FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Family Home Health Services (FHHS) appealed the September 13, 1999 decision by Administrative Law Judge (ALJ) Steven T. Kessel granting the Health Care Financing Administration's (HCFA's) motion for summary disposition. Family Home Health Services, CR615 (1999) (ALJ Decision). The ALJ found that FHHS failed to contest one of the two alternative bases that HCFA relied on to support its decision to terminate FHHS's participation in the Medicare program. Specifically, the ALJ found that FHHS never disputed that it had violated its Medicare provider agreement by furnishing services that FHHS knew, or should have known, were not reasonable and necessary. Further, the ALJ wrote, FHHS did not contend that HCFA could not, as a matter of law, terminate FHHS on this ground alone. Having reached the foregoing conclusion, the ALJ determined that he need not decide whether FHHS's request for hearing should be dismissed on the ground that it did not meet the requirements of 42 C.F.R. � 498.40(b), governing the content of hearing requests.

On appeal, FHHS argued that its hearing request contested HCFA's determination that FHHS provided care to Medicare patients that was not medically necessary. FHHS also submitted that its request for an ALJ hearing satisfied the requirements of 42 C.F.R. � 498.40(b). Finally, FHHS contended that the ALJ erred in failing to consider its request for an opportunity to amend its request for hearing or to add new issues pursuant to section 498.56(a).

Our standard of review on a disputed issue of law is whether the ALJ decision is erroneous; on a disputed issue of fact, the standard of review is whether the decision is supported by substantial evidence in the record as a whole. As discussed below, we conclude that substantial evidence supports the ALJ's determination that FHHS failed to contest in either its hearing request, or in any other submission, HCFA's determination that FHHS violated its Medicare provider agreement by furnishing (and billing Medicare for) services that were not reasonable and necessary. Further, the provisions of the Social Security Act (Act) and regulations on which HCFA relied support its action, and FHHS never denied that HCFA had the legal authority to terminate FHHS on this ground alone. Accordingly, we affirm the ALJ Decision that summary disposition was appropriate and that it was unnecessary to address whether FHHS had submitted a legally sufficient request for hearing within the meaning of section 498.40(b).

Under the Medicare program, a home health agency (HHA) is a public agency or private organization that primarily provides skilled nursing and other therapeutic services to patients on a visiting basis in places of residence used by the patients as their homes. See sections 1861(m) and (o) of the Act. Based on sections 1861(o) and 1891 of the Act, 42 C.F.R. Part 484 sets out the requirements that an HHA must meet to participate in Medicare.

These requirements, or conditions of participation, serve as the basis for survey, certification and enforcement activities, implemented by 42 C.F.R. Part 488. Under section 488.20, HCFA makes periodic determinations as to whether an HHA is in compliance with the conditions of participation and sets forth the responsibilities of State survey agencies in the review and certification of compliance. Under section 488.24(b), a State agency will certify that a provider is no longer in compliance with the conditions of participation "where the deficiencies are of such character as to substantially limit the provider's . . . capacity to furnish adequate care or which adversely affect the health and safety of patients." Section 488.24(c) provides that if HCFA determines that an HHA does not qualify to participate because it is not in compliance with the conditions of participation, or if a provider's agreement is terminated for that reason, the HHA has the right to appeal the determination pursuant to the procedures set forth in 42 C.F.R. Part 498.

Section 1866 of the Act and the regulations at 42 C.F.R. Part 489 set forth, among other things, the requirements for provider agreements and the grounds for terminating a provider agreement. Under section 1866(b)(2)(A) and 42 C.F.R. � 489.53(a)(1), HCFA may terminate an agreement if the provider has failed to comply substantially with the Medicare Act, Medicare regulations, or its Medicare agreement. Subsection 489.53(a)(3) further provides that HCFA may terminate a provider agreement if HCFA finds that the provider no longer meets the appropriate conditions of participation.

Under 42 C.F.R. � 498.40(a), an affected party seeking to challenge a HCFA termination must file a written request for an ALJ hearing within 60 days from its receipt of the notice of initial, reconsidered, or revised determination. Section 498.40(b) specifies that the hearing request must both "[i]dentify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees," and "specify the basis for contending that the findings and conclusions are incorrect."

Section 498.40(c) provides that the ALJ may extend the time for filing a request for hearing for good cause shown. Section 498.56(a) states that, within specified time limits, the ALJ may, at the request of either party, or on his or her own motion, provide a hearing on new issues that impinge on the rights of the affected party. Under 42 C.F.R. � 498.70(c), the ALJ may dismiss a hearing request entirely or as to any stated issue if the affected party did not timely file a hearing request and the time for filing has not been extended for good cause.

By letter dated January 13, 1999, HCFA notified FHHS that HCFA had decided to terminate FHHS's Medicare agreement effective January 28, 1999. HCFA wrote that on November 9 and 10, 1998, a complaint survey was conducted at FHHS. HCFA noted that the survey was not complete because the Federal Bureau of Investigation (FBI) had taken many of FHHS's records into custody in an ongoing investigation. Nevertheless, HCFA decided on the basis of the records available that the documented deficiencies supported "a conclusion under 42 C.F.R. � 488.26(b) that [FHHS] was out of compliance with [the] Conditions of Participation" at 42 C.F.R. �� 484.10, 484.14, 484.18, 484.30 and 484.36. January 13, 1999 HCFA Notice at 2. HCFA further wrote that the deficiencies "either individually or in combination substantially limited [FHHS's] capacity to render adequate care or adversely affected patient health and safety," under section 488.24(b). Id. Citing sections 488.24(b), 488.24(c), 488.26(b), 489.53(a)(1) and (3), HCFA stated that because FHHS was not in compliance with these five conditions of participation, it would terminate FHHS's provider agreement.

HCFA's notice further set forth "a separate and distinct" basis for terminating FHHS's Medicare agreement under section 1866(b)(2)(A) of the Act and section 489.53(a)(1) of the regulations. January 13, 1999 HCFA Notice at 3. Specifically, HCFA wrote that the survey revealed that FHHS had been furnishing (and billing Medicare for) services that FHHS knew or should have known were not medically necessary, violating its Medicare provider agreement to provide and bill for only covered, reasonable and necessary services. According to HCFA, the survey found that FHHS was billing Medicare for personal care, home health aide services furnished to "at least five Medicare patients residing in residential care facilities for the elderly (RCFEs)." Id. HCFA stated that there was no documentation to show that the services furnished were "beyond the scope and responsibility" of the RCFEs and that such documentation is required to show that the services were medically necessary. January 13, 1999 HCFA Notice at 2, citing Medicare Bulletin 411 (Sept. 30, 1997). HCFA wrote that FHHS's Medicare contractor informed HCFA that in 1997 the contractor twice sent FHHS a written notice describing the policy in the bulletin. The contractor also indicated to HCFA that a copy of the notice was posted on a bulletin board at FHHS.

On January 15, 1999, FHHS sent a letter to HCFA in response to HCFA's notice and the survey report. The letter read, in relevant part:

. . . . Since we have not been disclosed of the nature and extent of the complaint, it would be fair to conclude that the determination that five (5) Conditions of Participation which have not been met, . . . was based upon [an] incomplete investigation. . . . . We have not been given the opportunity to correct the deficiencies and get us back into compliance. We do not agree with this determination. Let this letter serve as the written notice that we are exercising our rights to appeal . . . .

On February 8, 1999, FHHS sent to HCFA a plan of correction and cover letter relating to the November 1998 survey and January 13, 1999 termination notice. The letter read in pertinent part:

. . . the cited deficiencies, either individually or in combination, did not and does not limit our agency's capacity to furnish adequate care and did not and does not jeopardize the health and safety of our patients. The survey report did not reflect negative outcomes, either verbally from our patients, caregivers, family members or legal representatives or care outcomes via surveyor patient observation and/or medical record review during the survey. We have provided quality and compassionate care to all our patients and will continue to do so. We invoke the administrative decision of Judge Steven T. Kessee [sic] [(Docket #C-96-363) . . . . * * * As we have pointed out in our letter dated January 15, 1999, the survey findings were based upon incomplete patient records and agency documents due to [the] on-going OIG [Office of Inspector General] investigation wherein said documents were seized and have not been returned to us . . . . We were not given the opportunity to present information and additional written evidence to show that some of the alleged deficiencies could have been dropped during a regular exit conference. . . . We were not given the opportunity to get back into compliance. This is clearly in violation of our right to conduct business because of non-application of the due process. Working in the light and spirit of the certification survey process, we are submitting our plan of correction and the attachments. Administrative decision dictated that we have abandoned the plan to open a parent home health agency office in Modesto, California. We got it licensed but, unfortunately, timing was not right as it got tangled up in the moratorium in 1997 and initial certification survey was not done. We have discharged all of our patients in these areas as soon as the home health goals were met. To date, we do not have patients in Modesto & Stockton and we will not provide home health services in these locations.

After the case was assigned to the ALJ, HCFA submitted a Motion to Dismiss or in the Alternative for Summary Judgment on June 30, 1999. HCFA argued that the case should be dismissed under section 498.70(c) because FHHS's letter seeking to appeal the termination did not meet the hearing request content requirements of section 498.40(b). HCFA argued in the alternative that the ALJ should grant summary judgment in HCFA's favor because FHHS failed to appeal the determination that FHHS had violated its Medicare agreement by furnishing services that were not reasonable and necessary.

Opposing HCFA's Motion to Dismiss, FHHS argued in its August 13, 1999 brief that, reasonably construed, FHHS's request for review of January 15, 1999, supplemented by its letter and attachment of February 8, 1999, satisfied the content requirements of section 498.40(b). FHHS also argued that summary judgment should be denied because FHHS's submissions should be construed as challenging "all pertinent issues," including "whether or not [FHHS] violated the terms of its participation agreement by providing services that were not reasonable and necessary." FHHS's Opposition to HCFA's Motion to Dismiss or in the Alternative for Summary Judgment at 10. Finally, FHHS requested that the ALJ construe FHHS's brief as an amended or substituted hearing request which satisfied all of the elements required of a hearing request as to all issues, or that the ALJ add any necessary issues for adjudication that were deficiently pleaded.

On September 13, 1999, the ALJ issued his decision, imposing summary disposition against FHHS, and this appeal followed.

As discussed below, we conclude that the ALJ properly entered summary disposition against FHHS. Substantial evidence in the record as a whole supports the ALJ's finding that FHHS failed to contest one of the two alternative grounds on which HCFA relied to support its decision to terminate FHHS. Specifically, FHHS did not contend, in its hearing request or in any other submission, that HCFA erred as a matter of fact or law in determining that FHHS had violated its Medicare provider agreement by furnishing (and billing Medicare for) personal care services that it knew or reasonably should have known were not reasonable and necessary. Further, FHHS never denied that HCFA had the authority to terminate the HHA's participation in Medicare on this basis alone. We also conclude that, having properly determined that summary disposition was appropriate, the ALJ did not err in deciding that he need not address whether FHHS had submitted a legally sufficient hearing request within the meaning of 42 C.F.R. � 498.40(b). Finally, we determine that the ALJ did not abuse his discretion in declining to grant FHHS's request to amend its hearing request or to add new issues under section 498.56(a). Though in its brief below, FHHS made a generalized request that the ALJ determine that the proceedings include the issue of whether FHHS had violated its provider agreement by providing unnecessary services, this generalized request was not sufficient to raise a genuine dispute of material fact relating to the issue, nor did FHHS argue that HCFA had erred as a matter of law in making this determination. Accordingly, FHHS provided no reason for the ALJ to conclude that granting its request might result in a different disposition of the case.

First, as the ALJ found, neither FHHS's January 15, 1999 letter, nor its February 8, 1999 letter and attached plan of correction, can be reasonably construed as challenging HCFA's determination that there was no documentation to show that the services furnished were beyond the scope and responsibility of the care available in the RCFEs. As reflected in the relevant passages quoted above, FHHS's letters seeking to appeal the termination responded only to HCFA's determination that FHHS was out of compliance with the five conditions of participation cited in the survey and that termination was appropriate under section 488.24(b) or section 488.26(b). Further, nothing in the plan of correction submitted with the February 8, 1999 letter addressed HCFA's finding that FHHS had provided services that were not reasonable and necessary. Moreover, these letters were entirely silent as to whether HCFA had the legal authority to terminate the HHA on this ground.

As it argued below, FHHS contended on appeal that "[t]aken in their entirety," its January 15, 1999 letter, February 8, 1999 letter, and plan of correction should be construed as raising "all pertinent issues," including whether FHHS violated the terms of its Medicare provider agreement by providing services that were not reasonable and necessary. Notice of Appeal at 8. In particular, FHHS cited: 1) the assertions in the February 8, 1999 letter that the survey report did not contain negative reports or outcomes relating to the care administered by the agency, that the HHA's capacity to provide adequate care was not limited and the health and safety of patients was not jeopardized, and that FHHS provided quality and compassionate care to all patients; 2) the statement in the last paragraph of the February 8, 1999 letter that patients had been discharged in the Stockton and Modesto areas; and 3) specified pages of FHHS's plan of correction. FHHS also contended that the ALJ should have liberally construed its letters seeking review because FHHS was not initially represented by legal counsel and because FHHS had acted with "punctuality and diligence." Notice of Appeal at 9.

We concur with the ALJ that not even the most liberal construction of the cited passages of FHHS's letters and pages of its plan of correction would support a conclusion that FHHS had timely raised an issue regarding HCFA's finding that FHHS furnished to Medicare beneficiaries residing in RCFEs services that were not reasonable and necessary. In sum, with the exception of the last paragraph of the February 8, 1999 letter, the statements cited by FHHS related to HCFA's decision to terminate based on either section 488.24(b) or section 488.26(b) because FHHS had failed to comply with the five conditions of participation cited in the survey. With respect to the last paragraph of the February 8, 1999 letter, we see no relationship between FHHS furnishing or not furnishing services in Stockton and Modesto and the question whether it provided personal care services to residents in RCFEs and billed Medicare for those services. Further, there is simply nothing in the plan of correction that addresses whether FHHS furnished (and billed Medicare for) these services. Moreover, as the ALJ noted, at no other time (including the period after which FHHS had retained legal counsel in March 1999) did FHHS argue that HCFA erred in concluding that FHHS should be terminated on the ground that it violated its provider agreement by furnishing (and billing Medicare for) services that were not reasonable and necessary.

We further concur with the ALJ that FHHS never argued in its brief opposing HCFA's motion to dismiss or elsewhere that HCFA did not have the legal authority to terminate FHHS solely on the ground that the HHA had furnished unnecessary services to Medicare beneficiaries in RCFE's. As noted above, HCFA cited section 1866(b)(2)(A) of the Act and 42 C.F.R. � 489.53(a)(1) to support its conclusion that FHHS should be terminated from the Medicare program on this ground. These provisions state that HCFA may terminate a provider agreement if the provider is not complying with the Act, regulations, or the terms of its provider agreement. Given that FHHS did not raise a genuine dispute regarding HCFA's factual determination that FHHS had provided (and billed Medicare for) personal care services that the Medicare Act excludes from coverage, we conclude that the legal authority cited by HCFA supports the ALJ's decision to enter summary disposition against FHHS.

We further conclude that, after properly determining that summary disposition was appropriate, it was not necessary for the ALJ to engage in an analysis of the separate question of whether FHHS had submitted a request for hearing that met the content requirements of section 498.40(b). That is, having found that the facts relating to FHHS's provision of unnecessary services were not in dispute and that there was no dispute that the law supported HCFA's termination on this ground, the ALJ properly determined that it was moot whether FHHS had submitted a complying hearing request.

Finally, FHHS argued on appeal that the ALJ erred in failing to address or consider its request that the ALJ construe its brief as satisfying the elements necessary for a hearing request as to all issues, consider its brief as an amended hearing request or, based on 42 C.F.R. � 498.56(a), add any issues that were deficiently pleaded. Though in its brief below, FHHS for the first time referred to HCFA's determination that the HHA had furnished (and billed Medicare for) unnecessary, personal care services to RCFE residents, FHHS made nothing but generalized allusions to the issue. In light of the procedural posture of the case, it was incumbent upon FHHS to provide more than a general reference to this issue in order to avoid summary disposition. That is, FHHS needed at the very least to state how HCFA erred as a matter of fact and/or law in making the determination that FHHS should be terminated from the Medicare program on this ground. FHHS, however, supplied no basis for the ALJ to conclude that adding the issue would result in a different case outcome. Moreover, we note that even on appeal to the Board, FHHS failed to identify a basis for challenging HCFA's determination that the HHA should be terminated because it violated its provider agreement by furnishing (and billing Medicare for) unnecessary services. Accordingly, we conclude that the ALJ did not abuse his discretion in declining to grant FHHS's request.

Based on the foregoing analysis, we uphold the ALJ Decision.

/S/ Donald F. Garrett

/S/ Judith A. Ballard

/S/ M. Terry Johnson
Presiding Board Member