SUBJECT:

Muir Road Health Care,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

Petitioner's request for hearing dated September 11, 2002, is dismissed pursuant to section 1128A(c)(4) of the Social Security Act (42 U.S.C. � 1320a-7a(c)(4)) (the Act) made applicable to this case by section 1819(h)(2)(B)(ii) of the Act (42 U.S.C. � 1395i-3(h)(2)(B)(ii)).

I. Procedural history

This case presents a tortured procedural history, due in large part to the failure of Petitioner's counsel to actively participate in the litigation and comply with my procedural orders. The history is set out in detail to provide context for the sanction that I have elected to impose.

On May 1, 2001, the California Department of Health Services (the State agency) completed a survey of Petitioner's facility, finding Petitioner not in compliance with participation requirements. Petitioner was advised by letter dated July 12, 2001, that the Centers for Medicare & Medicaid Services (CMS) agreed with the State agency findings of noncompliance and that CMS was imposing remedies including a denial of payment for new admission (DPNA), effective July 27, 2001, and a civil money penalty (CMP) of $500 per day, effective May 1, 2001. The letter specified that both sanctions continued until the facility was found in compliance or the Petitioner's provider agreement was terminated.

On October 15, 2001, the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB) received an October 9, 2001 memorandum from the Director, Long Term Care Branch, Division of State Operations, Health Care Financing Administration ⁽¹⁾ with Petitioner's September 11, 2001 hearing request attached. The Parties were advised by memorandum dated October 22, 2001, that Petitioner's request for hearing filed on September 11, 2001 (the date it was signed) was received and assigned to me for hearing and decision. A standard 60-day docketing Order was issued at my direction on October 22, 2001.

On December 21, 2001, CMS filed, in compliance with the 60-day docketing Order, its notice of intent to move for dismissal, notice of issues for further development, and notice of issues for which partial summary judgment would be requested. CMS advised that it was moving to dismiss the request for hearing as untimely filed and for failure to comply with the requirements of 42 C.F.R. � 498.40 or, in the alternative, CMS requested further development.

On January 17, 2002, I issued an Order establishing a briefing schedule for CMS's motion to dismiss. CMS was to file its opening brief by January 18, 2002. Petitioner's response was due by February 18, 2002. The CMS reply was due by February 28, 2002.

On January 22, 2002, CRD received CMS's brief dated January 18, 2002. Petitioner did not file a responsive brief on February 18, 2002, the date it was due. In a letter dated February 27, 2002, CMS's counsel advised me that they received on February 22, 2002, Petitioner's motion for extension of time to respond, dated February 19, 2002. CMS objected on grounds that the documents were not signed. Petitioner's unsigned motion for extension was not received at CRD until March 14, 2002. ⁽²⁾ In a letter dated March 11, 2002, CMS's counsel requested dismissal for abandonment by Petitioner and cited as grounds, inter alia., Petitioner's failure to file a brief in response to CMS's motion to dismiss.

On March 18, 2002, 28 days late, Petitioner filed a motion for leave to file out-of-time Petitioner's brief in opposition to the CMS motion to dismiss, Petitioner's brief in opposition, a request for oral argument, a notice of appearance, and a request to extend time to file an appeal. The documents were received at CRD on March 20, 2002. The cover letter bears a scrawl above the typed name of Petitioner's counsel that appears somewhat similar to that on Petitioner's request for hearing. Similar marks appear on the motion to file out-of-time, one copy of the declaration of Margaret Kane (the second copy of the declaration appears to bear the signature Margaret Kane), the declaration of Petitioner's counsel, the request to extend time to file appeal, the notice of appearance of Orrin Leigh Grover, Petitioner's counsel, and the request for oral argument. Petitioner's counsel did not sign any of the certificates of service attached to the various documents submitted and he did not certify service upon CMS in his cover letter.

In a letter dated April 1, 2002, CMS objected to the filing of all the documents submitted by Petitioner's counsel on March 18, 2002. Apparently, none of the copies served on CMS were signed by Petitioner's counsel. CMS opposed all Petitioner's requests for relief.

On May 21, 2002, I denied CMS's motion to dismiss, finding that Petitioner's request for hearing dated September 11, 2001, was timely filed. I noted in my Order of May 21, 2002, that both Parties had offended procedural rules and that I found no prejudice to either party in addressing the merits of CMS's motion to dismiss. I granted CMS's alternative motion for further development concluding that such development would be accomplished through the exchange and briefing process; the schedule for which was also set in my Order of May 21, 2002. On May 21, 2002, I also issued a separate Notice of Hearing, setting this case for hearing December 9 through 11, 2002, in San Francisco.

On June 6, 2002, counsel for CMS sent me a letter in which CMS objected to my Order of May 21, 2002, on various grounds. Petitioner filed no response.

On July 1, 2002, CMS submitted its prehearing exchanges as required by my Order of May 21, 2002. No exchange was received from Petitioner. By letter dated July 12, 2002, CMS submitted its proposed stipulation of undisputed fact, statement of issues and status report in an attempt to comply with the requirements of my Order of May 21, 2002. CMS advised in its submission that counsel for CMS attempted to confer with Petitioner's counsel and provided him copies of the proposed joint submissions, but Petitioner's counsel never responded. Counsel for CMS advised that there have been no settlement discussions in this case.

In a letter dated July 29, 2002, counsel for CMS advised that CMS had to that date received no exchanges from Petitioner and had no communication from Petitioner's counsel. CMS suggested that Petitioner may have abandoned its request for a hearing and requested that an Order to Show Cause be issued. On August 13, 2002, I issued an Order to Petitioner to show cause not later than August 27, 2002, why this case should not be dismissed for abandonment or why a sanction should not be imposed due to Petitioner's total failure to comply with my Order of May 21, 2002.

CMS filed its prehearing brief, request for subpoenas, an additional exhibit and revised exhibit list on August 15, 2002, in compliance with my Order of May 21, 2002. By letter dated October 4, 2002, CMS moved to further supplement its exchange. Petitioner has filed no response.

On September 3, 2002, CRD received Petitioner's motion to extend time to file its witness and exhibit lists dated August 27, 2002, and Petitioner's response to the Order to Show Cause dated August 27, 2002.

On September 6, 2002, CMS filed a reply to Petitioner's response to the Order to Show Cause. This pleading is not authorized by the regulations or required by my Order. CMS failed to request leave to file. However, Petitioner has not objected; I accept the pleading as filed.

On September 13, 2002, Petitioner's request for subpoenas was received at the CRD. On September 16, 2002, Petitioner's exhibit and witness lists and proposed exhibits were received at the CRD with a certificate of service indicating they were mailed on September 9, 2002. The requests for subpoenas, exhibit and witness lists, and exhibits do not conform with CRD and regulatory requirements and all are rejected.

On September 20, 2002, CMS filed its opposition to "Petitioner's Untimely Submittal of Proposed Exhibits, and List of Proposed Witnesses; Objection to Petitioner's Untimely Subpoena Requests; and Request for Time to Object to the content of Petitioner's Proposed Exhibits." Petitioner has filed no response.

Petitioner has not filed its prehearing brief.

II. Analysis

A. Issue:

Whether Petitioner should be sanctioned by dismissal of the request for hearing dated September 11, 2001.

B. Applicable Law:

Section 1128A(c)(4) of the Act is made applicable to civil money penalty proceedings involving nursing facilities by section 1819(h)(2)(B)(ii) of the Act, and provides that:

The official conducting a hearing under this section may sanction a person, including any party or attorney, for failing to comply with an order or procedure, failing to defend an action, or other misconduct as would interfere with the speedy, orderly, or fair conduct of the hearing. Such sanction shall reasonably relate to the severity and nature of the failure or misconduct. Such sanction may include -

(A) in the case of refusal to provide or permit discovery, drawing negative factual inferences or treating such refusal as an admission by deeming the matter, or certain facts, to be established, (B) prohibiting a party from introducing certain evidence or otherwise supporting a particular claim or defense, (C) striking pleadings, in whole or in part,
(D) staying the proceedings,
(E) dismissal of the action,
(F) entering a default judgment,
(G) ordering the party or attorney to pay attorneys' fees and other costs caused by the failure or misconduct, and
(H) refusing to consider any motion or other action which is not filed in a timely manner.

The regulations governing the conduct of administrative law judge (ALJ) hearings at 42 C.F.R. Part 498 provide that an ALJ may dismiss a hearing request for abandonment under the following circumstances:

Dismissal for abandonment.

(a) The ALJ may dismiss a request for hearing if it is abandoned by the party that requested it.

(b) The ALJ may consider a request for hearing to be abandoned if the party or its representative-(1) Fails to appear at the prehearing conference or hearing without having previously shown good cause for not appearing; and (2) Fails to respond, within 10 days after the ALJ sends a "show cause" notice, with a showing of good cause.

42 C.F.R. � 498.69.

The regulations also provide that--

An ALJ may vacate any dismissal of a request for hearing if a party files a request to that effect within 60 days from receipt of the notice of dismissal and shows good cause for vacating the dismissal.

42 C.F.R. � 498.72.

III. Discussion

I agree with the DAB that dismissal of a Petitioner's request for hearing with prejudice, thus depriving the Petitioner of a substantive due process right, is not a matter to be taken lightly. Alden-Princeton Rehabilitation & Health Care Center, Inc., DAB No. 1709 (1999). However, this case requires such a drastic sanction. I made clear to the Parties in this case exactly what was expected of them in order to bring this case to a hearing. In fact, based upon the difficulty Petitioner's counsel demonstrated in dealing with CMS's motion to dismiss, I ensured that the Parties had an extraordinarily long prehearing development period with a notice of hearing six months in advance of the hearing date. ⁽³⁾ Nevertheless, Petitioner has deliberately and repeatedly violated my orders in this case. Petitioner's conduct requires the severe sanction of dismissal.

My analysis starts with two recent DAB cases in which a DAB panel considered dismissal as a sanction, Kermit Healthcare Center, DAB No. 1819 (2002) and Osceola Nursing and Rehabilitation Center, DAB No. 1708 (1999). The sanction of dismissal was not approved in either case, reflecting the reluctance of the DAB to deprive a Petitioner of a hearing.

In Osceola Nursing, the ALJ dismissed a request for hearing for abandonment citing Petitioner's repeated acts in violation of the ALJ's orders over a prolonged period of time. A panel of the DAB reversed and remanded the case for further proceedings citing three reasons: (1) the record was incomplete; (2) the ALJ's orders were not sufficiently clear; and, (3) the ALJ did not consider all relevant factors. The DAB panel found the record incomplete because it was missing a joint request for extension of time; the ALJ referred to an order in which she granted a 90-day stay, but the order was not in the record; the ALJ referred to directives she gave the Parties, but the directives were not found in the record; a second request for stay or extension was missing; a communication between the ALJ's staff attorney and government counsel was not documented in the file; and there was no evidence in the face of a denial by Petitioner that Petitioner actually received an order that it allegedly violated. The DAB panel emphasized that the record must be fully documented so that appellate bodies can determine whether the ALJ properly exercised discretion to dismiss. The panel pointed out that it could not evaluate the clarity of an order not present in the record; that another order was not clear as to when or what the parties were expected to file as indicated by the government's failure to file and need to request clarification as to what to do next; nothing in the record controverted Petitioner's allegation that it did not receive the order allegedly violated; and government counsel never urged dismissal. The panel also found that the record did not support a finding that the sanction of dismissal was reasonably related to the severity of the alleged omission or misconduct. The panel reviewed decisions from several United States Circuit Courts of Appeal and concluded as a general proposition that dismissal should be a sanction of last resort, the record must be complete, and the ALJ orders to the parties must be clear. The panel concluded in Osceola that the evidence did not permit a conclusion that Petitioner's failures were due to willfulness, bad faith, or fault; that it was not clear that the Petitioner was sufficiently on notice that a dismissal remedy was imminent, or that the ALJ considered less drastic sanctions first.

In Kermit Healthcare Center, the ALJ dismissed the Petitioner's request for hearing for abandonment when the Petitioner failed to timely file a report of readiness. Petitioner requested that the ALJ vacate the dismissal, the ALJ declined, and Petitioner appealed. A panel of the DAB vacated the dismissal and remanded the case for further proceedings. The panel emphasized that the ALJ erred by not issuing an order to show cause prior to dismissal for abandonment pursuant to 42 C.F.R. � 498.69(b)(1) and the error was not remedied by considering Petitioner's motion to vacate. The panel found that Petitioner showed that its failure to file did not amount to abandonment, which the panel defined as an intentional relinquishment of the right to a hearing. The panel further found that while the ALJ had the authority to sanction the Petitioner for failure to obey an order, the sanction of dismissal did not reasonably relate to the severity and nature of the failure or misconduct. The panel noted that it was appropriate in sanction cases to apply the law of the federal circuit in which Petitioner is located, which is reasonable as that court will most likely review a DAB decision appealed by the Petitioner.

I take from these two decisions that the Board is unlikely to approve a sanction in the form of a dismissal unless it is clear: (1) that the sanctioned party acted willfully or in bad faith or was otherwise at fault; (2) that the sanctioned party was on notice that a sanction was imminent and that dismissal was a possibility; (3) that other lesser sanctions were considered first; and, (4) that the sanction of dismissal is reasonably related to the severity of the sanctioned party's omission or misconduct. The Board will also look to the law of the circuit where the Petitioner is located to determine how that circuit evaluates a dismissal for failure to prosecute or failure to obey an order.

In the case before me, Petitioner, Muir Road Health Center, is located in Martinez, California, within the jurisdiction of the United States Court of Appeals for the Ninth Circuit. A judge in the Ninth Circuit must weigh five factors before deciding whether or not to dismiss a claim for failure to prosecute or failure to comply with a court order: (1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its docket; (3) the risk of prejudice to the defendants/CMS; (4) the availability of less drastic alternatives; and (5) the public policy favoring disposition of cases on their merits. Pagtalunan v. Galaza, 291 F.3d 639, 642 (9^th Cir. 2002), citing, Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9^th Cir. 1992), cert. denied, 506 U.S. 915 (1992). See also, Thompson v. Housing Authority of City of Los Angeles, 782 F.2d 829 (9^th Cir. 1986), cert. denied, 479 U.S. 829 (1986).

IV. Findings of fact and conclusions of law

A. Dismissal for abandonment is not appropriate as Petitioner did not intentionally relinquish its right to a hearing.

My Order to Show Cause dated August 13, 2002, directed that Petitioner show cause not later than August 27, 2002, why its request for hearing should not be dismissed for abandonment or as a sanction for failure to comply with my Order of May 21, 2002. Petitioner responded with two different filings, a motion to extend time and a response to the Order to Show Cause, both dated August 27, 2002 and received at the CRD on September 3, 2002. Petitioner moved, in its motion for extension, that the July 1, 2002 deadline for exchanges of exhibits and witness lists be extended to September 9, 2002. In its response to the Order to Show Cause, Petitioner never focuses upon the issue of abandonment rather, the pleading focuses upon whether the request for hearing should be dismissed as a sanction and the definition of "good cause" as it applies to late filings. Based on Petitioner's filings, I conclude that the Petitioner, Muir Road Health Center, did not intend to relinquish its right to a hearing, the definition of abandonment adopted by the DAB in Kermit. Accordingly, I conclude that dismissal for abandonment pursuant to 42 C.F.R. � 498.69 is not appropriate in this case.

B. Dismissal is the appropriate sanction in this case.

The issue then is whether this case should be dismissed as a sanction against Petitioner for failure to comply with my Order of May 21, 2002. Counsel for Petitioner argues in response to my Order to Show Cause that dismissal is too drastic a sanction:

Here, the facts are unusual but they strongly support the discharge of the order to show cause without the imposition of any sanction, or alternatively, with the imposition of a lesser sanction because the Petitioner's counsel was unable to timely complete the Statement due because of (sic) combined health and problems of overwork that are outlined in his declaration.

Petitioner's Response to Order to Show Cause at 2. Thus, it appears that even counsel for Petitioner appreciates that some sanction may be appropriate. Unfortunately, my authority to impose sanctions does not include unlimited authority to impose a sanction directly against the attorney representing a party. Counsel for CMS has been very vocal in its demands that Petitioner be sanctioned. Although I requested no reply to Petitioner's response to my Order to Show Cause and no such reply is contemplated by the regulations, CMS filed a reply on September 6, 2002, strongly advocating for the sanction of dismissal. Petitioner filed no objection to the reply, so it is treated as filed. ⁽⁴⁾

The conduct of Petitioner that provokes my decision to impose the most severe of all sanctions is Petitioner's deliberate failure to comply with my Order of May 21, 2002. The Order specifically required that by July 1, 2002, the parties exchange exhibits, exhibit lists, witness lists, prior statements to be offered in lieu of testimony, and a summary of expert witness qualification, all prepared in accordance with Civil Remedies Division Procedures. Petitioner did not make its exchanges by July 1, 2002 as ordered, and when it did attempt to make exchanges, they were nonconforming. ⁽⁵⁾ By July 15, 2002, the Parties were to jointly report status of settlement discussions, to file a Joint Stipulation of Undisputed Facts, and a Joint Statement of Issues for Hearing. CMS represents that it made attempts to contact Petitioner, but there was no response. As a result, CMS filed the documents stating its perspective alone. See CMS Stipulation of Undisputed Facts, Statement of Issues Presented for Hearing, and Status Report, dated July 12, 2002 at 1. By August 1, 2002, the parties were to file objections to the opposing parties proposed exhibits. Petitioner did not timely file a list of exhibits and CMS complains that it had no way to know whether to object or not and requested additional time to file objections after Petitioner made its exchange of exhibits and witnesses. See Letter from Anne Hall, Assistant Regional Counsel, Office of Regional Counsel, Health and Human Services, dated July 29, 2002. By August 15, 2002, the Parties were to file their prehearing briefs. Petitioner has filed no prehearing brief. CMS timely filed its brief but complains it had no way to know the issues Petitioner disputed, as Petitioner made no exchanges that would reflect its theory of its case. See CMS's Pre-Hearing Brief, dated August 15, 2002. My May 21, 2002 Order required that any request for subpoenas be filed by August 15, 2002, and specified that such request must meet the requirements of 42 C.F.R. � 498.58. On September 13, 2002, CRD received a single, unsigned and undated sheet of paper from Petitioner with three lines of text - "Request for Subpoenas (sic)" and "The Department (sic) Appeals Board is requested to issue the attached subpoenas (sic)." - with five draft subpoenas attached. Petitioner's subpoena request does not meet the requirements of 42 C.F.R. � 498.58.

My decision to sanction Petitioner by dismissal is based on the following evaluation of the factors specified by the DAB and the Ninth Circuit:

1. Petitioner acted willfully or in bad faith or was otherwise at fault.

The DAB requires that there be some evidence of willfulness, bad faith or other fault. CMS indicated on December 21, 2001, that it intended to move to dismiss Petitioner's request for hearing for untimely filing. On January 17, 2002, I issued an order establishing a briefing schedule for CMS's motion to dismiss. CMS timely filed its brief by January 18, 2002. Petitioner, however, failed to file its response by February 18, 2002, as outlined in my January 17, 2002 Order. In a letter dated February 27, 2002, CMS's counsel advised me that they received on February 19, 2002, Petitioner's motion for an extension of time to respond dated February 19, 2002, one day after Petitioner's response was due. In a letter dated March 11, 2002, CMS's counsel requested dismissal for abandonment by Petitioner and cited as grounds, inter alia, Petitioner's failure to file a brief in response to CMS's motion to dismiss. I denied CMS's motions to dismiss in my Order of May 21, 2002. I noted at pages 3 and 4 of my Order that the pleadings of both Parties did not comply with 42 C.F.R. � 498.17(a) and were subject to being stricken. I specifically encouraged counsel for both Parties to review and comply with the procedural requirements of Part 498, Title 42, Code of Federal Regulations. I also stated that I would not remind the parties again of the importance of their compliance with procedural rules to ensure the prompt and orderly adjudication of the case. May 21, 2002 Order at 4, n. 2. I also set the schedule for prehearing preparation of this case in my May 21, 2002 Order. I specifically advised the Parties that failure to comply might (1) delay the hearing, (2) cause dismissal for abandonment or (3) appropriate sanction under the Act. I also reminded the Parties that exchanges were to be prepared in accordance with Civil Remedies Division Procedures. May 21, 2002 Order at 8, 10. I also specified that requests for extensions must be discussed with opposing counsel and submitted in writing.

It is clear that CMS received the Order of May 21, 2002, as it filed an objection on June 6, 2002. Petitioner acknowledges receipt of the May 21, 2002 Order in its response to the Order to Show Cause. Petitioner also does not deny that CMS made attempts to contact Petitioner's counsel in an effort to comply with requirements of the Order for joint submissions. I conclude that Petitioner received and was aware of the requirements of the May 21, 2002 Order.

In its response to the Order to Show Cause, Petitioner argues that noncompliance was caused by health problems and overwork of its counsel. Petitioner's counsel filed a declaration in support of the response. ⁽⁶⁾ Petitioner's counsel declares that he is a sole practitioner; that he has been working on a limited work schedule due to a medical condition referring to brief hospitalizations in 1992 and 2000 for staph infections, sleep apnea, hypertension, daytime somnolence; and that he was overburdened by other work. The declaration counsel submitted in support of his allegation of medical problems is unsigned, undated, and refers to events in 2000. I am sympathetic to anyone with health problems, but Petitioner's counsel describes chronic or long-term illnesses of which he was aware a significant time before the deadlines established by my May 21, 2002 Order and/or before the request for hearing was even filed to initiate this case. I am not inclined to impose a sanction for bad judgment, such as reflected by counsel's undertaking representation of a client being aware that his health may negatively impact his ability to competently perform. However, Petitioner's counsel's conduct in this case is much more egregious in that he was aware of his limits, but never bothered to advise me or opposing counsel or request an extension. I also view counsel's declaration to be inconsistent to the extent that on the one hand he blames his poor health, but on the other, represents he deliberately chose to work on other cases and not represent the interests of his client in this case. ⁽⁷⁾ Petitioner did not advise me or CMS of any difficulty its counsel was having and all that would have been required was a simple motion and communication with CMS. There is no indication that Petitioner's counsel sought the assistance of co-counsel. Clearly, Petitioner's counsel did not attempt to withdraw from representation so that Petitioner could obtain new representation. Only after the Order to Show Cause was issued on August 13, 2002, did Petitioner file a motion to extend time to comply with the May 21, 2002 Order. I conclude that Petitioner's noncompliance with my Order of May 21, 2002, was deliberate and willful. Further, Petitioner's noncompliance was either in bad faith in an effort to delay or negligent in that Petitioner failed to exercise reasonable care not to delay this case.

2. Petitioner was on notice that a sanction was imminent and that dismissal was a possibility.

My Order of May 21, 2002, clearly advised both Parties that they were required to comply with procedural requirements of the CRD Procedures ⁽⁸⁾ and 42 C.F.R. Part 498. The Order also clearly advised that failure to comply with the Order could result in an appropriate sanction. My Order to Show Cause dated August 13, 2002, advised that I was contemplating dismissal for abandonment or as a sanction for not complying with my May 21, 2002 Order. Petitioner cannot argue in good faith that it was not on notice that a sanction was possible for noncompliance and imminent. Despite having notice, Petitioner has never filed its prehearing brief that was due on August 15, 2002, or requested an extension to file.

3. Other lesser sanctions were considered first, or as characterized by the Ninth Circuit, less drastic alternatives were considered.

Section 1128A(c)(4) of the Act, provides a list of possible sanctions. I have considered each possibility and reject all, but dismissal, for the following reasons.

The CRD prehearing process, which involves the exchange of exhibits, exhibit lists, witness lists, statements to be offered in lieu of live testimony, and expert witness qualifications, is the only discovery process permitted in these administrative proceedings. Petitioner's failure to timely file and the failure to file in conformance with the requirements of CRD Procedures and regulations deprived CMS of an opportunity to learn Petitioner's theory of the case and impaired CMS's ability to prepare to examine Petitioner's evidence in a hearing on the record. While Petitioner might be compelled to fully disclose by another order, CMS would be prejudiced by limited time to prepare to meet the disclosed evidence, particularly with a firm trial date rapidly approaching. Petitioner has effectively denied CMS meaningful information regarding Petitioner's theory of the case. Further, I have no reason to belief Petitioner would comply with such an order. Clearly, an appropriate sanction would be to draw adverse inferences against Petitioner and/or exclude the evidence. However, because Petitioner has failed to submit meaningful information as to its theory of disputes, and drawing negative inferences or excluding all Petitioner's evidence would have similar punitive effect as simply dismissing the request for hearing.

Striking or refusing to accept Petitioner's prehearing brief, if ever offered, would cause more prejudice for CMS, which has repeatedly asked for clarification of Petitioner's theory, than upon Petitioner. Petitioner's failure to file a prehearing brief also negatively impacts my ability to adjudicate the case. The purpose of the prehearing brief, as indicated in my May 21, Order, is to focus the hearing on the remaining issues and facts; to allow me to meaningfully participate in the hearing; and to ensure that there is a full and fair hearing.

Staying the proceedings would only create further delay in completing adjudication of this case and interfere with the adjudication of other cases. Furthermore, CMS has diligently prepared for hearing, complying with each and every requirement of the May 21, 2002 Order in a timely manner. Staying proceedings would not vindicate the government or the public's interest in prompt adjudication. Staying proceedings would effectively reward Petitioner by granting more time to comply with my Order.

Given the status of this case, entering a default judgment for CMS is little different in effect than a dismissal with prejudice.

I have carefully considered the idea of ordering the payment of attorney fees by Petitioner's counsel to the government, either as the only sanction or in combination with dismissal. The difficulty with this approach relates to identifying the cost to the government in excess of that it would have incurred if this case had simply proceeded to hearing on a normal schedule, i.e., the cost incurred as a result of Petitioner's misconduct as opposed to usual and regular costs. My conclusion is that the effort required for the government to identify such costs will exceed the value of the recovered costs, assuming they are paid, and any deterrent effect.

Refusing to consider untimely filings would result in my rejecting Petitioner's exchanges and any prehearing brief Petitioner would file. I would then adjudicate this case based solely upon CMS's filings, with the likely result little different than that of dismissal with prejudice or a default judgment for CMS.

4. The sanction of dismissal is reasonably related to the severity of the Petitioner's omission or misconduct.

CMS moved in the alternative to its January 2002 motion to dismiss, for a more definite statement of the grounds for appeal. In my May 21, 2002 Order, I granted the motion directing that Petitioner clarify the grounds for its appeal through the prehearing development of the case. Whether intentionally or by neglect, Petitioner has effectively deprived both CMS and me of any meaningful understanding of why the request for hearing was ever filed. Further, Petitioner's failure to file exchanges that conformed with procedural requirements either by omission or design ensured that neither CMS nor I would be informed of Petitioner's true theory of the case until just before the scheduled hearing in this case. If this was Petitioner's intent, then it rises to the level of bad faith, if not fraud on the tribunal. If Petitioner's omissions are attributable to the negligence of its counsel, the effect upon the prompt adjudication of this case is no less severe. Because I find all lesser sanctions inadequate and, considering the conduct of Petitioner who was on notice that such conduct would not be tolerated, I conclude that the sanction of dismissal is clearly reasonably related to the severity of Petitioner's omissions or misconduct.

5. The public's interest in expeditious resolution of litigation.

It should be no news to the Parties or the public at large that there are many pending cases and that it often takes more time to fully adjudicate these complex cases than is in the best interest of the many nursing home residents who are impacted by the decisions in these cases. It is common knowledge that the tax paying public has an interest in expeditious litigation. Petitioner's omissions or misconduct in this case are clearly inconsistent with the public interest because it has required additional government resources to defend and risks causing delay in other pending cases.

6. The need to manage the docket.

My May 21, 2002 Order, particularly the part directing further development, establishing an exchange date and procedure, and setting the schedule for prehearing development is similar to the Order issued in all my cases. The purpose of the Order is to give the parties a definite schedule that leads to hearing. The Order anticipates and resolves many questions typically raised by the Parties and ensures that the case is ready for scheduling when I have time available on my docket. Petitioner's is not the only case assigned to me. Petitioner's failure to comply with my May 21, 2002 Order has resulted in additional motions being filed by CMS and the need to handle those motions. As a result, it interferes with my handling of other cases in which the parties are complying with prehearing development. If more Petitioners choose to ignore my scheduling Orders or those of other judges, it will quickly become impossible to docket cases for hearing with any certainty that they will be ready to hear or that hearings will actually occur. Further, any day scheduled for the hearing of a case means that other cases deserving of a hearing will not be heard that day. In this case, three days were set aside for hearing and Petitioner's omissions or misconduct jeopardized bringing the case to hearing as scheduled, thus depriving other parties of the valuable hearing time or requiring prompt rescheduling of another case to avoid waste of that time. Failure to sanction this Petitioner at this time for its conduct would send a message to other Petitioners that they too might risk obstructing the orderly adjudication of cases by ALJs of the CRD with little fear of being held accountable.

7. The risk of prejudice to CMS attendant to Petitioner's conduct.

CMS has met the requirements of my May 21, 2002 Order. CMS is thus prepared for the hearing of this case, at no small expense to the taxpayers I am sure. Prejudice for CMS at this time includes the additional expense associated with briefings on Petitioner's nonconforming pleadings and the issue of sanctions which would not otherwise have been required, and the possibility that this case would not be heard as scheduled, requiring rescheduling and impairing counsel's ability to prepare and present other pending cases. In a larger sense, Petitioner's omissions or misconduct are prejudicial to the taxpaying public which pays most costs associated with these proceedings and will not have its interested vindicated by having the issues in this case adjudicated promptly and as cost-effectively as possible.

8. The public policy favoring disposition of cases on their merits.

The Ninth Circuit, the DAB, and most state and federal courts recognize that public policy favors disposing of cases on the merits, which always weighs against the sanction of dismissal. However, this factor is mitigated to an extent in this case, because Petitioner, by error or design, has disclosed so little of the theory for its appeal that it is not possible to make even a preliminary determination of whether the appeal has any merit. Certainly, if Petitioner had in good faith complied with my May 21, 2002 Order, it might have been possible to assess whether there is any merit to the appeal and, if merit was found, that might dictate imposing a lesser sanction so there could be a full-adjudication. However, where as here, Petitioner's conduct, by omission or design, has the effect of concealing, rather than revealing, the true merits of the case, I find that this factor has lesser weight in my decision to impose the severe sanction of dismissal.

In summary, seven of the eight factors weigh in favor of the sanction of dismissal in this case: (1) Petitioner acted willfully, in bad-faith, or negligently; (2) Petitioner was on notice that there would be a sanction for noncompliance; (3) lesser sanctions would be inadequate; (4) the sanction of dismissal is reasonable in light of Petitioner's omissions or misconduct; (5) Petitioner's omissions or misconduct violated the public interest in prompt adjudication; (6) Petitioner's omissions or misconduct interfered with the orderly disposition of this and other cases on my docket; and (7) the government is prejudiced as a result of Petitioner's omissions or misconduct. Only one factor weighs against the sanction of dismissal and that is the public policy favoring disposition of cases on their merits. The weight of this single factor is lessened however, as the effect of Petitioner's omissions or misconduct is to obscure the merits of Petitioner's appeal.

V. Conclusion

For the foregoing reasons, Petitioner's request for hearing dated September 11, 2001, is dismissed with prejudice.

Keith W. Sickendick

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Financing Administration was renamed the Centers for Medicare & Medicaid Services. 66 Fed. Reg. 35,437 (2001).

2. Receipt of mail at CRD has been, in some cases, extremely slow due to the special handling required since the anthrax attacks during the fall of 2001.

3. The Parties were advised by notice of hearing dated May 21, 2002, that I would hear this case December 9, 10 and 11, 2002 in San Francisco.

4. CMS also calls for sanctions in its September 20, 2002 pleading in which it objects to Petitioner's nonconforming exchanges and subpoena requests.

5. Petitioner's witness and exhibit lists dated September 9, 2002 were received at the Civil Remedies Division on September 16, 2002. On September 20, 2002, CMS filed its Opposition to Petitioner's Untimely Submittal of Proposed Exhibits, and List of Proposed Witnesses; Objection to Petitioner's Untimely Subpoena Requests; and Request for Time to Object to the Content of Petitioner's Proposed Exhibits (CMS Opposition). The CMS document is more appropriately characterized as motion to strike and/or sanction or for alternative relief. See CMS Opposition at 9-10 and 17-18 of the referenced pleading. CMS describes accurately and in detail in this pleading the deficiencies of Petitioner's exchanges and subpoena request.

6. I note with interest that counsel indicates that he received the "July 8, 2002 Order to Show Cause on July 15, 2002." The Order to show cause in this case was not issued until August 13, 2002.

7. My authority to impose sanctions under section 1128A(c)(4) of the Act does not include the authority to sanction the attorney representing a party rather than the party except by ordering the offending attorney to pay costs. An order that Petitioner's counsel pay cost is not an adequate remedy for the reasons discussed hereafter. It may seem harsh for Petitioner to suffer the consequences of its counsel's failure to act, but not when it is considered that Petitioner has the freedom to choose counsel and has a responsibility to follow the progress of litigation it initiates.

8. The CRD acknowledged receipt of Petitioner's request for hearing by letter dated October 22, 2001. The acknowledgment letter states that a copy of the Civil Remedies Division Procedures is provided. I also noted in my May 21, 2002 Order that a copy of the CRD Procedures had previously been provided. Counsel for Petitioner has never asserted that he did not receive a copy of the Procedures or that he did not understand the requirements thereof.