SUBJECT:

Palm Grove Convalescent Center,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

For reasons set forth below, the Centers for Medicare & Medicaid Services' (CMS) Motion to Dismiss the request for hearing filed by Petitioner, Palm Grove Convalescent Center, is granted and Petitioner's Motion for Summary Judgment is denied.

I. Background

By letter dated October 18, 1999, CMS determined that the effective date of Petitioner's reinstatement in the Medicare program was July 30, 1999. By letter dated December 8, 1999, Petitioner appealed the October 18, 1999 determination. In its appeal, Petitioner contended that it was entitled to reinstatement at the close of the second reasonable assurance survey, June 4, 1999, rather than the date when CMS found compliance, July 30, 1999.

On July 25, 2000, CMS submitted a Motion to Dismiss for Lack of Jurisdiction accompanied by three exhibits marked A - C. I have remarked these exhibits as CMS exhibits 1 - 3 (CMS Exs. 1 - 3) to conform to Civil Remedies Division procedures. On July 25, 2000, Petitioner submitted a Motion for Summary Judgment accompanied by eight exhibits (P. Exs. 1 - 8). Both parties filed response and reply briefs. Petitioner's reply brief was accompanied by three additional exhibits marked exhibits 1 - 3 but which I have remarked as exhibits 9 - 11 (P. Exs. 9 - 11). CMS objected to P. Exs. 10 and 11. I gave CMS an opportunity to respond to Petitioner's reply brief and to discuss in detail CMS's objections to P. Exs. 10 and 11. CMS filed a response to Petitioner's reply brief on October 23, 2000 along with an attachment. I decline to admit into evidence P. Exs. 10 and 11 as these exhibits are immaterial to the issue before me and I admit into evidence CMS Exs. 1 - 3 and P. Exs. 1 - 9.

II. Issue

The issue here is whether the October 18, 1999 notice contained an initial determination for which a request for hearing may be granted.

III. Discussion

Petitioner is a skilled nursing facility located in Garden Grove, California. The Medicare agreement held by Petitioner was involuntarily terminated on December 5, 1998 due to Petitioner's failure to maintain substantial compliance with the Medicare participation requirements applicable to nursing homes. 42 C.F.R. � 493.53(a)(2). Before Petitioner could be reinstated in the Medicare program following the involuntary termination, it had to apply for readmission and CMS had to find that the reason for termination of the previous agreement had been removed and there was reasonable assurance that it would not recur. Social Security Act (Act), section 1866(c)(1); 42 C.F.R. � 489.57. In this case, Petitioner had to establish the ability to maintain substantial compliance with Medicare requirements by successfully completing a reasonable assurance process. This process requires a provider seeking reinstatement to undergo two surveys, one at the beginning and one at the end of a specified reasonable assurance period. See State Operations Manual � 2016; CMS Ex. 2. Reinstatement would be granted only if these surveys show that the facility was in substantial compliance with the nursing home requirements at the beginning and end of the reasonable assurance period.

Petitioner applied for readmission following the involuntary termination and the California Department of Health Services (DHS), a State survey agency, completed the first of two required surveys on April 12, 1999. This survey found that Petitioner was not in substantial compliance with the requirements at 42 C.F.R. Part 483. Petitioner promptly submitted a plan of correction. After a review, CMS accepted the plan as credible evidence of corrective action and determined that under the specific circumstances it was reasonable to exercise discretion to conclude that Petitioner had achieved substantial compliance with the applicable federal requirements, effective April 30, 1999. P. Ex. 3.

The DHS completed the second reasonable assurance survey on June 4, 1999. By letter dated July 9, 1999, CMS found that Petitioner was not in substantial compliance with the requirements of 42 C.F.R. Part 483 but in the exercise of discretion permitted Petitioner (under the then controlling policy) to submit a plan of correction. CMS Ex. 2; P. Ex. 3. By letter dated October 18,1999, CMS stated that it had reviewed the plan of correction submitted by Petitioner and determined that Petitioner was in substantial compliance as of July 30, 1999, the date when all corrective action called for by the plan of correction was completed. CMS Ex. 2; P. Ex. 4. CMS further found that Petitioner was complying with all other pertinent requirements of Title XVIII of the Act, and otherwise fulfilled, or made satisfactory arrangements to fulfill, all of the statutory and regulatory responsibilities of its previous agreement. Finally, CMS concluded that, under the governing regulation at 42 C.F.R. � 489.13, the effective date of Petitioner's reinstatement to the Medicare program was July 30,1999. Id.

I find that I lack jurisdiction over Petitioner's hearing request and I therefore grant CMS's Motion to Dismiss.

"The authority to provide an ALJ [Administrative Law Judge] hearing using the procedures in Part 498 is derived from statutory and regulatory provisions." Specialty Hospital of Southern California, La Mirada, DAB No. 1730, at 16 (2000). The regulations which define the Departmental Appeal Board's (DAB's) jurisdiction, pursuant to 42 C.F.R. Part 498, make clear that CMS's decisions on reinstatement following involuntary terminations are discretionary and are not subject to appeal. An action taken by CMS which is not one of the initial determinations listed at 42 C.F.R. � 498.3(b) is not subject to appeal under Part 498 of the regulations. Affordable Skilled Nursing, DAB CR562 (1998). Administrative actions that are not initial determinations and not subject to an appeal are listed at 42 C.F.R. � 498.3(d). Section 42 C.F.R. � 498.3(d)(4) specifies that the finding that an entity that had its provider agreement terminated may not file another agreement because the reasons for terminating the previous agreement have not been removed or there is insufficient assurance that the reasons for the exclusion will not reoccur is not an initial determination. CMS contends that, under 42 C.F.R. � 498.3(d), a finding by CMS that there is "insufficient assurance" that the reasons for termination will not recur is not an "initial determination" that is subject to appeal to the Board. I agree. It has been held that the regulations explicitly establish that CMS determinations concerning reasonable reassurance and readmission "are considered not to be determinations subject to reconsideration and appeal. Rather these decisions are classified as administrative actions over which CMS retains discretionary authority." Heartland Manor at Carriage Town, DAB No. 1664 at 4 (1998) citing 42 C.F.R. � 498.3(d)(4); see State Operations Manual � 2016 ("[t]he reasonable assurance decision is an administrative action (not an initial determination) and is not subject to appeal process" under Part 498.)

For its part, Petitioner asserts that 42 C.F.R. � 498.3(d)(4) is not applicable to its case. It maintains that this subsection does not apply because CMS accepted Petitioner back into the Medicare program and the issue therefore involves the effective date of the new provider agreement. On this issue, Petitioner also asserts that Heartland Manor at Carriage Town, supra, is not relevant because that case involved a provider which was denied re-entry into the Medicare program following termination while Petitioner's case involves the effective date of its provider agreement.

Petitioner contends that its claim is subject to 42 C.F.R. � 498.3(b)(14)(1999), now recodified at 42 C.F.R. � 498.3(b)(15), which states that the effective date of a Medicare provider agreement is an initial determination, subject to DAB review. I find no merit in these arguments. This provision pertains only to the effective date of an agreement sought by a "prospective provider" and has no application in the case of an entity, such as Petitioner, that has been involuntarily terminated as a Medicare provider. This point is clarified in the Notice of Proposed Rulemaking (NPRM) which was published on October 8, 1992 prior to the adoption of 42 C.F.R. � 498.3(b)(14)(1999). The NPRM explains that this new paragraph was intended to "specifically provide the appeal rights specified in sections 498.3(b)(1) and (4) and 498.5(a) and (b) to prospective providers and suppliers who are dissatisfied with a finding of noncompliance . . . as of the date of the initial survey." 57Fed. Reg. 46363. Section 498.3(b)(14)(1999) reflects that a finding that a prospective provider does not qualify as a new Medicare provider at a date prior to the date of admission approved by CMS is in effect a denial, however temporary, of the initial application. There is no indication that section 498.3(b)(14)(1999) was intended to grant the same rights to previously terminated providers seeking reinstatement.

Petitioner's attempt to distinguish Heartland Manor at Carriage Town, supra, also falls short. Heartland Manor at Carriage Town recognized that CMS determinations concerning reasonable assurance and readmission are considered not to be initial determinations subject to reconsideration and appeal. This case is applicable because if the DAB review of the denial of an application for readmission is not permitted, clearly the DAB lacks jurisdiction to adjudicate the sub-issue of the effective date of readmission.

It is clear that under 42 C.F.R. � 498.3(d)(4) providers which have been stripped of their Medicare provider agreements for failing to comply with the applicable participation requirements have no right to challenge CMS's denial of an application for readmission. It would be inconsistent with section 498.3(d)(4) to grant the right to a hearing on the effective date of readmission. Moreover, CMS's decision not to reinstate an involuntarily terminated entity as of the date of a reasonable assurance survey represents a denial of readmission whether or not reinstatement is granted as of a later date.

Petitioner's motion for summary judgment also requests review of the effective date of Petitioner's reinstatement to Medi-Cal, California's Medicaid program. Part 498 however does not give an ALJ any authority to intervene in the decisions regarding admission or readmission of entities as participants in State Medicaid programs.

In addition, Petitioner contends that the July 30,1999 date of reinstatement was incorrect because it "was required to submit a plan of correction citing a later date when the corrections would be made because DHS issued the Statement of Deficiencies in an untimely manner and [Petitioner] did not have the opportunity to contest the merits of the surveyor's findings." Petitioner's Motion at 4. Petitioner's argument that it should be certified at a date that is earlier than July 30, 1999 is, in effect, an assertion of estoppel. I do not have the authority to hear and decide claims of estoppel against CMS or the Secretary. Vermillion Behavioral Health Center, DAB CR751, at 4 (2001); The Rivers Health Care Resources, Inc., DAB CR446 (1996); SRA, Inc. D/B/A St. Mary Parish Dialysis Center, DAB CR341 (1994); T.L.C. Mental Health Center, DAB CR636 (1999); Therapeutic Rehabilitation Centers, Inc., DAB CR531 (1998); Harriet Cohn Center, DAB CR797 (2001).

III. Conclusion

CMS's Motion to Dismiss the request for hearing filed by Petitioner is granted and Petitioner's Motion for Summary Judgment is denied.

Joseph K. Riotto

Administrative Law Judge