SUBJECT:

Homestead of Hugo,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

For the reasons set forth below, I dismiss as untimely the hearing request filed by Homestead of Hugo (hereafter Petitioner or facility). I find, in the alternative, that even if Petitioner had filed timely or satisfied the criteria for extending the time for filing, the Centers for Medicare & Medicaid Services (CMS) would nevertheless be entitled to summary judgment, for the reasons discussed below.

Petitioner is a nursing facility that was certified to participate in the Medicare and Medicaid programs as a provider of services. Petitioner challenges CMS's decision to terminate its provider agreement, claiming that the Oklahoma State Department of Health (State agency) sent a misleading notice or notices that caused the facility harm.

The parties agree that this matter may appropriately be decided based on the written submissions, and have filed cross-motions for summary judgment. As part of its submission, Petitioner filed three exhibits (P. Exs. 1 - 3). As part of its submission, CMS filed 11 exhibits (CMS Exs. 1 - 11). In the absence of any objection, Petitioner's exhibits 1 - 3 and CMS's exhibits 1 - 11 are admitted into evidence.

On June 1, 2000, the State agency completed a standard survey to determine the facility's compliance with federal requirements for nursing home participation in the Medicare and Medicaid programs. The State agency concluded that Petitioner was not in substantial compliance with Medicare conditions of participation, and, by letter dated June 14, 2000, provided a list of the deficiencies found, directing Petitioner to submit a Plan of Correction (POC) no later than June 26, 2000. Because of the scope and severity of the deficiencies and the facility's past compliance history, the State agency recommended that CMS impose remedies without first allowing Petitioner the opportunity to correct. The State agency also recommended that CMS impose a civil money penalty (CMP), ban new admissions if the facility did not achieve substantial compliance within three months, and terminate the provider agreement on December 1, 2000, if the facility did not achieve substantial compliance by that date. CMS Ex. 1; CMS Ex. 11 at 1 - 3.

Thereafter, Petitioner submitted a POC, and the State agency conducted a revisit survey on August 3, 2000. At the revisit, the State agency determined that the facility's noncompliance continued, and initially determined that the deficiencies posed immediate jeopardy to resident health and safety. CMS Ex. 2. In a letter dated August 11, 2000, the State agency advised Petitioner of its findings, warned that only onsite confirmation could halt the termination, and advised Petitioner of its recommended sanctions. CMS Ex. 11. The letter also told Petitioner that CMS would send notice of the imposition and effective dates of any sanctions it decided to impose. Id. at 4 - 5.

Thereafter, however, the State agency consulted with CMS, and the agencies determined that the facility deficiencies did not constitute immediate jeopardy. In a letter dated August 24, 2000, the State agency rescinded the August 11, 2000 notice and the recommendation for imposition of a $10,000 per day CMP. Still, the letter reiterated that deficiencies cited in the June 1, 2000 survey had not been corrected, and that the facility was still not in substantial compliance with program requirements. The State agency enclosed a list of the cited deficiencies, and advised Petitioner that its POC was due by September 5, 2000. The letter advised Petitioner of the State agency's new recommendations to CMS: (1) that the CMP increase from $50 to $500 per day from August 3, 2000 until the day the facility achieved substantial compliance; (2) that, effective August 30, 2000, CMS impose a ban on new Medicare/Medicaid admissions if the facility did not achieve substantial compliance by that date; and (3) termination of the provider agreement on December 1, 2000, if the facility were not in substantial compliance by that date. CMS Ex. 11 at 8 - 9.

In a letter dated September 6, 2000, CMS advised Petitioner that it concurred with the State agency findings, and the facility's provider agreement would terminate on December 1, 2000. The September 6, 2000 letter from CMS stated, "Your facility's Medicare agreement will terminate on December 1, 2000." CMS Ex. 3. In addition, CMS warned that it might impose a CMP in the amount of $50 per day from June 1, 2000 through August 2, 2000, and $500 per day CMP commencing August 3, 2000, and that it would ban all new Medicare and Medicaid admissions from September 21, 2000, until the day the facility achieved substantial compliance or was terminated, whichever came first. The letter also explained the Medicare regulatory requirement that CMS not accept a new provider agreement from a terminated provider until the reason for termination has been removed, and the facility provides reasonable assurance that it will not recur. 42 C.F.R. � 489.57. Finally, the letter set forth Petitioner's appeal rights, although Petitioner did not then appeal. CMS Ex. 3.

On November 9, 2000, the State agency concluded its second revisit survey, and again determined that the facility's noncompliance continued. CMS Ex. 4. The State agency sent Petitioner another letter, dated November 15, 2000, explaining that the facility remained out of compliance with federal requirements, and that it must, within 10 days, submit an acceptable POC. The November 9, 2000 State agency letter stated:

If you fail to submit an acceptable PoC by the due date, we may recommend (to the CMS Regional Office) termination of your provider agreement.

P. Ex. 1 at 2.

The State agency then listed the imposed remedy, a ban on new Medicare/Medicaid admissions, and its recommendations to CMS, which included termination on December 1, 2000, if the facility were not in compliance by that date, and the imposition of CMPs.

If the [CMS] Regional Office . . . decides to impose the recommended remedies, that office will send you a notice of imposition with the appropriate effective dates.

Id. at 3.

On November 28, 2000, CMS sent the facility a letter advising that it was not in substantial compliance as of the November 9, 2000 second revisit survey, and that the enforcement actions mentioned in CMS's September 6, 2000 letter would continue. Specifically, the letter advised the facility that CMS's decision to terminate the facility's provider agreement, effective December 1, 2000, remained unchanged. CMS Ex. 5.

On the same day, the State agency sent the facility its own letter, noting that uncorrected deficiencies were identified at the November 9, 2000 revisit, but that the State had received the facility's POC, which was acceptable. This letter also stated:

You have stated these deficiencies will be corrected and that your facility will be in compliance by November 27, 2000. If upon our subsequent revisit, your facility has achieved substantial compliance, we will certify Hugo Health & Rehabilitation Center for further participation in the Medicare/Medicaid programs.

However, if your facility has failed to achieve compliance at the time of our next revisit, the previously imposed remedies will remain in effect until such time as your facility achieves compliance.

P. Ex. 2; CMS Ex. 6.

In a letter dated December 6, 2000, CMS advised the facility that its provider agreement was terminated on December 1, 2000, because of its continued noncompliance with program requirements. The letter reiterated the other penalties imposed (CMPs, no payment for new residents) and repeated the regulatory requirement that a terminated facility demonstrate reasonable assurance that the reasons for termination will not recur. CMS Ex. 7.

In a letter dated January 24, 2001, Petitioner requested a hearing, citing the November 15 and 28, 2000 letters from the State agency, and complaining that the State agency's conclusions are "so confusing as to be no notice at all." CMS Ex. 8. Petitioner noted that it was found in compliance at the "third revisit" on December 21, 2000, and, by the terms of the State agency statements, should never have been decertified. Petitioner also argued that the State agency should have completed a third revisit prior to December 1, 2000, in time to avoid the termination. Id.

Applicable Law

The Social Security Act (Act) sets forth requirements for nursing facility participation in the Medicare and Medicaid programs, and authorizes the Secretary of Health and Human Services (Secretary) to promulgate regulations implementing the statutory provisions. Act, sections 1819 and 1919.

Generally, states conduct surveys and certify facility compliance with program participation requirements. Act, section 1819(g) and (h). If the state finds that a facility is not in compliance, it may recommend that the Secretary impose a remedy, and, so long as the deficiencies do not pose immediate jeopardy to resident health and safety, the Secretary may select among certain alternative remedies to assure facility compliance. Act, sections 1819(h)(2)(A)(ii) and 1819(h)(2)(B). However, if the facility does not achieve compliance within three months, the Secretary must impose a denial of payment for new admissions (DPNA). Act, section 1819(h)(2)(D). And, the Secretary may not continue any payments to a deficient facility for more than six months unless substantial compliance is demonstrated. Act, section 1819(h)(2)(C). The regulations authorize termination of a facility's provider agreement if it is not in substantial compliance, whether or not its deficiencies pose immediate jeopardy to resident health and safety. 42 C.F.R. � 488.456(b)(1)(i). Again, the Secretary may not allow a deficient facility to continue its program participation for more than six months. 42 C.F.R. � 488.412.

Section 1866(h) of the Act authorizes administrative review of determinations that a provider fails to comply substantially with the provisions of the regulation "to the same extent as is provided in section 205(b) [of the Act]." Under section 205(b), the Secretary must provide reasonable notice and opportunity for a hearing "upon request by [the affected party] who makes a showing in writing that his or her rights may be prejudiced" by the Secretary's decision.⁽¹⁾ The request for review "must be filed within sixty days" after receipt of the notice of CMS' underlying determination (emphasis added). Act, section 205(b). Under the regulations, an affected party must file its request in writing within 60 days from receipt of the initial determination unless that period is extended. 42 C.F.R. � 498.40(a). If the request is not filed within 60 days, the affected party may file with the Administrative Law Judge (ALJ) a written request for an extension of time stating the reasons why the request was not filed timely, and, upon a showing of good cause, the ALJ may extend the time for filing. 42 C.F.R.� 498.40(c).

On motion of a party or on his or her own motion, the ALJ may dismiss a hearing request where that request was not timely filed and the time for filing was not extended. 42 C.F.R. � 498.70(c).

Discussion

Petitioner has not appealed any of the deficiency findings, but effectively concedes that it was not in compliance with program requirements at the times of the June 1, August 3, and November 9, 2000 surveys. As a basis for its appeal, Petitioner makes two arguments: (1) the November 15 and November 28, 2000 State notices and the November 28, 2000 CMS notice misled Petitioner into thinking that any termination decision was tentative, and so long as it submitted an acceptable POC and achieved compliance before the threatened termination date, it would not be terminated; and (2) Petitioner actually achieved compliance prior to the termination date of December 1, 2000, but the State agency did not conduct the revisit survey until after the termination date. The facility should not be accountable for the "untimeliness" of the third revisit survey.

CMS argues: (1) it had sufficient basis for terminating Petitioner's provider agreement on December 1, 2000, because for six continuous months Petitioner failed to comply substantially with program requirements; (2) to the extent that the State agency notice may have suggested otherwise, the State agency acted outside its authority; and (3) CMS cannot be estopped from terminating Petitioner's Medicare participation.

Before considering the merits of any case, however, I consider the threshold question of my jurisdiction to review.

A. Petitioner did not file a timely hearing request and has not shown good cause to extend the time for filing.

By September 6, 2000, the facility had failed both the initial and the revisit surveys, and in its September 6, 2000 notice, CMS unambiguously notified Petitioner that it was terminating Petitioner's participation in the Medicare program. The September 6, 2000 notice states that the surveys conducted on June 1 and August 3, 2000 showed that the facility was not in substantial compliance with Medicare requirements. The notice then lists the participation requirements that the facility did not meet. In bold letters the notice states: "Your facility's Medicare agreement will terminate on December 1, 2000." The notice sets forth Petitioner's appeal rights, stating "A written request for hearing must be filed no later than November 5, 2000 (60 days from the receipt of this letter via fax)." CMS Ex. 3.

I see no defect in this notice.

CMS discusses its September 6, 2000 notice in its submission (See, e.g.,CMS Brief at 6 - 7), and Petitioner does not deny receiving it, so I may assume that Petitioner received it. Wellington Oaks Care Center, DAB No. 1626 (1997).⁽²⁾ Petitioner did not request a hearing within 60 days. Petitioner filed no appeal until January 24, 2001.

The statute requires that a request for review "must be filed within 60 days" after receipt of the notice of CMS' underlying determination. Act section 205(b). The regulation echoes the statutory requirement: "The affected party must file the request in writing within 60 days from receipt of the notice . . . unless the period is extended." 42 C.F.R. � 498.40(a)(2). To extend the period for filing, the affected party "may file a written request for extension of time stating the reasons why the request was not filed timely." 42 C.F.R. � 498.40 (c)(1). I may extend the time for filing the request "for good cause shown." 42 C.F.R. � 498.40(c)(2). Here, however, I need not reach the issue of good cause because Petitioner has not satisfied the threshold requirement of filing a written request for extension.

I am no more free to ignore the regulations' procedural requirements than I would be to ignore the substantive rules. Alden Nursing Center - Morrow, DAB CR784 at 5 (2001). See Schweiker v. Hansen, 450 U.S. 785, 790 (1981) ("A court is no more authorized to overlook the valid regulation requiring that applications be in writing than it is to overlook any other valid requirement for the receipt of benefits.")

I note also that the notices Petitioner complains were misleading are dated November 15 and 28, 2000, after the appeal time had elapsed, so Petitioner can hardly claim that those documents dissuaded it from appealing the September 6, 2000 determination.

In reaching the conclusion that this matter be dismissed, I recognize that CMS failed to raise the timeliness issue, and that the parties have not briefed it. Nevertheless, under the regulations, I am authorized to dismiss the hearing request on my own motion where the hearing request was not timely filed. 42 C.F.R. � 498.70(c). And the regulations are clear. I do not see how I can avoid dismissal inasmuch as I do not have before me a timely filed hearing request, and Petitioner has not requested, in writing, an extension of time. Without a valid, timely filed hearing request, I am simply not authorized to hold a hearing. Act, sections 1866(h) and 205(b).

Nevertheless, I considered allowing the parties an opportunity to address the timeliness issue. However, given the weaknesses of Petitioner's claim on the merits, which I discuss below, this seemed an inefficient and unfair course, needlessly increasing the time and cost of the litigation. I next discuss why, if this matter were not dismissed, I would nevertheless grant CMS's motion for summary judgment.

B. CMS is entitled to Summary Judgment.⁽³⁾

1. Petitioner received sufficient notice of the termination action.

One confusing element to this case is that the termination stems from the June 1 and August 3, 2000 surveys, with notices sent June 14 and August 24, 2000 by the State agency, and the ultimate termination notice from CMS sent on September 6, 2000. Petitioner has not complained about ambiguities in any of these notices. In fact, the State notices specify that the State agency is making recommendations to CMS (CMS Ex. 11), and the September 6, 2000 CMS notice is straightforward: "Your facility's Medicare agreement will terminate on December 1, 2000." CMS Ex. 3.

Nor did any subsequent correspondence nullify this termination notice. The Departmental Appeals Board (DAB) has explained that notices such as these are not conditional in any sense that would excuse facility failure to achieve compliance, nor preclude termination or other sanction based on the facility's failure to achieve compliance. In Cary Health and Rehabilitation Center, DAB No. 1771 (2001), an appellate panel of the DAB upheld CMS's imposing a denial of payment for new admissions, based on a notice stating "if you do not achieve substantial compliance within 3 months [of the survey], the remedy of denial of payment for new admissions must be imposed."

The DAB explained that, once found out of compliance, a facility has a duty to correct its deficiencies and achieve substantial compliance. CMS encourages prompt corrections through escalating enforcement efforts. CMS "may 'consistent with the remedial purpose of inducing compliance,' choose to impose a remedy on a date certain in the future, if the noncompliance is not eliminated before the date arrives." Id. at 23. A facility may have the remedy lifted before it goes into effect by taking swift corrective action and demonstrating compliance.

However, the remedy simply goes into effect as imposed without requiring additional steps from [CMS] unless the facility affirmatively acts to avert it.

Id. at 24. Desert Hospital, DAB No. 1623 (1997).

I note that neither the State agency's November 15, 2000 letter nor CMS's November 28, 2000 letter suggest otherwise. In fact, CMS' letter states:

The other remedy(ies) mentioned in the September 6 letter, remain unchanged:

Ban on all New Medicare/Medicaid Admissions, effective September 21, 2000;

Termination of facility's Medicare/Medicaid Provider agreement, effective December 1, 2000.

CMS Ex. 5. Petitioner thus received sufficient notice of the termination action.

2. Petitioner's claim of reliance on the State agency's November 28, 2000 letter is unreasonable.

Petitioner does not present extensive arguments as to why the State's actions preclude CMS from terminating its provider agreement. It claims generally that "the notices were so deficient that the termination must be reversed." As set forth above, Petitioner received ample notice of the December 1, 2000 termination, and only one document, the State agency's November 28 letter, is arguably misleading. That letter accepts the facility's latest plan of correction, and states:

[Y]ou have stated that these deficiencies will be corrected and that your facility will be in compliance by November 27, 2000. If upon our subsequent revisit, your facility has achieved substantial compliance, we will certify Hugo Health & Rehabilitation Center for further participation in the Medicare/Medicaid programs.

P. Ex. 2.

I note first that the letter is dated November 28, 2000. The record is silent as to when Petitioner actually received the document, but the presumption is that receipt occurs five days after the date on the notice. 42 C.F.R. � 498.22(b)(3). Based on that presumption, Petitioner received the notice on Monday, December 4, 2000. Petitioner thus did not even receive this document until after the termination date, and could hardly have relied on it in any significant way.

Moreover, although dated November 28, 2000, the State agency letter refers to November 27, 2000 as if it were a future date ("these deficiencies will be corrected and your facility will be in compliance by November 27, 2000"). The November 28, 2000 State agency letter was obviously a form letter with an incorrect date. Significantly, at about the same time it received the State agency letter, Petitioner must also have received the CMS letter also dated November 28, 2000. The CMS letter was neither confusing nor ambiguous. It plainly advised that the December 1, 2000 termination remained unchanged. In light of the CMS letter, Petitioner's reliance on the State agency letter would not have been reasonable.

3. Petitioner well knew that the authority to impose sanctions rests with CMS, and that the State agency did not have the authority to certify its further participation in the Medicare/Medicaid programs.

The Medicare statute reflects Congress' explicit intent that the Secretary bear ultimate responsibility for monitoring facility compliance with Medicare requirements. Act, section 1819(f) ("It is the duty and responsibility of the Secretary to assure that requirements that govern the provision of care in skilled nursing facilities under this title, and the enforcement of such requirements are adequate . . ."). CMS has the final authority to impose sanctions, as Petitioner knew or should have known. See Heckler v. Community Health Services of Crawford County, 467 U.S. 51 (1984) ("As a participant in the Medicare program, respondent had a duty to familiarize itself with the legal requirements . . .").

Moreover, the State notices repeatedly refer to its "recommending" actions to CMS. If confused by an apparent discrepancy between the November 28 letter from the State agency and the November 28 letter from CMS, Petitioner well knew or should have known that CMS made the ultimate call.

4. CMS may not be estopped from enforcement of the Medicare Act.

CMS accurately points out that the statute mandates termination for failure to achieve substantial compliance within six months. Act, section 1819(h)(2)(C). The facility was admittedly not in substantial compliance at the time of the June 1, 2000 survey, and did not demonstrate that it had achieved substantial compliance before the December 1, 2000 termination date. CMS therefore appropriately terminated its provider agreement.

Here, Petitioner received sufficient notice of its termination and failed to demonstrate substantial compliance within six months. Under the statute, CMS may not allow a deficient facility to continue program participation for more than six months. Petitioner nevertheless argues that CMS may not enforce the statute because of its agent's action in sending the November 28, 2000 letter. Notwithstanding Petitioner's objection to the characterization, this is an estoppel argument. CMS accurately points out the well-settled principle that the government may not be estopped on the same terms as any other litigant. Id. at 60. Here, however, Petitioner has not even demonstrated the traditional elements of an estoppel - detrimental reliance on the agent's misconduct that has caused it to change its position for the worse. Petitioner claims harm but demonstrates no harm. Petitioner suggests no action that it took or failed to take to its detriment as a result of the letter. In fact, since its provider agreement had been terminated (or was about to be terminated) by the time it even received the letter, Petitioner can demonstrate no harm.

5. The State agency was not required to schedule a revisit after November 27, 2000 but before December 1, 2000, in order to accommodate Petitioner.

Finally, it is well settled that, the State agency's acceptance of Petitioner's POC does not demonstrate that a facility has achieved substantial compliance.⁽⁴⁾ With limited exception not applicable here, substantial compliance must be demonstrated by a revisit survey. Cross Creek Health Care Center, DAB No. 1665 at 3 (1998). The timing of the revisit survey is solely within the agency's discretion. See Arbor Hospital of Greater Indianapolis, DAB No. 1591 (1996). Moreover, even if I had the authority to review and rule on the timing of the revisit survey, I could not fault the State agency for its "failure" to survey prior to the termination date. Petitioner does not claim to have achieved substantial compliance until November 27, just four days prior to termination. Accepting Petitioner's position would compel the State agency to conduct a third revisit within this extremely limited time, which is simply unreasonable.

Conclusion

For all of these reasons, I exercise my authority under 42 C.F.R. � 498.70 and dismiss this case. In the alternative, I grant CMS's Motion for Summary Judgment.

xxx

Carolyn Cozad Hughes

Administrative Law Judge

1. CMS has the delegated authority to make these initial and reconsidered decisions on the Secretary's behalf. 42 C.F.R. Part 498, Subpart B.

2. The letter indicates that it was faxed to Petitioner on September 6, 2000 and Petitioner has not questioned that. In any event, even if it were not faxed on that date, the presumption is that Petitioner received it five days after the date on the notice (September 11, 2000). 42 C.F.R. � 498.22(b)(3). Cary Health and Rehabilitation Center, DAB No. 1771 at 12 (2001). Assuming the notice was received September 11, 2000 the deadline for requesting hearing was November 10, 2000, months before Petitioner actually requested hearing. The manner of delivery thus does not affect the outcome of this decision.

3. Inasmuch as Petitioner did not even request, under 498.40(c), an extension of time in which to file an appeal, I am not convinced that I have the discretion under 498.70(c) not to dismiss. Alden-Princeton Rehabilitation and Health Care Center, Inc., DAB No. 1709 (1999). Nevertheless, the reasons for which I would grant summary judgment are also reasons why I would exercise my authority to dismiss under 498.70(c).

4. Indeed, here the facility twice submitted POCs that were accepted, but failed to demonstrate substantial compliance at the subsequent revisit surveys.