Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Desert Hospital,
Petitioner,
- v. -
Health Care Financing Administration.
DATE: December 13, 1996
Docket No. C-96-295
Decision No. CR448
DECISION
I grant the motion of Desert Hospital (Petitioner) for
summary disposition on the issue of whether the Health
Care Financing Administration (HCFA) had the authority to
impose against Petitioner denial of payment for new
admissions, effective March 20, 1996. I dismiss
Petitioner's request for a hearing as to a civil money
penalty imposed by HCFA, in view of Petitioner's
assertion that it would withdraw its hearing request
concerning the civil money penalty if it prevailed in its
motion for summary disposition. I deny as moot HCFA's
motion that I amend my prehearing order in this case.
I. Background
On April 16, 1996, HCFA advised Petitioner that it was
imposing remedies against Petitioner which included the
following:
• Denial of payment for new admissions, effective
March 20, 1996.
• A civil money penalty.
HCFA advised Petitioner additionally that it would
terminate Petitioner's agreement to participate in the
Medicare program, effective August 5, 1996, if Petitioner
did not attain substantial compliance with Medicare
participation requirements by that date.
On May 23, 1996, HCFA advised Petitioner that it had
determined that Petitioner had attained substantial
compliance with Medicare participation requirements,
effective April 9, 1996. Consequently, HCFA determined
not to terminate Petitioner's participation in Medicare.
HCFA ended the accrual of the civil money penalty and
the denial of payment for new admissions effective April
9, 1996.
Petitioner requested a hearing from HCFA's April 16 1996
determination to impose remedies against it, and the case
was assigned to me for a hearing and a decision.
Petitioner moved for summary disposition on the issue of
whether HCFA could impose against Petitioner denial of
payment for new admissions, effective March 20, 1996. In
its motion, Petitioner averred that, if it prevailed, it
would withdraw its request for a hearing concerning the
civil money penalty that HCFA had imposed. Petitioner
submitted 10 exhibits (P. Exs. 1 - 10) with its motion
for summary disposition.
HCFA opposed Petitioner's motion for summary disposition.
HCFA submitted two exhibits with its opposition to
Petitioner's motion (HCFA Exs. 1 - 2). Neither
Petitioner nor HCFA objected to my receiving into
evidence any of the exhibits that were submitted by
Petitioner or by HCFA. Therefore, I am receiving into
evidence P. Exs. 1 - 10 and HCFA Exs. 1 - 2.
Additionally, HCFA moved that I amend the prehearing
order that I issued in this case. Petitioner opposed
HCFA's motion.
II. Issue, findings of fact and conclusions of law
The issue is whether HCFA was authorized to impose
against Petitioner a denial of payment for new
admissions, effective March 20, 1996, and continuing
until April 9, 1996, the date on which HCFA found that
Petitioner was complying substantially with Medicare
participation requirements. I make the following
findings of fact and conclusions of law (Findings), which
I discuss in detail at Part III. of this decision.
1. HCFA is required to give a long term care
facility at least 15 days' notice in writing of its
intent to impose a remedy against the facility,
except in a case where HCFA determines that the
facility's noncompliance with Medicare participation
requirements poses immediate jeopardy to the health
and safety of residents.
2. As part of the notice requirement, HCFA must
inform a long term care facility of the
participation requirements that HCFA determines that
the facility has not complied with, and which are
the basis for HCFA's determination to impose a
remedy.
3. On February 15, 1996, the California Department
of Health Services (California survey agency)
advised Petitioner that, based on a survey which the
California survey agency conducted of Petitioner on
February 6, 1996, Petitioner had been found not to
be complying with federal participation requirements
for the Medicare and Medicaid programs. The
California survey agency told Petitioner that, based
on these findings of noncompliance, it would
recommend to HCFA that HCFA impose remedies against
Petitioner, including denial of payment for new
admissions.
4. In its February 15, 1996 notice to Petitioner,
the California survey agency did not specify which
participation requirements it had found that
Petitioner had not complied with. However, a report
of the February 6, 1996 survey alleged failures by
Petitioner to comply with requirements contained in
the following regulations: 42 C.F.R. § 483.10(b)(4);
42 C.F.R. § 483.10(b)(5) - (6); 42 C.F.R. §
483.10(b)(11); 42 C.F.R. § 483.10(n); 42 C.F.R. §
483.10(o); 42 C.F.R. § 483.13(a); 42 C.F.R. §
483.15(f)(1); 42 C.F.R. § 483.15(g); 42 C.F.R. §
483.15(h)(1); 42 C.F.R. § 483.20(a); 42 C.F.R. §
483.20(b); 42 C.F.R. § 483.20(b)(4)(iv); 42 C.F.R. §
483.20(d); § 42 C.F.R. § 483.20(d)(3)(i); 42 C.F.R.
§ 483.25(c); 42 C.F.R. § 483.25(d)(2); 42 C.F.R. §
483.25(i)(1); 42 C.F.R. § 483.25(k); 42 C.F.R. §
483.25(l)(1), (2); 42 C.F.R. § 483.35(h)(2); 42
C.F.R. § 483.45(b); 42 C.F.R. § 483.60(c)(2); 42
C.F.R. § 483.65(a)(1) - (3); 42 C.F.R. § 483.75; 42
C.F.R. § 483.75(d)(1) - (2); 42 C.F.R. § 483.75(i);
42 C.F.R. § 483.75(l)(1); 42 C.F.R. § 483.75(o)(1);
and 42 C.F.R. § 483.75(o)(2) - (3).
5. On February 29, 1996, HCFA advised Petitioner
that it concurred with findings by the California
survey agency that Petitioner did not comply with
two federal participation requirements. These
requirements are contained in 42 C.F.R. §§
483.15(f)(1), and 483.25(c). HCFA did not advise
Petitioner that it concurred with other findings of
noncompliance made by the California survey agency.
6. The reasonable construction of HCFA's February
29, 1996 notice to Petitioner is that HCFA concurred
with the California survey agency's findings that
Petitioner failed to comply with participation
requirements contained in 42 C.F.R. §§ 483.15(f)(1)
and 483.25(c), but did not concur with findings by
the California survey agency that Petitioner failed
to comply with other participation requirements.
7. In its February 29, 1996 notice, HCFA advised
Petitioner that HCFA would impose denial of payment
for new admissions and other remedies against
Petitioner if Petitioner did not attain compliance
with Medicare participation requirements. The
notice implied that, in order to avoid imposition of
denial of payment for new admissions, Petitioner
must attain compliance with participation
requirements by March 20, 1996.
8. The California survey agency resurveyed
Petitioner on March 20, 1996. The California survey
agency found that Petitioner had attained compliance
with the two participation requirements cited by
HCFA in the February 29, 1996 notice from HCFA to
Petitioner. However, the California survey agency
found that Petitioner had not attained compliance
with other participation requirements that it had
found that Petitioner was not complying with at the
February 6, 1996 survey of Petitioner.
9. On April 16, 1996, HCFA advised Petitioner that
it had determined that, based on the findings made
by the California survey agency at its March 20,
1996 survey of Petitioner, Petitioner had not
corrected all of the deficiencies that had been
alleged previously by the California survey agency.
HCFA advised Petitioner that it had determined to
impose remedies against Petitioner, which included
denial of payment for new admissions, effective
March 20, 1996.
10. HCFA's determination to impose denial of
payment for new admissions against Petitioner,
effective March 20, 1996, was premised on findings
by the California survey agency that some of the
deficiencies that the California survey agency had
identified at its February 6, 1996 survey of
Petitioner had not been corrected by Petitioner as
of March 20, 1996. However, HCFA did not concur
with the California survey agency's initial findings
of these deficiencies in HCFA's February 29, 1996
notice to Petitioner.
11. The first notice from HCFA to Petitioner in
which HCFA implied that it concurred with findings
made at the February 6, 1996 survey by the
California survey agency, other than the findings
that Petitioner was not complying with participation
requirements contained in 42 C.F.R. §§ 483.15(f)(1)
and 483.25(c), is HCFA's April 16, 1996 notice to
Petitioner.
12. HCFA did not give Petitioner 15 days' notice of
its intent to impose denial of payment for new
admissions as a remedy for Petitioner's failure to
correct deficiencies that the California survey
agency identified on February 6, 1996 and which the
California survey agency found that Petitioner had
not corrected as of March 20, 1996.
13. HCFA is without authority to impose denial of
payment for new admissions, effective March 20,
1996, as a remedy for Petitioner's failures to
comply with participation requirements, which
failures were identified by the California survey
agency at the February 6, 1996 and March 20, 1996
surveys, but which were not cited by HCFA in its
February 29, 1996 notice to Petitioner.
14. HCFA's motion that I clarify my prehearing
order in this case is moot.
III. Discussion
A. Governing law (Findings 1 - 2)
Petitioner is a provider of long-term care whose
participation in Medicare is subject to the requirements
contained in 42 C.F.R. Part 488 which govern providers of
long-term care. 1/ The regulations in this Part
contain notice requirements that HCFA must adhere to
before imposing a remedy against a long-term care
provider that HCFA determines is not complying with
participation requirements.
Where HCFA determines to impose a remedy, HCFA must give
the provider advance notice of its determination. 42
C.F.R. § 488.402(f)(1). The notice must tell the
provider: the nature of the provider's noncompliance with
participation requirements; which remedy HCFA has
determined to impose; the effective date of the remedy;
and the provider's right to appeal HCFA's determination
to impose a remedy. 42 C.F.R. § 488.402(f)(1)(i) - (iv).
The regulation's requirement that HCFA tell the provider
the nature of the provider's failure to comply with
participation requirements, as a prerequisite to imposing
a remedy against the provider, means that HCFA may not,
as a predicate to imposing a remedy, rely on a general
statement that the provider is not complying with
participation requirements. Nor may HCFA give the
provider an incomplete statement of the provider's
deficiencies, and then, at a later date, impose a remedy
based on the presence of deficiencies that were not cited
by HCFA in its notice to the provider. The regulation
requires nothing less than a complete disclosure by HCFA
to the provider of the deficiencies for which HCFA may be
imposing a remedy at a later date. Id.
HCFA must give the provider 15 days' written notice of
its intent to impose a remedy in any case where the
provider's noncompliance with participation requirements
does not pose immediate jeopardy to the health and safety
of residents, except in the instance where HCFA
determines to impose a civil money penalty or to impose
monitoring of the provider's performance by a State. 42
C.F.R. § 488.402(f)(4). The 15-day notice period begins
to run on the date that the notice is received by the
provider. 42 C.F.R. § 488.402(f)(5). However, the
remedy will become effective no later than 20 days from
the date that HCFA mails to the provider its notice of
intent to impose a remedy.
The regulations in Part 488 which apply to providers of
long-term care were published in order to implement those
sections of the Social Security Act (Act) which govern
the participation of such providers in the Medicare
program and State health care programs. In particular,
the Part 488 regulations are intended to implement the
parts of sections 1819, 1919, and 1866 of the Act, which
authorize the Secretary of the United States Department
of Health and Human Services (the Secretary) and the
States to impose remedies on providers of long-term care
who do not comply with federal requirements which govern
participation in the Medicare and State health care
programs. In the Part 488 regulations, the Secretary has
delegated authority to HCFA and to the States to impose
remedies that are consistent with the requirements of the
Act.
The purpose of remedies imposed pursuant to the
regulations in Part 488 is to encourage providers of
long-term care that are not complying with participation
requirements to correct their deficiencies. The
authority to impose remedies is not intended to be a
mechanism by which to punish such providers for failing
to comply with participation requirements. It would be
inconsistent with the requirements of both the Act and
the Part 488 regulations, and punitive, to impose a
remedy under circumstances where the remedy did not serve
a remedial purpose.
Where HCFA imposes a remedy without first satisfying the
notice requirements, that remedy becomes a punishment
that is inconsistent with the Act's remedial purpose.
The notice requirements of 42 C.F.R. § 488.402(f)(4) and
(5) must be read consistent with the remedial purpose of
the Act and regulations. The purpose of the notice
requirements is to give a long-term care provider an
opportunity to correct its deficiencies in order to
forestall the imposition of a remedy. If a long-term
care provider is not given adequate notice of its
deficiencies and of HCFA's intent to impose a remedy
based on HCFA's determination that the provider manifests
those deficiencies, then the provider will not be
encouraged to correct the deficiencies in order to
forestall the imposition of a remedy.
The requirement of adequate notice is made more
compelling by the fact that the Part 488 regulations give
the States and HCFA independent authority, in some
circumstances, to make determinations of deficiencies and
to impose remedies based on those determinations. See 42
C.F.R. § 488.400. In some circumstances, a State may
make a determination of a deficiency and impose a remedy
against a provider of long-term care without seeking
HCFA's concurrence or approval. In other circumstances,
as in this case, the State will make a recommendation to
HCFA, and HCFA will make the ultimate determination of a
deficiency and whether to impose a remedy. The parallel
authority to impose remedies makes it imperative that the
provider know which authority (State or HCFA) it must
satisfy in order to avoid the imposition of a remedy.
B. The relevant facts (Findings 3 - 12)
The parties do not dispute the relevant facts. The
undisputed facts are as follows.
On February 6, 1996, the California survey agency
conducted a survey of Petitioner to determine whether
Petitioner was complying with federal participation
requirements governing nursing homes participating in
Medicare and Medicaid. P. Ex. 1 at 1. The surveyors who
conducted the survey concluded that Petitioner was not
complying substantially with several participation
requirements. The requirements which the surveyors
concluded that Petitioner was not complying substantially
with are stated in: 42 C.F.R. § 483.10(b)(4); 42 C.F.R. §
483.10(b)(5) - (6); 42 C.F.R. § 483.10(b)(11); 42 C.F.R.
§ 483.10(n); 42 C.F.R. § 483.10(o); 42 C.F.R. §
483.13(a); 42 C.F.R. § 483.15(f)(1); 42 C.F.R. §
483.15(g); 42 C.F.R. § 483.15(h)(1); 42 C.F.R. §
483.20(a); 42 C.F.R. § 483.20(b); 42 C.F.R. §
483.20(b)(4)(iv); 42 C.F.R. § 483.20(d); § 42 C.F.R. §
483.20(d)(3)(i); 42 C.F.R. § 483.25(c); 42 C.F.R. §
483.25(d)(2); 42 C.F.R. § 483.25(i)(1); 42 C.F.R. §
483.25(k); 42 C.F.R. § 483.25(l)(1), (2); 42 C.F.R. §
483.35(h)(2); 42 C.F.R. § 483.45(b); 42 C.F.R. §
483.60(c)(2); 42 C.F.R. § 483.65(a)(1) - (3); 42 C.F.R. §
483.75; 42 C.F.R. § 483.75(d)(1) - (2); 42 C.F.R. §
483.75(i); 42 C.F.R. § 483.75(l)(1); 42 C.F.R. §
483.75(o)(1); and 42 C.F.R. § 483.75(o)(2) - (3). HCFA
Ex. 1 at 1 - 66.
On February 15, 1996, the California survey agency sent a
notice to Petitioner. P. Ex. 1. The notice recited that
a survey had been conducted of Petitioner on February 6,
1996. Id. at 1. It stated that Petitioner had been
found not to be complying with participation
requirements. Id. The notice did not state specifically
which participation requirements Petitioner had been
found not to be complying with, except that it referred
Petitioner to the finding of the surveyors that
Petitioner had not complied with the requirements of 42
C.F.R. § 483.25, and, therefore, had provided care of a
substandard quality. Id. at 3. Nor did the notice
specifically incorporate by reference the findings which
the surveyors reported separately. However, it appears
that the California survey agency furnished Petitioner a
copy of the surveyors' report. See HCFA Ex. 1.
The notice instructed Petitioner to submit a plan of
correction to the California survey agency. P. Ex. 1 at
1. In addition, the notice advised Petitioner that the
California survey agency was recommending to HCFA that
HCFA impose remedies consisting of the following: a
civil money penalty, to be imposed effective January 30,
1996; denial of payment for new admissions, to be imposed
effective March 5, 1996; and directed in-service training
to be imposed effective March 5, 1996. Id. at 2.
On March 4, 1996, the California survey agency sent an
amended notice to Petitioner. P. Ex. 2. The amended
notice differs from the February 15, 1996 notice only in
the following respect: it stated that Petitioner had
also not complied with the requirements of 42 C.F.R. §
483.15, and therefore, had provided care of a substandard
quality.
On February 29, 1996, HCFA sent a notice to Petitioner.
P. Ex. 3. The notice recited that the California survey
agency had surveyed Petitioner on February 6, 1996, and
that it had found that Petitioner was not complying
substantially with federal participation requirements.
Id. at 1. HCFA told Petitioner that:
As a result of the survey findings listed on
the Statement of Deficiencies and Plan of
Correction (Form HCFA-2567) which was forwarded
to you after the survey, the [California survey
agency] notified you that it would recommend to
. . . (HCFA) that remedies be imposed. We
concur with the survey findings which indicate
that the following Medicare requirements were
out of compliance:
42 C.F.R. 483.15(f)(1) Quality of Life
42 C.F.R. 483.25(c) Quality of Care
Id.
HCFA informed Petitioner that, as a result of its
"current and past noncompliance with Medicare
requirements," HCFA would impose remedies against
Petitioner. Id. These remedies included denial of
payment for new admissions, effective March 20, 1996.
Id. at 1 - 2.
Petitioner prepared a corrective action plan. HCFA Ex. 1
at 1 - 66. The corrective action plan addressed all of
the findings of noncompliance that were made by the
California survey agency surveyors, and not just those
that were recited in the February 15 and March 4, 1996
notices from the California survey agency to Petitioner,
or in HCFA's February 29, 1996 notice to Petitioner.
HCFA Ex. 1 at 1 - 66; see P. Ex. 1 - 3. The corrective
action plan is dated March 11, 1996, and is signed by
Petitioner's Administrative Director. HCFA Ex. 1 at 1;
see P. Ex. 4 at 2.
It is not clear from the exhibits in this case whether
Petitioner sent the completed corrective action plan to
the California survey agency or to HCFA. In any event,
on March 13, 1996, Petitioner informed HCFA that it had
attained compliance with Medicare participation
requirements. P. Ex. 4. In this letter, Petitioner
asserted that it had completed required corrective
actions as of March 2, 1996. Id. at 1. Petitioner
asserted that it was ready to be resurveyed in order to
demonstrate that it was complying substantially with
participation requirements. Id. at 1 - 2.
On March 20, 1996, the California survey agency
resurveyed Petitioner. P. Exs. 5, 6. On April 3, 1996,
the California survey agency notified Petitioner that,
based on the resurvey, the California survey agency
concluded that Petitioner remained noncompliant with
participation requirements contained in 42 C.F.R. §§
483.20, 483.45, and 483.75. P. Ex. 6 at 1. The
California survey agency advised Petitioner that it would
recommend to HCFA that HCFA impose against Petitioner the
remedy of directed in-service training. Id. The
California survey agency advised Petitioner,
additionally, that HCFA might determine to impose a civil
money penalty against Petitioner. Id. at 1 - 2.
On April 9, 1996, Petitioner submitted a plan of
correction to the California survey agency. P. Ex. 7.
The plan of correction addressed the deficiencies that
the California survey agency identified at its March 20,
1996 survey of Petitioner. P. Ex. 7 at 2 - 8.
On April 16, 1996, HCFA notified Petitioner that HCFA was
imposing remedies against Petitioner. P. Ex. 8. HCFA
announced that its determination to impose remedies was
based on findings by the California survey agency at the
March 20, 1996 resurvey of Petitioner, that Petitioner
continued to manifest failures to comply with
participation requirements, and that Petitioner had not
corrected all deficiencies that were identified
previously by the California survey agency. The remedies
imposed by HCFA included denial of payment for new
admissions "effective March 20, 1996 as stated in our
February 29, 1996 letter." Id. at 1; see P. Ex. 3.
Other remedies that were imposed included a civil money
penalty and continuation of directed in-service training.
Id. at 1.
Petitioner's April 9, 1996 plan of correction, which
addressed the deficiencies identified by the California
survey agency at the March 20, 1996 resurvey of
Petitioner, was accepted by the California survey agency
as being credible evidence that Petitioner had corrected
those deficiencies. HCFA Ex. 2 at 2. Based on that
acceptance, HCFA determined that Petitioner complied with
all federal participation requirements, effective April
9, 1996. Id. HCFA determined to rescind the remedies of
denial of payment for new admissions, civil money
penalty, and directed in-service training, effective
April 9, 1996. Id. However, the consequence of HCFA's
determination to impose denial of payment for new
admissions, effective March 20, 1996, and its subsequent
rescission of that determination, effective April 9,
1996, is that HCFA denied Petitioner payment for new
admissions occurring between March 20, 1996 and April 9,
1996.
From the foregoing recitation, certain key facts emerge,
which are central to my decision in this case. They are
the following:
• HCFA's February 29, 1996 notice to Petitioner
states that HCFA concurs with only two of the findings of
deficiencies that the California survey agency made at
the February 6, 1996 survey of Petitioner. P. Ex. 3 at
1. HCFA did not concur with or ratify the additional
findings of deficiencies that the California survey
agency made at its February 6, 1996 survey of Petitioner.
Id. The reasonable implication of this notice is that
HCFA concurred with the California survey agency's
findings that Petitioner did not comply with the
requirements of 42 C.F.R. §§ 483.15(f)(1) and 483.25(c),
but that HCFA did not concur with other findings of
deficiencies made by the California survey agency.
• The three continuing deficiencies that the
California survey agency identified at its March 20, 1996
resurvey of Petitioner did not include either of the two
deficiencies that HCFA identified in its February 29,
1996 notice to Petitioner. P. Ex. 6 at 1; see P. Ex. 3
at 1.
• The California survey agency did not recommend
that HCFA impose against Petitioner denial of payment for
new admissions as a remedy for the three remaining
deficiencies that the California survey agency identified
at its March 20, 1996 resurvey of Petitioner. P. Ex. 6
at 1.
• Petitioner corrected all of the three remaining
deficiencies, effective April 9, 1996. P. Ex. 7; HCFA
Ex. 2 at 2.
• The two findings of deficiencies that HCFA
concurred with in its February 29, 1996 notice to
Petitioner were not a basis for HCFA's determination to
impose against Petitioner denial of payment for new
admissions, effective March 20, 1996, inasmuch as
Petitioner corrected these deficiencies on or before
March 20, 1996. P. Ex. 7.
• Notwithstanding, HCFA determined to impose
against Petitioner denial of payment for new admissions,
effective March 20, 1996. P. Ex. 8 at 1. HCFA's basis
for determining to impose denial of payment for new
admissions was the California survey agency's
determination that, as of March 20, 1996, Petitioner
remained out of compliance with three participation
requirements that the California survey agency had found
Petitioner to be out of compliance with at its February
6, 1996 survey. P. Ex. 8 at 1; see P. Ex. 6; see HCFA
Ex. 1. None of these three participation requirements
comprise either of the two requirements that HCFA cited
in its February 29, 1996 notice to Petitioner. Id.
• HCFA did not give Petitioner 15 days notice of
the basis for its determination to impose against
Petitioner denial of payment for new admissions.
• Prior to April 16, 1996, the only participation
requirements which HCFA had advised Petitioner that it
found Petitioner not to be complying with are those
contained in 42 C.F.R. §§ 483.15(f)(1) and 483.25(c). P.
Ex. 3.
C. Application of the law to the facts (Finding 13)
As I find at Part III.A., 42 C.F.R. § 488.402(f)(1)
requires HCFA to state with particularity the basis for
its determination to impose a remedy against a provider
of long-term care. HCFA failed to comply with this
requirement in imposing denial of payment for new
admissions against Petitioner, effective March 20, 1996.
The plain meaning of HCFA's February 29, 1996 notice to
Petitioner is that HCFA agreed with the California survey
agency's findings that Petitioner was not complying
substantially with participation requirements only to the
extent that HCFA concurred with the California survey
agency's findings that Petitioner was not complying
substantially with the participation requirements
contained in 42 C.F.R. §§ 483.15(f)(1) and 483.25(c).
2/ HCFA linked its warning to Petitioner that it would
impose denial of payment for new admissions, effective
March 20, 1996, unless Petitioner attained compliance
with participation requirements by that date, to the
determination that, as of February 6, 1996, Petitioner
was not complying with 42 C.F.R. §§ 483.15(f)(1) and
483.25(c). There is nothing in HCFA's February 29, 1996
notice that suggests that HCFA might impose denial of
payment for new admissions, effective March 20, 1996,
based on continued failures by Petitioner to comply with
other participation requirements that the California
survey agency had found Petitioner not to be complying
with at the February 6, 1996 survey.
In this case, HCFA failed, on February 29, 1996, to give
Petitioner the requisite notice of the specific basis,
later relied on by HCFA, for imposing against Petitioner
the remedy of denial of payment for new admissions. HCFA
did not give Petitioner 15 days notice, as is required by
42 C.F.R. § 488.402(f)(4), of its intent to impose denial
of payment for new admissions effective March 20, 1996,
based on Petitioner's continued failure to comply with
participation requirements other than those stated in 42
C.F.R. §§ 483.15(f)(1) and 483.25(c). Such notice was
not provided by HCFA until April 16, 1996, and thus
cannot be a basis for imposing denial of payment for new
admissions effective March 20, 1996.
It is true that HCFA's notice of February 29, 1996 told
Petitioner that HCFA would impose a denial of payment for
new admissions if Petitioner did not attain compliance
with participation requirements by March 20, 1996.
However, that notice explicitly refers only to
Petitioner's failure to comply with the participation
requirements contained in 42 C.F.R. §§ 483.15(f)(1) and
483.25(c). By stating only that HCFA concurred with the
California survey agency's findings concerning these two
requirements, the notice creates the impression that HCFA
did not concur with the California survey agency's
findings that Petitioner was deficient in other respects.
Given that, the February 29, 1996 notice was inadequate
notice of HCFA's intent to impose denial of payment for
new admissions, effective March 20, 1996, for continued
failure by Petitioner to comply with the participation
requirements that the California survey agency found that
Petitioner had not complied with as of February 6, 1996
but which were not mentioned in HCFA's February 29, 1996
notice.
I do not dispute the fact that the California survey
agency gave Petitioner notice of the deficiencies that
were identified at the February 6, 1996 survey. 3/
Petitioner's understanding of what the California survey
agency had found is demonstrated by the fact that
Petitioner submitted a plan of correction which addressed
all of the deficiencies that were identified on February
6, 1996, and not just the two findings of deficiencies
that HCFA concurred with in its February 29, 1996 notice
to Petitioner. But, the notice of deficiencies which the
California survey agency gave to Petitioner is not notice
of HCFA's determination, or of the remedies that HCFA
might impose. Under 42 C.F.R. § 488.402(f), where HCFA
determines to impose a remedy against a provider of long-
term care, then HCFA must give that provider notice of
the determination, including the specific basis for the
determination.
D. HCFA's motion that I amend my prehearing order
(Finding 14)
HCFA's motion that I amend my prehearing order is moot.
HCFA premised its motion on an assertion that I had not
stated with sufficient clarity the issues to be heard and
decided at an evidentiary hearing of the merits of this
case. However, I do not reach the merits of this case,
inasmuch as I find that HCFA provided Petitioner with
inadequate notice of its intent to impose the remedy of
denial of payment for new admissions.
IV. Conclusion
I conclude that HCFA provided Petitioner with inadequate
notice of its intent to impose against Petitioner the
remedy of denial of payment for new admissions effective
March 20, 1996. Consequently, HCFA is without authority
to impose against Petitioner the remedy of denial of
payment for new admissions, effective March 20, 1996. I
conclude further that Petitioner has withdrawn its
request for a hearing as to HCFA's imposition of a civil
money penalty against Petitioner. However, that
withdrawal is conditioned on my ruling in favor of
Petitioner on Petitioner's motion for summary disposition
on the issue of HCFA's authority to impose against
Petitioner the remedy of denial of payment for new
admissions, effective March 20, 1996. In the event that
HCFA should appeal my disposition of that issue, and
should it succeed in its appeal, then Petitioner could
choose to renew its hearing request at that time. To do
so, Petitioner would have to notify this office within 45
days of receipt of the decision on appeal. Finally, I
conclude that HCFA's motion that I amend my prehearing
order in this case is moot.
________________________
Steven T. Kessel
Administrative Law
Judge
* * * Footnotes * * *
1. The parties agree that Petitioner is subject
to the requirements which govern providers of long-term
care contained in 42 C.F.R. Part 488.
2. I make no finding in this decision whether
HCFA concurred with all, or only some, of the California
survey agency's findings, because it is not necessary
that I do so. My decision in this case is based on the
adequacy of the notice that HCFA gave Petitioner of its
determination to impose denial of payment for new
admissions, effective March 20, 1996. It is not based on
the actual findings that HCFA may have made concerning
Petitioner's compliance with participation requirements.
3. That is not to say that the California survey
agency stated its findings to Petitioner with absolute
clarity. Neither the February 15, 1996 notice nor the
amended notice of March 4, 1996 recites the specific
findings of noncompliance. P. Ex. 1; P. Ex. 2.
Petitioner was left to assume that the California agency
had accepted all of the findings made by the surveyors
who conducted the February 6, 1996 survey.