SUBJECT:

The Hertiage Center,

Petitioner,

Centers for Medicare & Medicaid Services.

AMENDED RULING AND ORDER DISMISSING UNTIMELY REQUEST FOR HEARING

THIS MATTER IS BEFORE ME on the Center for Medicare and Medicaid Services' (CMS', formerly HCFA's) Motion to Dismiss for Failure to Submit a Timely Request for Hearing. Because the Motion to Dismiss is supported by the facts of this case and the settled authority of this forum, I GRANT the Motion and DISMISS Petitioner Heritage Center's Request for Hearing. My reasons for doing so are set out below.

This case and CMS' Motion have been pending for some time, as the brief procedural history I shall review will show. I regret the delay in ruling on the Motion. The intervening period has, however, allowed the Departmental Appeals Board to rule definitively on one point involved in, though not dispositive of, this appeal, and to amplify other controlling doctrines.

Petitioner Heritage Center is a long-term care facility located in Morristown, Tennessee. A compliance survey of Heritage Center was completed by state authorities on or about 29 September 2000, and on 10 October 2000 CMS' predecessor agency HCFA formally notified Heritage Center that penalties would be imposed on the facility based on citations deriving from the survey. Heritage Center did not file its request for hearing as contemplated by 42 C.F.R. � 498.40(a)(2) until 26 December 2000.

The case was opened and docketed as C-01-278 on 5 January 2001 and assigned to Administrative Law Judge M. H. Leahy. The parties filed a Joint Response to the 5 January 2001 Uniform Order on 6 March 2001, and on 20 April 2001 HCFA filed the Motion to Dismiss now before me. Heritage Center responded on 4 June 2001 with Petitioner's Opposition to the Motion to Dismiss and its own Motion that it be allowed an extension of time to file its request for hearing. Heritage Center concluded its memorandum with the request that it be permitted "to file a surreply to HCFA's reply if needed�" HCFA replied on 19 June 2001, and by separate letter of that date expressed its opposition to Heritage Center's being allowed to file a surreply. Although no order granting Petitioner permission to do so appears in this record, Heritage Center filed its Sur-Reply on 9 July 2001. I have received and have considered Petitioner's Sur-Reply. The case was reassigned to Administrative Law Judge A. J. Montaño on 18 July 2001; to Administrative Law Judge J. K. Riotto on 29 November 2001; and on 3 January 2002 to me.

There is no material disagreement between the parties as to the sequence in which events unfolded between 10 October 2000 and 26 December 2000, and both sides of this litigation agree that the hearing request filed on 26 December 2000 was not filed within 60 days of Heritage Center's receipt of HCFA's notice letter of 10 October 2000. At one point, HCFA suggested that service of the notice letter had actually been perfected by facsimile transmission ("FAX') on 10 October 2000, but that position is no longer tenable in light of Riverview Village, DAB No. 1840 (2002): absent a showing to the contrary, Heritage Center was entitled to the benefit of the "5-day presumption" created at 42 C.F.R. � 498.22(b) for receipt of the mailed copy of the actual notice letter, and so was entitled to perfect its appeal within 65 days of 10 October 2000. Since Riverview Village reminds us that requests for hearings are filed when mailed, Heritage Center could have satisfied the timeliness requirement of 42 C.F.R.� 498.40(a)(2) by mailing its request for hearing at any time on or before 14 December 2000. Its 26 December 2000 request was mailed, and thus filed, on the seventy-seventh day.

These dates leave little room for argument on the matter of timeliness, and the parties do not differ on that matter: CMS asserts that the request was filed out-of-time, and Petitioner concedes, both in its 4 June 2001 Opposition and its 9 July 2001 Sur-Reply, that it did not meet the filing deadline. But Petitioner vigorously asserts that it has good cause for the lateness of its filing, and that I should exercise my discretion to extend the filing deadline as allowed by 42 C.F.R. � 498.40(c)(1) and (2). In its effort to demonstrate good cause for the late filing, Petitioner asserts that HCFA's notice letter failed to convey explicit notice of the 60-day deadline, and that its administrator believed that an 11 October 2000 letter from herself to the state authorities, in which an informal dispute resolution (IDR) hearing was requested, had tolled or delayed running of the 60-day period for appeal from HCFA's notice letter. Petitioner further asserts that when it became aware that the 60-day period had not been tolled or delayed, it took prompt measures to gain an extension of time to perfect its appeal. Petitioner does not deny that the administrator's invocation of IDR was intentional and deliberate, but does describe it as based on "the mistaken belief that her request for an Informal Dispute Resolution would suspend the running of the 60 day time period in which to file a formal appeal," a mistaken belief based on the fact that the Heritage Center administrator "simply did not understand the process." Request for Hearing, 4.

The Motion to Dismiss, then, turns on two questions. The first is: what is the definition of "good cause" as that term is applied in the context of 42 C.F.R. � 498.40(c)? The second is: do the facts asserted by Petitioner here meet that definition? Both questions arise frequently, and answers to both questions can be found in the decisions of the Board and the Administrative Law Judges of this forum.

It is probably inevitable that any forum which establishes and enforces procedural deadlines will find itself occasionally asked to relax or suspend those deadlines, and will be required to develop and enunciate standards by which it evaluates those requests. Appeals authorized by 42 C.F.R. � 498 Subpart D are subject to the jurisdictional deadline of 42 C.F.R. � 498.40(a)(2): if the deadline is not met and has not been extended, the appeal is subject to dismissal. 42 C.F.R. � 498.70(c). The deadline may be extended, but only for "good cause shown." 42 C.F.R. � 498.40(c)(2). The regulations employ the term "good cause" but do not define it; to all outward appearances, the authorities empowered to draft and amend the regulations have remained content to allow the Board and the Administrative Law Judges of this forum to develop a working definition of "good cause." Since at least 1996, we have evaluated attempted showings of good cause in the context of 42 C.F.R. � 498.40 by a standard based on language employed by the Board in Hospicio San Martin, DAB No. 1554 (1996).

That language is usually quoted simply as "circumstances beyond the provider's (or party's) ability to control," but there may be more to the question than that mere recitation. The Administrative Law Judge annunciated that standard in Hospicio San Martin, DAB CR387 (1995), but the provider did not challenge its form or phrasing on appeal. Indeed, a close reading of the Board's approval of the ALJ's standard leaves room at least for speculation that there might be other working definitions of "good cause" waiting to draw vitality from compelling facts:

As the ALJ stated, while the regulations do not define the term "good cause," the term has been held to mean circumstances beyond the ability of the provider to control. ALJ Decision at 3 and case cited therein. HSM did not challenge this definition of good cause in its appeal.

The Board's recent decision in Hammonds Lane Center, at al., DAB No. 1853 (2002) contains language hinting that the matter may not be settled with finality. In a footnote, the Board wrote:

3. In light of Petitioners' decisions, it is not necessary to reach the questions whether "good cause" is limited, as the ALJ declared, solely to circumstances beyond a party's ability to control.

Similar hints can be detected in Glen Rose Medical Center Nursing Home, DAB No. 1852, at 7, n. 7 (2002); and Hillcrest Healthcare, L.L.C., DAB No. 1879 (2003). Nevertheless, the Board has announced no other standard or definition by which "good cause" as the regulation employs the term can be measured; consequently, I shall apply the Board's test as it appears in Hospicio San Martin, supra, and ask: was Heritage Center's failure to meet the 60-day requirement of 42 C.F.R. � 498.40(a)(2) due to circumstances beyond its ability to control?

If such circumstances exist in this record, then they must be found in the omission of an explicit reference to "60 days" in CMS' notice letter, in the Heritage Center administrator's mistaken belief that IDR efforts tolled the 60-day period, or a combination of both. Both possibilities have been argued before, and neither has sustained a finding of "good cause." And since both arguments fail for the same particular reason--a lapse or deliberate choice by petitioners presumed to be informed participants in the Medicare and Medicaid programs, as distinct from the intervention of outside events or circumstances--they cannot together coalesce into a showing of uncontrollable circumstances.

HCFA's 10 October 2000 notice letter appears in this record as CMS Ex. 3; CMS acknowledges that its letter differed from the form usually employed in similar situations by omitting an explicit statement that providers should file hearing requests within 60 days. But the notice letter carefully stitched each of its material points to a specifically-cited statutory or regulatory provision, and explicitly informed Petitioner that "�you or your legal representative may request a hearing before an administrative law judge of the�Departmental Appeals Board. Procedures governing this process are set out in section 498.40, et seq." Two mailing addresses to which a request for hearing might be sent were set out fully, and each of them was used twice by Petitioner in attempting to perfect this appeal. CMS Exs. 5, 6; Request for Hearing, pp.1, 4.

Petitioner's first correspondence with HCFA on 20 December 2000 sought an extension of the already-expired filing deadline based on the Heritage Center administrator's mistaken belief that the IDR process would suspend the running of the 60-day period. This first letter contained absolutely no assertion that the notice letter was in any way incomplete, insufficient, vague, or misleading, but it did include the Heritage Center administrator's 11 October 2000 letter to state authorities. CMS Ex. 5. A second letter, identical in everything except its addressee, was sent to this forum on 21 December 2000. Petitioner's third (mailed to HCFA) and fourth (mailed to this forum) letters were the actual requests for hearing of 26 and 27 December 2000, and they too were void of any attack on the notice letter's sufficiency. As to each pair of letters, it will have been observed that I have treated the date of the earlier of the pair as the effective filing date.

Did the omission of explicit reference to the 60-day deadline in the notice letter create a circumstance beyond the ability of Petitioner and its administrator to control? The only imaginable route by which the omission could have done so is by concealing or obscuring the deadline to Petitioner's disadvantage. But two decisions stand directly athwart that route, and one addresses a notice letter very similar to this one. In Hamilton County Nursing Home, DAB CR716 (2000), Administrative Law Judge José A. Anglada held that the omission of explicit reference to the 60-day deadline was immaterial in the context of a notice letter which carefully and explicitly pointed out that requests for hearings were governed by 42 C.F.R. � 498.40 et seq. The section of that letter dealing with appeal rights was identical to the corresponding section in CMS Ex. 3, and of it ALJ Anglada wrote:

The inference that I draw from the cited portion of the notice letter, and the regulatory language regardingPetitioner's appeal rights, is that it did not read the information carefully enough. The notice letter of sanction unequivocally makes reference to the specific section of the regulation that establishes that Petitioner has 60 days from the receipt of the notice to appeal the Agency action.Had Petitioner read the regulation and counted 60 days from January 24, 2000, it would not have filed the request on March 31, 2000.

Thus, Hamilton County Nursing Home stands for the proposition that a notice letter is fully compliant with the fair notice requirements of 42 C.F.R. �� 488.434 (a)(2)(viii) and 488.436, and with Section 1866(h)(1) of the Social Security Act, 42 U.S.C. � 1395cc(h)(1), if it makes unequivocal reference to the procedures established by 42 C.F.R. � 498.40 et seq. Although this proposition does not seem to have been tested on appeal, it is eminently sound and I adopt it here, in part because its notion of placing some obligation on a provider to keep itself at least minimally informed of its duties and responsibilities found powerful support in Cary Health and Rehabilitation, DAB No. 1771 (2001).

Cary has substantial bearing on another part of this discussion, but for immediate application this language from its Footnote 5 is significant:

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.

Cary Health and Rehabilitation Center, supra, at 21, n. 5.

The implication of this observation for the present debate is unmistakable: it reinforces the notion set out in Hamilton County that a provider must not simply turn its head and hope for the best when it receives notice of impending and adverse agency action. It must act by choosing from many tactical and strategic options, it must do so within regulatory time schemes, and it will be expected to have informed itself about them before it chooses. When those principles are applied to the instant case, it is clear that the omission of an explicit recitation of the 60-day deadline from the 10 October 2000 notice letter did not constitute or set in motion a set of circumstances beyond Heritage Center's ability to control. It did not create "good cause" for Heritage Center's late filing.

Nor was Heritage Center's incorrect belief that IDR discussions had the effect of tolling or suspending the 60-day deadline "good cause" for its untimeliness. First, the initial mention of IDR appeared in a 4 October 2000 letter to Heritage Center from the state survey agency, and it could not have been plainer in its caution that an incomplete IDR process would not delay the effective date of HCFA's enforcement action. CMS Ex. 2, p. 2. It was also a plain warning that adverse enforcement action had been recommended to the federal authorities. When HCFA's notice letter arrived approximately six days later, the Heritage Center administrator had already been told that the IDR process would not delay HCFA's proposed actions.

Next, as a matter of law, any IDR mechanism Heritage Center might have invoked via 42 C.F.R. � 488.331(a)(1) would have been separate from, and in addition to, its right of appeal to this federal forum. The regulation is as explicit as the state agency's letter: 42 C.F.R. � 488.331(b)(1) and (2) provide that pending IDR does not delay, and a facility may not assert pending IDR to seek delay of, the effective date of an enforcement action. This point is the second on which Cary Health and Rehabilitation Center, supra, is instructive:

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 was the first in a series of Board decisions that squarely examined the relationship between IDR and the formal appeal process in the context of an untimely hearing request. Nursing Inn of Menlo Park, DAB No. 1812 (2002); Concourse Nursing Home, DAB No. 1856 (2002); and Hillcrest Healthcare, L.L.C., supra, all adhered to and elucidated the fundamental principle on which Cary rested: state IDR and the formal appeal contemplated in 42 C.F.R. � 498.40 are distinct and separate, are provided and administered by different sovereigns, and are to be understood as representing two discrete avenues for resolving adverse survey findings. When a facility opts for relief via IDR, whether through "inadvertence or tactical choice," Hillcrest Healthcare, L.L.C., supra, such as a "conscious decision to focus on its POC�rather than prepare an appeal," Nursing Inn of Menlo Park, supra, its choice is a "deliberate decision by a provider to focus its resources on achieving compliance rather than challenging adverse survey findings (that) does not excuse the failure to file a timely hearing request," Hillcrest Healthcare, L.L.C., supra. This forum's Administrative Law Judges have applied those principles in an array of cases that resemble this one, e.g. Preston Health Care, DAB CR953 (2002); and John Knox Village Care Center, DAB CR963 (2002). Heritage Center was faced with no array of circumstances beyond its ability to control when it chose its remedy, and its 11 October 2000 letter demonstrates the intention and the ability to act promptly on its choice. It has not shown "good cause" for its late filing in this forum.

Heritage Center's two arguments--the first based on the language of the notice letter, and the second based on the facility's reliance on IDR to toll the filing deadline--fail here for the same core reason: that providers have choices in seeking relief from survey citations, but that they must accept the consequences of their choices in the "cost-benefit tradeoff between continued participation in IDR and invocation of the formal appeal process." Hillcrest Healthcare, L.L.C., supra. Since neither claim rests on more than a choice proved unhelpful by hindsight, they cannot aggregate themselves into more. Taken together, the two arguments do not demonstrate "good cause" for the late filing.

A final point requires brief attention. Petitioner has argued that the Board's decisions in such cases as Alden Nursing Center--Morrow, DAB No. 1825 (2002) and The Carlton at the Lake, DAB No. 1829 (2002) reflect its intention that filing deadlines be construed with lenity, and that the ALJ exercise a liberal discretion in finding "good cause" for untimeliness. As CMS correctly points out, however, Alden and Carlton are milestones in the debate over the content requirements of 42 C.F.R. � 498.40(b)(1) and (2), and involved challenges not to the fundamental timeliness of certain hearing requests, but to their sufficiency. The Board did direct that the content requirements be construed with lenity, and did direct that the ALJ should exercise discretion liberally in allowing an extension of time for a facility to salvage its appeal by filing a sufficiently-specific request for hearing, but only in situations where an imperfectly-vague request had been filed within the 60-day period allowed by 42 C.F.R. � 498.40(a)(2). The Alden-Carlton line of cases is inapposite to the issues before me.

For all of the reason set forth above, I FIND and CONCLUDE as follows:

1. Heritage Center's request for hearing was filed more than 60 days after it was presumed to have received CMS' 10 October 2000 notice letter, and was therefore not timely filed. 42 C.F.R. � 498.40(a)(2).

2. No "good cause" for the untimely filing has been shown, and thus no reason has been shown for me to exercise my discretion and extend the time for filing. 42 C.F.R. � 498.40(c)(1) and (2).

3. Because Heritage Center's request for hearing was not timely filed, and because the time for filing it has not been extended, Heritage Center's request for hearing should be dismissed. 42 C.F.R. � 498.70(c).

ACCORDINGLY, and based on the Findings and Conclusions I have here announced, Petitioner Heritage Center's 4 June 2001 Motion for Extension of Time is denied, and CMS' 20 April 2001 Motion to Dismiss is GRANTED. Petitioner Heritage Center's hearing request should be, and it is, DISMISSED.

RICHARD J. SMITH

Administrative Law Judge