SUBJECT: Hammonds Lane Center;
Spa Creek Center; Rose View Center;
and Salisbury Center,

Petitioners,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Hammonds Lane Center, Spa Creek Center, Rose View Center, and Salisbury Center (Petitioners) submitted a request for review of the June 10, 2002 decisions by Administrative Law Judge (ALJ) Marion T. Silva dismissing the Petitioners' requests for a hearing to challenge the determinations by the Centers for Medicare & Medicaid Services (CMS) to impose the remedy of a denial of payment for new admissions (DPNA) on Petitioners. See Hammonds Lane Center, DAB CR913 (2002); Spa Creek Center, DAB CR914 (2002); Rose View Center, DAB CR915 (2002); and Salisbury Center, DAB CR916 (2002) (ALJ Decisions). The ALJ found that Petitioners had failed to file their hearing requests within the 60-day period provided for in the applicable regulations and had not shown good cause to extend the time for filing. On appeal, Petitioners argued that the ALJ erred in finding that there was not good cause to extend the filing deadlines, contending that CMS changed an enforcement policy and retroactively imposed DPNAs after the periods to appeal had elapsed.

For the reasons discussed below, we find that Petitioners' alleged reliance on an unwritten CMS policy that CMS later purportedly amended was not good cause for extending Petitioners' filing deadlines. Petitioners failed to file hearing requests within the deadlines set by regulations and explicitly set forth in CMS's notifications of the imposition of the DPNA remedy. Petitioners each had the opportunity to request a hearing but consciously chose not to do so, and therefore they must accept the consequences of their inaction. Accordingly, we sustain the ALJ Decisions denying Petitioners' requests for a hearing.

The record here includes the records before the ALJ and the parties' submissions on appeal. ⁽¹⁾ Our standard of review of an ALJ decision on a disputed issue of law is whether the ALJ erred. Our standard of review on a disputed finding of fact is whether the ALJ decision is supported by substantial evidence on the record as a whole. See, e.g., Lake Cook Terrace Nursing Center, DAB No. 1745 (2000). The bases for modifying, reversing or remanding an ALJ decision include the following: a finding of material fact necessary to the outcome of the decision is not supported by substantial evidence; a legal conclusion necessary to the outcome of the decision is erroneous; the decision is contrary to law or applicable regulations; or a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations) was committed. See Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs, � 4(b), at http://www.hhs.gov/dab/guidelines/prov.html.

Applicable Regulations

Regulations require that a DPNA be imposed if a facility does not achieve substantial compliance within three months of the survey identifying the noncompliance. 42 C.F.R. � 488.417(b)(1). Payments to a facility "resume prospectively on the date that the facility achieves substantial compliance, as indicated by a revisit or written credible evidence acceptable to" CMS under Medicare or the state under Medicaid. 42 C.F.R. � 488.417(d).

Procedures for requesting a hearing to appeal CMS's imposition of remedies are set forth at Subpart D of 42 C.F.R. Part 498. As pertinent to this case, these regulations require that -

[t]he affected party or its legal representative or other authorized official must file the request in writing within 60 days from receipt of the notice of initial, reconsidered, or revised determination unless that period is extended in accordance with paragraph (c) of this section.

42 C.F.R. � 498.40(a)(2).

The regulations permit the affected party to request an extension:

If the request was not filed within 60 days-
(1) The affected party or its legal representative or other authorized official may file with the ALJ a written request for extension of time stating the reasons why the request was not filed timely.
(2) For good cause shown, the ALJ may extend the time for filing the request for hearing.

42 C.F.R. � 498.40(c).

Factual Background and Procedural History

Before the ALJ, Petitioners requested that their appeals be consolidated for hearing, asserting that there were no material facts in dispute with respect to any of their cases and that all four cases turned on a common issue of law. The ALJ denied the request to consolidate the cases under one docket number, noting, "Each facility is different and each case involves different facts, different surveys and survey cycles, different survey agencies . . . and different notices." ALJ Decision at 1, n. 1. The ALJ, however, "in the interest of efficiency," issued four decisions in one document "based on the fact that their hearing requests were filed late, they argue the same reasons for filing their hearing requests late, and I have not found good cause to extend their time for filing based on those reasons." Id.

As the ALJ Decision did not, however, contain a factual description of each Petitioner's case, we put forth the following summary of the factual background from the parties' briefs submitted on appeal. The parties agreed that the essential facts of the cases were undisputed.

At the outset, we note that each Petitioner's factual situation is essentially the same, in that each facility was cited for deficiencies, was informed that a DPNA would be imposed if the deficiencies were not corrected by a specified date, and each facility did not request a hearing within 60 days of receipt of the notice that a DNPA would be imposed.

Hammonds Lane Center: The Maryland state survey agency conducted a survey on April 28, 2000, finding Hammonds Lane not in substantial compliance with participation requirements. A June 29, 2000 resurvey found the facility remained out of compliance.

On July 13, 2000, the Maryland state survey agency sent Hammonds Lane a notice of the imposition of remedies, including a DPNA that would be withdrawn provided the facility regained substantial compliance by September 30, 2000. On August 2, 2000, the Maryland state survey agency informed Hammonds Lane of a typographical error in its original notice and that the DPNA would be withdrawn if substantial compliance were achieved by July 31, 2000. On August 10, 2000, the Maryland state survey agency again informed that the facility the DPNA would be imposed effective July 31, 2000. Both the July 13 and the August 10 notices informed Hammonds Lane that if it disagreed with that determination, it was required to file a written request for a hearing within 60 days from receipt of the notice. On October 4, 2000, the Maryland state survey agency completed a second revisit of Hammonds Lane and notified the facility on October 24, 2000, that this survey found the facility was in substantial compliance. In a December 5, 2000 letter, CMS notified Hammonds Lane that it had determined that the deficiencies were corrected as of October 4, 2000, and that the DPNA had continued for 65 days, ending on October 4, 2000. On April 24, 2001, Hammonds Lane filed a written request for a hearing. The deadline for appealing the August 10, 2000 imposition of the DPNA was October 10, 2000.

Spa Creek Center: The Maryland state survey agency conducted a survey on May 4, 2000, finding Spa Creek not in substantial compliance with participation requirements. A July 11, 2000 resurvey found the facility remained out of compliance. On July 25 and August 10, 2000, the Maryland state survey agency sent Spa Creek notices of the imposition of remedies, including a DPNA that would be withdrawn provided the facility regained substantial compliance by August 2, 2000. Both the July 25 and the August 10 notices informed Spa Creek that if it disagreed with that determination, it was required to file a written request for a hearing within 60 days from receipt of the notice. On October 3, the Maryland state survey agency completed a second revisit of Spa Creek, and on October 4, 2000, notified the facility that it was in compliance effective October 3, 2000. On April 24, 2001, Spa Creek filed a request for a hearing. The deadline for appealing the August 10, 2000 imposition of the DPNA was October 10, 2000.

Rose View Center: The Pennsylvania state survey agency conducted a survey on May 19, 2000, finding Rose View not in substantial compliance with participation requirements. An August 4, 2000 resurvey found the facility remained out of compliance. On August 16, 2000, CMS notified Rose View that it was imposing a DPNA effective September 1, 2000, which would be withdrawn only if the facility regained substantial compliance by that date. The notification informed Rose View that it could contest the imposition of the DPNA remedy by filing a written request for a hearing within 60 days. On October 24, 2000, the Pennsylvania state survey agency conducted a second revisit of Rose View, and on October 31, 2000, notified Rose View that it had achieved substantial compliance. On December 7, 2000, CMS notified Rose View that it had determined that the deficiencies had been corrected as of October 24, 2000, and the DPNA had continued for 54 days, from September 1 through October 24, 2000. On April 24, 2001, Rose View filed a request for a hearing. The deadline for appealing the August 16, 2000 imposition of the DPNA was October 16, 2000.

Salisbury Center: The Maryland state survey agency conducted a survey on September 22, 2000, finding Salisbury not in substantial compliance with participation requirements. A November 30, 2000 resurvey found the facility remained out of compliance. On December 4, 2000, the Maryland state survey agency notified Salisbury that CMS had authorized the survey agency to inform Salisbury that a DPNA would be imposed effective December 22, 2000, and further informed the facility that it would recommend to CMS that the remedy be terminated if a subsequent revisit determined the facility was in substantial compliance. On January 2, 2001, the Maryland state survey agency conducted a complaint survey, which, as stated in a January 10, 2001 letter, found that Salisbury was still not in substantial compliance. This January 10, 2001 notice further stated that Salisbury remained under a DPNA since December 22, 2000. After a February 14, 2001 fourth survey of the facility, completed on February 16, 2001, the Maryland state survey agency informed Salisbury on March 12, 2001, that the facility was in substantial compliance and that the compliance was achieved as of December 15, 2000. On April 24, 2001, CMS informed Salisbury that it had amended the survey agency's March 12 letter and that Salisbury had achieved substantial compliance as of February 14, 2001, with the result that the DPNA had continued for 54 days, ending February 13, 2001. On April 24, 2001, Salisbury requested a hearing. The deadline for appealing the December 4, 2000 imposition of the DPNA was February 4, 2001.

When Petitioners appealed the ALJ Decisions to the Board, they requested that the Board consolidate the four appeals for purposes of review. CMS did not object to the consolidation of the appeals for purposes of briefing, as long as the appeals were docketed separately and recognized as four separate providers. Accordingly, the Board docketed the appeals separately but consolidated the appeals so that a single Board decision would encompass all four appeals.

The ALJ Decision

In reaching her decisions denying Petitioners' requests for a hearing, the ALJ made two findings of fact and conclusions of law (FFCLs):

1. Petitioners are not entitled to a hearing because they did not file timely hearing requests.

2. Petitioners have not established good cause for me to extend the time for them to file their hearing requests.

Petitioners readily admitted that they did not timely request hearings to appeal the imposition of a DPNA and therefore did not dispute FFCL 1. Petitioners Request for Review (P. RR) at 13 n. 19. Rather, on appeal, they limited their arguments to a challenge to FFCL 2.

In making FFCL 2, the ALJ dismissed the relevancy of Petitioners' arguments that good cause for an extension was established by a change in CMS's "revisit policy." The ALJ summarized Petitioners' arguments about the purported change in CMS policy as follows:

Petitioners state that, prior to this "change" in the revisit policy, CMS allowed facilities that had corrected deficiencies and resumed substantial compliance before a State survey agency conducted an on-site revisit, to be considered in compliance as of the date the facility was found by the State survey agency to be in compliance (which the State could find to be a date preceding the resurvey date). According to Petitioners, after the change, CMS no longer accepted State survey agency recommendations determining facilities to be back in substantial compliance prior to the resurvey date. Petitioners note that CMS has since returned to the practice of permitting a State survey agency to find that a facility has resumed compliance (at least with respect to relatively minor deficiencies) as of the date the facility indicated in a plan of correction, even if the revisit survey did not occur until a later date. Petitioners state that each of the Petitioners had DPNAs imposed as a result of this change to the revisit policy even though, in each case, the pertinent State survey agency found as a matter of fact that each Petitioner in question had resumed compliance prior to the resurvey date. Petitioners assert that in the case of three of the four Petitioners: the compliance date established was prior to September 22, 2000, the date of the revised revisit policy; in each case the State survey agency found that the Petitioner in question had resumed compliance when it indicated it would; and, in each case, CMS disregarded the State survey agency's finding of compliance.

ALJ Decision at 3.

The ALJ stated that she did not have the authority to address many of the arguments Petitioners raised about CMS's revisit policy and purported revisions to that policy, but did examine Petitioners' assertion that their misunderstanding of the revisit policy constituted good cause for extending the time for filing a hearing request. The ALJ noted that there was no statutory or regulatory definition of "good cause," but that previous ALJ decisions have held "good cause" to mean "a circumstance or circumstances that would prevent a party from requesting a hearing timely and is beyond a party's ability to control." ALJ Decision at 6. The ALJ concluded that Petitioners' decisions as to whether or not to appeal the DPNAs in a timely fashion were not beyond their ability to control. The ALJ found that the notices Petitioners received imposing the DPNAs were clear and unambiguous in their language. The ALJ further found that the rationale offered by Petitioners - their expectation that the corrective actions they were taking would result in a finding of substantial compliance prior to the remedies actually being imposed - was conscious decision-making that was not a circumstance beyond a party's control so as to constitute good cause. Moreover, the ALJ questioned Petitioners' position in light of the fact that the revisits that found Petitioners back in substantial compliance took place after the 60-day period to file a hearing request had elapsed and Petitioners did not know with certainty whether the revisits would in fact find them in substantial compliance. The ALJ concluded:

Petitioners in these cases had the ability to appeal these decisions and made conscious legal decisions not to do so. I do not find such conscious decision-making to constitute good cause to extend the time for the Petitioners to submit hearing requests.

ALJ Decision at 8.

Discussion

On appeal, Petitioners essentially repeated the arguments made before the ALJ on the alleged revision by CMS of its revisit policy. Petitioners argued that the four cases involved similar fact patterns where the survey agencies of two different states, Maryland and Pennsylvania, notified facilities that a DPNA would be imposed at a future date, then notified the facilities that they had resumed substantial compliance and the remedy would not be imposed, but that CMS then later changed an enforcement policy and retroactively imposed a DPNA long after the ostensible period to appeal that remedy had elapsed. P. RR at 2. Petitioners contended that, if a change in enforcement policy by CMS that serves both to impose a remedy and cut off any appeal of that remedy does not constitute "good cause" to allow an otherwise untimely appeal, it is hard to imagine what circumstances would constitute good cause. Id.

Petitioners alleged that, prior to the events at issue, CMS allowed state survey agencies to conduct revisits after the ninetieth day from the finding of noncompliance and to find that the facility had corrected its deficiencies as of a date prior to the date the state survey agency actually conducted the revisit, as long the state survey agency could determine the facility had made the corrective actions by that earlier date. Petitioners argued that CMS, however, on September 22, 2000, issued a "new revisit policy" in which CMS instructed state survey agencies that it would no longer permit state survey agencies to find that a facility had resumed substantial compliance prior to the date of the actual revisit by the state survey agency. Petitioners asserted that CMS then decided to apply this new policy retroactively to pending cases. Petitioners further asserted that this new policy drew such criticism that CMS subsequently withdrew the new policy on May 3, 2001, and returned to the previous policy of permitting state survey agencies to find resumed compliance prior to the date of the resurvey. Petitioners maintained that the crux of their appeal in each of the cases was that CMS notified the facilities, after the 60 days had passed since the initial notice imposing the DPNA, that it was applying its new revisit policy retroactively to impose DPNAs as of the ninetieth day after the finding of noncompliance extending through the date of the actual revisit. P. RR at 6. Indeed, Petitioners emphasized that CMS's decision after the filing deadline to impose retroactively a remedy based on a new enforcement policy was the "only reason" why Petitioners were appealing the imposition of the DPNAs. Id. at 14 (emphasis in original).

The difficulty with Petitioners' position is that it is based on their reliance on what they admit was an unwritten CMS policy, indeed a policy for which they provided no evidence that said policy was ever announced or distributed by CMS in any shape or form. Moreover, Petitioners questioned CMS's application of what they termed a "new" revisit policy to their circumstances, even though CMS put forth that "new" policy in a September 22, 2000 memorandum to its regional administrators and the state survey agencies as "guidance about the enforcement policies dealing with provider compliance . . ." Nothing in that memorandum indicates that it represented a "new" policy on CMS's part. Moreover, the guidance in that memorandum is perfectly consistent with the regulations as stated in 42 C.F.R. � 488.417(d), in that it set forth the date of a revisit as the date establishing substantial compliance. ⁽²⁾

Petitioners' contention that CMS's application of a policy that was consistent with the regulations was a circumstance that constituted "good cause" for an ALJ to extend the filing deadline for a hearing request is simply not persuasive. It is readily apparent that when they received the notice of the imposition of a DPNA, Petitioners made conscious decisions not to request a hearing based on a series of assumptions: that the state survey agency would revisit the facility within the 60-day period to file a hearing request; that the state survey agency would then find the facility had achieved substantial compliance; that the finding of substantial compliance would then be applied retroactively to a date prior to that of the revisit; and that CMS would still not then impose the DPNA as of the date of the revisit that established substantial compliance.

The weakness of Petitioners' position is readily demonstrated by examining what would have occurred if just one of these assumptions proved false. Could Petitioners argue that CMS's retroactive application of its "new" policy constituted good cause for extending the filing deadline if the state survey agencies had found the facilities still out of substantial compliance on the date of the revisit? In that case, no matter what policy CMS was applying, the "old" or the "new," assuming arguendo there was a change in policy, Petitioners' right to a hearing would have elapsed with the passing of 60 days. The question of good cause for extending the filing deadline would simply not arise, as CMS's alleged retroactive application of its "new" policy would be irrelevant to the situation.

Moreover, it is questionable how the alleged change in CMS policy might have affected the actions of three of the facilities - Hammonds Lane, Spa Creek, and Rose View - as these facilities failed to file appeals even within 60 days from receiving the further notice from CMS of the full extent of their DPNAs based on their return to compliance, thereby losing even the opportunity to argue that they had come into compliance at an earlier time. While Salisbury's April 24, 2001 request for a hearing did come within 60 days of CMS's final assessment of the DPNA, this request for review was not timely with respect to the original December 4, 2001 notice of the imposition of a DPNA. Since the only issue presented to us by Salisbury is whether there was good cause for its untimely challenge to the December 4 notification, Salisbury is in the same position as the other three facilities with regard to timeliness.

Clearly, there was nothing to prevent Petitioners from filing hearing requests as the 60-day deadline approached in order to preserve their rights to a hearing in the event the state survey agencies did not revisit and find substantial compliance within that time frame. Petitioners chose, however, not to undertake that protective course of action. ⁽³⁾ As such, the ALJ was correct in concluding that Petitioners had failed to establish good cause for granting an extension to the filing deadline.

Conclusion

For the reasons discussed above, we sustain the ALJ Decisions. In doing so, we affirm and adopt all the FFCLs made by the ALJ.

Judith A. Ballard

Donald F. Garrett

Marc R. Hillson
Presiding Board Member

1. After the Board received Petitioners' Reply Brief, CMS submitted its own Reply Brief. The Board's procedures do not provide for such an additional stage of submissions unless the party making the submission has sought and received permission from the Board or agreement from the opposing party. Upon receipt of CMS's Reply Brief, the Board asked Petitioners whether they objected to the admission of CMS's Reply Brief, or, alternatively, whether they wished to submit a sur-reply. Petitioners responded that their request was that CMS's Reply Brief be excluded from the record. Petitioners' Reply Brief did not raise any significant new issues that merited a further response from CMS. We hereby grant Petitioners' request that CMS's Reply Brief be excluded from the record. We did not consider the contents of the Reply Brief in reaching our decision in these appeals.

2. This regulation also permits CMS to find that a facility has attained substantial compliance without a resurvey based on written credible evidence. However, Petitioners did not allege that they had provided such evidence.

3. In light of Petitioners' decisions, it is not necessary to reach the question whether "good cause" is limited, as the ALJ declared, solely to circumstances beyond a party's ability to control.