Decision No. CR663 Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | ||
Tenet HealthSystem Philadelphia, Inc.,
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DATE: Apr. 7, 2000 | |
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Health Care Financing Administration
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Docket No.C-99-773 |
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DECISION | ||
The Health Care Financing Administration (HCFA)
moved for summary disposition against Tenet HealthSystem Philadelphia, Inc.
(Petitioner). Petitioner opposed the motion. I find that HCFA has established
a prima facie case to support its decision establishing March 18 and 22,
1999 respectively as certification dates for two end-stage renal dialysis
(ESRD) units operated by Petitioner. Petitioner has not adduced material
facts which rebut HCFA's prima facie case. Therefore, I sustain the certification
dates established by HCFA and enter summary judgment in HCFA's favor.
HCFA filed sixteen proposed exhibits (HCFA Exs. 1 - 16)
in support of its motion for summary disposition. However, Petitioner
opposed the admission into evidence of HCFA's Exhibit 7. Petitioner asserted
that this Exhibit represented part, but not all, of a facsimile transmission
from Petitioner's Fiscal Intermediary (Intermediary) to the Pennsylvania
Department of Health (State Survey Agency). Petitioner argued that this
Exhibit omitted a cover page and other attachments which demonstrated
that the State Survey Agency did not perform HCFA-required surveys. Moreover,
Petitioner alleged that the Exhibit "does not appear to be the complete
transmission . . . but . . . reflects incomplete pages from two separate
transmissions." Petitioner Brief (Br.) at 9, n.14.
HCFA cites this Exhibit at page 4 of its Brief and page
3 of its Reply Brief to show that the Intermediary recommended a particular
course of action. Moreover, Petitioner Exhibits 5 and 10 are essentially
copies of HCFA's Exhibit 7. Petitioner Exhibit 10 contains the facsimile
cover page. HCFA appears to rely upon its Exhibit 7 solely to establish
a time line, which Petitioner does not dispute. Given the limited use
of this Exhibit by HCFA, the fact that Petitioner has also submitted copies
of it and that I do not rely on it in reaching my decision, I overrule
Petitioner's objection and hereby admit into evidence HCFA Exs. 1-16.
Petitioner filed seventeen proposed exhibits (P. Exs.
1-17) in opposition to the motion. HCFA has not opposed the admission
into evidence of Petitioner's proposed exhibits. I hereby admit into evidence
P. Exs. 1-17. Background On November 10, 1998, Petitioner executed a purchase agreement
with Allegheny Health Education and Research Foundation (AHERF) under
which Petitioner acquired a number of Philadelphia area health care facilities.
The facilities transferred to Petitioner included acute care hospitals,
skilled nursing facilities home health agencies and ESRD units within
the hospitals. At issue here are the ESRD units in two hospitals purchased
by Petitioner in the November 1998 transaction, Hahnemann University Hospital
(Hahnemann) and St. Christopher's Hospital for Children ( St. Christopher's).
Both Hahnemann and St. Christopher's hospitals were Medicare-certified
while under AHERF ownership and had Medicare provider agreements. In addition
to its Medicare-certified hospitals, AHERF had a number of other Medicare
provider agreements in effect for various non-acute hospital services
at the time Petitioner acquired ownership. AHERF also had existing Medicare
supplier approvals, including those covering items and services provided
in Hahnemann's and St. Christopher's ESRD units. HCFA Ex.
2 at 1-3, 5-6. Pursuant to 42 C.F.R. � 489.18, Petitioner had the option
of assuming all of AHERF's existing Medicare provider agreements and supplier
approvals. Assumption of these agreements and approvals would have continued
an uninterrupted Medicare payment stream in spite of the transfer of ownership.
However, on October 15, 1998, Petitioner informed HCFA that "it is in
. . . [Petitioner's] best interest not to accept assignment of AHERF's
existing provider agreements and to request new Medicare and Medicaid
certification . . . ." HCFA Ex. 2 at 1. Petitioner's business decision
relieved it of any claims HCFA may have had against
AHERF and its affiliates and ensure that HCFA would not look to Petitioner
for satisfaction of any of AHERF's outstanding liabilities. Id.
at 3 The certification of Hahnemann and St. Christopher's Hospitals,
under Petitioner's ownership was through the process of applying for initial
certification of a provider into the Medicare program. The hospitals'
unique status, as entities "deemed" to meet the Medicare requirements
by virtue of their accreditation by the Joint Commission on Accreditation
of Health Care Organizations (JCAHO), allowed them to be accredited effective
November 11, 1998 because JCAHO had provided accreditation on that date.
See 42 C.F.R. � 489.13(d)(2); HCFA Ex. 3 at 1. However, as a result
of Petitioner's decision not to assume the preexisting Medicare agreements,
all other provider agreements and supplier approvals, because they were
not accredited services, were subject to the effective date regulations
for new providers/suppliers set out at 42 C.F.R.
� 489.13(b) or (c). On October 12, 1998, Petitioner completed Medicare/Federal
Health Care Provider/Supplier Enrollment Applications (HCFA 855s) for
the Hahnemann and St. Christopher's ESRD units. HCFA Exs. 4 and 5. Petitioner
forwarded the completed HCFA 855s to the State Survey Agency on October
13, 1998. The State Survey Agency forwarded the completed HCFA 855s to
Mutual of Omaha, Petitioner's Intermediary for review and recommendation.
On October 30, 1998, the Intermediary recommended that Petitioner's enrollment
applications be approved. Petitioner became owner of the facilities on
November 10, 1998. HCFA Exs. 1 and 2. The State Survey Agency conducted Medicare surveys of
Hahnemann's ESRD unit on March 4, 1999 and St. Christopher's on March
5th. The surveys uncovered deficiencies at both facilities.
Both facilities timely submitted plans of correction. Hahnemann's plan
was received by the State Survey Agency on March 18th and St.
Christopher's plan was received on March 22nd. HCFA Exs. 8-13.
By letter dated April 22, 1999, Pennsylvania's Acting
Secretary of Health asked HCFA if it would consider using the results
of a November 3-6, 1998 State Licensure Survey at Hahnemann Hospital to
satisfy the Medicare certification requirements for Hahnemann's ESRD unit.
Part of that survey included a visit to the ESRD unit. No deficiencies
were found at that time. The Acting Secretary recognized, however, that
a licensure survey and a Medicare certification survey were different
procedures. HCFA Ex. 14. On June 21, 1999 HCFA notified the Hahnemann and St. Christopher's
Hospitals that the Medicare effective dates for their ESRD units would
be March 18 and 22, 1999, respectively. HCFA Ex. 15. Petitioner's request
for a hearing followed. The Law Section 1881 of the Social Security Act establishes Medicare
coverage for ESRDs. The implementing regulations are found at 42 C.F.R.
Part 405, Subpart U. ESRD applicants are required to have onsite Medicare
surveys so that HCFA may determine their compliance with the Subpart U
requirements. 42 C.F.R. � � 488.6 and 488.10(d).
The regulations establishing the effective date for an
ESRD's supplier approval provide:
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42 C.F.R. � 489.13(b), (c). JCAHO or American Osteopathic Association accredited hospitals are deemed by HCFA to meet all Medicare conditions except for certain requirements enumerated at 42 C.F.R. � 488.5(a). An accredited hospital may obtain an effective date based on 42 C.F.R. � 489.13(d). However, paragraph (d) applies only where an accredited provider or supplier, whose program had HCFA approval at the time of the accreditation survey and the accreditation decision, requests participation in the Medicare program. HCFA does not permit ESRD services to be deemed to meet Medicare conditions of participation by virtue of national accreditation. 42 C.F.R. �� 488.6 and 488.10(d). Consequently, an applicant seeking approval as a supplier of ESRD services is required to have an onsite Medicare survey and the subsequent ESRD effective date determination must be made pursuant to 42 C.F.R. � 489.13(b) and (c).
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FINDINGS OF FACT AND CONCLUSIONS OF LAW | ||
I find that Petitioner has not rebutted HCFA's prima facie
case for summary judgment. Below, I set out the findings of fact and conclusions
of law (Findings) supporting my decision. 1. Petitioner executed the purchase of the ESRD units
at Hahnemann and St. Christopher's on November 10, 1998, as part of a
larger transaction. HCFA Exs. 1 and 2. 2. On October 15, 1998, Petitioner notified HCFA that
it would not accept assignment of the existing Medicare provider numbers
for the facilities purchased in the November 10, 1998 transaction including
the ESRD units at Hahnemann and St. Christopher's. HCFA Ex. 2 at 1.
3. As a result of Petitioner's decision not to assume
the preexisting Medicare agreements, all other provider agreements and
supplier approvals, because they were not accredited services, were subject
to the effective date regulations for new providers/suppliers set out
at 42 C.F.R. � 489.13(b) or (c). 4. The State Survey Agency conducted Medicare surveys
of Hahnemann's ESRD unit on March 4, 1999 and St. Christopher's on March
5th. The surveys uncovered deficiencies at both facilities.
Both facilities timely submitted plans of correction. Hahnemann's plan
was received by the State Survey Agency on March 18th and St.
Christopher's plan was received on March 22nd. HCFA Exs. 8-13.
5. By letter dated April 22, 1999, Pennsylvania's Acting
Secretary of Health asked HCFA if it would consider using the results
of a November 3-6, 1998 State Licensure Survey at Hahnemann Hospital to
satisfy the Medicare certification requirements for Hahnemann's ESRD unit.
Part of that survey included a visit to the ESRD unit. No deficiencies
were found at that time. The Acting Secretary recognized, however, that
a licensure survey and a Medicare certification survey were different
procedures. HCFA Ex. 14. 6. On June 21, 1999, HCFA notified the Hahnemann and St.
Christopher's Hospitals that the Medicare effective dates for their ESRD
units would be March 18 and 22, 1999, respectively. HCFA Ex. 15.
7. No basis in law exists to grant Petitioner earlier
certification dates for the Hahnemann and St. Christopher's ESRD units.
8. Estoppel does not lie against HCFA.
9. Petitioner did not rebut HCFA's prima facie case. Petitioner's Position
Generally, Petitioner argued that:
Discussion No basis in law exists to grant Petitioner
earlier certification dates for the Hahnemann and St. Christopher's ESRD
units. In order to become an approved supplier of Medicare services,
an ESRD facility must be surveyed on-site, so that HCFA may determine
whether the ESRD facility is complying with the requirements found in
42 C.F.R. Part 405, Subpart U. The earliest date that a renal dialysis
facility may be approved is the date of completion of an initial on-site
facility survey, assuming no deficiencies or, if deficiencies are found,
the date on which HCFA or the State survey agency receives an acceptable
plan of correction. 42 C.F.R. � 489.13(b) and (c).
The uncontroverted facts of this case are that the Hahnemann
and St. Christopher's ESRD units were surveyed on March 4 and 5, 1999,
respectively. Deficiencies were found in each unit and acceptable plans
of correction were received by the State Survey Agency on March 18th
and 22nd respectively. Consequently, by law the earliest available
certification dates for the facilities were March 18 and 22, 1999.
The program regulations do not permit HCFA or an administrative
law judge to look behind the completion date of an on-site survey, or
the date on which an acceptable plan of correction was received. Snowden
at Fredricksburg and Mary Washington Hospital, DAB CR486 at 22-23
(1997); Renal Services Group of El Centro, DAB CR482 at 6-7 (1997).
Under these circumstances, an administrative law judge does not have the
authority to order an earlier effective certification date.
Petitioner argues that the various cases cited by HCFA
presented factual circumstances so radically different from the instant
case as to warrant a different outcome. According to Petitioner, these
cases involve providers which were truly "new" Medicare applicants, not
cases in which providers had continued a certified programs but whose
new ownership had not accepted assignment of the bankrupt seller's Medicare
provider numbers, nor providers which had had undergone full surveys within
days or months prior to the closing of the sales transaction, nor did
any of the cited cases involve a State Agency that did not process an
application consistent with the application's clear language. Petitioner
Br. at 13. Contrary to Petitioner's protestations, regardless of
the perceived factual differences in the cases cited by HCFA, the case
law relied upon by HCFA is on point. The governing regulations are essentially
unforgiving. While Petitioner may not perceive itself as a new applicant
in the sense that it was a program novice, the fact remains that for economic
reasons Petitioner placed itself on the same footing as a new applicant
and was thus required to satisfy the regulatory guideline for certification.
At the first survey after the change in ownership, both ESRD units had
correctable deficiencies, but deficiencies which were impediments to certification
nonetheless. Whatever the units' history in the context of prior surveys
under previous ownership, the deficiencies found here, in the first
survey after the transfer of ownership, warranted certification only
after receipt of an acceptable plan of correction. Estoppel does not lie against HCFA.
The common thread in Petitioner's arguments against summary
judgment is that HCFA should be estopped from imposing the March 1999
certification dates. Petitioner relies upon several exhibits to support
its claim. Petitioner's Exhibit 3 is an October 16, 1998 from the
Pennsylvania Associate Director Division of Acute and Ambulatory Care
to the HCFA Acting Chief of Survey and Certification Branch I transmitting
CHOW [change of ownership] packets for 8 AHERF Hospitals and two ESRD
units for an impending change of ownership. The letter specifically stated:
"These replace the packets previously submitted September 29, 1998 on
behalf of the same buyer . . .[Petitioner]." Petitioner Ex. 3. Petitioner
asserts that this letter should have put HCFA on notice that the State
Agency was treating the situation at hand as changes of ownership rather
than new enrollments. Petitioner Br. at 6. There are several flaws with
this argument. First, other than the paraphrasing above, the State Agency
Official's letter does not identify the ESRD units in issue. Second, it
is an amendment to a September 29, 1998 submission. Third, there is no
evidence that this submission was made in the context of Petitioner's
record notice to HCFA that it would not assume the old Medicare provider
numbers. Petitioner's Exhibit 5 is an October 30, 1998 letter sent,
on what purports to be HCFA letterhead, to the State Survey Agency recommending
acceptance of facilities for Medicare enrollment, including the ESRD units
at Hahnemann and St. Christopher's. Petitioner again asserts that this
is further proof that HCFA knew or should have known of the position in
which Petitioner was placed. Regardless of the HCFA letterhead, the letter
appears to be from Petitioner's Intermediary, Mutual of Omaha, as the
author provides a Nebraska telephone number and the Intermediary's logo
and Nebraska address appear at the bottom of the letterhead.
Petitioner's Exhibit 6 consists of Medicare/Medicaid Certification and Transmittal Forms for the ESRD units at Hahnemann and St. Christopher's. Petitioner noted that on or about December 1, 1998, unknown to Petitioner, the State Survey Agency sent these forms to HCFA. Petitioner noted that both forms reflected changes of ownership for the ESRDs rather than new enrollments. Additionally, neither form contained a survey date. Again Petitioner asserted that HCFA's failure to catch
these signals precluded HCFA from acting in a manner which would have
mitigated the damages Petitioner alleges to have
suffered, i.e., ultimately approximately 13 weeks of renal procedures
for which it would not obtain Medicare reimbursement. Petitioner Br. at
7-8. Petitioner generally recounts a variety of telephone conversations
occurring in January 1999 in which it claims its representatives inquired
about the absence of "Provider Tie-Ins" which are forms used by HCFA to
notify the Fiscal Intermediary of enrollments. Petitioner then professed
a lack of concern about these forms as it believed HCFA routinely took
months to issue such forms. Petitioner Br. at 8, n.12. Petitioner also
noted that even on February 17, 1999, when HCFA alerted the State Survey
Agency to undertake Medicare certifications for outpatients at the ESRDs,
HCFA failed to tell Petitioner that the ESRDs were not Medicare certified.
Additionally, "three more weeks elapsed" before the surveys were performed.
Petitioner Br. at 8-9; Petitioner Exs. 8 and 9.
As a matter of law, even if the fact alleged by Petitioner
are true, I cannot grant the relief it has requested. It is well-settled
that estoppel rarely, if ever, will lie against the Federal government.
Office of Personnel Management v. Richmond, 496 U.S. 414 (1990);
Schweiker v. Hansen, 450 U.S. 785 (1981). Moreover here, the chain
of events posited by Petitioner do not even begin to rise to the level
of affirmative misconduct required for estoppel. In fact, Petitioner's
general characterization of the events between the date of purchase and
the eventual certifications of the ESRD units is that HCFA knew or should
have known of Petitioner's circumstances and its potential jeopardy. While
it might be safe to assume that there existed a fair degree of confusion
between various branches of HCFA and the State Survey Agency regarding
the status of these ESRDs, Petitioner remained liable for compliance with
the applicable program regulations. Those regulations required that, as
a new applicant, Petitioner's ESRD units complete the certification process
before they were eligible to receive Medicare reimbursement for services
provided. While there may a significant number of disputed facts
here, the are no material facts in dispute. Petitioner purchased
the Hahnemann and St. Christopher's ESRD units as part of a larger transaction.
As part of that larger transaction, Petitioner made a business decision
not to assume the various facilities' preexisting Medicare provider numbers
and communicated that decision to HCFA. HCFA Ex. 2 at 1; Petitioner Ex.
2 at 1. In spite of this decision, Petitioner asserted before me that
these ESRD units were not, by definition, new applicants to the Medicare
program and impliedly argued that they should not be treated as such.
Petitioner Br. at 14-15. However, in the same letter in which Petitioner
communicated to HCFA its decision not to assume the preexisting provider
numbers, it recognized that the ESRDs, as well as
other providers, would "require a survey based on our election to terminate
the old provider numbers." HCFA Ex. 2 at 2; Petitioner Ex. 2 at 2. Petitioner did not rebut HCFA's prima facie
case. HCFA established that, under the circumstances, the ESRD units at Hahnemann and St. Christopher's were certified at the earliest possible dates allowed by law. Even if the facts as alleged by Petitioner are true, they are immaterial to the result here. The ESRD units at Hahnemann and St. Christopher's were properly certified. Consequently, I grant HCFA's motion for summary judgment, and affirm its decision establishing March 18 and 22, 1999, respectively, as certification dates for these two ESRDs.
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JUDGE | ||
Marc R. Hillson
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