Rights" also in boldface. CMS Ex. 1, at 3. CMS's instructions to Nursing Inn in the notice could not have been more explicit. We are at a loss to understand how Nursing Inn can claim that it found the wording of the notice confusing. There was nothing in the notice to the effect that some other action by Nursing Inn, be it engaging in the IDR process or preparing a plan of correction to submit to the State survey agency, would stay the imposition of the remedies or the 60-day deadline for requesting a hearing. Moreover, as the ALJ noted, Nursing Inn did not describe any effort to discuss or clarify the policy or procedures with CMS or Daly City.

Nursing Inn's reliance on its participation in the IDR process as an explanation for not timely requesting a hearing is unconvincing.(3) The IDR regulations are explicit in stating that use of the IDR process does not delay the effective date of any enforcement actions. 42 C.F.R. § 488.331(b)(1). Furthermore,
Nursing Inn based much of its appeal on its assertion that it reasonably expected the CMP to be adjusted significantly downward as a result of the IDR process and that a notice to that effect would subsequently be issued by CMS. However, there were no reasonable grounds for an expectation that any significant change in the imposed remedies would result from the IDR process. First, Nursing Inn did not even dispute in the IDR process 19 deficiency findings. CMS Ex. 4. Then, as a result of the IDR process, only one of 27 cited deficiencies was deleted (F432 Pharmacy Services). Id. Nursing Inn put great emphasis on the fact that the IDR process also reduced the scope and severity of "several" other deficiencies. Nursing Inn Br. at 3. Actually, the IDR process reduced the scope and severity of only one deficiency (F327 Quality of Care), from the "G" level (actual harm that is not immediate jeopardy) to the "D" level (no actual harm with potential for more than minimal harm that is not immediate jeopardy). Five other deficiencies, however, remained at the "G" level. CMS Ex. 4. Thus, even after the IDR process, 26 of 27 original deficiencies remained, with five resulting in actual harm to Nursing Inn's residents. For Nursing Inn to claim that it expected the CMP to be eliminated or significantly reduced as a result of the IDR process is unconvincing when the IDR process essentially left the findings in the original Form 2567 unchanged.

Moreover, even after the IDR process was expeditiously completed, Nursing Inn failed to file a hearing request. The IDR process was completed on October 7, 1999. Nursing Inn at that time, with knowledge that the IDR process had not resulted in any significant reduction in the number of deficiencies, nor any change in the State survey agency's recommendation regarding the remedies to be imposed, still had 39 days to submit a request for a hearing, or petition for an extension of time to file a hearing request, yet it failed to pursue either course.

We accordingly find that Nursing Inn's participation in an IDR process did not toll the time for filing a request for a hearing on the remedies imposed in the September 16, 1999 notice.

We also have no basis to question the ALJ's denial of Nursing Inn's request for an extension to file a hearing request. The regulations permit an ALJ to grant an extension request when good cause shown is shown for not filing a timely hearing request. 42 C.F.R. § 498.40(c)(2). Here the ALJ found no such good cause, discounting any suggestion that either the State survey agency or CMS represented to Nursing Inn that a POC or a resurvey would toll the period in which a hearing request was permitted. The ALJ rejected Nursing Inn's contentions that it was startled by what it alleged was a new policy by CMS of the immediate imposition of remedies, or that it had been told by Daly City that a resurvey would be forthcoming. The ALJ noted that Nursing Inn never contended that it was misled by CMS's employees, nor alleged that Daly City ever represented that the remedies imposed by CMS would not be effective or held in abeyance until a resurvey was completed. ALJ Decision at 5. The ALJ further noted that there was no need for him to make any findings regarding the alleged prior practices of either CMS or the State survey agency on the immediate imposition of remedies given the unambiguous language of the September 16, 1999 notice. ALJ Decision at 7.

We agree with the ALJ that the explicit, unambiguous language in the notice renders unpersuasive any argument by Nursing Inn that it was confused by CMS's action to immediately impose a CMP, especially in light of Nursing Inn's failure to provide any evidence to support its position.

Finally, we reject Nursing Inn's suggestion that enforcement of the regulations mandating a timely request for a hearing would result in providers being forced to file "shell" hearing requests. Nursing Inn questioned how a facility would have the time and resources to draft an appropriate POC if it were required to specifically rebut each deficiency stated in a Form 2567 in a request for a hearing. It suggested that any pro forma request for a hearing it might have submitted after receiving the September 16, 1999 notice would have been greeted with a dismissal motion by CMS on the basis that the facility's hearing request was premature. This argument is apparently based on Nursing Inn's mistaken belief that the September 16 notice was somehow invalid because Nursing Inn expected another notice to be issued after the IDR process. We addressed the fallacy of that belief above and we consider this argument mere speculation on Nursing Inn's part to excuse its dereliction in filing a hearing request. As the ALJ stated, Nursing Inn "made a conscious decision to focus on its POC and the resurvey rather than prepare an appeal." ALJ Decision at 6. Nursing Inn must bear the consequences of that conscious decision. Accordingly, we sustain the ALJ Decision.

Conclusion

For the reasons discussed above, we sustain the ALJ's dismissal of Nursing Inn's hearing request. In doing so, we affirm and adopt all the FFCLs made by the ALJ.

 

JUDGE
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Judith A. Ballard

M. Terry Johnson

Donald F. Garrett
Presiding Board Member

FOOTNOTES
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1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001). We use "CMS" in this decision unless we are quoting from documents that refer to HCFA.

2. The January 7, 2000 notification informed Nursing Inn that a CMP of $1,000 per day would also be imposed for the period beginning on December 10, 1999, the date of the resurvey, and continuing until CMS terminated Nursing Inn's provider agreement or CMS determined Nursing Inn was in substantial compliance with Medicare requirements. CMS Ex. 2, at 3. The ALJ found that Nursing Inn had timely filed a request for hearing of that remedy. ALJ Decision at 7. Accordingly, we do not consider here the additional remedy imposed in the January 7, 2000 notification.

3. We note that Nursing Inn never explicitly raised before the ALJ the IDR process as an explanation for its failure to file a timely request for a hearing. Rather, Nursing Inn primarily argued before the ALJ that it focused its attention not on a hearing request or the IDR process, but on preparing a POC, for which it hired independent nursing consultants, for submission to Daly City.

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