SUBJECT: Hillcrest Healthcare, L.L.C.,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Hillcrest Healthcare, L.L.C. (Hillcrest) appeals a November 25, 2002 decision by Administrative Law Judge (ALJ) Steven T. Kessel. Hillcrest Healthcare, L.L.C., DAB CR976 (2002) (ALJ Decision). In that decision, the ALJ granted a motion by the Centers for Medicare & Medicaid Services (CMS) to dismiss the case pursuant to 42 C.F.R. § 498.70(c).

This case concerns a determination of noncompliance issued by CMS on May 7. The May 7 determination advised Hillcrest that CMS would impose civil money penalties (CMPs) and other remedies because of deficiencies found at Hillcrest's nursing facility during a survey completed on May 1, 2002. In granting CMS's motion to dismiss the case, the ALJ found that Hillcrest had failed to file a timely request for hearing regarding the May 7 determination and had not shown "good cause" to extend the deadline for filing the hearing request.

Based on the analysis below, we affirm the ALJ's decision to dismiss the case.

Background

The following summary of the facts is drawn from the ALJ Decision. See ALJ Decision at 1-4. Hillcrest concedes that the ALJ Decision contains an accurate recitation of the facts. Request for Review (RR) at 1. All of the relevant events took place in 2002.

Hillcrest is a Medicare-participating skilled nursing facility. On May 1, the Tennessee Department of Health (TDH) completed a survey of Hillcrest (the "May 1 survey"). On May 7, CMS sent Hillcrest, by faxed letter, a notice of noncompliance. The May 7 notice advised Hillcrest that a $3,450 per day CMP and a denial of payment for new admissions (DPNA) would be imposed to address "immediate jeopardy"-level and other deficiencies found during the May 1 survey. CMS Ex. 2. The May 7 notice stated that the amount of the CMP "may be decreased if we find that the immediate jeopardy to residents' health and safety has been removed but that noncompliance continues." Id. at 2. In addition, the May 7 notice advised Hillcrest of its rights under 42 C.F.R. § 498.40(a), which permits a facility to appeal an initial, reconsidered, or revised determination that results in the imposition of a CMP or other remedy by filing a request for hearing within 60 days after receiving notice of the determination. Id. at 4. Finally, the May 7 notice stated that the amount of the CMP would be reduced by 35 percent if Hillcrest waived its right to a hearing. Id. at 3.

On May 30, TDH completed a revisit survey (the "May 30 survey") of Hillcrest. CMS Ex. 4. During that survey, TDH found that residents were no longer in immediate jeopardy but that Hillcrest continued to be out of compliance with Medicare participation requirements. Id. at 1.

On June 7, CMS issued a second notice letter informing Hillcrest of the May 30 survey findings and announcing a change in the previously imposed remedies. CMS Ex. 3. In recognition of the finding that immediate jeopardy no longer existed, the June 7 notice stated that the CMP would be reduced from $3,450 per day to $100 per day on May 24, and that the DPNA would remain in effect. Id. at 2. In addition, the June 7 notice advised Hillcrest that it could request a hearing (within 60 days) to challenge the determinations "that are based on [the] May 30, 2002 Revisit," and that if it waived its hearing rights with respect to those determinations, CMS would reduce by 35 percent the penalties accruing on or after May 24.

On July 15, Hillcrest's corporate parent, Healthmark Services, sent a letter to the DAB's Civil Remedies Division (CRD). CMS Ex. 6. This letter states that it was a "formal request for the 60 day waiver of Appeal Rights for both surveys conducted on May 1, 2002 and revisit on May 30, 2002." Id. The letter indicates that Hillcrest was urging TDH or CMS to find that the immediate jeopardy had ceased on May 10, not May 24. The July 15 letter concluded by stating that Hillcrest wished to "[w]aive [its] right to appeal once the correct stop date has been granted by the State of Tennessee." Id.

On July 16, CMS notified Hillcrest by letter that the enforcement remedies had been further revised based on a TDH desk review. CMS Ex. 4. The July 16 letter stated that CMS had moved back -- from May 24 to May 16 -- the effective date of the reduced ($100 per day) CMP. Id. at 2. The July 16 letter also indicated that the appeal deadlines in the May 7 and June 7 notices were unchanged. Id.

On August 7, Hillcrest faxed another letter to the CRD, stating that it was waiving its right to a hearing regarding the June 7 notice. CMS Ex. 7, at 2. On August 22, CMS acknowledged receipt of Hillcrest's August 7 waiver request. CMS Ex. 8, at 2. That same day, in a separate letter, CMS notified Hillcrest that it had attained substantial compliance with Medicare participation requirements on May 17, and that all of the remedies previously imposed would terminate as of that date. CMS Ex. 5.

On August 26, Hillcrest notified CRD by letter of its intent to go forward with a hearing on the findings of the May 1 survey. CMS Ex. 9. Hillcrest explained that its August 7 "waiver letter" was a request to waive hearing rights only as to the May 30 survey. Id.

On September 13, CMS filed a motion to dismiss, arguing that Hillcrest had (among other things) not filed a timely hearing request regarding the remedies imposed as a result of the May 1 survey. In its response to the motion, Hillcrest admitted that it had not filed a hearing request within 60 days after receiving CMS's notice regarding the May 1 survey findings (i.e., the May 7 notice) as required by 42 C.F.R. § 498.40(a)(2), but argued that the filing deadline should be extended pursuant to 42 C.F.R. § 498.40(c)(2), which authorizes such an extension "[f]or good cause shown." Hillcrest asserted that it had failed to file a timely hearing request because it was "concentrating all efforts on the safety of residents" and attempting to resolve the outstanding issues through the internal dispute resolution (IDR) and revisit process. Because these processes had not been completed within the alloted 60-day filing period, said Hillcrest, it did not know the "full extent of imposed sanctions" and thus could not have made an intelligent decision about whether to waive its hearing rights.

On November 25, 2002, the ALJ issued a decision dismissing the case based on the following findings of fact and conclusions of law (FFCLs): FFCL 1 -- Hillcrest waived its right to a hearing to challenge the noncompliance findings that were made at the May 30 survey; FFCL 2 -- Hillcrest was not entitled to a hearing to challenge the noncompliance findings that were made at the May 1 survey because its request for hearing was not filed within the 60-day period prescribed by the regulations; FFCL 3 -- the term "good cause" in 42 C.F.R. § 498.40(c)(2) means "either a circumstance which is beyond a petitioner's ability to control which prevents the petitioner from filing its hearing request timely, or an action by CMS which misleads petitioner into not filing its hearing request timely"; and FFCL 4 -- Hillcrest did not show "good cause" to waive or extend the 60-day deadline to appeal the findings of the May 1 survey. See ALJ Decision at 5-10.

In discussing the meaning of "good cause," the ALJ noted that the regulations in 42 C.F.R. Part 498 do not define that term. ALJ Decision at 6. The ALJ also found that: (1) "good cause" is a concept that is used and defined in 20 C.F.R. Parts 404 and 416, the regulations governing hearings before Administrative Law Judges in cases involving claims for Social Security disability and Supplemental Security Income benefits; (2) the regulations in 20 C.F.R. Parts 404 and 416 and the regulations in 42 C.F.R. Part 498 "emerge from common roots," having been promulgated by the Department of Health and Human Services (HHS) at a time when the Social Security Administration (SSA) was part of HHS and when cases involving CMS were heard by ALJs employed by SSA; (3) although the definition of "good cause" in 20 C.F.R. Parts 404 and 416 are "not verbatim transferable to cases brought under" 42 C.F.R. Part 498, the definition of good cause in Parts 404 and 416 "establishes principles that logically apply" to cases brought under Part 498; and (4) SSA's regulations describe two types of situations that would warrant a finding of good cause -- (a) events that are beyond the claimant's ability to control that prevented a party from timely filing a timely claim or appeal, and (b) actions taken by the SSA that misled the party into not filing his or her request timely. Id. at 6-7.

Standard of Review

Our standard of review on a disputed conclusion of law is whether the ALJ Decision is erroneous. Our standard of review on a disputed issue of fact is whether the ALJ decision as to that fact is supported by substantial evidence on the record as a whole. See Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs (at http://www.hhs.gov/dab/ guidelines/); South Valley Health Care Center, DAB No. 1691 (1999), aff'd South Valley Health Care Center v. HCFA, 223 F.3d 1221 (10^th Cir. 2000). We review a "good cause" finding under 42 C.F.R. § 498.40(c)(2) for abuse of discretion. See Cary Health and Rehabilitation Center, DAB No. 1771 (2001).

In its request for review (RR), Hillcrest concedes that it waived its right to challenge the determination of noncompliance and revised remedies stemming from the May 30 survey. RR at 1. Hillcrest also concedes that it failed to file, within the prescribed 60-day period, a hearing request concerning the determination of noncompliance and remedies imposed based on the May 1 survey. Id. Hillcrest's only disagreement is with the ALJ's finding that good cause did not exist to extend the time for filing the hearing request.

In paragraph 3 of its request for review, Hillcrest takes issue with the criteria used by the ALJ to determine the existence of "good cause," stating that the "the Appeal Timelines found in the Social Security Administration [regulations] are based upon an individual appealing for themselves, and not a provider preparing both an appeal and a Plan of Correction around total census level of the facility." RR at 2. As CMS asserts, the Board has never attempted to provide an authoritative or complete definition of the term "good cause" in section 498.40(c)(2). See Glen Rose Medical Center Nursing Center, DAB No. 1852, at 7 n.5 (2002). In this case, we need not decide whether the ALJ's definition is appropriate because the ALJ's factual findings support his good cause determination under any reasonable definition of that term, and because Hillcrest's asserted reasons for failing to file a timely hearing request do not -- under our prior decisions -- warrant an extension of the filing deadline.

Hillcrest contends (as it did before the ALJ) that there was good cause to extend the filing deadline because "[t]he ongoing attempts to have the May 30, 2002 revisit deficiencies removed with [TDH] placed it in a position of the sixty day appeal window expiring prior to resolutions eventually granted." RR ¶ 3. Hillcrest explains that it wanted to pursue IDR with TDH and CMS in an attempt to resolve certain issues regarding the duration of the remedies before making a decision about whether to appeal or to waive its right to a hearing and receive a 35 percent reduction in the proposed fines pursuant to 42 C.F.R. 488.436(b). Id. ¶ 2.

In response to these assertions, the ALJ found that Hillcrest "did not need to know the details pertaining to remedy duration in order to be able to file timely a hearing request challenging the noncompliance findings that were made at the May 1 survey." ALJ Decision at 9. The ALJ also found that Hillcrest: (1) knew after receiving the June 7 notice that CMS had established an endpoint (May 24) for the penalties that were imposed based on the May 1 survey; (2) had sufficient information to prepare a timely hearing request; (3) did not provide "any persuasive proof that its staff was so busy . . . as to be unable to set aside the time required to prepare and file a hearing request"; and (4) did not allege that it had been misled by CMS into believing that it could delay its filing of that request. Id. at 9-10. None of these findings are disputed by Hillcrest, and we find that they adequately support the ALJ's good cause determination.

Moreover, we have held that participation in IDR, or a deliberate decision by a provider to focus its resources on achieving compliance rather than challenging adverse survey findings, does not excuse a failure to file a timely hearing request. ⁽¹⁾ In Concourse Nursing Home, DAB No. 1856 (2002), for example, the ALJ had dismissed an untimely request for hearing based on a finding that the provider had consciously decided to focus its efforts on pursuing IDR, rather than requesting an ALJ hearing. Before the Board, the provider argued that it did not file a timely request for hearing in order to spare the government a potentially unnecessary appeal, and that its participation in IDR should have tolled the running of the 60-day filing period. We found those contentions insufficient to establish good cause, noting that CMS, when it created the IDR process, sought to balance the need for narrowing disputed issues and avoiding litigation with its concern that IDR not be used to delay enforcement. We stated that "both interests can be accommodated by granting reasonable but short delays of ALJ proceedings where it appears IDR might be productive, after a timely appeal has been filed." Concourse, DAB No. 1856, at 11. We also noted that CMS's notice of noncompliance was not defective, that it clearly described the 60-day time frame in which to request a hearing, and that the facility had failed to take advantage of this opportunity either by filing a timely hearing request or by requesting (prior to the 60-day deadline) an extension of the time in which to file such a request.

In this case, by inadvertence or tactical choice, Hillcrest elected, at least initially, to resolve its dispute by means other than a formal administrative hearing. With that election came the possibility that the time for filing a hearing request regarding the remedies based on the May 1 survey would expire before Hillcrest could predict or know the outcome of the IDR process. Evidently one of Hillcrest's chief concerns during that process was the May 1 survey's immediate jeopardy findings. When the deadline for filing the hearing request arrived on or about July 7, Hillcrest knew that CMS had not rescinded those findings but had merely determined the date on which the immediate jeopardy had ceased. Hillcrest also knew that the $3,450 per day CMP had continued to accrue until May 24. Hillcrest no doubt hoped to scale back the CMP by convincing CMS that the cessation of immediate jeopardy had occurred earlier than May 24. However, there is no indication that Hillcrest was urging CMS or TDH, via the IDR process, to completely reverse the immediate jeopardy findings stemming from the May 1 survey (i.e., by finding that its deficiencies never placed residents in immediate jeopardy). Therefore, Hillcrest had every reason to make a timely hearing request regarding those findings (assuming it wished to contest them).

In deciding when to file its hearing request, Hillcrest may have perceived a cost-benefit tradeoff between continued participation in IDR and invocation of the formal appeal process. As we have indicated in other cases, the provider's evaluation or response to that perceived tradeoff does not warrant a finding of good cause, particularly when the provider received, as it did here, a clear notice of its right to request a hearing and the deadline for making such a request. Like the notice of determination in Concourse, CMS's May 7 notice of noncompliance advised Hillcrest in clear language of the 60-day time frame for requesting a hearing. There is no suggestion in that notice that the filing deadline would be held in abeyance or extended during the pendency of IDR or extended based on the findings of subsequent revisits. Despite the clear notice, Hillcrest did not, prior to the filing deadline, ask for an extension of time to file a hearing request. Moreover, its August 26 letter of intent to proceed with a hearing regarding the May 1 survey findings was submitted well beyond (almost 45 days after) the filing deadline.

Conclusion

Based on the foregoing analysis, we conclude that the ALJ did not abuse his discretion in refusing to extend the time for filing a request for hearing concerning the determination issued by CMS on May 7, 2002. Accordingly, we affirm the ALJ's decision to dismiss the case pursuant to 42 C.F.R. § 498.70(c).

Cecilia Sparks Ford

Donald F. Garrett

Marc R. Hillson
Presiding Board Member

1. See Concourse Nursing Home, DAB No. 1856 (2002); Nursing Inn of Menlo Park, DAB No. 1812 (2002) (noting that the provider was obliged to bear the consequences of its "conscious decision to focus on its POC and the resurvey rather than prepare an appeal").