Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
|IN THE CASE OF|
||DATE: November 2, 2004|
| Docket No. A-04-73
Grant No. D09 HP 00280
Decision No. 1950
Webster University (Webster) appealed the decision of an Ad Hoc Grant Appeals Review Committee (Committee) of the Health Resources and Services Administration (HRSA) voiding an Advanced Education Nursing Grant and demanding the return of funds disbursed pursuant to that grant award. On appeal, Webster disputed HRSA's authority to recover the funds, but did not seek to reinstate the grant. The only issue addressed by this decision is whether HRSA may recover these funds on the ground that the grant award was void.
As explained below, we reverse the Committee's determination that this grant award was void and that Webster must repay all funds disbursed pursuant to the grant award on that basis. We do not reach the question of whether HRSA may require repayment of the grant funds on some other ground. See 42 C.F.R. § 50.404.
In January 2001, Webster submitted to the Bureau of Health Professions (Bureau) of HRSA an application for an Advanced Education Nursing Grant entitled "Reaching Out to Rural Communities" (Grant #5 DO9 HP 00280). HRSA Ex. A. With this grant application, Webster sought funding under section 811 of the Public Health Service Act, Title VIII (Act), to add a distance learning method of delivery to its existing Masters in Nursing Anesthesia Program. The primary purpose of the distance learning initiative was to "enhance Webster University's Masters in Nursing Anesthesia program in order to prepare more certified registered nurse anesthetists for service in rural communities." HRSA Ex. 1, at 11.
On June 26, 2001, the Bureau approved Webster's application for funding over a three-year period, July 1, 2001 to June 30, 2004. HRSA Ex. B. In the first year of the grant, Webster was authorized to spend grant funds for planning, equipment acquisition, and hiring and training of staff. In the second and third years of the grant, the grant award authorized use of grant funds to support Webster's Nursing Anesthesia Program in delivering instruction to students at distance learning locations. HRSA Ex. A, at 34-36.
Webster's Nursing Anesthesia Program was accredited by the Council on Accreditation of Nurse Anesthesia Education Programs (COA) in 1997. Under COA's Accreditation Policies and Procedures, the addition of the distance learning initiative constituted a "major programmatic change" to Webster's accredited program. HRSA Ex. I, Att. 4, at M-1, ¶ 1.c. As a major programmatic change, the distance learning initiative required COA approval before students could be taught by that method of delivery. Id. At the time the grant was awarded, Webster had not applied to COA for approval of the distance learning method of delivery. The dispute in this case involves the question of whether the lack of COA approval for the distance learning initiative at the time the grant award was made rendered the award void ab initio, even though Webster's Nurse Anesthesia Program was accredited.
In March 2002, Webster applied for approval from COA to add a distance learning method of delivery to its Nurse Anesthesia Program. (1) HRSA Ex. M, at unnumbered 3. In May 2002, COA denied Webster's application "because of incomplete information submitted by the program" and asked for additional information. HRSA Ex. G, at 1; HRSA Ex. I, Att. 1, at 3. In October 2002, COA again denied Webster's request for approval and asked for additional information. HRSA Ex. I, Att. 1, at 3. As a result of these denials, Webster did not use the distance learning methodology to teach the students in the academic year beginning September 2002. (2)
In October 2002, Webster informed the Bureau that COA had denied Webster's application for approval of the distance learning initiative. In response, HRSA restricted Webster's account to prevent additional charges to the grant. HRSA Ex. I, Att. 1, at 2. The Bureau represented that "this [October] is the first time that the Bureau had learned that the distance learning program had not been accredited . . . ." HRSA Ex. N, at 2.
On April 17, 2003, the Bureau informed Webster that the grant award was void because "the grant-funded program lacked the required program accreditation at the time of application and remains unaccredited to date." (3) HRSA Ex. I, Att. 1, at 1. The Bureau demanded the repayment of funds disbursed pursuant to the grant. Id.
Webster appealed the Bureau's decision to the Committee. 42 C.F.R. § 50.406. On February 6, 2004, the Committee upheld the Bureau's decision. HRSA Ex. N.
Webster appealed the Committee's decision to the Board pursuant to 45 C.F.R. Part 16. On appeal, Webster disputed HRSA's authority to recover the funds, but did not seek to reinstate the grant. Webster letters dated February 25, 2004 and June 16, 2004.
Applicable Statutes, Regulations, and Policies
Section 811 of the Act (42 U.S.C. § 296j) authorizes the Secretary to award grants to meet the costs of "projects that support the enhancement of advanced nursing education and practice." As to nurse anesthesia programs, it provides:
The HRSA 2001 Guidelines applicable to section 811 grants define the terms "program" and "project" as follows.
HRSA Ex. I, Att. 2, at original page 24.
As to nurse anesthesia programs, the Guidelines provide:
Id. at original page number 11.
The Guidelines define "accredited" as follows:
Id. at original page 17.
HRSA asserted that this grant award was void because it was not authorized by section 811(d)(2) of the Act. HRSA argued that, as applied here, section 811(d)(2) means that grants may support only activities that are a COA-approved part of a COA-accredited program when the grant is awarded. Because Webster's distance learning methodology had not been approved by COA when the grant was awarded, HRSA concluded that the grant award was void from its inception.
Webster argued that section 811(d)(2) authorizes grants supporting activities that are part of an accredited program, as long as the program is accredited when the grant is awarded even if COA has not approved the funded activities at the time of the grant award.
Appendix A, paragraph C(a)(4) of 45 C.F.R. Part 16 addresses the Board's review of decisions voiding grants under direct, discretionary project programs. It defines voiding as a determination that "an award is invalid because it was not authorized by statute or regulation or because it was fraudulently obtained." Thus, we consider whether the grant award was not authorized or was fraudulently obtained.
The language of section 811(d)(2) limits eligibility for grant funding to COA-accredited education programs. But the statute is ambiguous as to whether this limitation should be read to include only COA-approved methods of delivering the accredited education program, or could have a broader reading to include an accredited program even if the grant project involves changes in method of delivery not specifically approved or that are pending approval. The Secretary has not adopted regulations implementing section 811. Thus, whether the disputed award was outside of the authorized scope of this provision depends upon whether HRSA could and did permissibly adopt an official interpretation of the accreditation requirement for "education programs" to preclude such an award. Because we find that HRSA did not have such an official interpretation, we conclude that it did not lack statutory authority to award the grant. Essentially, as we discuss in more detail below, we find that the interpretive guidance HRSA relied on does not address the key issue and is simply too thin a reed upon which to base a determination that HRSA acted outside of the scope of its own authority in making the award to Webster.
The parties do not dispute that, at all times herein, Webster's Nurse Anesthesia Program as a whole was accredited by COA. Nor do the parties dispute that the distance learning methodology was a change in method of delivery subject to COA's review for approval as a "major programmatic change," and that such approval had not been obtained as of the grant award or the disbursement of grant funds. The record indicates that COA conducts reviews of such changes to ensure that "any substantive change will not adversely affect the capacity of the program to continue to meet accreditation standards." COA Accreditation Policies and Procedures, HRSA Ex. I, Att. 4, at M-1.
HRSA argued that its 2001 Guidelines set forth its interpretation of the statutory scope of authority. Our review of these Guidelines indicates that they did not expressly address the issue of whether a project involving a major programmatic change could be funded as within the scope of an accredited program only if COA had approved the change prior to the award.
HRSA relied on the following Guideline which provides:
HRSA Ex. I, Att. 2, at original page 11 (emphasis added). (4)
The plain language of the second sentence does not expressly require evidence of approval by the accreditation organization of education projects, particularly in light of evidence that COA does not grant separate accreditation to education projects. Furthermore, the provision read as whole indicates that the sentence is referring to programs, such as Webster's Nurse Anesthesia Program. This is clear when the last sentence addresses whether a new "program", rather than "project", is accredited.
HRSA's position here is also inconsistent with the Guideline which states that the term "accredited"--
Id. at original page 17. Again, this definition looks to the question of whether the university or program sponsoring the project is accredited, not to whether every aspect of a specific project has approval from the accrediting body at the time of the award.
In determining that HRSA did not have an official interpretation of the statutory provision that precluded the award of the grant, we note that HRSA failed to respond to Webster's assertion that the Bureau, which makes these grants, does not actually require COA prior approval of projects in all cases. See Webster letter of June 16, 2004, at 2; of September 3, 2004, at 1. Additionally, we note that the Bureau, which is the entity most familiar with how section 811 grants are made, stated that it was voiding the grant award because "the grant-funded program lacked the required program accreditation at the time of application and remains unaccredited to date." HRSA Ex. H at 1 (emphasis added). This language arguably indicates that the Bureau's key concern was that Webster had not obtained COA approval for distance learning in time to deliver training in accordance with the grant time table. Thus, it is not clear that the Bureau considered the grant award void when made. Further, it seems reasonable to assume that the Bureau knew COA's policies required approval of distance learning methodologies and that Webster's representation in its grant application that the Nurse Anesthesia Program had been accredited since 1997 referred to the status of the Nurse Anesthesia Program and not the COA approval process for major programmatic changes. Had the Bureau been concerned about the COA approval status of the distance learning methodology at the time it was reviewing the grant application, it seems reasonable that it would have explicitly asked Webster about the status prior to funding the grant application.
Thus, we conclude that the Guidelines HRSA relied on did not represent a statutory interpretation that would preclude the award of the grant to Webster and justify voiding the award.
We also review HRSA's implied argument that the grant is subject to voiding under 45 C.F.R Part 16 because it was fraudulently obtained. The record simply does not support such a finding. In its grant application, Webster represented that its Nursing Anesthesia Program was COA-accredited in 1997. HRSA Ex. A, at 61. Webster made no representations as to the status of the proposed distance learning initiative. If Webster knew or had reason to know that HRSA interpreted section 811(d)(2) to preclude awards for activities that were not part of a COA-accredited program at the time of the award, we would have to consider whether the grant was fraudulently obtained and void. However, the evidence in the case does not establish that HRSA had adopted such an interpretation or indicate that Webster had reason to believe HRSA had adopted such an interpretation. (5)
For the reasons discussed above, we conclude that neither the language of section 811 of the Act, nor any official interpretation of that language, conditioned grant funding for an accredited program on pre-approval by COA of any major programmatic change to that program. Further, we conclude that there is no evidence to support a finding that Webster obtained the grant award in fraudulent disregard of any interpretation of which it had notice. Therefore, this grant award was not void at its inception, and HRSA may not recover the funds expended pursuant to the award on the ground that it is void.
We reverse the Committee's determination that this grant award was void and that Webster must repay the funds disbursed pursuant to the grant because the grant was void. We do not reach the question of whether HRSA may require repayment of the grant funds on some other grounds.
Donald F. Garrett
1. COA meets in October and May of each year. HRSA Ex. I, at 3. Webster represented before the Committee that it had made an initial inquiry to COA about obtaining approval for its distance learning initiative in July 2001. It represented further that it was told by COA "to wait until new policy and Appendix was developed before submission to COA." HRSA Ex. M at unnumbered 3.
2. In the "Project Timetable" in the grant application, Webster represented its intention to "begin teaching via distance learning in June 2002." HRSA Ex. 1, at original page 35.
3. COA subsequently approved the addition of the distance learning method of delivery to Webster's Nurse Anesthesia Program in May 2003. HRSA Ex. K, at 2.
4. The version of this Guideline quoted in the Bureau's decision (HRSA Ex. I, Att. 1, at 2), the Committee's decision (HRSA Ex. N, at 2), and HRSA's brief (at 4) differs from the above text. We conclude that these differences are not material. Additionally, we note that HRSA did not cite to any exhibit in this record setting forth the language on which it relied. The version we discuss in the text of this decision is found at HRSA Ex. I, Att. 2, at original page 11. Webster quoted this version in its appeal to the Committee and supplied it to the Committee as an attachment.
5. HRSA failed to respond to Webster's assertion that requiring programs to obtain COA approval for projects, prior to obtaining a section 811 grant, is contrary to how institutions customarily allocate scarce resources. Webster argued as follows. Section 811(a)(1) requires that grants "support the enhancement of advanced nursing education and practice." Such enhancements often constitute major programmatic changes and require COA approval prior to full implementation. Seeking COA approval for a major programmatic change is a resource-intensive process and grant applications are often not successful. Therefore, institutions conserve resources by seeking funding for programmatic changes before expending resources to obtain COA approval for such changes. HRSA Ex. I at 3; Webster letter dated June 16, 2004, at 2.