SUBJECT:

The Physicians' Hospital in Anadarko,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

Petitioner, The Physicians' Hospital in Anadarko (Petitioner), is an Oklahoma hospital that seeks from the Centers for Medicare & Medicaid Services (CMS) provider-based status for its remote physical therapy/occupational therapy facility, Rehab Services in Chickasha (Rehab Services). However, the State of Oklahoma has advised CMS that Rehab Services is not licensed. Since federal regulations require that a provider-based facility operate under the same state license as the main facility, CMS has denied Petitioner's application, and Petitioner appeals. CMS now files a motion to dismiss for lack of subject matter jurisdiction, or, in the alternative, for summary judgment.

For the reasons set forth below, I grant CMS's motion for summary judgment.

The relevant facts are not in dispute. Petitioner is an Oklahoma hospital that participates in the Medicare program. Located about twenty miles away from the hospital's main campus is its affiliated facility, Rehab Services, which provides physical and occupational therapy services. On March 5, 2003, Petitioner filed with CMS a "Provider-Based Attestation Statement," seeking provider-based status for Rehab Services. CMS Ex. 1; P. Ex. 1.

Provider-based status means the relationship between a main provider and a provider-based entity or a department of a provider, remote location of a hospital, or satellite facility, that complies with the provisions of [42 C.F.R. � 413.65].

42 C.F.R. � 413.65(a)(2). ⁽¹⁾

After some correspondence back and forth, CMS indicated by letter dated December 10, 2003, that it would approve provider-based status for Rehab Services. CMS Ex. 5; P. Ex. 4. However, in a letter dated December 22, 2003, the Oklahoma State Department of Health (State Agency) advised CMS that Rehab Services was not licensed, either alone or under the hospital's license, and was not certified or accredited. CMS Ex. 6. ⁽²⁾ Thereafter, in a notice letter dated January 8, 2004, CMS advised Petitioner that, because Rehab Services did not satisfy the licensure requirements for provider-based status, 42 C.F.R. � 413.65(d)(1), its request was denied. CMS Ex. 7; P. Ex. 5.

Petitioner sought reconsideration, and, in a notice dated November 18, 2005, CMS affirmed the denial of provider-based status. CMS Ex. 12; P. Ex. 10. Petitioner requested a hearing, and the matter has now been assigned to me for decision.

CMS has moved to dismiss or for summary judgment, and has submitted 12 exhibits (CMS Exs. 1-12). Petitioner opposes and has submitted 10 exhibits (P. Exs. 1-10). ⁽³⁾ For purposes of resolving this motion, and, in the absence of any objections, I admit CMS Exs. 1-12 and P. Exs. 1-10.

II. Issues

I first consider whether I have jurisdiction to review this matter. If I find I have jurisdiction, I consider whether summary judgment is appropriate. ⁽⁴⁾

On the merits, the sole issue before me is whether Rehab Services meets the licensure requirements for provider-based status.

III. Discussion

A. I have jurisdiction to review this reconsidered determination of provider-based status. ⁽⁵⁾

Petitioner's hearing rights are established by regulations found at 42 C.F.R. Part 498. Under the regulatory scheme, CMS makes an initial determination with respect to whether a prospective department of a provider, remote location of a hospital, satellite facility, or provider-based entity qualifies for provider-based status under 42 C.F.R. � 413.65. 42 C.F.R. � 498.3(b)(2). Any prospective provider dissatisfied with an initial determination that it does not qualify may request reconsideration, and, if dissatisfied with the reconsidered determination, is entitled to a hearing before an Administrative Law Judge. 42 C.F.R. � 498.5(a). I therefore have jurisdiction to review denials of provider-based status so long as the prospective provider otherwise satisfies timeliness and content requirements for hearing requests. See 42 C.F.R. � 498.40.

Here, Petitioner properly sought reconsideration, is dissatisfied with the reconsidered determination, and has timely requested a hearing. I therefore have jurisdiction to review this case.

B. Summary disposition is appropriate because this case presents no dispute over genuine issues of material fact.

Summary judgment is appropriate if a case presents no genuine dispute as to any material fact, and one party is entitled to judgment as a matter of law. The moving party may show the absence of a genuine factual dispute by presenting evidence so one-sided that it must prevail as a matter of law, or by showing that the non-moving party has presented no evidence "sufficient to establish the existence of an element essential to its case, and on which it will bear the burden of proof at trial." Livingston Care Center v. United States Dep't of Health and Human Services, 388 F.3d 168, 173 (6^th Cir. 2004), quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). To avoid summary judgment, the nonmoving party must then act affirmatively by tendering evidence of specific facts showing that a dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 n.11 (1986). See also Vandalia Park, DAB No. 1939 (2004), and Lebanon Nursing and Rehabilitation Center, DAB No. 1918 (2004). Denials in pleadings or briefs are not sufficient to overcome a well-supported motion. Nor is a mere scintilla of supporting evidence sufficient. "If the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Livingston, at 173, quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986).

As discussed below, federal regulations generally require that a facility seeking provider-based status operate on the same state license as the main provider. 42 C.F.R. � 413.65(d)(1). Here, CMS asserts - and presents evidence to establish - that Rehab Services does not meet this requirement. This evidence includes the December 22, 2003 letter from Mr. Dean Bay, Director of the State Agency's Facility Services Division, saying that "Rehab Services . . . is not licensed, either alone or under the hospital's license" (CMS Ex. 6), and an August 29, 2005 letter from Mr. Bay stating that Petitioner had not requested the addition of Rehab Services to its hospital license. CMS Ex. 11.

To avoid summary judgment, Petitioner must now tender evidence showing that a dispute exists as to whether Rehab Services operates under Petitioner's hospital license. Somewhat disingenuously, Petitioner faults CMS's "failure" to produce a certified copy of Petitioner's hospital license. But CMS is not required to present such evidence. Petitioner is required to produce evidence establishing a factual dispute as to whether it meets the federal licensure requirements. Petitioner has presented no such evidence. Indeed, Petitioner does not even claim that Rehab Services operates under Petitioner's hospital license. Instead, it acknowledges that adding Rehab Services to its license is an issue that is currently pending before the State Agency. P. Br. at 3, 8; see P. Ex. 9; see also Social Security Act, section 1861(e)(7).

The summary judgment rule exists, in large part, "to isolate and dispose of factually unsupportable claims or defenses." Livingston at 172, quoting Celotex, 477 U.S. at 323-24. Producing its own license should not be a significant burden for any appropriately licensed facility. Summary judgment is thus appropriate here because Petitioner has not established evidence showing that a factual dispute exists as to its licensing. ⁽⁶⁾

C. Because Rehab Services does not operate under Petitioner's hospital license, it does not meet requirements for provider-based status.

Among other requirements, a facility seeking provider-based status must be operated under the same license as the main provider, unless the state requires a separate license or state law does not permit licensure of both entities under a single license. CMS will also deny provider-based status to a facility if a state health facilities' cost review commission or comparable authority finds that the particular facility is not part of a provider. 42 C.F.R. � 413.65(d)(1).

Oklahoma state law allows a hospital to include its remote facilities under its license so long as: 1) the facilities are separated by no more than fifty (50) miles; 2) both facilities are operated by the same governing body with one administrator; and 3) the medical staffs for both facilities are totally integrated so that a practitioner's privileges extend to all facilities operated under the common license. Okla. Admin. Code 310:667-1-3(f) (2006). ⁽⁷⁾ Thus, no provision of state law precludes Petitioner and Rehab Services from operating under a single license. See CMS Ex. 9 (February 13, 2004 letter in which State Agency explains to Petitioner that outpatient facilities located at different addresses from a hospital may be licensed as part of the hospital if certain requirements are met) and CMS Ex. 11 (State Agency opinion letter setting forth relevant provisions of state statute). CMS therefore properly denied Rehab Services provider-based status because it does not satisfy federal licensure requirements.

IV. Conclusion

For the reasons discussed above, I find that this matter presents no dispute over genuine issues of material fact, so summary judgment is appropriate. Because Petitioner has not shown that its remote facility, Rehab Services, operates under the same hospital license as Petitioner, and nothing in Oklahoma state law precludes the two facilities from operating under the same license, CMS properly determined that the facility does not qualify for provider-based status.

Carolyn Cozad Hughes

Administrative Law Judge

1. Petitioner does not challenge CMS's assertion that provider-based status means higher Medicare reimbursement. With provider-based status, Rehab Services could bill at the hospital's rate rather than the lower free-standing facility rate. See CMS Br. at 9-10.

2. Apparently, the State of Oklahoma does not require its free-standing rehabilitation facilities to be licensed. See CMS Ex. 11.

3. Petitioner refers to its attachments as "tabs." To conform to Civil Remedies Division procedure, I have re-designated them "exhibits."

4. Petitioner complains of inconsistencies in CMS's requesting both dismissal for lack of jurisdiction and summary judgment, which necessarily requires me to assume jurisdiction over the subject matter. But parties commonly present these motions in the alternative. Indeed, under the federal rules, a Rule 12(b) motion to dismiss may be treated as a Rule 56 motion for summary judgment where the court finds it appropriate to consider evidence outside the pleadings. Fed. R. Civ. P. 12(c).

5. I make Findings of Fact and Conclusions of Law (Findings) to support my decision in this case. I set forth each finding in italics and bold, as a separate heading.

6. Petitioner correctly notes that in summary judgment all reasonable inferences must be drawn in favor of the non-moving party. However, the factual issue here - whether Rehab Services operates under Petitioner's hospital license - is not one for which any inferences can be drawn. Either the facility is on the hospital license or it is not.

7. These requirements are similar to federal requirements for provider-based status. See 42 C.F.R. � 413.65(d) and (e).