SUBJECT:

Lopatcong Center,

Petitioner,

Health Care Financing Administration

HCFA offered four exhibits in support of its motion (HCFA Ex. 1 - HCFA Ex. 4). Petitioner offered four exhibits in opposition to HCFA's motion (P. Ex. A - P. Ex. D). I receive into evidence HCFA Ex. 1 - HCFA Ex. 4 and P. Ex. A - P. Ex. D.

I. Issues, findings of fact and conclusions of law

A. Issue

The issue in this case is whether a basis exists for me to dismiss Petitioner's hearing request.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision. I set forth each Finding below as a separately numbered heading. I discuss each Finding in detail.

1. HCFA's December 10, 1999 notice to Petitioner unambiguously informed Petitioner of HCFA's determination to impose a remedy and of Petitioner's right to request a hearing to challenge that determination.

Petitioner is a nursing facility that is located in Phillipsburg, New Jersey. It participates in the Medicare program and is subject to the laws and regulations that govern participation in the program. HCFA surveyed Petitioner's facility on two occasions in 1999 in order to determine whether Petitioner was complying substantially with federal requirements that govern participation of nursing facilities in the Medicare program. The first survey occurred on August 27, 1999. A revisit survey occurred on November 24, 1999. At each of these surveys, HCFA determined that Petitioner was not complying substantially with participation requirements.

On December 10, 1999 HCFA sent a notice to Petitioner. HCFA Exs. 1 and 2; P. Ex. A. HCFA referred to the November 24, 1999 survey in the notice. HCFA advised Petitioner that, at that survey, it had found that Petitioner was not complying with certain itemized participation requirements. It informed Petitioner that:

As a result of our findings that your facility is not in substantial compliance, we are imposing the following remedy:

Denial of payment for new admissions effective December 26, 1999

Id. at 1. HCFA advised Petitioner that it must submit a plan of correction showing how it would correct the deficiencies identified by HCFA within 10 days of receiving a copy of the report of the November 24, 1999 survey. Id. Also, HCFA informed Petitioner that if it did not achieve substantial compliance with all participation requirements by April 15, 2000, HCFA would have to terminate Petitioner's Medicare provider agreement. Id. at 2.

HCFA additionally advised Petitioner that it had a right to a hearing to challenge HCFA's determination. It told Petitioner that:

If you disagree with this determination, you or your legal representative may request a hearing before an administrative law judge of the Department of Health and Human Services, Departmental Appeals Board. Procedures governing this process are set out in [42 C.F.R.��] 498.40, et seq. A written request for a hearing must be filed no later than 60 days from the date of receipt of this letter . . . .

HCFA Exs. 1 and 2 at 2.

Petitioner argues that HCFA's December 10, 1999 notice did not state a final remedy determination that triggered an obligation by Petitioner to request a hearing if it wished to preserve its hearing rights. According to Petitioner, the notice did not articulate a remedy determination but, rather, stated a proposal by HCFA to impose remedies conditioned on Petitioner's failure to attain compliance with participation requirements by certain specified dates. Petitioner asserts that the notice told Petitioner that HCFA would impose the remedy of denial of payment for new admissions only if Petitioner failed to file an acceptable plan of correction with HCFA.

I disagree. The December 10, 1999 notice was not a conditional statement. The notice plainly and unambiguously told Petitioner that HCFA was imposing the remedy of denial of payment of new admissions based on the noncompliance that HCFA identified at the November 24, 1999 survey. In equally unambiguous language, the notice told Petitioner that it had a right to a hearing to contest HCFA's determination, but only if Petitioner requested a hearing within 60 days of its receipt of Petitioner's notice.

The statement in the notice that "we are imposing" the remedy of denial of payment for new admissions is not conditional language. HCFA Exs. 1 and 2 at 1. Moreover, the fact that the notice explained to Petitioner that it had a right to request a hearing is a clear statement that HCFA had determined to impose a remedy. Under applicable regulations, a right to a hearing exists only in the circumstance where HCFA determines to impose a remedy. 42 C.F.R. �� 498.3 and 498.5. HCFA would not have advised Petitioner that it had a right to request a hearing unless it had determined to impose a remedy.

It is true that the notice told Petitioner that the remedy of denial of payment for new admissions would not go into effect until December 26, 1999, 16 days after the date of the notice. But, that language does not suggest that there was anything conditional about HCFA's determination to impose a remedy. At most, it suggested that there was some possibility that HCFA might be persuaded between December 10, 1999 and December 26, 1999 to rescind its determination.

2. Petitioner is not entitled to a hearing because it did not file a timely hearing request.

Petitioner did not file its hearing request timely and, therefore, it is not entitled to a hearing. A party is entitled to a hearing if it makes its request within 60 days from the date that it receives an adverse determination from HCFA. 42 C.F.R. � 498.40(a)(2). Ordinarily, "receipt" is presumed to occur five days from the date that a notice is mailed to a party. Id.; see 42 C.F.R. � 498.22(b)(3). A party is not entitled to a hearing if it does not file its hearing request timely. Petitioner filed its hearing request on June 5, 2000. That is more than 60 days from the date of its receipt of HCFA's December 10, 1999 notice.

3. Petitioner did not establish good cause for its failure to file a timely hearing request.

An administrative law judge may dismiss an untimely hearing request where a party fails to demonstrate good cause for not filing the request timely. 42 C.F.R. � 498.70(c). I do not find that Petitioner established good cause for not filing its hearing request timely.

Petitioner argues that, if HCFA's December 10, 1999 notice was not a conditional notice, then it misled Petitioner into believing that it was a conditional notice. Petitioner argues that the language of the notice was ambiguous and misleading. Petitioner asserts additionally that its misunderstanding of the notice was reinforced by practices employed by HCFA and State survey agencies that led it to believe that the notice communicated a conditional proposal to impose remedies and not a remedy determination. Petitioner argues also that the notice, if it communicated a remedy determination, contradicted the criteria for notices expressed in the State Operations Manual (SOM), a document that HCFA publishes as guidance for State survey agencies. Finally, Petitioner contends that HCFA is, in effect, manipulating its notices so as to obtain "free" medical care from facilities such as Petitioner.

I am not persuaded by these arguments. First, and contrary to Petitioner's contentions, the December 10, 1999 notice was in no respect ambiguous or misleading. I have discussed the operative language of the notice above at Finding 1. I conclude that it plainly and unambiguously told Petitioner that HCFA had determined to impose a remedy. There was nothing in the notice to suggest that HCFA's remedy determination was conditional.

As I have discussed at Finding 1, the notice told Petitioner that the remedy of denial of payments of new admissions would become effective on December 26, 1999, 16 days after the date of the notice. The notice left open some possibility that HCFA might decide after reviewing a plan of correction submitted by Petitioner that Petitioner had attained compliance with participation requirements prior to December 26, 1999. HCFA had the discretion to rescind its remedy determination in that event. But, the notice did not suggest that HCFA was in any respect hesitant about imposing the remedy or that its determination to do so was preliminary and not final. The notice plainly told Petitioner that, absent some affirmative action by HCFA to rescind its determination, the denial of payment for new admissions would go into effect on December 26, 1999.

Second, I am not persuaded that either HCFA's practices or the practices of State survey agencies detracted in any respect from the plain meaning of the notice. Petitioner argues that some State survey agencies and, at times, HCFA, have followed a practice of making remedy determinations conditional. Petitioner contends that it has been the past practice of these agencies to review a facility's plan of correction before making a "final" remedy determination. It suggests that it was misled by this asserted practice into believing that the December 10, 1999 notice was a conditional determination and not a final remedy determination.

I do not make any findings here about the practices that were followed in 1999 by either State survey agencies or by HCFA. It is not necessary for me to do so inasmuch as the December 10, 1999 notice so unambiguously announced HCFA's determination. There was no language in the notice that suggested that HCFA would make a final remedy determination only after it reviewed Petitioner's plan of correction. Petitioner had no reason to assume that HCFA would supersede the plain language of the notice with some unwritten practice that it may have followed in other instances.

Third, I find that HCFA followed the criteria for notices set forth in the SOM. Petitioner argues that its belief that some other notice would be forthcoming from HCFA as a final determination was reinforced by language in the SOM. The SOM states that, where HCFA makes a determination to impose a remedy, it sends an initial notice first, followed by a formal notice in which the remedy is actually imposed. Petitioner asserts that it assumed that HCFA's December 10, 1999 notice was the initial notice and not a formal notice of HCFA's intent to impose a remedy. Petitioner's assumption that the December 10, 1999 notice was an initial notice is clearly incorrect. HCFA clearly points out in its reply brief, that, in accordance with the SOM, it sent Petitioner an initial notice on October 15, 1999 followed by the final notice on December 10, 1999. HCFA Reply at 9 and HCFA Ex. 4.

Thus, HCFA's December 10, 1999 notice contained nothing to suggest that HCFA's plainly stated determination should be interpreted otherwise and, certainly, the plain language of HCFA's notice gave Petitioner no basis to disregard that notice.

Finally, I am not persuaded by Petitioner's contention that HCFA manipulated regulations to cut off Petitioner's right to a hearing. Petitioner asserts that it was "manipulated" into foregoing its hearing rights, thereby giving HCFA a windfall of "free" medical care during the period between December 1999 and April 2000. Petitioner contends that HCFA did so by first, proposing to impose a remedy at a future date, then ignoring Petitioner's good faith response to HCFA's proposal until after the 60-day request period had expired, and then telling Petitioner that its proposed corrections were accepted. Petitioner avers that it filed its proposed plan of correction within 10 days of receipt of HCFA's notice and then waited until April 2000 to learn of HCFA's response. By then, according to Petitioner, any opportunity to request a hearing had elapsed.

Petitioner's argument would be persuasive if there was some language in the December 10, 1999 notice to the effect that HCFA would hold in abeyance its remedy determination while it evaluated Petitioner's plan of correction. If that were the case, then Petitioner might have a basis to assert that it was left dangling while it awaited HCFA's response to its plan of correction. But, there is nothing in the notice which suggests that the remedy determination would be held in abeyance. The December 10, 1999 notice was not a proposal to impose a remedy. It was a determination to impose a remedy. Petitioner could have avoided any adverse consequences of failing to request a hearing simply by requesting a hearing within the 60 day period specified by the regulations.

Steven T. Kessel

Administrative Law Judge