Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
Hillman Rehabilitation Center,
Petitioner,
- v. -
Health Care Financing Administration.
DATE: February 28, 1997
Civil Remedies C-95-159
App. Div. Docket
No. A-96-157
Decision No. 1611
FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION
The Health Care Financing Administration (HCFA) appealed
a May 22, 1996 decision by Administrative Law Judge (ALJ)
Steven T. Kessel. Hillman Rehabilitation Center,
DAB CR419 (1996) (ALJ Decision). Hillman Rehabilitation
Center (Hillman) had sought a hearing before the ALJ
challenging HCFA's termination of Hillman's participation
in the Medicare program for substantial noncompliance
with federal requirements for outpatient physical therapy
and rehabilitation agencies. The ALJ concluded that HCFA
had failed to establish a basis for terminating Hillman's
participation.
As discussed below, we conclude that the ALJ erred in
determining that HCFA had the ultimate burden of
persuasion. While we reject some of HCFA's arguments, we
conclude that HCFA established a prima facie case that
Hillman was not complying substantially with the two
conditions of participation at issue. We further
conclude that, on the record before us, Hillman did not
meet its burden of proving by a preponderance of the
evidence that it was in substantial compliance with the
conditions. We have determined, however, that Hillman
may have been prejudiced by ALJ errors in assigning the
burden of proof, in analyzing the evidence, and in ruling
on evidentiary issues, and that Hillman should have an
opportunity to proffer additional evidence to meet its
burden. Therefore, we remand the case for further
proceedings consistent with this decision and our
instructions below.
I. BACKGROUND
A. Factual summary
Hillman Rehabilitation Center has provided outpatient
physical therapy (OPT) in New Jersey with Medicare
certification since about 1985. 1/ Its business office
is in Lakewood but the vast majority of treatments to
patients are provided by therapists working for Hillman
who operate out of rented offices in eight long-term
care facilities (LTCs) around the state. The original
treatment records for these patients are maintained in
the LTCs.
HCFA contracts with the New Jersey Department of Health
to perform periodic compliance surveys of participating
providers. On January 13, 1995, a State surveyor visited
Hillman's central office to perform a periodic survey of
Hillman's compliance with Medicare conditions of
participation (COPs). This and the subsequent surveys
were conducted only at the central office in Lakewood,
and did not include visits to any of the LTCs.
Hillman's administrator was not present during the
January 1995 survey, but the surveyor met with the office
manager. Hillman was found out of compliance with a
number of conditions of participation at that survey,
including the COP for maintaining clinical records. HCFA
Exs. 3, 4, 5. Hillman submitted a plan of correction.
Uncontradicted testimony indicated that a revised plan of
correction was ultimately accepted (although the accepted
plan was not submitted for the record). On February 22,
1995, the surveyor returned for a follow-up survey.
After that survey, the State survey agency prepared a
report showing that the violations had been corrected.
HCFA Exs. 8, 9. The parties disputed whether the
certification of Hillman after the February revisit
constituted an indication that Hillman's record-keeping
system was then acceptable or reflected reliance on
Hillman's written promise in correspondence after the
revisit that it would update its central office records
monthly in the future. See HCFA Ex. 10. On April 5,
1995, the surveyor returned to Hillman's office in
Lakewood, along with a representative of the Medicare
fiscal intermediary, Aetna. At that visit, some records
were reviewed and photocopied. As a result of this
visit, Hillman was found deficient and given until May 5,
1995 to submit an acceptable plan of correction. 2/
Since no acceptable plan was received as of that date,
Hillman was terminated effective July 5, 1995. HCFA Ex.
15.
HCFA terminated Hillman because it determined, based on
the State survey results, that Hillman could not be
certified due to substantial noncompliance with two COPs
for rehabilitation agencies. 3/ The two relevant COPs
relate to (1) physician involvement in planning and
delivering care [42 C.F.R. § 405.1717] and (2)
maintenance of complete and accurate clinical records [42
C.F.R. § 405.1722]. P. Ex. 7 (HCFA Termination Letter,
June 13, 1995). 4/
Hillman sought review of HCFA's determination to
terminate its participation as provided by 42 C.F.R.
§ 488.24(a) and received a hearing before an ALJ as
provided by 42 C.F.R. § 498.40 et seq. 5/ The hearing
regulations require the provider to specify in its
hearing request "the specific issues, and the findings of
fact and conclusions of law" with which it disagrees and
the "basis for contending" that they are wrong. 42
C.F.R. § 498.40(b). A party dissatisfied with an ALJ's
decision after the hearing may seek review before the
Departmental Appeals Board (DAB), as HCFA has done in
this case. 6/ 42 C.F.R. § 498.80 et seq.
B. The ALJ Decision
The ALJ Decision contained six numbered findings of fact
and conclusions of law (FFCLs) as follows:
1. HCFA has the burden of proving that Petitioner
failed to comply with a condition of participation
in Medicare.
2. The Act and regulations require Petitioner to
maintain clinical records that are completely and
accurately documented, readily accessible, and
systematically organized to facilitate retrieving
and compiling information.
3. Petitioner is not obligated to maintain at its
Lakewood, New Jersey, business office complete and
contemporaneous copies of records of treatments
that it provides at eight long-term care centers.
4. The account by the New Jersey State Agency
surveyor of his April 5, 1995 visit to Petitioner is
not credible.
5. HCFA did not prove that Petitioner failed to
comply with the condition of participation governing
plans of care and physician involvement in the
planning and delivery of care contained in 42 C.F.R.
§ 405.1717.
6. HCFA did not prove that Petitioner failed to
comply with the condition of participation governing
clinical records contained in 42 C.F.R. § 405.1722.
ALJ Decision at 3-4.
C. HCFA's Exceptions
HCFA appealed five of the six FFCLs in the ALJ Decision.
HCFA Br. at 5-6. Since neither party excepted to FFCL
2, it is summarily affirmed. HCFA contended that the
ultimate burden of proof remained on the provider to
demonstrate by a preponderance of the evidence that it
was in substantial compliance with federal requirements.
HCFA argued that the ALJ erred in interpreting the
clinical records requirements not to require copies of
off-site records to be maintained at the central office,
but further argued that this interpretation was
irrelevant here, since the ALJ found that the provider
was obligated to produce records at the central office
when requested by a surveyor regardless of the location
of the records (for example, by facsimile transmission).
Hence, HCFA argued that Hillman should have been found
out of compliance, without regard to where its records
were filed, based on the survey finding that complete
records were not available when requested. Id. at 6-7.
HCFA argued that the entire case "hinges" on the ALJ's
erroneous conclusion that the State agency surveyor did
not request patient clinical records during the April 5th
survey, since the ALJ stated that Hillman's versions of
the patient clinical records would otherwise be "self-
serving exhibits" with "little or no probative value."
Id. at 9. HCFA argued that the ALJ's conclusion about
the survey events was founded on factual findings not
supported by the record and disregarded other evidence
tending to undercut the credibility of Hillman's version
of events. Id. at 7-8.
HCFA argued that the ALJ, having accepted Hillman's
version of events at the April survey, then erred further
by relying uncritically on Hillman's patient record
exhibits rather than HCFA's exhibits to evaluate
Hillman's compliance with the COPs as of the survey date.
Id. at 9-10. HCFA also contended that the ALJ erred in
accepting the existence of a distinction between the
`billing file' and the `clinical file' drawn by Hillman's
lone witness. Id. at 7.
Further, HCFA claimed that it was prejudiced by errors in
the ALJ's rulings on certain evidence. Specifically,
HCFA argued that the ALJ precluded evidence from HCFA
relating to what the Aetna representative was seeking at
the April 5th survey, while allowing Hillman to present
evidence on that issue. Id. at 8.
D. Standard of review on appeal
Our standard for review of an ALJ decision on a disputed
issue of law is whether the ALJ decision is erroneous.
Our standard for review on a disputed issue of fact is
whether the ALJ decision as to that fact is supported by
substantial evidence on the record as a whole. We must
thus uphold the ALJ's findings of fact "if a reasonable
mind reviewing the evidence in the record as a whole
could accept it as adequate to support his conclusion."
Consolidated Edison v. NLRB, 305 U.S. 197, 229 (1938);
Richardson v. Perales, 402 U.S. 389, 401 (1971).
However, the substantiality of the evidence must be
weighed in light of whatever in the record detracts from
as well as whatever supports each finding. See Universal
Camera Corp. v. NLRB, 340 U.S. 474 (1951); see also
Walker v. Mathews, 546 F.2d 814, 818 (9th Cir. 1976).
E. Guide to our decision
The analysis in our decision is divided into two major
components. First, we discuss the correct allocation of
the burden of proof. Second, we address the disputed
issues on the merits of this case. The main sections of
our discussion can be found on the following pages.
ANALYSIS OF THE BURDEN OF PROOF
A. Summary of major conclusions..................8
B. The ALJ failed to clearly distinguish the.....10
burden of going forward and the ultimate
burden of persuasion.
C. The structure and purpose of the Medicare....12
program and the role of certification and of
provider agreements support our analysis.
D. The ALJ's allocation of the burden of........17
proof is inconsistent with relevant case
precedent and relies on analogies to types
of cases that are inapposite.
E. Hillman's due process attack is without......20
merit.
F. The underlying concerns reflected in the.....22
ALJ analysis can be met without placing the
ultimate burden of persuasion on HCFA.
ANALYSIS OF THE MERITS OF THE CASE
A. Summary of major conclusions.................25
B. The ALJ's conclusion that Hillman's..........27
patient record exhibits were the best evidence
of its compliance on April 5, 1995 is not
supported by substantial evidence or reasonable
inferences therefrom.
C. The factors cited by the ALJ in accepting....44
Hillman's version of survey events are neither
supported by substantial evidence nor based on
reasonable inferences, and other relevant
factors were disregarded without adequate
explanation.
D. Noncompliance with the physician involve-....53
ment condition of participation
E. Noncompliance with the clinical records......61
condition of participation
Finally, we set out our conclusions and disposition of
the exceptions to the FFCLs and our instructions to the
ALJ on remand.
II. ANALYSIS OF THE BURDEN OF PROOF
A. Summary of major conclusions
HCFA took exception to FFCL 1, which stated:
HCFA has the burden of proving that Petitioner
failed to comply with a condition of participation
in Medicare.
We conclude that the ALJ erred in determining that HCFA
had the burden of proof (in the sense of the ultimate
burden of persuasion) in this proceeding. We reverse the
ALJ's conclusion in FFCL 1 and substitute the following
FFCLs:
FFCL 1A. HCFA must set forth the basis for its
determination terminating a provider with sufficient
specificity for the provider to respond, including
the basis for any finding that a condition-level
deficiency exists. The provider must then identify
which of the findings material to the determination
the provider disputes, and must also identify any
additional facts the provider is asserting.
FFCL 1B. At the hearing, HCFA has the burden of
coming forward with evidence related to disputed
findings that is sufficient (together with any
undisputed findings and relevant legal authority) to
establish a prima facie case that HCFA had a legally
sufficient basis for termination.
FFCL 1C. At the hearing, the provider has the
burden of coming forward with evidence sufficient to
establish the elements of any affirmative argument
or defense which it offers.
FFCL 1D. The provider bears the ultimate burden of
persuasion. To prevail, the provider must prove by
a preponderance of the evidence on the record as a
whole that it is in substantial compliance with the
relevant statutory and regulatory provisions.
The major reasons for our conclusions, explained below,
are:
• The rationale for the ALJ's conclusion regarding
burden of proof failed to distinguish clearly the
burden of going forward from the ultimate burden of
persuasion, and misconstrued the effect of requiring
HCFA to make a prima facie case.
• Congress authorized payments to be made to
rehabilitation agencies only if they qualified--not
only by filing a provider agreement, but also by
meeting applicable conditions of participation, as
shown by an affirmative determination of compliance,
generally made by HCFA on the basis of state survey
agency findings. A mere determination on appeal
that it is only "as likely" that the conditions were
substantially met as that they were not met could
result in payment contrary to statutory intent. The
purpose of the conditions--to protect the health and
safety of the patients who are the intended
beneficiaries of the program--requires that an
affirmative determination of substantial compliance
be made.
• Contrary to what the ALJ found, there is no
distinction, relevant for who bears the burden of
proof, between a provider first seeking to
participate in the program and a provider whose
agreement is terminated. The provider agreement is
not a contract which should be presumed to continue
in effect unless HCFA can prove at a hearing that
its terms were violated. The provider's obligation
to meet the conditions of participation in order to
qualify for payment does not arise from the
agreement, but from the statute. While HCFA must
make a determination consistent with the statutory
and regulatory requirements for termination of a
provider agreement, that determination alone is a
basis for termination, effective on the date set by
HCFA in the notice of its determination. In any
event, a provider agreement by itself is not
sufficient to show that payment under the statute is
authorized. Under the regulations, a finding of
noncompliance supersedes any previous certification.
• The ALJ's allocation of the burden of proof is
inconsistent with the relevant case precedent and
relies on analogies to types of cases that are
inapposite.
• Hillman's reliance on cases involving due process
issues is misplaced. Nothing in the due process
cases requires that HCFA bear the burden of
persuasion here. Contrary to what Hillman implied,
the courts have not found any provider expectation
of continued participation that outweighs HCFA's
interest in protecting the patients and program. At
most, they have held that a provider has a right to
reasonable notice and an opportunity for a hearing,
which in most cases can be satisfied by a post-
termination hearing or an informal pretermination
hearing followed by a post-termination evidentiary
hearing.
• The underlying concerns reflected in the ALJ
analysis can be met without placing the ultimate
burden of persuasion on HCFA.
B. The ALJ failed to distinguish clearly the burden
of coming forward and the ultimate burden of
persuasion.
In discussing burden of proof, it is important to
distinguish the "burden of coming forward with evidence"
(also known as the "burden of production"), which may
shift between the parties during the case depending on
the order of proof and the particular issues in dispute,
and the "ultimate burden of persuasion" which determines
the outcome of a case when the evidence is in equipoise.
7/ See Director, Office of Workers' Compensation
Programs, Dept. of Labor v. Greenwich Collieries, 512
U.S. 267 (1994). Effectively, the ALJ placed on HCFA
both the burden of coming forward with evidence that
would establish a prima facie case that the provider had
failed to comply substantially with a COP and the
ultimate burden of persuasion that such failure had
occurred.
The prehearing order stated that HCFA would "have the
burden of coming forward with evidence proving by a
preponderance of the evidence that Petitioner failed to
comply substantially" with the Medicare COPs, and also
stated Petitioner would "have the burden of rebutting
evidence offered by HCFA, to the extent that HCFA
establishes a prima facie case," as well as the "burden
of proving any affirmative arguments that it alleges."
Order and Notice of Hearing at 2-3. 8/ The ALJ erred
in assuming that the requirement that HCFA come forward
with evidence establishing a prima facie case implies
that HCFA bears the ultimate burden of proving
substantial noncompliance by a preponderance of the
evidence. This error was made even more explicit in the
final ALJ Decision, where the ALJ stated that since "HCFA
has obtained the evidence that it believes justifies"
termination, HCFA should be put "to the test of proving
that its determination is supported by a preponderance of
the evidence." ALJ Decision at 4.
HCFA did not dispute that it has the burden of coming
forward with evidence establishing a prima facie case
that Hillman substantially failed to comply with program
requirements. This is appropriate because HCFA's
determination to terminate a provider agreement must be
legally sufficient under the statute and regulations. We
agree with the ALJ that HCFA must identify the legal
criteria to which it seeks to hold a provider. Moreover,
to the extent that a provider challenges HCFA's findings,
HCFA must come forward with evidence of the basis for its
determination, including the factual findings on which
HCFA is relying and, if HCFA has determined that a
condition of participation was not met, HCFA's evaluation
that the deficiencies found meet the regulatory standard
for a condition-level deficiency.
HCFA contended, however, that it was inconsistent with
the statutory goal of protecting Hillman's patients--the
intended beneficiaries of the program--to place the
ultimate burden of persuasion on HCFA. Our analysis of
the relevant statutory and regulatory provisions leads us
to the same conclusion. As we explain below, the ALJ
erred because he misconstrued the nature of the provider
agreement and the effect of a prior certification. As we
further explain, the ALJ's rationale for his conclusions
regarding burden indicates that he also failed to
consider other relevant factors and based his
determination on concerns that, while valid, can be met
without placing the ultimate burden of persuasion on
HCFA.
C. The structure and purpose of the Medicare
program and the role of certification and of
provider agreements support our analysis.
The statute and regulations, read as a whole, compel the
conclusion that the ultimate burden of persuasion must
rest on the provider. We discuss here the nature and
purpose of the program and relevant parts of the major
provisions supporting our conclusions.
Medicare is a benefits program, intended to provide
health insurance for the aged and disabled. Since
Medicare involves an exercise of Congress' spending
authority, funds may be expended only for authorized
payments. The statute authorizes payments for particular
types of items or services (provided to eligible
individuals). Restrictions on payment are contained in
the service definitions, in definitions of terms
incorporated in those definitions, and in other statutory
provisions.
For example, section 1832(a)(2)(C) of the Act authorizes
payments for certain "outpatient physical therapy
services." The term "outpatient physical therapy
services" is defined in section 1861(p) of the Act. This
definition excludes services furnished by a
"rehabilitation agency" like Hillman unless the
rehabilitation agency meets certain conditions specified
in the statute, as well as "other conditions relating to
the health and safety of individuals . . . , as the
Secretary may find necessary, . . . ." Section
1861(p)(4)(a). Section 1835(a) of the Act specifies that
payment for outpatient physical therapy services may be
made: 1) only if certain requirements are met (such as
requirements for plans of care); and 2) "only to
providers of services who are eligible therefor under
section 1866(a) . . . ."
Section 1866(a) sets out requirements for provider
agreements. Having a provider agreement is not enough to
qualify for program participation, however. The lead-in
language to section 1866(a)(1) states: "Any provider of
services . . . shall be qualified to participate . . .
and shall be eligible for payments . . . if it files with
the Secretary an agreement . . . " (Emphasis added.)
The term "provider of services" includes a rehabilitation
agency only if such "agency meets the requirements of
section 1861(p)(4)(A)"--the conditions mentioned above--
and "only with respect to the furnishing of outpatient
physical therapy services (as therein defined) . . . ."
Section 1866(e) of the Act (emphasis added); see also
section 1861(u) of the Act; 42 C.F.R. § 405.1701.
In sum, a rehabilitation agency that is not a "provider
of services" is not qualified to participate in Medicare
(whether or not it has a provider agreement), nor would
services provided by such an agency meet the statutory
definitions of services for which Congress has authorized
payment.
Moreover, the Act and regulations set out a survey and
certification process requiring an affirmative finding
that a provider substantially meets the conditions of
participation. The Secretary may use an appropriate
state or local agency to determine whether providers meet
relevant conditions of participation. Specifically, the
Secretary may use such an agency "for the purpose of
determining . . . whether a . . . rehabilitation agency .
. . meets the requirements of subparagraph A . . . of
section 1861(p)(4)." Section 1864 of the Act. An
"agency that such a State or local agency certifies is a
[particular type of provider] (as those terms are defined
in section 1861) may be treated as such by the
Secretary." Id. (emphasis added). 9/
Under the implementing regulations, "certification" is a
"recommendation made by the State survey agency on the
compliance of providers . . . with the conditions of
participation . . . ." 42 C.F.R. § 488.1; see
42 C.F.R. § 488.12. 10/ On the basis of a state
survey agency's recommendations, HCFA will determine
whether "a provider is eligible to participate in"
Medicare. Thus, unless a provider has been certified as
meeting the appropriate requirements, it is not qualified
for purposes of Medicare participation and payment.
11/
In the case of a provider which had previously been
certified, the state agency will certify that the
provider "is not or is no longer in compliance with the
conditions for participation . . . where the deficiencies
are of such character as to substantially limit the
provider's . . . capacity to render adequate care or
which adversely affect the health and safety of patients
. . . ." 42 C.F.R. § 488.24(a). Under the regulations,
a "State survey agency certification to HCFA that a
provider . . . is no longer in compliance with the
conditions of participation . . . will supersede the
State survey agency's previous certification." 42 C.F.R.
§ 488.20(c).
Additional statutory and regulatory provisions support a
conclusion that: 1) prior certification should not be a
basis for presuming the provider is qualified; 2) the
health and safety of the program beneficiaries is
paramount; and 3) the effective date of a termination is
determined by HCFA and may be prior to an evidentiary
hearing. Under the Act, the Secretary--
may refuse to enter into an agreement under this
section or, upon such reasonable notice to the
provider and the public as may be specified in
regulations, may refuse to renew or may terminate
such an agreement after the Secretary--
(A) has determined that the provider fails to
comply substantially with the provisions of the
agreement, with the provisions of this title and
regulations thereunder, . . . ,
(B) has determined that the provider fails
substantially to meet the applicable provisions
of section 1861, or
(C) has excluded the provider from participation
in a program under this title pursuant to section
1128 or 1128A.
Section 1866(b)(2) of the Act (emphasis added). Section
1866(b)(3) provides that a termination of an agreement
shall be effective on same date and in the same manner as
an exclusion from participation under section 1128(c) of
the Act (that is, "at such time and upon such reasonable
notice . . . as may be specified in regulations . . . ").
Implementing regulations provide that the effective date
of a termination is the date specified in a termination
notice issued by HCFA. 42 C.F.R § 489.53. Generally,
notice must be given at least 15 days prior to the
effective date, with shorter notice in cases of immediate
jeopardy to patient health or safety. Similarly, section
1866(c)(1) of the Act provides:
Where the Secretary has terminated or has refused to
renew an agreement under this title with a provider
of services, such provider may not file another
agreement under this title unless the Secretary
finds that the reason for the termination or
nonrenewal has been removed and that there is
reasonable assurance that it will not recur.
An institution or agency dissatisfied with either a
determination that it is not a provider of services or a
determination to terminate its provider agreement "is
entitled to a hearing thereon (after reasonable notice)
to the same extent as is provided in section 205(b)" of
the Act. Section 1866(h)(1) of the Act. HCFA
regulations at 42 C.F.R. Part 498 establish the
procedures for appeal of either type of determination,
whether the institution or agency had previously been
certified or not. Although these regulations do not
specify who has the burden of proof (in either sense),
these regulations treat HCFA's determination as an
"initial determination" (rather than merely a proposal)
that is binding unless reconsidered by HCFA or reversed
or modified on appeal. 42 C.F.R. § 498.20(b).
Considering the Act and regulations read as a whole, we
conclude that a mere determination on appeal that it is
only "as likely" that the conditions of participation
were substantially met as that they were not met (as
could be the effect of placing the ultimate burden on
HCFA) could result in payment contrary to statutory
intent. As HCFA argued, the purpose of the conditions is
to protect the health and safety of the patients who are
the intended beneficiaries of the program, and this
interest outweighs any interest the provider might have
in program participation. Congress provided that an
affirmative determination certifying compliance must be
made for a provider to qualify.
Contrary to what the ALJ suggested, the posture of the
provider seeking review of a HCFA determination that the
provider no longer complies with the conditions of
participation (i.e., where the provider was previously
certified) is not distinguishable from the posture of a
provider refused an initial certification, except that
reasonable notice (as defined in HCFA regulations) must
be given before the effective date of a termination of an
agreement based on a previous certification. That
certification, however, is automatically "superseded" by
the state survey agency finding of noncompliance. Thus,
this is not a situation where the hearing is to determine
whether a previously granted certification should be
revoked, nor is it equivalent to a license revocation.
The provider agreement is not a contract which should be
presumed to continue in effect unless HCFA can prove at a
hearing that its terms were violated. The provider's
obligation to meet the conditions of participation in
order to qualify for payment does not arise from the
agreement, but from the statute. The primary function of
the provider agreement is so that the otherwise qualified
provider can provide certain necessary assurances about
its participation in the program. 12/ Yet, a provider
agreement by itself is not sufficient to show that
payment under the statute is authorized. The burden
remains on the provider to show that it continues to
qualify under the Act and regulations.
Under the statute and regulations, it is Hillman which
seeks through its request for review of HCFA's
determination to change the status quo. While HCFA must
make a determination consistent with the statutory and
regulatory requirements for termination of a provider
agreement, that determination is a basis for termination,
effective on the date set by HCFA in the notice of its
determination. Thus, Hillman was terminated as a
provider prior to this appeal and seeks to overturn its
termination and to be certified retroactively as in
compliance. Like a prospective provider filing a
provider agreement for the first time, Hillman here is
the proponent of an order certifying it as qualified to
participate in the program and to receive Medicare
payment for services rendered, so it is fair to place the
ultimate burden of persuasion on Hillman. 13/
D. The ALJ's allocation of the burden of proof is
inconsistent with relevant case precedent and relies
on analogies to types of cases that are inapposite.
Contrary to what the ALJ Decision suggested, allocation
of burden of proof is a matter of substantive law, not
simply procedural flexibility. Greenwich Collieries,
supra. Thus, the ALJ erred in relying on regulations
granting the ALJ discretion to determine order of
presentation to conclude that the ALJ had discretion
regarding how the burden of proof should be allocated.
14/ In determining burden of proof, the ALJ must act
within the legal framework and constraints discussed
above. An allocation which would permit Medicare
payments when it is no more likely than not that the
provider complied with the applicable conditions of
participation is simply not an appropriate allocation of
the burden.
The Board has not previously addressed the burden of
proof issue, contrary to what Hillman argued here.
However, prior decisions by the Appeals Council of the
Social Security Administration--which reviewed ALJ
decisions in these cases prior to 1993--interpreted the
statute and regulations as requiring allocation of the
ultimate burden of persuasion to the provider. Jefferson
Memorial Hospital Assn, Docket No. PS-109, at 17 (SSA
Appeal Council 1983); see also Harry D. Lawson, D.P.M.,
Case No. 010-00-0002, at 2 (ALJ Prehearing report and
order, April 5, 1983) (HCFA must establish a prima facie
case; ultimate burden of proof remains with the provider
who is "proponent" of a decision reversing HCFA's initial
determination); Extenda Care Home Health Agency, Docket
No. 000-51-7198 (ALJ Decision 1993) (HCFA must show prima
facie case, provider has ultimate burden of proof in
termination case). These decisions evidence a long-
standing interpretation, which Congress has not acted to
overturn.
The ALJ misconstrued the Appeals Council decisions. See
Arecibo Medical Hospice Care, DAB CR363, at 12 (1995);
see also Hospicio en el Hogar de Lajas, DAB CR366, at 8
(1995). Instead, the ALJ and Hillman relied on analogies
to other types of cases. This reliance is misplaced,
however. Those cases are inapposite, for the following
reasons:
• Contrary to what the ALJ concluded, terminating
Medicare provider participation is not equivalent
to terminating disability benefits to someone
previously found to have been eligible for such
benefits. There are programmatic and other reasons
for presuming that a disability continues (and the
intended program beneficiaries should continue to
receive payments) unless it is proven otherwise.
Those reasons do not apply here.
• Contrary to what Hillman argued, Medicare provider
termination cases are not analogous to health care
program exclusion and civil money penalty cases
brought by the Inspector General in which the
government bears the burden of proof. Hillman Br.
at 15; see section 1128 of the Act. 15/
Different due process concerns are implicated in
those cases, because they involve allegations of
wrongdoing and may involve questions of intent.
Moreover, the effect of an exclusion is like a
debarment: it bars participation in multiple
government programs for a period of time,
irrespective of whether the excluded individual or
entity is qualified and providing covered services.
On the other hand, Medicare providers may be
terminated for reasons that do not bear on the
integrity or reputation of the provider, and thus do
not impugn any protected liberty interests. Compare
Gonzales v. Freeman, 334 F.2d 570 (D.C.Cir. 1964).
A terminated provider may be reinstated in the
program whenever it demonstrates that the reasons
for termination no longer exist and provides
adequate assurances that the deficiencies will not
recur.
As HCFA argued, a more appropriate analogy would be cases
involving termination of a Head Start grant. In those
cases, this Board has held that the agency terminating a
Head Start grantee must make a prima facie case that
there exists sufficient evidence to satisfy the
regulatory standards for termination but that the grantee
has the ultimate burden of persuasion. See, e.g.,
Richmond Community Action Program, Inc., DAB No. 1571, at
6-7 (1996); see also Rural Day Care Ass'n of N.E. North
Carolina v. ACF, DAB No. 1489, at 8 (1994), aff'd Civ.
No. 2:94-CV-40-BO (E.D.N.C., Dec. 19, 1995)
(unpublished). Like those cases, the case here raises
the issue whether conditions for receipt of federal funds
have been met.
E. Hillman's due process attack is without merit.
Hillman argued that due process considerations here
supported allocating the ultimate burden of proof to
HCFA. Hillman argued that, as a provider rather than an
applicant, it had a contractual relationship with HCFA,
which constituted a property interest subject to
constitutional due process protections.
Hillman's due process arguments are misplaced. These
arguments, like the ALJ Decision, rest on a contractual
analysis which fails to recognize the role of the statute
and regulations in determining Hillman's rights. 16/
Hillman has received due process in the form of an
uncontested entitlement to a formal hearing before the
ALJ. Hillman did not argue that it was entitled to a
formal hearing prior to its termination, and such an
argument would fly in the face of the express provisions
of the Act, discussed above. Courts have held that a
provider has no due process right to a pretermination
hearing, even where termination might effectively end the
business:
[T]he "death" of a corporation does not warrant the
degree of protection required for a welfare
recipient, or even a disability recipient. This is
especially true since patients receiving Medicare or
Medicaid benefits are the intended beneficiaries,
and [the provider] is a mere incidental beneficiary.
Furthermore, the government's interest in
conserving scarce resources and protecting Medicare
and Medicaid recipients is much stronger than the
financial interest of a corporation.
Northwest Healthcare, L.P. v. Sullivan, 793 F. Supp. 724,
727-28 (E.D. Tex. 1992). All of the considerations
supporting the denial of any hearing prior to termination
also undergird the analysis here that would place the
burden on a provider to show that it is more likely than
not that it is in compliance with the conditions required
for certification.
The issue before us is whether under the statute and
regulations the provider is due a process in which the
government has the ultimate burden of proving
noncompliance by a preponderance of the evidence. None
of the cases cited by the ALJ or Hillman remotely
suggests that a terminated provider's due process rights
extend beyond receiving a full and fair hearing to
include specifically how the burden of proof should be
allocated in such a hearing.
Courts have rejected the notion that a Medicare provider
has a property interest in an expectation of continued
participation. In Cervoni v. Sec'y of Health, Education
and Welfare, 581 F.2d 1010, 1010-14 (1st Cir. 1978), a
physician challenged the determination that his clinical
laboratory services would be compensated under Part B
rather than Part A of Medicare, which he claimed would
reduce his income, without due process. The Medicare
classification scheme does not, the court found, affect
"interests that properly may be classified as property."
581 F.2d at 1018. Further, the court held that "the
real parties in interest are the beneficiaries" and that
physicians "do not have a protectable property interest
in their continuing eligibility to bill for
reimbursement." Id. Prior receipt of payment did not
imply a continuing promise or valid expectation of
continued eligibility. 581 F.2d at 1018-19; cf. Kelly
Kare v. O'Rourke, 930 F.2d 170 (2d Cir.), cert. denied
502 U.S. 907 (1991) (home health provider has no property
interest in continuing qualified provider status under
Medicaid).
We conclude that Hillman did not demonstrate any
constitutionally-protected due process interest
sufficient to justify altering the burden of proof in
cases involving terminated providers from that applicable
to providers denied initial certification. Absent
certification based on substantial compliance with the
conditions of participation, no category of provider is
qualified to participate in Medicare.
F. The underlying concerns reflected in the ALJ
analysis can be met without placing the ultimate
burden of persuasion on HCFA.
The ALJ stated that, apart from due process concerns
addressed above, assigning the burden of proof to HCFA
would be "efficient." ALJ Decision at 4. The basis for
this was that HCFA had possession of the evidence on
which it was relying and that it would be unreasonable to
require a provider "to prove a negative proposition--that
it did not fail to comply with a condition of
participation--in the absence of proof that it failed to
comply with that condition of participation" or to
respond to shifting arguments by HCFA. Id. The ALJ
further stated:
If HCFA has a burden of coming forward with
evidence, but no burden of persuasion, then HCFA has
neither an obligation nor an incentive to make even
a prima facie case to justify its
determination . . . . Indeed, under HCFA's theory,
Petitioner could offer evidence which might rebut
completely whatever evidence HCFA opts to offer, but
which would fail to overcome the presumption of
validity which HCFA asserts attaches to its
determination . . .
ALJ Decision at 5. 17/
It is traditional (and based on fundamental fairness), in
deciding who has the burden of proof, to consider who has
control of relevant information. The reasoning that the
ultimate burden of persuasion should be on HCFA because
it gathered the evidence of noncompliance does not apply
here, however. Any evidence which HCFA has came from a
survey of Hillman's own records and facilities, and
Hillman is the one in possession of the most complete
evidence of the state of its compliance. While it was
fair to require HCFA to come forward with the evidence of
noncompliance which HCFA obtained from Hillman, it is
unfair under the circumstances to place the ultimate
burden of persuasion on HCFA.
Similarly, we find no basis for concluding that HCFA
would somehow lack the incentive to make a prima facie
case simply because HCFA does not have the ultimate
burden of persuasion. If HCFA has the burden of coming
forward with evidence sufficient to establish a prima
facie case and does not do so, then HCFA would lose even
if the provider presents no evidence. We understand the
ALJ's concern about a HCFA position suggesting that all
HCFA had to do was to present what its determination was,
without providing the underlying basis for the factual
findings. Often, survey findings are cursory and HCFA
determination letters conclusory. Unless HCFA fully
discloses and presents the basis for its findings of
noncompliance, placing the ultimate burden of persuasion
of showing substantial compliance on the provider would
put the provider in the position of presenting all the
evidence it has relevant to any COP at issue, even if
HCFA's evidence would not ultimately be contradictory.
This concern is fully met by placing the burden on HCFA
of coming forward with evidence establishing a prima
facie case.
The argument that the provider cannot be asked to prove a
negative is largely a matter of semantics. The burden
can be phrased positively: the provider must prove that
it complied with any conditions which HCFA determined
were not met or that any deficiencies do not justify
termination. The concern that the provider would be
forced to present a massive and unfocused case defending
its status is best addressed by requiring HCFA to make
the basis for its action specific enough for the provider
to respond. The provider need not address every
requirement for certification but only those requirements
which HCFA determined the provider did not meet and, as
to those, demonstrate by a preponderance of the evidence
only that any basis for termination established in HCFA's
prima facie case does not exist.
We are not persuaded by Hillman's argument that HCFA has
shifted its arguments and allegations in this case,
illustrating why the burden should be on HCFA and how
impossible it would be "to anticipate all those arguments
to present a case at the outset." Oral Argument Tr. 18-
19. The rule we adopt here requires HCFA to make its
case at the outset, addressing Hillman's major concern.
Moreover, to the extent that HCFA made any new arguments,
Hillman had ample opportunity to respond.
Finally, we note that the ALJ may meet some of the
concerns for efficiency by other means, such as requiring
HCFA to present all of its evidence initially, even with
respect to facts asserted by a petitioner. There may
also be such efficiency concerns in a situation where a
petitioner does not deny that the deficiencies alleged,
if found, would together justify termination, but offers
proof that not all of those deficiencies existed and that
any ones that did exist would not justify termination.
The ALJ could reasonably, in such a situation, require
HCFA to present any counter-evidence as part of its case-
in-chief. We note, however, that evaluating whether
deficiencies substantially limit a petitioner's ability
to provide adequate care or adversely affect patient
health and safety is not a purely evidentiary question.
The relevant statutory and regulatory requirements
reflect congressional and administrative determinations
relevant in evaluating what is necessary to ensure
adequate care and patient health and safety. If the
petitioner does not prove that it was substantially
complying with these requirements, this may be sufficient
to establish that termination was justified.
III. ANALYSIS OF THE MERITS OF THE CASE
A. Summary of major conclusions
We find that the ALJ drew inferences in evaluating the
significance of Hillman's patient record exhibits that
are not supported by the record as a whole.
Specifically, in considering whether Hillman's exhibits
were the best evidence of the state of its compliance on
the date of the April 5, 1995 survey, the ALJ accepted
two explanations by Hillman of why more complete records
were not produced on that date (if then extant); we find
these explanations mutually inconsistent and not
supported by substantial evidence in the record.
Further, the ALJ ignored intrinsic evidence of
unreliability of Hillman's exhibits for the purposes for
which they were offered. In reaching his conclusions
about Hillman's exhibits, the ALJ relied heavily on his
determinations about the events of the April 5th survey.
His assessment of the plausibility of the two accounts
was not based on the demeanor of the witnesses, but
rather on factual findings and inferences which were not
supported by substantial evidence in the record, and
ignored other relevant facts.
We conclude below that Hillman had the burden of proving
as an affirmative argument that more complete records
were readily available on April 5, 1995 which would have
demonstrated substantial compliance with the COPs but
were not produced because the surveyors' document request
was too limited. Based on the present state of the
record, we would find that there is not substantial
evidence to support a conclusion that Hillman proved by a
preponderance of the evidence that records more complete
than those produced at the survey were readily accessible
(either in distinct clinical files or in the LTCs) on
April 5, 1995--which would have demonstrated substantial
compliance with the COPs. However, our review of the
proceedings below indicates that it may not have been
clear to the parties that Hillman bore both the burden of
coming forward with evidence and the burden of persuasion
on this issue. Therefore, we adopt an FFCL clarifying
the burden of proof, and in our instructions below
provide for an opportunity to Hillman to proffer
additional evidence.
Absent other proof, the patient record exhibits which
Hillman produced at the hearing are not reliable evidence
of what clinical records were readily accessible on the
survey date. However, this would not suffice to make
Hillman's patient record exhibits irrelevant to assessing
its compliance with the plan of care and physician
involvement COP. Even if not readily accessible,
Hillman's records could evidence the involvement of
physicians, if they could be shown to be a reliable
picture of the condition of records (in terms of
physician signatures and completion). In addition, other
evidence of physician oversight and timely completion of
clinical records extrinsic to the records themselves
could establish substantial compliance. It does not
appear from the proceedings below that the parties
clearly understood the relevance of such evidence beyond
the question of which set of records should be considered
by the ALJ. Therefore, in our instructions, we provide
an opportunity for Hillman to proffer evidence to meet
its burden of proof on this COP by either demonstrating
that its patient record exhibits are reliable evidence of
the condition of its clinical records on April 5, 1995
(even if not readily accessible) or producing other
extrinsic evidence of compliance.
Turning to the specific COPs at issue, we find that,
while HCFA's interpretation of the requirements for
physician review of plans of care to require review at
the outset of the plan of care is reasonable, it was not
the only reasonable interpretation of the provision.
Hillman's alternative interpretation that such review was
required within 30 days of the beginning of treatment was
not unreasonable, and HCFA did not give sufficient notice
of its interpretation. The ALJ concluded that, even
accepting HCFA's interpretation, Hillman was in
compliance based on its own exhibits because he found
that they all had plans of care signed by a physician and
most also had written orders for OPT, either of which
sufficed to show physician review. We conclude Hillman's
compliance should be weighed against its interpretation
of the requirements. However, we determine that
Hillman's exhibits are not reliable and sufficient
evidence of its compliance as of April 5, 1995. We
determine that Hillman has the burden of showing that it
was in compliance as of April 5, 1995. Hence, Hillman
must either show that its exhibits reliably demonstrate
compliance as of that date or it must otherwise
demonstrate compliance as of that date by extrinsic
evidence.
In regard to the clinical records COP, we determine that
the ALJ's conclusion that contemporaneous filing of
copies of clinical records in the central office is not
required does not support a finding that Hillman was
complying with the requirement to have readily accessible
records. On the contrary, Hillman's production of
incomplete records in response to surveyors' requests
establishes a prima facie case that completed records
were not readily accessible. We agree with HCFA and the
ALJ that the regulations require prompt completion
(meaning within 14 days of generation of the entry) of
all clinical entries requiring a physician signature.
The ALJ concluded that the regulations do not expressly
require the physician to date entries except for progress
reviews of plans of care. However, since we hold that
Hillman has the ultimate burden of proof, we conclude
that Hillman had to show prompt completion of the
requisite entries in order to support a claim of
compliance based on timely completion. Absent
contemporaneous dating by physicians, the burden is on
Hillman to demonstrate by other reliable and probative
evidence that the records were in fact completed
promptly. The ALJ found, and we agree, that Hillman's
own exhibits evidence late, undated, and missing
physician signatures. See ALJ Decision at 26-27. The
ALJ found that HCFA had not sufficiently proven that the
deficiencies rose to the level of noncompliance with a
condition of participation because, relying on Hillman's
exhibits as the more credible, he found no "pattern" or
"wholesale failure" to obtain physician signatures.
Again, this conclusion is premised on the erroneous
assumption that HCFA had the ultimate burden to prove
such a pattern or wholesale failure rather than that
Hillman had the burden to show either that physicians did
timely complete the records or that any failure to do so
was not substantial enough to violate the condition.
B. The ALJ's conclusion that Hillman's patient
record exhibits were the best evidence of its
compliance on April 5, 1995 is not supported by
substantial evidence or reasonable inferences
therefrom.
A central dispute in this case is what inferences the
record supports concerning the probative value, if any,
of the treatment records proffered by Hillman. 18/
HCFA argued that Hillman's patient record exhibits were
wholly irrelevant because they were not the records
produced at the April survey and were therefore not the
measure of Hillman's compliance at the time of the
survey. 19/ Hillman argued that its compliance should
be measured only on the basis of its exhibits, because
the surveyor did not make a sufficiently clear request at
the April survey for complete clinical records. The ALJ
concluded that Hillman's exhibits were authentic and
inferred that they must therefore be the best evidence of
the state of Hillman's compliance. Consequently, the ALJ
entirely disregarded (as mere excerpts) the patient
records obtained at the survey and submitted by HCFA. We
find neither of these extreme positions fully supported
on the record as a whole.
Hillman's exhibits purport to be more complete clinical
records for the same patients whose records (as obtained
at the April survey) were offered by HCFA to show the
inadequacy of Hillman's clinical records and the lack of
required physician involvement. 20/ HCFA's exhibits
consisted mostly of records for treatments in January and
February 1995 (as well as some dating as far back as
September 1994) which contained spaces for physician
signatures and dates that were not completed. See, e.g.,
HCFA Ex. 17-35. Hillman's exhibits included additional
records about the same patients' treatments during
roughly the same periods, and, in many instances, contain
records identical to ones in HCFA's exhibits but with
initials or signatures added on the physician lines, most
of them without accompanying dates. 21/
The obvious question is why Hillman would produce on the
date of the survey copies of incomplete patient records
(for example, orders for treatment and plans of care
lacking physician signatures), if in fact it had
completed copies of these documents readily accessible
as required. Hillman offered two somewhat inconsistent
explanations for this: (1) that the completed records
were available but were not in the Lakewood office and
that the surveyors were told so and indicated that was
acceptable, or (2) that the surveyors asked only for
"billing" records and failed to request patients'
clinical records which would have included the completed
records. We discuss each theory in turn and then turn to
a review of Hillman's patient record exhibits themselves
to assess their intrinsic reliability.
1) Hillman repeatedly represented that its records
were forwarded monthly to Lakewood, yet claimed that
documents over a month old were not produced because
they were not at Lakewood.
Hillman repeatedly maintained that its original treatment
records were at the LTCs and that copies were forwarded
monthly to the Lakewood office. Hillman promised the
State survey agency in writing before the April survey
visit that it was updating its central files monthly.
P. Ex. 2 and HCFA Ex. 10. Thus, Hillman asserted that it
supplied "plans of correction, which provided, among
other things, that: (i) all current clinical records are
maintained at Hillman's offices located in the LTCs in
which it treats patients and (ii) all plans of care are
approved by physicians who sign the plans of care."
Hillman Br. at 5 (citations omitted). Hillman then
stated that it "subsequently confirmed," by letter, that
"current clinical records are maintained" at the LTCs and
"then copied and sent to Hillman's Lakewood billing
office on a recurrent basis." Hillman Br. at 3. 22/
Further, Hillman stated that its administrator, Dr.
Akinrolabu, informed the State surveyor, Mr. End, of
"this procedure during the initial surveys." Hillman Br.
at 4.
Dr. Akinrolabu's testimony at the hearing similarly
asserted repeatedly that the therapists were in fact
forwarding copies of their records monthly. Thus, asked
what the procedure was for forwarding the records from
the LTCs, Dr. Akinrolabu testified that on "a monthly
basis when the therapist writes up all the notes and we
have to bill the fiscal intermediary, every 30 days, they
send us their records either by Express Mail or by
regular mail or sometimes we tell them to fax a few
things over." Hearing Tr. 198-99 (emphasis added).
23/ Similarly, in its appeal letter, Hillman stated that
--
[O]riginals of all clinical notes are always
available at these [LTC] facilities on a daily
basis. However, in order to meet the provisions of
Section 405.1722(c) and specifically those of
Section 405.1722(f), photocopies of these records
are retrieved from these remote locations and kept
in the main office of the provider on a monthly
basis, with subsequent monthly updates.
Hillman Appeal Letter at 3 (emphasis added). The appeal
letter further asserted that this was what was promised
in the January plan of correction and was consistent with
the letter sent by Hillman and accepted by the State
agency "to the effect that active patient charts shall be
updated in our main office on a recurrent basis." Id.
24/
Hillman certainly made numerous representations to HCFA
throughout the survey and certification processes that
its understanding of its obligations under the
regulations and its intended method of fulfilling them
involved copying all patient records at the LTCs and
forwarding them monthly to the central office. At the
January survey, Mr. End found that Hillman was not in
compliance with the clinical records COP because it was
unable to produce six records of patients treated in the
last 30 days. HCFA Post-Hearing Br. at 6-7; HCFA Ex. 4;
Hearing Tr. 53-54. Mr. End testified that he told the
office manager that "the records must be maintained on
site for easy review and that they should be readily
accessible" and that "the originals must be kept in
nursing homes so we accept copies of the medical
records." Hearing Tr. 51-52. By "on site," he said he
told her he meant "in the main facility." Hearing Tr.
52-53. 25/
Hillman was given 45 days to achieve compliance with the
five COPs for which it was cited, and submitted a plan to
do so. The State agency required that plan to be
supplemented by a letter to correct the absence of
patient records at the main facility in Lakewood.
Hearing Tr. 60-66. At the follow-up survey in February,
the other COPs were found to be corrected but no patient
records were available for review. Mr. End testified
(and Mr. Kozek, his superior, confirmed) that they
decided to give Hillman "a break" or the "benefit of the
doubt" and find compliance since it had corrected four of
five violations. Hearing Tr. 69, 169-70. The premise of
this decision was (1) that Hillman would provide written
assurance that "records would from then on be maintained
on site," and (2) that the surveyors would "return in the
near future to do a record review." Id. The Hillman
letter containing the requisite commitment was referenced
above. HCFA Ex. 10; P. Ex. 2. Hillman gave no notice to
the State survey agency of its inability to meet this
commitment.
The ALJ focused his analysis on Hillman's argument
disputing the reasonableness of interpreting the clinical
records COP to require central filing of contemporaneous
copies of all records in its main office. The ALJ found
HCFA's interpretation unreasonable. He concluded that
the evidence did not establish that Hillman promised to
maintain contemporaneous copies, but "proves at most that
Petitioner promised that it would maintain such records
at its Lakewood office, updated at 30-day intervals."
ALJ Decision at 14. It is, in fact, undisputed that
Hillman did so promise, and we therefore adopt an FFCL to
that effect as set forth at the end of this decision.
The ALJ failed to examine the records actually produced
by Hillman, in light of Hillman's promise. Such an
examination supports an inference that either (1) Hillman
failed to fulfill this promise, or (2) the documents
produced at the April 5th survey were the product of the
monthly updating which Hillman both promised and claimed
to have instituted, and they show wholly inadequate
record-keeping.
HCFA denied that it ever asserted a requirement that
"contemporaneous" copies be centralized and further
denied that the issue was material to the case since
Hillman's participation was not terminated for failure to
keep centralized copies of its files but only because the
records in fact produced by Hillman (from wherever
located) showed noncompliance. The ALJ found that HCFA's
purported requirement of contemporaneous central copies
was "central to HCFA's case" that Hillman's exhibits were
not "relevant" because they were not present at the
central office on April 5th. ALJ Decision at 9-10. The
ALJ went on to reject the contemporaneous central filing
requirement, because the Act and regulations contain no
such express requirement, "so long as the provider is
able to access the records, and to retrieve information
in those records, or copies of them, promptly when
necessary." ALJ Decision at 10. The ALJ concluded that
this interpretation meant that the records provided by
Hillman as exhibits were relevant even though not
provided to the surveyor in April.
The conclusion that Hillman's exhibits are relevant and
should be the sole basis of assessing Hillman's
compliance does not follow from the interpretation of the
regulation not to require contemporaneous centralized
copies, for several reasons:
• Hillman was not faulted for failing to produce
"contemporaneous" copies, but for failing to have
required records readily accessible and for having
records without timely physician signatures for
service periods generally one to three months
earlier.
• Hillman had expressly promised to keep central files
updated monthly and repeatedly indicated that it had
done so, as part of addressing an already identified
deficiency in its ability to fulfill its obligations
to monitor its therapists' work and to evaluate its
performance, as required by 42 C.F.R. §405.1726.
Therefore, the records produced on the survey date
should have been complete at least as of the
preceding month and were not.
• The ALJ agreed with HCFA, as do we, that the
regulations do require that records be maintained
"in a way that enables a surveyor to have access to
them" upon request at a provider's central office.
ALJ Decision at 12-13. Thus, Hillman should have
been required to show that it was able to produce
the documents on request even if housed elsewhere,
even under the ALJ's interpretation of the
regulation, whether through faxing or physical
retrieval, or other means. (We note that the record
established that Hillman did have available
facsimile transmission equipment for this purpose).
The facts established by HCFA give rise to an inference
that the records produced in response to the survey
represented the records in fact readily accessible on the
day of the survey and that more complete files produced
many months later for the hearing are not relevant to
represent the state of Hillman's clinical records on
April 5, 1995. The burden was on Hillman to negate this
inference by probative evidence establishing that its
exhibits represented a more accurate measure of the state
of its records as of the survey date.
2) The alternative explanation that only a subset
of "billing" records was requested and other
available documents were not provided is
inconsistent with the record evidence.
To counter the above-described inference, Hillman
asserted that complete clinical records were not actually
requested at the survey, but rather only "billing"
records were requested. This assertion appears
inconsistent with Hillman's arguments about off-site
filing. Hillman's argument is that Dr. Akinrolabu showed
Mr. End the files where Hillman kept the monthly updated
clinical files, in accordance with its promise, and Mr.
End was allegedly satisfied merely to observe the filing
cabinets and made no requests for records. See Hearing
Tr. 215. The request for records made by the Aetna
representative, Mr. Livesay, was allegedly directed only
at "billing" records. Thus, Hillman contended, the
complete records were not provided because of the limited
nature of the request. This theory appears to imply that
Dr. Akinrolabu was asserting to Mr. End by his actions
(i.e., showing him where the updated central files were
being kept) that the promise of monthly updating was
being fulfilled, which would make the initial filing of
clinical records off-site irrelevant to Hillman's defense
to its failure to produce adequate records. In other
words, Hillman here was saying that it produced
incomplete records, even though complete records were
available, not because they were off-site, but because
only a subset of records was requested.
Hillman asserted that this distinction between its
billing records and its clinical records was central to
its case because Dr. Akinrolabu believed that Mr. Livesay
was requesting only billing files. See, e.g., Oral
Argument Tr. 102. 26/ Yet, Hillman failed to produce
consistent testimony supporting either the existence of
such a distinction in its record-keeping system or the
specific request for such narrow document production by
either surveyor. Thus, Hillman did not provide testimony
from any staff at Hillman that a practice of dividing
clinical and billing records predated the survey nor
offer any documentation, such as a staff manual or
instructions to the therapists, explaining which records
were to be transmitted for or maintained in a billing
file, as opposed to the clinical file. Dr. Akinrolabu
stated that the difference between "billing files" and
clinical files was that instead of creating a "third
copy" of the clinical records (besides the original and
therapists' copies in the satellite LTC offices) --
[W]e said, "Okay. We need only a number of things
for billing." For example, we want to be sure that
we have the patient's information, which is the
Patient Information Sheet, a copy of the evaluation,
and then in this same file we keep the UB 92 [sic],
we keep letters for coinsurance . . . and that's --
as the "Billing File," because that's what the
billing person needs information from to do her
billing.
Hearing Tr. 212-13. But as noted elsewhere, his
descriptions of the documents forwarded by therapists to
the central office, both in the letters submitted to the
state agency and in testimony and briefing elsewhere,
show no consistent support for the idea that the
therapists identified such a limited subset of documents
to forward.
Most significantly, this description is wholly
inconsistent with what was in fact produced on April 5,
1995. The files provided to the surveyors did not
include the named items (such as UB-82's or coinsurance
papers) and did include clinical records such as patient
plans of progress, physician treatment orders (as well as
evaluations), and discharge summaries. See, e.g., HCFA
Exs. 20 and 22. As HCFA pointed out, neither party's
exhibits contain documents purporting to be coinsurance
records or UB-82's. HCFA Reply Br. at 37. 27/ If
Hillman's position were correct, the UB-82's ought to be
in HCFA's exhibits, since, according to Hillman, those
represent the "billing files" for which it said Mr.
Livesay was looking. There was no claim that HCFA's
exhibits were not a full set of the documents produced by
Hillman at the April survey, and Hillman did not assert
that UB-82's appear in the record or otherwise respond to
this point.
Further, Dr. Akinrolabu's descriptions of the scope of
the surveyors' document requests were inconsistent. For
example, he initially said that Mr. Livesay asked for UB-
82s, coinsurance documents, and "to see the -- admission
that was -- as authorized by the physician." Hearing Tr.
213. To see the physician authorizations for treatment
would mean reviewing the very kind of records for which
Mr. End was looking, i.e., clinical records. See HCFA
Reply Br. at 38-39. Dr. Akinrolabu later testified that
Mr. Livesay "didn't ask me for physician signatures. He
wanted to see the initial evaluation. It was later on
that they said, `Well, some of them did not have
physician signatures' and we explained it to him. He
said, `Fine.'" Hearing Tr. 238. 28/ Thus, Dr.
Akinrolabu acknowledged that Mr. Livesay did seek
treatment records containing physician authorizations.
29/
A further difficulty which HCFA pointed out with the
alleged distinction between billing and clinical records
is that it does not exist in the law, but only, if at
all, in Hillman's own characterizations. HCFA Reply Br.
at 38, n.33. The Act and the COPs refer only to clinical
records. If this distinction is not one in general use
and was never explicitly communicated to the State survey
agency prior to the survey, it is less plausible for
Hillman to say that the reason it did not produce all the
records then in its possession (regardless of where they
were located) for the patients about whom the surveyors
inquired is that only billing records were requested.
30/ Mr. End specifically testified that he requested
complete clinical records and that he was not told that
Hillman maintained "separate files, in other words, a
billing file as well as a patient-care file." Hearing
Tr. 73, 124, 128. 31/ Had such a distinction been
clearly communicated, there might conceivably be some
basis to accept that Mr. End should have known that a
request for documents as part of a fiscal review might
result in records from the limited billing file, and that
he should have followed up by requesting the clinical
files. However, if, as appears from the record here, he
knew only that the files might be at different locations,
then he had no reason to think that if he got files for a
patient at all, they might consist of only a separate
billing file rather than clinical records, especially
where the files that he did get included clinical
documents. Furthermore, if it was not reasonable to
expect Mr. End or Mr. Livesay to be aware of the
purported filing distinction, this undercuts the
likelihood that Dr. Akinrolabu did in fact think that the
document request was intended to be limited based on that
distinction.
Hillman elaborated on appeal on this explanation that the
request was too narrow to include completed clinical
records by suggesting that Aetna sought only billing
documents from very specific time frames. To this end,
Hillman relied on a computerized list of claims and on
documents showing claims denied by service dates.
Hillman described the computer print-out as "the actual
list presented by Aetna" at the April 5, 1995 survey.
Analysis by Petitioner at 2-3, and annexed list. 32/
HCFA argued that the list does not demonstrate that
Aetna's document request at the survey was limited only
to patient records from those time periods, or that the
records for those time periods need not be complete.
HCFA Reply Memorandum at 6. Further, HCFA argued that
Mr. End, in any case, asked for complete patient records,
and that the documents received by Mr. End included ones
outside the time periods in the list. Id. at 7.
Even assuming that Mr. Livesay presented the list to
identify the service dates of patient claims about which
he wanted to review the documentation, and even assuming
that Dr. Akinrolabu did not understand Mr. End to be
making a broader request for documents than Mr. Livesay,
that would not mean that Hillman was asked to produce
only records dating from the particular services dates.
Records from other periods would be relevant to the
extent they were necessary to support the allowability of
the claims for that period. Thus, in order to
substantiate its claim to payment for the treatment
provided during the specified service dates, Hillman
would have had to provide evidence that required
certification and/or recertifications were obtained to
support the medical necessity and appropriateness of the
treatment, and that the treatments were provided under a
plan of care which was reviewed within the required time
frame, even if the documentation was dated outside the
service date period. Furthermore, on April 5th, Hillman
clearly understood the request as broader than what it
later contended; the documents provided at the survey
included many documents dated prior to the listed service
dates. See, e.g., HCFA Exs. 18, 20, 30, and 34.
Similarly, while the claims denial records included with
Hillman's patient record exhibits (and the beneficiary
on-site worksheets included with HCFA's patient record
exhibits) support Hillman to the extent that they suggest
that the records Aetna requested for each beneficiary
were related to a particular service period, they do not
support Hillman's position that this meant it was asked
to produce records only from that period. For example,
records showing a plan of care, physician's order, or
certification prepared prior to the immediate service
period would be relevant to responding to many of the
items reflected on the review worksheets and listed as a
basis for claims denial. For example, a plan of care
which simply continues a plan from an earlier period
could only be reviewed by providing the earlier plan
specifying the amount, duration, and scope of services.
The claim denial records, in many cases, show reasons for
denials that reference the absence of documents that
would not necessarily be dated within the time period,
such as physician certifications and initial orders for
treatment, but which would be relevant to support claims
for the service period treatments. See, e.g., P. Ex. 14,
at 8; P. Ex. 27, at 12.
3) Intrinsic evidence undercuts the reliability of
Hillman's exhibits.
The ALJ concluded, based on examination of Hillman's
exhibits, that they appear on their face to be what they
purport to be -- authentic complete treatment records of
the patients at issue. ALJ Decision at 18. The problem
is that Hillman asserted only that these were records
maintained at the LTCs. Hillman did not expressly assert
that its exhibits constituted an accurate representation
of the state of its files at the time of the April
survey, nor did it even explain at what point the records
which it submitted were gathered and copied nor when
signatures absent on HCFA's corresponding documents were
added to those produced by Hillman. Even assuming
Hillman's exhibits were authentic treatment records
maintained at the LTCs, this fact would not suffice to
show that they were relevant. The issue is not whether
these exhibits are copies of authentic clinical records -
- but whether they are clinical records that existed in
their present form at the LTCs on April 5, 1995, were
readily accessible, and would have been produced at the
survey, if requested. Only based on these premises are
they relevant for the purpose for which they were
offered, i.e., as evidence of Hillman's state of
compliance with the Medicare COPs as of the time of the
April 5th survey. The ALJ Decision does not examine the
exhibits in light of these additional implied claims.
Accordingly, the exhibits are on their face unreliable to
show compliance. If offered for the proposition that
physicians did timely review plans of care, Hillman's
exhibits are insufficient. Physicians' signatures on
plans of care for services provided in January or
February that are dated weeks late or even after the
survey date evidence late review, not timely review, and
tend to support HCFA's findings rather than to rebut
them. See, e.g., P. Ex. 9, at 3, 8. Other of Hillman's
exhibits merely show (assuming the authenticity of the
physicians' signatures) that physicians ultimately signed
the plans of care, but show nothing about whether they
were signed as of the survey date. See, e.g., P. Exs.
12, 17, 18, 20, 28. Hillman argued that physicians may
have signed the forms in a timely fashion, but simply
neglected to fill in dates or relied on dates elsewhere.
However, this contention is unsupportable on the
evidence here. 33/ Absent dating of the signatures or
other evidence clearly showing that the physician reviews
were timely, we do not find support in the record to rely
on Hillman's exhibits as evidence of its compliance at
the relevant time, for several reasons.
• As noted, the few physician signatures which were
dated were in some cases dated substantially more
than 14 days after the order or review which they
approved, undercutting any assumption that
physicians' signatures implied timely review.
• As discussed above, Hillman did not offer a
sufficient explanation for why it would not have
produced the completed versions of the documents at
issue earlier, if they were in fact available
(either at the LTCs or in a separate "clinical
file"), when the incomplete versions were themselves
produced as responsive to the April document
requests. Even if the therapists did not routinely
update the central office files with completed
copies of their records, despite Hillman's promises
to do so after the earlier surveys, if Dr.
Akinrolabu understood the surveyors' requests
sufficiently to produce these records at all, he
should certainly have understood that the most
complete version of a specific form should be
provided.
• Hillman failed to produce a single physician to
identify a signature, to explain adequately how
signatures came to appear on Hillman's exhibits but
not HCFA's, or to testify about the practices of
attending physicians in regard to signing and dating
reviews.
• Dr. Akinrolabu, even if a credible witness, did not
state that he had personal knowledge that
physicians' signatures had been obtained in a timely
manner, or that the records in the LTCs had been
completed in a timely manner. In fact, he testified
that he had "no way of knowing exactly what date" a
physician signed a particular record "[i]f it's not
dated." Hearing Tr. 236. This statement
underscores the importance of physicians dating
their signatures. The rehabilitation agency is
responsible for supervising treatment and assuring
compliance with Medicare requirements, and
performance of its oversight duties depends on an
accurate and complete clinical record to allow it to
verify that physician review is being performed
timely.
• Hillman presented no testimony from any witness with
personal knowledge of the preparation of the
clinical records at issue or the conduct of the
physicians' reviews, such as therapists or LTC
staff.
• Many of the forms (e.g., progress reviews) have
multiple entries dated over a significant period of
time, so that it is clear that they were not filled
out on a single date. Therefore, it would be
unreasonable to infer that an undated signature
should be associated with any particular date on the
form, rather than with another.
• The forms in most instances have an express request
for a date immediately next to the physician
signature request, e.g. a single line with the words
"physician's signature and date" imprinted
underneath. See, e.g., P. Ex. 18, at 3. Thus, the
physicians had reason to know that their signatures
should have been accompanied by a date.
• The other professionals who signed these records,
such as nurses and therapists, generally did date
their signatures in the appropriate spaces on the
forms.
• Many of the forms produced at the survey, which had
apparently been copied and forwarded to the central
office before the physicians signed them, already
contained dated signatures by therapists, so it
cannot reasonably be assumed that physicians
routinely affixed their signatures on the same day
as the therapists. Consequently, it is clear that
physicians could not have been relying in most cases
on the dates affixed by therapists as an accurate
statement of when the physicians signed the
documents. Even if physicians intended to rely on
some other date on the form, such a practice would
make it impossible for the rehabilitation agency to
meet its oversight responsibilities in assuring that
the physicians were performing timely reviews, since
no inference can be drawn as to which date on the
form is the date on which the physician signed it.
Thus, while Hillman's exhibits might be "relevant" in a
general sense, they are clearly inadequate by themselves
to show compliance with either of the COPs at issue here.
The ALJ's conclusion that Hillman's patient record
exhibits are the best evidence of its compliance with the
Medicare COPs is not supported by substantial evidence on
the record as a whole. Cf. ALJ Decision at 16.
C. The factors cited by the ALJ in accepting
Hillman's version of survey events are not supported
by substantial evidence or based on reasonable
inferences, and other relevant factors were
disregarded without adequate explanation.
The ALJ rejected the surveyor's testimony as a basis for
concluding that HCFA's exhibits represent all of the
treatment records for the patients at issue maintained by
Hillman and readily accessible on the date of the April
5th survey. Instead, he accepted Dr. Akinrolabu's
assertions that other treatment records existed then but
were not produced because the surveyor failed properly to
request them. The ALJ's consideration of the exhibits
produced by Hillman as relevant to the state of Hillman's
records on the date of the survey is entirely founded on
the credence which he gave to Hillman's version of survey
events. 34/ We conclude below that, in weighing the
competing versions, the ALJ erred in not assigning to
Hillman the burden of proof even in regard to the
affirmative claims which it made concerning the
inadequacy of the survey process and how Hillman was
affected by any such inadequacy.
Further, in considering the testimony, the ALJ expressly
did "not find from the demeanor of either witness that
the witness was not credible." ALJ Decision at 18.
35/ Instead, the ALJ evaluated credibility by measuring
each version of events "against whatever facts are in
evidence that supports or contradicts it," thus
emphasizing the believability of the accounts rather than
that of the witnesses. Id. Below, we find that none of
the cited facts is adequately supported by the record and
that together they do not suffice to show by a
preponderance of the evidence that Dr. Akinrolabu's
account of events is more believable.
1) Hillman's claim that it did not produce complete
clinical records at the survey because the surveyors
requested only limited billing records is an
affirmative argument for which Hillman had both the
burden of coming forward and the burden of
persuasion.
Hillman's assertions that the records it produced at the
survey were incomplete because of the inadequacy of the
surveyors' document requests constitute a challenge to
the procedural regularity of the survey and is therefore
in the nature of an affirmative argument. 36/ The ALJ
recognized that the petitioner has the burden of proving
such an argument. See Prehearing Order at 3. As part of
that burden, Hillman was required to show that it was
prejudiced by any procedural failure.
Under the circumstances here, this meant at a minimum
that Hillman would have to show that the records
requested by Aetna and produced on April 5th were
different from the records that would have been produced
if the surveyor had made clear that he was requesting all
of the treatment records that were maintained and readily
accessible on that date for the patients at issue. Thus,
even were Dr. Akinrolabu's account of the survey events
credible, that alone would not suffice to establish that
Hillman's exhibits were reliable as evidence of its
compliance on April 5th.
2) The ALJ's reasons for finding Hillman's account
of the events plausible are not sufficient on the
record and do not address other relevant facts.
The ALJ relied on three factual findings to conclude that
Dr. Akinrolabu's account of the events was more
believable: (1) that the primary purpose of the April
5th visit was a billing record review; (2) that Mr. End's
testimony that documents were faxed into Lakewood that
day was not credible; and (3) that Hillman's exhibits are
"on their face" consistent with what they purport to be.
ALJ Decision at 18. We discuss each of these findings
below and then discuss other factors which the ALJ
disregarded.
a) Primary purpose
The first finding was that the "primary purpose" of the
April survey was "not to conduct a Medicare compliance
survey, but to review Petitioner's billing records to
satisfy questions raised by the Medicare intermediary."
ALJ Decision at 18. The ALJ stated that Mr. End and Dr.
Akinrolabu agreed on this one point. Id. Yet, the ALJ
cited to no testimony by Mr. End to the effect that the
primary purpose of the visit was a claims inquiry and not
a follow-up to the earlier Medicare compliance survey,
and we have found no such testimony in the transcript.
The April visit, according to both Mr. End and Mr. Kozek,
his supervisor, was conducted to perform the planned
follow-up to the promises Hillman made after the February
revisit and was timed partly to take advantage of the
"opportune" circumstance that Aetna was interested in
doing joint targeted surveys of several rehabilitation
agencies with billing problems. Hearing Tr. 71, 170-71.
Mr. End testified that the April survey was
"specifically to inspect for the condition of clinical
records." Hearing Tr. 71. Mr. Kozek testified that the
State survey agency was focusing on "looking at clinical
records" and would have sent Mr. End for this purpose
within several months of the February survey even if
Aetna had not become involved. Hearing Tr. 171, 179.
This testimony is not consistent with characterizing Mr.
End as in agreement that Aetna's claim inquiry was the
"primary purpose" of the joint visit.
In any case, the ALJ gave no reason why it would be
relevant what the "primary" purpose of the survey was, if
it were evident that a follow-up records review for
Medicare compliance was an additional purpose of the
visit. Hillman pointed to no authority by which it could
disregard record review obligations to Medicare based on
the relative primacy of the purpose of visits by two
surveyors. Hillman had obligations both to Aetna as its
fiscal intermediary and to the State survey agency.
Regarding the purpose of the visit, the ALJ stated that
Mr. Livesay brought the patient list and that he was
persuaded that therefore the most likely documents to
have been sought were "records related to Petitioner's
reimbursement claims." ALJ Decision at 19. Even if Dr.
Akinrolabu perceived, and perceived correctly, that
Aetna's representative was the more active in presenting
the document requests or selecting particular patients to
be the subject of review, Dr. Akinrolabu could not
reasonably assume under the circumstances that Mr. End
was merely a disinterested observer. Mr. End's presence
implied that he had some independent purpose in visiting,
and the context of the prior surveys should have alerted
a reasonable provider that that purpose was likely
related to a records survey. Thus, the ALJ should have
considered that this joint visit did not occur in a
vacuum, but after two prior survey visits and follow-up
correspondence all touching on the inadequacy of
Hillman's available records.
The ALJ further disregarded evidence that the interests
of the two surveyors in reviewing Hillman's records were
sufficiently co-extensive that it was not necessary for
Mr. End to assert a different document request. The
evidence suggests that the records relating to
reimbursement claims would be expected to include the
same documentation the absence of which caused Mr. End to
find deficiencies. The regulatory requirements for
claims reimbursement are very similar in their physician
certification requirements to the participation
provisions evidencing physician involvement in ordering
and reviewing care. The claims denial forms reference
the absence of physician orders, physician
certifications, and other items that would be in clinical
records. Consequently, it is difficult to see what sort
of billing records would support the legitimacy of a
claim without containing most of the same information
that would be required in clinical records showing
physician involvement as required by the two COPs.
As noted above, the conclusion that Mr. Livesay and Mr.
End both sought clinical records is consistent with the
observation that the documents actually produced, while
incomplete in terms of demonstrating adequate and timely
physician review, consisted of clinical treatment
records, not the purported "billing file" described by
Dr. Akinrolabu. We note that in its appeal letter,
Hillman stated that the Aetna surveyor requested "the
charts" of patients for review, and that the state agency
surveyor "did ask to see the location of current clinical
charts" to verify the central filing promised in
February. Hillman Appeal Letter at 4. This supports the
conclusion that both surveyors were interested in the
same documents (even if Mr. End did not ask for the
records himself) and further undercuts any claim that
there was a difference between patient charts or clinical
records and a limited billing file.
b) Faxing documents
The second finding was that the ALJ did not believe "Mr.
End's testimony that Petitioner faxed documents to its
Lakewood office" on the survey date. ALJ Decision at 18.
The ALJ did not believe that the documents were faxed
because the exhibits submitted by HCFA do not contain fax
imprints and because Mr. End "admitted" not personally
witnessing any document being faxed. Mr. End testified
that on April 5, 1995 he met with Dr. Akinrolabu and
asked for the records of the listed patients and further
requested "to go to the files and observe these records
while they were being pulled." Hearing Tr. 72. He
testified, however, that when they went to the files, the
records were not available and "had to be faxed in over a
period of approximately two hours -- two to three hours
from nursing homes across the state." Id. at 73; see
also id. at 85, 89, 93, 97-98 (additional references to
faxing). On cross-examination, Mr. End testified that he
did not actually see the documents coming in on a fax
machine but "was told they had to be faxed." Hearing Tr.
119-20.
Apparently, because Mr. End explained only on cross-
examination that he was basing his belief that documents
were being faxed on Dr. Akinrolabu's statement to him to
that effect, the ALJ characterized this explanation as an
admission. The ALJ ignored the fact, however, that this
statement also constituted an uncontradicted assertion.
Dr. Akinrolabu did not deny that the surveyor was kept
waiting for two or three hours and, while he denied that
documents were faxed in, he never directly denied that
the surveyor was either directly or indirectly led to
believe that they were. Dr. Akinrolabu did acknowledge
that the Lakewood office and the LTC satellite offices
had fax machines, and the LTC offices sometimes faxed in
records. Hearing Tr. 216.
Thus, Mr. End presented a reasonable basis for his
assumption that the documents were being faxed and, if he
proved misled in this regard, it does not undercut his
credibility. 37/ The ALJ does not explain why Mr. End
would have any motive to lie about he understood or what
Dr. Akinrolabu told him about faxing documents, nor did
Mr. End at any point make an inconsistent claim to have
personal knowledge of the faxing. Therefore, even
assuming the documents were not faxed, this would not
undercut Mr. End's credibility.
We note that it is not important to HCFA's case that any
of these documents have been faxed. To the contrary, the
fact that Hillman had available the means to make those
documents available even if they were housed off-site
means that Hillman's production of incomplete records
raises questions regarding what records Hillman had
readily accessible and when the records were completed.
c) The appearance of the records on their face
The third finding was that Hillman's exhibits "are
consistent with what Petitioner purports them to be,
which is complete treatment records of the 20 patients"
at issue. 38/ As discussed above, while the documents
appear on their face to be patient treatment records,
nothing in their appearance gives any assurance that they
are complete treatment records as of April 5, 1995.
The ALJ was also impressed, in relying on Hillman's
documents as credible, by the appearance on Hillman's
records of signatures of "numerous individuals" as
suggesting genuine rather than fabricated documents. ALJ
Decision at 19. However, this reliance overlooks the
fact that what is disputed is not the genuineness of the
numerous signatures of nurses and physical therapists.
It is perfectly possible for physicians' signatures to
have been added (by the physicians or others) to
otherwise complete and genuine treatment records long
after the fact and such an alteration would not
necessarily show any obvious indicia of fabrication. At
least one file, for example, has signatures added to
January records but dated April 20 (after the survey).
Clearly, this physician was asked or permitted to
complete the record months late, and one could infer that
perhaps others of the undated added physicians'
signatures might also have been obtained long after the
fact. See P. Ex. 9, at 2 and 8; HCFA Ex. 26. The
reasonableness of such an inference is buttressed by the
fact that many key signatures are undated but appear
above lines that call for both a signature and a date.
d) Other factors disregarded by the ALJ
The ALJ failed to address record evidence that appears to
conflict with his conclusion about the credibility of the
two accounts of the survey or to explain why he did not
credit such conflicting evidence. 39/ Thus, the ALJ
did not address evidence that Hillman's only witness was
Hillman's administrator and co-owner and therefore had
himself much at stake in the outcome of the testimony.
See Hearing Tr. 194. While the surveyor could
conceivably have some interest in being seen as having
done his job adequately, the ALJ did not explain why he
did not consider in evaluating the credibility of the
witnesses' accounts whether the degree of self-interest
which might impact Dr. Akinrolabu's memory or description
of events was disproportionately greater, making his
uncorroborated testimony at least somewhat less reliable.
In addition, the ALJ erred in stating that no witness
corroborated the testimony of either Mr. End or Dr.
Akinrolabu. ALJ Decision at 18. Neither party produced
a second eyewitness to support its account of events at
Hillman's office on April 5, 1995. However, Mr. End's
supervisor did testify and corroborate some important
elements of Mr. End's testimony about the timing and
purpose of the several surveys. See Hearing Tr. 159,
164. Thus, Mr. Kozek testified that Mr. End was sent to
Hillman on April 5, 1995 with the intention of following
up on whether Hillman had achieved compliance in
accordance with its commitments after the February
survey, which makes it more likely that Mr. End was at
Hillman actively seeking to determine whether its records
were in compliance rather than merely serving as a
companion to Mr. Livesay. Mr. Kozek's testimony also
provided support in that his testimony shows that Mr.
End's contemporaneous accounts of his visits to Hillman
were consistent with his later testimony.
Furthermore, the ALJ specifically faulted HCFA for
failing to produce a statement or testimony from the
Aetna surveyor to support Mr. End. ALJ Decision at 17,
n.10. However, Hillman was the proponent of the
proposition that a billing inquiry had been made for
which only limited records were needed, rather than a
request to survey patient clinical records. Despite
clearly having the burden to support its proposition,
Hillman not only failed to produce Mr. Livesay to explain
the scope of his inquiry but objected to any testimony
from Mr. End on this topic and offered no testimony from
the individuals presumably under its control who worked
with Dr. Akinrolabu to produce the records on April 5
(who could have at least addressed what their
understanding was of what they were asked to produce).
40/
Finally, the documentary record includes with each of
HCFA's patient record exhibits a form entitled
Beneficiary On-Site File Review Worksheet (mentioned
above) with a date entry of April 5, 1997 on each one.
Hillman did not challenge the authenticity of these
documents. The record is not clear on whether these
documents were prepared by Mr. End or Mr. Livesay
(although the latter seems more likely in light of the
title reference to beneficiaries and HCFA asserted on
appeal that they were Aetna forms). The record also does
not indicate whether these forms were filled in during
the survey at Hillman's offices or later. Even in the
absence of more information about the preparation of
these documents, the ALJ should have considered them as
contemporaneous written evidence of the scope of what was
requested. The worksheets generally support Mr. End's
testimony that the information Aetna was seeking would
have required the same kind of documentation as he was
seeking, since they include entries for whether the file
includes a "physician's written order for the service,"
whether the plan of care was complete and "signed by the
physician prior to" billing, and whether the medical
necessity of the plan of care was "recertified by the
physician on a timely basis," i.e., "every 30 days; prior
to billing." See, e.g., HCFA Ex. 23, at 1.
D. Noncompliance with the physician involvement and
plan of care condition of participation
An essential part of the Medicare scheme for OPT services
is that physicians provide oversight to assure that the
care provided is appropriate and necessary for the
patients' conditions. The parties disputed at what point
the oversight provisions require physicians to review
plans of care established by PTs. In this section, we
explain our conclusions on the interpretation of these
provisions and discuss how to analyze the evidence of
compliance and of the nature of the deficiencies in light
of these conclusions.
The Act permits payment for OPT services only for a
beneficiary, who is "under the care of a physician"
and --
with respect to whom a plan prescribing the type,
amount and duration of physical therapy services
that are to be furnished . . . has been established
by a physician . . . or by a qualified physical
therapist and is periodically reviewed by a
physician.
Section 1861(p) of the Act. This section should be read
together with section 1835(a)(2)(C) which permits payment
for OPT services only if a physician certifies (and
recertifies as required by regulations) that the services
are needed, that "a plan for furnishing such services has
been established" by the physician or therapist, and that
the plan "is periodically reviewed by a physician."
The regulations require that a written plan of care be
established by either a physician or a PT, and that --
The plan of care and results of treatment are
reviewed by the physician or by the individual who
established the plan at least as often as the
patient's condition requires . . . . (For Medicare
patients, the plan must be reviewed by a physician
in accordance with § 424.25(e) of this chapter.)
42 C.F.R. § 405.1717(b)(3). The reference to section
424.25(e) is mistaken as that section was superseded by
section 410.61(e) in the regulations on Medicare Part B
benefits. The latter provides that OPT services must be
furnished under a written plan of treatment established
before treatment by a physician or PT, and must prescribe
the "type, amount, frequency, and duration" of services.
42 C.F.R. § 410.61(a) - (c). The physician must review
the plan "as often as the individual's condition
requires, but at least every 30 days" and each "review is
dated and signed by the physician who performs it." 42
C.F.R. § 410.61(e)(emphasis added).
HCFA argued that these provisions, read together, require
that a physician review the plan of care at the outset of
treatment. Hillman argued that a physician was required
to do a review of the plan of care within the first 30
days (if treatment extended beyond 30 days). HCFA Br. at
59; HCFA Post-Hearing Br. at 35-37; Hillman Br. 27-31.
The ALJ concluded that (1) HCFA's interpretation of this
regulation was unreasonable; (2) even if he accepted
HCFA's interpretation, the weight of the evidence would
not show a violation; and (3) HCFA did not prove that the
asserted violation would be a condition-level deficiency.
ALJ Decision at 19-20.
The ALJ characterized HCFA as requiring physicians to
"approve the details" of the plan "before therapy is
initiated," and he found this interpretation inconsistent
with the statutory and regulatory language, which he read
as allowing the PT to plan and initiate care subject to a
physician review within 30 days. Id. at 20-22. The ALJ
also concluded, and Hillman did not contest, that the Act
"mandates that physical therapy be ordered by a
physician." ALJ Decision at 20-21. The ALJ further
concluded, and HCFA did not contest before us, that such
physician approval for treatment could be evidenced by
either a signed order for OPT or a physician signature on
the initial plan of care. ALJ Decision at 22; HCFA Br.
at 72, n.35. 41/
HCFA contended that its interpretation was supported by a
review of the Medicare payment regulations and that the
ALJ erred in considering the plan of care COP in
isolation from the overall legal scheme regulating
providers. HCFA Br. at 55, 57-58. The conditions for
payment of OPT services require (in relevant part)
certification by a physician that the services were
needed, were furnished "under the care of a physician"
and were provided "under a plan of treatment that meets
the requirements of § 424.25." 42 C.F.R. § 424.24(b) and
(c)(ii) and (iii). This certification by the physician
must "be obtained at the time the plan of treatment is
established, or as soon thereafter as possible" from
either the physician who established the plan or (if a
therapist established the plan) a physician who has
knowledge of the case. 42 C.F.R. § 424.24(c)(2) and (3).
In addition, the physician must recertify the continuing
need for OPT services "at least every 30 days." 42
C.F.R. § 424.24(c)(4). HCFA argued that this language
ties together the plan of care requirements and the
certification requirements in a way that contemplates a
physician review near the time of the establishment of
the plan of care, as well as a 30-day review period
thereafter. (HCFA denied that it interpreted the
regulations to require the review before any treatment,
as the ALJ suggested.)
HCFA contended that HCFA Action Transmittal No. 57 (May
1985) (AT-57) also supported this reading. HCFA Br. 58-
59; P. Ex. 8, at 4. AT-57 noted that therapists were
permitted to establish plans of care, but stated that a
plan established by a therapist must be periodically
reviewed and signed by a physician at least every 30
days. AT-57 stated that the same physician reviewing the
plan of care should do the certification, at or near the
time the plan of care is established, and that
recertification should be obtained at the same time the
plan is reviewed since the interval of 30 days is the
same and the same physician who reviews the plan should
recertify. Id. HCFA reasoned that if the same physician
who did the review is going to certify the need near the
time of establishing the plan, it follows that a review
is assumed to be taking place about the same time as the
certification (i.e., at the beginning of care). HCFA
Post-Hearing Br. at 35-36.
Further, HCFA argued that logic suggested that the 30-day
review had to have a starting date in an initial review
where the physician did not establish the plan initially.
HCFA Post-Hearing Br. at 35. Pragmatically, HCFA
asserted that the importance of an early review of the
plan of care is to assure that it is in accord with the
physician's order for treatment and that a patient does
not receive weeks of inappropriate care waiting for a
physician's review. HCFA Post-Hearing Br. 36.
Upon review of the relevant provisions, we conclude that
since the physician is required to certify that a
treatment plan setting out the type, amount, frequency,
and duration of services has been established, it follows
that the physician must either have established the plan
or have been made aware of the plan established by the
PT. It does not necessarily follow, however, that all
documents setting out a plan (even those that merely
provide more detail than the physician's order) must be
reviewed and signed by the physician. Such an
interpretation is not evident on the face of the Act or
regulations, nor was it communicated adequately in the
action transmittal.
As the ALJ noted, the regulations contain no express
language requiring physicians to review and sign the
detailed contents of a plan of care developed by a PT
before treatment is begun. ALJ Decision at 21-22. The
ALJ's conclusion that a plan of care developed by a
therapist based on the order of the physician must be
reviewed by the physician and approved in writing but
that review may take place at any point within 30 days of
the inception of treatment is not unreasonable and is
consistent with the plain language of the Act and
regulations. Id. This interpretation is only reasonably
applied, however, where a physician's order sets forth
the type, amount, frequency, and duration of services
ordered so that one can reasonably conclude that the
services being provided are those for which the physician
certified the need and that at the time of the
physician's order, the type, amount, frequency, and
duration of services had been planned. The AT-57
provisions are met if the reviewing physician met the
certification requirements, and if recertification is
obtained whenever the plan is reviewed in the ensuing 30-
day interval.
HCFA's position that the physician should review any
initial plan of care documents developed by a therapist
(and so indicate by signing and dating the document) is a
reasonable one, since it would provide assurance that the
plan of care to which the physician certified was the
plan of care that the therapist would implement, and
would facilitate monitoring the 30-day review and
recertification requirements. Contrary to what HCFA
argued, however, it is not necessary to interpret the
physician review requirement to mean a signed and dated
review at the outset of care in order to have a "starting
point" to calculate 30-day intervals (in fact, "outset"
is a somewhat vague concept). Hillman could have
reasonably understood the requirement to mean that
physician reviews were required within 30 days of the
first treatment or within 30 days of the physician
certification, and every 30 days thereafter.
Hillman contended that HCFA, by interpreting the plan of
care requirements to require physician involvement at the
outset, was seeking to impose a superseded requirement
that the plan of care be established by physicians rather
than by therapists . See Hillman Br. at 27-29. 42/
Thus, Hillman argued that HCFA was trying to rewrite the
requirement that a physician or therapist establish a
plan of care as if it meant both physician and therapist
must establish the plan. Id. Hillman characterized
HCFA's effort to interpret the timing of physician review
of the plan of care in relation to other parts of the
Medicare regulations, law or action transmittal as
"bootstrapping." Id. at 29.
We disagree with this analysis. The statute clearly
requires that the physician certify that a plan has been
established either by the physician or by the physical
therapist, as well as that the services were needed.
HCFA's interpretation that this means that the physician
should actually review, sign and date the document
containing the plan established by a PT is reasonable,
perhaps even preferable in providing additional assurance
of the appropriateness of the actual care, and does not
amount to usurping a physical therapist's ability to
design a plan of care. We find simply that it is not the
only reasonable interpretation and that Hillman did not
have adequate notice.
Even though HCFA argued that we should defer to its
interpretation of the regulations to require a physician
to review and sign the plan of care at the beginning of
treatment, HCFA also argued that even if this
interpretation were not accepted, Hillman would be out of
compliance with this condition. HCFA argued that many of
the files obtained at the survey do not show physicians
performing any plan of care reviews at all, either at the
outset or after 30 days. HCFA Br. at 70, n.32. 43/ A
review of HCFA's exhibits supports this conclusion in
many cases. See HCFA Exs. 17, 19-21, 23, 26-27, 31-33,
35. 44/ HCFA further argued that 10 out of 20 of the
records reviewed at the survey lacked physicians' orders
or other certifications for OPT. HCFA Ex. 12, at 2-3;
HCFA Br. at 70-73. Given the absence of either initial
orders or signed plan of care reviews, we conclude that
HCFA established a prima facie case that Hillman was not
complying substantially with this COP as of April 5,
1995. Unless Hillman presented evidence sufficient to
show the contrary by a preponderance of the evidence,
HCFA would prevail on this issue.
Based on its interpretation and using its own set of
patient record exhibits, Hillman argued that it had met
the 30-day review requirement in virtually every case.
In part, Hillman argued that it was in compliance in
certain instances, despite the absence of reviews,
because most of the patients at issue completed their
course of therapy within 30 days (even if they later
reentered therapy) and those whose treatment exceeded 30
days had physician reviews in their files in all but one
instance (P. Ex. 26). Hillman Br. at 30. Further,
Hillman argued that the fact that the vast majority of
the relevant physician signatures appearing in its
exhibits are undated should not undercut their
reliability or timeliness because (1) physicians may have
relied on other dates on the documents, and (2) whether
physicians signed and dated progress reviews under 42
C.F.R. § 410.61(e)(3) is "clearly not an issue subject to
challenge here." Id.
Even taking as accurate Hillman's representations about
the service dates of treatment for the patients about
whom Aetna was requesting documents, we would not
conclude, for reasons discussed above, that Hillman was
asked to provide only documents from within that narrow
time frame. As a factual matter, as also discussed
above, a careful review of Hillman's documents does not
support Hillman's suggestion that the timeliness of
physician signatures may be assessed based on other dates
on the same pages. As a legal matter, Hillman's
contention that HCFA may not raise the question of the
timeliness of the physician signatures in Hillman's
exhibits is unfounded. HCFA obviously had no reason to
discuss the absence of dating of physician signatures in
regard to the documents produced at the survey, in light
of the fact that they lack physician signatures almost
entirely. This does not preclude HCFA from pointing out,
in regard to the versions of the patient records
proffered as evidence of compliance by Hillman, that they
lack dates. Since the regulations expressly require that
physician reviews of plans of care be dated, as well as
signed, it can be reasonably inferred, at least as to
reviews of plans of care, that the absence of a date
accompanying a physician's signature makes it less likely
that the review occurred within the required 30-day time
period. See 42 C.F.R. § 410.61(e).
Because its burden of proof may not have been clear, we
have determined that Hillman should have an opportunity
to proffer evidence which would support its claim that
the physicians oversight requirements were met. Absent
such evidence being proffered in accord with our
instructions to the ALJ, we would find that Hillman's
evidence is not sufficient to show that physician reviews
were performed when required.
The ALJ concluded as to this COP that HCFA had not proved
a condition-level deficiency because it had not proved
noncompliance. ALJ Decision at 24. The ALJ noted that
"the Act and regulations contemplate that a physician
will exercise control over the physical therapy that is
provided to a beneficiary." Id. The record here
established that the absence of physician involvement
could raise serious risks to the patients. Mr. Kozek
testified without contradiction that these patients are a
"very vulnerable, at-risk population," with such
complications as age, strokes, and broken hips. Hearing
Tr. 173. Mr. End testified that some physical therapy
treatments may cause harm to patients, absent physician
oversight. Hearing Tr. 46, 91, 108-09. Clearly,
Congress and the Secretary anticipated that physical
therapy for such beneficiaries had risks sufficient to
require active and timely involvement by physicians in
approving and monitoring the care, even if PTs may
develop the plans of care.
We conclude that the documents produced at the survey so
wholly lack documentation of physician oversight as to
amount to a condition-level deficiency, absent other
reliable evidence of the requisite physician involvement.
Hillman's exhibits are not by themselves reliable
evidence of such involvement, for reasons discussed
above. Should Hillman proffer and present additional
reliable evidence, the ALJ should review the evidence as
to the level of the deficiency based on the record as a
whole at that point.
E. Noncompliance with the clinical records
condition of participation
The Act requires OPT agencies to maintain "clinical
records on all patients" and the regulations specify that
the OPT agency must maintain "clinical records on all
patients in accordance with accepted professional
standards, and practices," which must be "completely and
accurately documented, readily accessible, and
systematically organized to facilitate retrieving and
compiling information." 42 C.F.R. § 405.1722. The
standard on completion of records under this condition
provides as follows:
Current clinical records and those of discharged
patients are completed promptly. All clinical
information pertaining to a patient is centralized
in the patient's clinical record. Each physician's
entries into the clinical records are signed by the
appropriate physician.
42 C.F.R. § 405.1722(c).
The ALJ concluded that HCFA proved that Hillman failed to
comply "in some respects" with the standard requiring
prompt completion of clinical records, but that this
failure did not rise to a condition-level deficiency
because there was not a pattern of failure. 45/ ALJ
Decision at 25.
The ALJ characterized HCFA as interpreting the clinical
records COP as (1) implicitly requiring maintenance of
"contemporaneous copies" of treatment records at a
central location and (2) requiring prompt completion of
records, with "prompt" meaning required signatures must
be added within 14 days of generation of a record. Id.
at 25-26.
The ALJ rejected the first implicit requirement. As
discussed elsewhere, we do not agree that HCFA was
requiring contemporaneous copies or that the violation
alleged of the clinical records COP depended on location,
as opposed to the unavailability, of the files. Based on
the records provided at the survey, Hillman clearly did
not have readily accessible clinical records which were
completely and accurately documented. We therefore
conclude that HCFA established a prima facie case that
Hillman was not complying substantially with this COP as
of April 5, 1995. Unless Hillman presented evidence
sufficient to show the contrary by a preponderance of the
evidence, HCFA would prevail on this issue.
We have already discussed the contradictions and
inadequacies of Hillman's explanations for producing
incomplete records at the survey while alleging that it
did have readily accessible at other locations or in
other files completed and accurate records. Again,
because its burden of proof may not have been clear, we
have determined that Hillman should have an additional
opportunity to proffer evidence which would support its
claim that surveyors' limited document requests misled
Hillman into producing incomplete records.
The ALJ accepted HCFA's 14-day rule for prompt completion
(for example, for physicians to sign off on records of
verbal or telephonic orders), but refused to read in a
requirement that physicians' signatures in the clinical
records must be dated. Id. at 26. The ALJ found that
section 405.1717(b)(3) (incorporating section
410.61(e)(2)) required that "a progress review of a plan
of care be dated and signed by the physician who performs
the review," but denied that the dating requirement
attached more generally to other records signed by a
physician because section 405.1722(c) says only that each
physician's entry should be "signed." Id. Even assuming
that the only explicit requirement is that reviews of
plans of care need to be themselves dated, the lack of
any associated date on other entries showing timely
physician oversight raises the question here about when
the records were completed by the physician.
Accepting Hillman's exhibits as the best evidence of its
records, the ALJ found that physicians sometimes signed
records more than 14 days after their creation, that "in
many instances, physicians signed and dated their
signatures," but that in many others, their signatures
were undated. ALJ Decision at 26-27. In addition, some
records were not signed by physicians that should have
been. ALJ Decision at 27. However, the ALJ found no
"pattern of failure" by physicians to sign requisite
records. He pointed to one patient's records in which a
physician's order for OPT was signed and dated (but
illegibly), and a plan of care was dated January 25, 1995
and signed by the physician on March 7, 1995. ALJ
Decision at 27; P. Ex. 9, at 3. A physician's signature
on a plan for outpatient rehabilitation for the same
patient was apparently dated April 20, 1995, even though
it was executed by the PT on January 25, 1995. Id.
46/ After finding that Hillman's other exhibits "contain
a similar pattern of signatures," with a "substantial
number of instances in which physicians signed documents
more than 14 days" after creation, the ALJ nevertheless
concluded that the records "demonstrate physician
involvement" rather than a "wholesale failure" of
physicians to sign orders or review treatment. ALJ
Decision at 27. He concluded that this degree of failure
did not amount to a condition-level deficiency.
Id. at 28.
The ALJ's analysis confused the assessment of physician
involvement, which is more related to the plan of care
and physician involvement COP, with the assessment of
whether the clinical records are complete, accurate, and
readily accessible and whether they reflect prompt
completion of entries by physicians. While HCFA relied
on the same evidence (i.e., the records produced at the
survey) to show noncompliance with both COPs, the
criteria to be applied in each are different. Even were
there unassailable evidence that physicians were meeting
their oversight obligations, Hillman would still be out
of compliance with the clinical records COP if its
records did not accurately, completely and timely
document that oversight activity in a readily accessible
form.
Moreover, we do not agree with the implication of the
ALJ's analysis that mere signing by the physicians,
whenever done, is sufficient to show substantial
compliance with the clinical records COP. A provider of
OPT has an oversight responsibility to assure that care
is provided to beneficiaries in accordance with
applicable requirements, including the requirements that
physicians are exercising actual control. In addition,
the provider represents in seeking payment for a claim
that all requirements have been met, and therefore must
be able to verify when it submits a claim to the
intermediary for payment that physicians have timely
performed their legal function in ordering, certifying
the continuing need for, and reviewing the progress of
treatment. 47/ The provider must also undertake
annual evaluations of data on its patients, which require
ready access to complete and accurate clinical records.
42 C.F.R. § 405.1726(b); 42 C.F.R. § 405.1722(e). Thus,
to carry out its responsibilities, the provider must rely
on its clinical records for many purposes. If clinical
records are incomplete or are completed only long after
the events they record or if their timeliness cannot be
verified because they lack dating, the provider may be
unable to perform its oversight responsibilities
effectively. Further, Mr. Kozek testified that surveyors
reviewing care for patients are entirely dependent on
documentation to see that necessary services are being
provided. Hearing Tr. 173-74. Therefore, clinical
records which are inaccessible, incomplete, and do not
reflect the timely involvement of physicians can place
patients in danger of inappropriate care and out of reach
of proper evaluation and review by administrators or
surveyors.
In sum, even if Hillman's exhibits are more complete than
the documents obtained at the survey, Hillman did not
establish that the more complete documents were readily
accessible on the date of the survey, and the ALJ erred
in evaluating the noncompliance shown even on the face of
Hillman's exhibits. Absent further proof from Hillman
that it had complete records readily accessible, or that
its deficiencies were not such as to substantially limit
its ability to provide adequate care or adversely affect
patient health and safety, Hillman has not met it burden
to show substantial compliance.
IV. FINDINGS, CONCLUSIONS AND INSTRUCTIONS TO THE ALJ ON
REMAND
Based on our analysis above, we reverse FFCLs 1, 3, 4, 5
and 6. We adopt the following substitute FFCLs 1A, 1B,
1C, 1D, and 3-15, which are final and binding on the ALJ.
Some of the substitute FFCLs are findings from the ALJ
Decision, undisputed by Hillman; others are based on our
analysis above.
FFCL 1A. HCFA must set forth the basis for its
determination terminating a provider with sufficient
specificity for the provider to respond, including
the basis for any finding that a condition-level
deficiency exists. The provider must then identify
which of the findings material to the determination
the provider disputes, and must also identify any
additional facts the provider is asserting.
FFCL 1B. At the hearing, HCFA has the burden of
coming forward with evidence related to disputed
findings that is sufficient (together with any
undisputed findings and relevant legal authority) to
establish a prima facie case that HCFA had a legally
sufficient basis for termination.
FFCL 1C. At the hearing, the provider has the
burden of coming forward with evidence sufficient to
establish the elements of any affirmative argument
or defense which it offers.
FFCL 1D. The provider bears the ultimate burden of
persuasion. To prevail, the provider must prove by
a preponderance of the evidence on the record as a
whole that it is in substantial compliance with the
relevant statutory and regulatory provisions.
FFCL 3. Hillman promised the State survey agency
that it would maintain copies of its clinical
records at its Lakewood office, updated at 30-day
intervals, and repeatedly represented that it was
doing so.
FFCL 4. The State surveyor was not obligated to
visit multiple sites where Hillman provides
treatment and could appropriately request that
Hillman produce its records at its central office,
by fax or other means.
FFCL 5. The records which Hillman provided at the
April 5, 1995 survey (submitted as HCFA
Exhibits 17-35) lack documentation of physician
involvement in ordering OPT and reviewing plans of
care.
FFCL 6. The records which Hillman provided at the
April 5, 1995 survey (submitted as HCFA exhibits 17-
35) do not evidence timely completion of clinical
entries by physicians.
FFCL 7. A physician must certify that a plan of
care specifying the type, amount, frequency, and
duration of services has been established by either
the physician or a physical therapist and that the
planned services are needed.
FFCL 8. Where a physician has established a plan of
care specifying the type, amount, frequency, and
duration of services and has certified that those
services are needed (either in an order or
otherwise), the physician need not review at the
outset of treatment the detailed treatment plan
documented by the physical therapist, but the 30-day
period for review of the plan of care may be
measured from the date of the physician's
certification or the start of treatment.
FFCL 9. Where the initial plan of care specifying
the type, amount, frequency, and duration of
services is established by the physical therapist,
there must be documentation that would support a
conclusion that, at the time of certification, the
physician was certifying the need for the planned
services and had determined that the plan met the
statutory and regulatory plan of care requirements.
FFCL 10. HCFA may reasonably interpret the plan of
care requirements together with the physician
certification requirements to mean that an initial
plan established by a physical therapist should be
signed and dated by the physician to evidence that
the physician has reviewed the plan to ensure it met
plan requirements and that the services for which
the physician is certifying the need are the planned
services.
FFCL 11. Hillman, however, had not been given
sufficient notice of this interpretation. Thus, so
long as Hillman's documentation is sufficient to
show both that a physician certified the need for
the services and that a physician had determined
that a plan was established that met the plan
requirements, Hillman need not show that a plan of
care established by a physical therapist was signed
and dated by a physician at the outset of treatment.
FFCL 12. Physicians' orders for evaluation of the
need for physical therapy are not adequate as
certifications of the need for the particular
physical therapy services that were in fact
provided.
FFCL 13. HCFA established a prima facie case, on
the evidence which it produced and the legal
authority on which it relied, that, as of April 5,
1995, Hillman failed to comply with the conditions
of participation governing plans of care and
physician involvement (42 C.F.R. § 405.1717) and
clinical records (42 C.F.R. § 405.1722).
FFCL 14. HCFA established a prima facie case, on
the evidence which it produced and the legal
authority on which it relied, that the deficiencies
on which it relied were "of such character as to
substantially limit [Hillman's] . . . capacity to
render adequate care" or would "adversely affect the
health and safety of patients," as provided in 42
C.F.R. § 488.24(a).
FFCL 15. It is an affirmative argument by Hillman
that more complete records were readily available on
April 5, 1995, which would have demonstrated
substantial compliance with the conditions of
participation but were not produced because the
surveyors' document request was too limited.
We find that the record as a whole in its present form
supports the following FFCLs. Unless further reliable,
probative evidence is presented, pursuant to our
instructions below, to support different findings and
conclusions, these FFCLs will be binding and should be
adopted in the ALJ's decision on remand.
FFCL 16. Hillman did not prove by a preponderance
of the evidence that more complete records were
readily accessible on April 5, 1995 and would have
demonstrated substantial compliance with the
conditions of participation but were not produced
because the surveyors' document request was too
limited.
FFCL 17. The documents in the record as Hillman's
patient record exhibits (Hillman Exhibits 9-28) were
not readily accessible on April 5, 1995, as required
by the clinical records condition of participation.
FFCL 18. Hillman's patient record exhibits are not
reliable evidence of its compliance with Medicare
conditions of participation on April 5, 1995.
FFCL 19. Hillman did not prove that physicians
approved and reviewed the care provided to its
patients as required by the Act and regulations.
FFCL 20. Hillman did not prove that physicians
timely completed records documenting approval and
review of care provided to its patients.
FFCL 21. The records which Hillman produced at the
April 5, 1995 survey (submitted as HCFA exhibits 17-
35) so wholly lack documentation of ongoing
physician review of plans of care or of timely
completion of clinical entries by physicians as to
establish a condition-level deficiency in each of
the two conditions of participation at issue as a
matter of law.
FFCL 22. Hillman did not prove by a preponderance
of the evidence that it was in substantial
compliance with the Medicare conditions of
participation.
FFCL 23. Hillman did not prove by a preponderance
of the evidence that HCFA's termination of Hillman's
participation in the Medicare program lacked
adequate legal or factual basis.
On remand, the ALJ should provide an opportunity for
Hillman to make an offer of proof of additional evidence
which it would present to sustain its burden of proof on
its affirmative arguments that the surveyors on April 5,
1995 requested only a limited subset of patient records,
that its patient record exhibits constitute reliable
evidence of its compliance as of that survey date, and
that physicians performed timely reviews and completed
records promptly despite the absence of dated
signatures. 48/ If, based on Hillman's offer of
proof, the ALJ determines to reopen the record on some or
all of the issues addressed in FFCLs 16-23, the ALJ may
require that any testimonial evidence offered be in the
form of a signed affidavit or declaration or may
reconvene the in-person hearing to receive evidence
relevant to these issues. Should Hillman present such
evidence, the ALJ shall permit HCFA to cross-examine
witnesses and to present evidence and/or argument in
rebuttal.
In addition, on remand, the ALJ should determine whether
to admit the Aetna list proffered by Hillman as an
exhibit and whether to permit an opportunity for
testimony from either party to clarify its use at the
survey and its relation to the patient records in the
parties' exhibits. If reliable and probative evidence is
presented by the parties that supports modifying those
substitute FFCLs not made final in this decision, the ALJ
may adopt alternative or additional FFCLs. If no
evidence or no probative evidence sufficient to support a
different result is presented before the ALJ, the
substitute FFCLs as set forth above are final and
binding, and should be adopted in the ALJ decision on
remand.
____________________________
Cecilia Sparks Ford
____________________________
M. Terry Johnson
____________________________
Judith A. Ballard
Presiding Board Member
* * * Footnotes * * *
1. Here we provide a brief statement of the facts
which are not contested, except as indicated. Matters
which were the subject of factual dispute are discussed
where relevant in the analysis sections.
2. Hillman did not dispute that it had not
provided a plan of correction as of the required date,
but argued that it had requested an extension (evidenced
by a letter dated May 5, 1995, the same day the
correction plan was due). P. Ex. 5. Hillman received no
reply to this request and submitted a proposed plan dated
May 19, 1995, two weeks late. P. Ex. 6. The State
surveyor's supervisor testified that the extension was
not given because such requests are not traditionally
granted and because Hillman's track record did not
justify it. Hearing Tr. 172; see also Hearing Tr. 75.
Both the surveyor and his supervisor testified that the
plan as submitted was unacceptable, as well as untimely.
Hearing Tr. 75-76, 173; HCFA Ex. 12 (Hillman's proposed
plan with annotations by the supervisor dated May 23,
1995 showing unacceptable points).
3. The regulations provide that state surveyors
are "professionals who use their judgment, in concert
with Federal forms and procedures, to determine
compliance." 42 C.F.R. § 488.26(b)(3). A state survey
agency is required to certify that a provider is not in
compliance with the COPs "where the deficiencies are of
such character as to substantially limit the provider's .
. . capacity to render adequate care or which adversely
affect the health and safety of patients." 42 C.F.R.
§ 488.24(a). In determining compliance, the state agency
is to consider "the manner and degree" to which a
provider satisfies each standard in a COP and to document
"the nature and extent of deficiencies, if any."
42 C.F.R. § 488.26(a). A provider found deficient in one
or more standards under the COPs may participate in
Medicare only if it "has submitted an acceptable plan of
correction for achieving compliance within a reasonable
period of time" and if its deficiencies do not
"jeopardize" patient health and safety or "seriously
limit" its capacity to render adequate care. 42 C.F.R.
§ 488.28(a).
4. The OPT regulations at 42 C.F.R. § 405.1701 et
seq. were redesignated as 42 C.F.R. § 485.701 et seq. in
1995. 60 Fed. Reg. 2325 (January 9, 1995). All parties
used the older citations and there does not appear to be
any relevant substantive difference, so we have used the
same form. See HCFA Br. at n.1.
5. The ALJ noted that the survey, certification
and enforcement regulations (at 42 C.F.R. Parts 488 and
489) were revised effective July 1995, but that all his
citations were to the earlier versions since the actions
at issue occurred prior to the change. ALJ Decision
at 2, n.1, citing 59 Fed. Reg. 56,116, 56,237 (1994).
The revised regulations would not have affected the
outcome. ALJ Decision at 2, n.1.
6. The Board was substituted for the Appeals
Council of the Social Security Administration as the
reviewing authority in 1993. 58 Fed. Reg. 58,170 (Oct.
29, 1993).
7. The burden of persuasion becomes meaningful
only in the unusual case where both parties have come
forward with evidence and the weight of all the competing
evidence appears in equipoise. In such a situation, the
decision-maker has resort to the concept of burden of
proof in this sense to determine which party prevails:
the party with the burden of proving its case by a
preponderance of the evidence has failed to do so if the
evidence on each side is of equal weight. The
significance of allocating the burden of persuasion is
thus narrow, but can be crucial in specific cases, the
weighing of evidence not being an exact science.
8. This statement could be read as placing the
ultimate burden of persuasion on Hillman once HCFA
established a prima facie case, as we require here.
However, this is contradicted by the claim that HCFA must
prove its case "by a preponderance of the evidence"--a
standard relevant to the ultimate burden of persuasion.
The language of the final decision discussed above
treated HCFA as bearing the ultimate burden of proving
noncompliance by a preponderance of the evidence.
9. Surveys conducted by such state or local
agencies are to produce findings "relating to the
[provider's] compliance . . . with (1) the statutory
conditions of participation imposed under this title and
(2) the major additional conditions which the Secretary
finds necessary in the interest of health and safety of"
those furnished care or services. Section 1864 of the
Act.
10. As a result of nursing home reform
provisions in the Omnibus Budget Reconciliation Act of
1987 (OBRA '87) and other special considerations, nursing
facilities are treated somewhat differently from other
providers. On the whole, however, the provisions
relating to nursing facilities and their history support
the view that Congress intended that the patients'
interests be paramount rather than the providers'
interests. This overarching emphasis on the importance
of patient health and safety requirements is central to
our view that a provider cannot be considered qualified
to participate without affirmatively demonstrating that
it continues to substantially meet such requirements.
11. As noted, OBRA '87 provided a different
scheme for survey and certification of nursing
facilities. However, HCFA emphasized that, under both
schemes, "the facility was responsible for fully
complying with all requirements." 56 Fed. Reg. 48,827
(Sept. 6, 1991) (emphasis added).
12. HCFA may require that a provider include in
the agreement an assurance that it will comply with all
program requirements, including the conditions of
participation, but this does not make the agreement the
source of the obligation to meet the conditions. We note
that, in the Medicaid program administered by the states,
a provider agreement between the state and an entity
providing services is evidence of certification, but HCFA
may "look behind" the provider agreement and deny
Medicaid funding to the state if HCFA finds that the
conditions of participation are not met. Thus, in this
sense, a provider agreement is analogous to a grant
agreement--it has contractual aspects, but cannot be
viewed in the same manner as a bilateral contract
governing discrete transactions; unlike such a contract,
it is governed by statutory provisions expressing the
judgment of Congress concerning desirable public policy.
See Bennett v. Kentucky, 470 U.S. 668, 669 (1985).
13. Under the Administrative Procedure Act
(APA), the burden of proof in administrative hearings
generally lies with the proponent of an order. 5 U.S.C.
§ 556(d). Thus, our result here is consistent with the
APA.
14. The regulations provide that the ALJ is to
inquire "fully into all of the matters at issue" and to
receive "the testimony of witnesses and any documents
that are relevant and material." 42 C.F.R.
§ 498.60(b)(1). The ALJ is given discretion to decide
"the order in which the evidence and the arguments of the
parties are presented and the conduct of the hearing." 42
C.F.R. § 498.60(b)(3). This does not, however, imply
discretion to allocate the burden of proof. The
regulation on its face says nothing about burden of proof
and references only the order of presentation at the
hearing, which is procedural, not substantive. 42 C.F.R.
§ 498.60(b)(3).
15. The regulations for Inspector General cases
do not place the burden of persuasion on the government
in all such cases, but only in those for which Congress
provided "special due process protections" or where a
Professional Review Organization made findings on which
exclusion is based; burden of proof in some exclusion
cases is to be allocated by an ALJ as the ALJ deems
"appropriate". 42 C.F.R. § 1005.15; 57 Fed. Reg. 3326-27
(Jan. 29, 1992). Contrary to the ALJ's interpretation
(in an earlier case), the fact that the Secretary left it
to the ALJ to determine the appropriate burden of proof
in some exclusion cases does not indicate that allocation
of the burden of proof is left to the ALJ's discretion in
provider termination cases. Contra Arecibo Medical
Hospice Care, DAB CR363, at n.6 (1995).
16. The ALJ distinguished the due process status
of an initial applicant to participate in Medicare from
that of a terminated provider on the grounds that a
terminated provider has an ongoing contractual
relationship with the Medicare program entitling it to
greater due process protections. ALJ Decision at 5.
Thus, in a case involving an initial applicant, the same
ALJ recognized that it is "apparent from the language and
content of the [survey and certification] regulation that
it is a provider's . . . burden to satisfy HCFA that it
meets all requirements for certification." SRA, Inc.,
D/B/A St. Mary Parish Dialysis Center, DAB CR341, at 5
(1994); cf. Nazareno Medical Hospice Fajardo, Caguas,
Cayey, DAB CR386, at 13 (1995). As discussed above, the
statute and regulations do not support this distinction.
17. This discussion appears to respond to a HCFA
theory quite different from the theory we adopt here. In
its briefing before the ALJ in this and prior cases, HCFA
referred at times to its willingness to present a prima
facie case as if the "prima facie propriety" of its
determination was to be presumed unless "overcome by
competent evidence" rather than established first by HCFA
coming forward with evidence on its face sufficient to
support its determination. HCFA's Post-Hearing
Memorandum of Law at 20; see also Nazareno Medical
Hospice, Fajardo, Caguas, Cayey, DAB CR386, at 8 (1995)
(HCFA asserted "presumption of correctness" in that
case). Thus, HCFA mistakenly relied on the presumed
validity of its actions, a concept which the ALJ
correctly noted is not applicable to a de novo hearing
within the agency as opposed to a court review of agency
actions. ALJ Decision at 6-7; but cf. HCFA Post-Hearing
Memorandum of Law at 19. Elsewhere, however, HCFA
recognized that its prima facie case must be based on
"coming forward with evidence to demonstrate failure to
comply." HCFA Post-Hearing Memorandum of Law at 17
(emphasis added). Further confusion may have arisen from
prior cases in which HCFA apparently claimed that the ALJ
review was to be based on a standard other than
preponderance of the evidence--the appropriate standard
here. See Nazareno at 8; Hospicio en el Hogar de Utuado,
DAB CR371, at 7 (1995) (rejecting HCFA argument that
presumptively correct findings of a surveyor must be
upheld if supported by "substantial evidence" or unless
found "clearly erroneous"); see also Guaynabo Hospice
Care, Inc., DAB CR374, at 12 (1995)("substantial
evidence" is appellate standard not relevant in de novo
administrative hearing).
18. These records were admitted without
objection by HCFA, and therefore it is their significance
rather than their admissibility which is at issue. See
Hearing Tr. 36-38. Although the parties' exhibits
included material other than the patient records at
issue, our references to "Hillman's exhibits" and "HCFA's
exhibits" in this discussion refer specifically to the
patient records contained at HCFA Exhibits 17-35 and
Hillman Exhibits 9-28 respectively.
19. HCFA did not contend that the ALJ should be
restricted to considering the evidence before the
surveyor at the time of the survey or the evidence before
HCFA at time of its determination. However, HCFA took
the position, and we agree, that any evidence proffered
by the provider at the hearing should bear on the facts
of its compliance as of the relevant time, and not simply
reflect later events. Evidence that at some other point
in time the provider may have completed or obtained
records that were incomplete or not readily accessible on
the date of the survey is not relevant to contest a
factual finding about compliance on that date. The
dispositive date for assessing whether a facility is out
of compliance is the date of the survey from which its
termination resulted. Carmel Convalescent Hospital, DAB
No. 1584, at 12 (1996).
20. A list of the parties' treatment record
exhibits matched by patients appears in the ALJ Decision,
which also notes that one of Hillman's treatment record
exhibits does not correspond to any HCFA exhibit. ALJ
Decision at 15, n.9.
21. To illustrate the relationship between
HCFA's and Hillman's exhibits, we compare the contents of
two corresponding exhibits for the same patient. HCFA's
exhibit consists of the following documents: Beneficiary
On-Site File Review Work sheet (showing dates of service
of January 3-31, 1995), chart copy of physician's orders
showing an order to continue OPT dated January 11, 1995
(the physician's signature by the entry is signed but not
dated), an initial evaluation report for October 10, 1994
containing a plan of treatment with no signature in the
space for physician, an updated plan of progress for OPT
for January 3-31, 1995 containing a plan for treatment
and signed by the physical therapist but not the
physician, a similar plan of treatment similarly unsigned
by a physician for October 10-31, 1994, a monthly summary
form for January 1995 reporting progress with no entry in
the space labelled for physician signature and date, and
an OPT patient consent form. HCFA Ex. 30, at 1-8.
Hillman's exhibit consists of: an admission form with
patient identification information, an initial evaluation
report for October 10, 1994 identical to that in HCFA's
exhibit except a physician has signed in the indicated
box, a monthly summary form for October 1994 signed but
not dated by the physician, the same October 10-31 plan
of treatment, signed physician's orders certifying a
treatment plan including OPT dated November 5, 1994, an
updated plan of progress for OPT for November 1-30, 1994,
a November 1994 monthly summary (unsigned by physician),
a signed but undated physician certification for a
treatment plan including OPT apparently related to
December 1994 orders, an updated plan of progress for
December 6-30, 1994, the same physician's orders for
January 11, 1995 as in HCFA's exhibit, the same January
3-31 updated plan of progress, the same monthly summary
form for January 1995 but with an undated physician's
signature, a patient consent to payment to provider, and
a claims denial form showing service dates January 3-31,
1995. P. Ex. 18, at 1-14.
22. We note here that Hillman thus stated that
it was copies of the "clinical records" which were to be
forwarded monthly, and did not specify that only some
subset known as billing records was abstracted for that
updating process. This inconsistency must be considered
in assessing the plausibility of Hillman's alternative
"billing file" explanation for the incomplete records.
23. Thus, both the briefing and the testimony of
Hillman's witness assert a claim that Hillman instituted
as promised a system of monthly updating of central
clinical files. This is wholly contradictory of an
eleventh-hour claim by Hillman's counsel at the appellate
oral argument that --
there was an effort to try to do it and that they
weren't able to update the records on . . . a 30 day
basis from all their facilities. . . . I think it's
clear that there was some effort made, but they
weren't able to do that. . . . And I think that's
why . . . if they were able to do that, the
clinical records -- not clinical, the billing
records in the central Lakewood office would have
been more up to date.
Oral Argument Tr. 106. Counsel appeared to recognize
that, had the files actually been updated monthly, the
documents produced on April 5, 1995 should have been up-
to-date at least for January and February 1995. However,
the claim that an unsuccessful effort was made to fulfill
the promised scheme or that any alternative approach was
adopted to comply with the regulatory requirements or was
ever communicated to the State survey agency or to HCFA
finds no support in the evidence in the record even from
Hillman's witness. It is also noteworthy that the quoted
testimony referred to therapists forwarding all their
notes monthly, and mentioned the billing of the
intermediary only in terms of a reason for the monthly
scheduling.
24. Again, we note the total absence of any
reference in this description to a separation of billing
records or to a restriction in the documents to be
forwarded to a subset of billing records. In fact, the
letter clearly refers to monthly updating to the main
office of all clinical notes and to updating "active
patient charts" which implies treatment records rather
than merely billing information.
25. Mr. End's testimony about what he told the
office manager is uncontradicted, since no one else
testified to being present, Hillman did not present the
office manager to dispute it, and Dr. Akinrolabu did not
offer even hearsay evidence about what the office manager
told him about Mr. End's instructions to her.
26. Hillman apparently used "billing files" to
refer to records maintained by Hillman to support its
billing, not to records sent to Aetna in the billing
process, since Hillman used electronic transmission to
bill Aetna based on the services identified in its own
records. Hearing Tr. 224. Also, it is clear, from the
testimony and the fact that the two sets of exhibits
consist in many instances of the same forms except for
added signatures, that there were not entirely different
forms prepared or sent for billing purposes from the
forms maintained in the clinical records at the LTCs.
See Hearing Tr. 228-232. For example, Dr. Akinrolabu
explained why a form requiring a physician's signature
was signed in Hillman's exhibits but not in HCFA's by
saying that the form happened to be sent to the office
for billing purposes after the therapist signed it but
before the physician signed it. Hearing Tr. 232.
However, he noted that they are the "same documents."
Hearing Tr. 231. Thus, the purported billing file
actually contained clinical records distinguishable only
by their incomplete content.
27. Nowhere in the record is it identified what
documents are known as UB-82's, although Dr. Akinrolabu
testified that they were prepared as original billing
documents in the central office rather than being among
the copies of documents forwarded by therapists from the
LTCs. Hearing Tr. 226-27.
28. The single word "Fine" does not necessarily
imply that whatever explanation was proffered was
acceptable in lieu of providing completed records, but
rather may simply have been an acknowledgment of Dr.
Akinrolabu's statement. (We note that Dr. Akinrolabu did
not elaborate on what explanation he gave for the absence
of the requested physician signatures.)
29. A review of the clinical records produced as
exhibits by Hillman demonstrates that initial evaluation
reports contained the PT's plan of treatment for the
patient and had a space for physicians to sign.
Typically, the initial evaluation report on a patient
contained a physician's signature (generally without
accompanying date) in the exhibits produced by Hillman
while the corresponding copy produced at the survey in
HCFA's exhibits is not signed by the physician. Compare,
e.g., HCFA Exs. 17, 19, 23, and 30 with P. Exs. 17, 20,
22, and 18. Since Dr. Akinrolabu acknowledged that the
surveyors requested the signed records (regardless of
whether they accepted, as he claimed, an explanation for
their unavailability), the fact that these documents were
not produced on request at the least contradicts Dr.
Akinrolabu's previous testimony that no documents had to
be obtained by fax that day for either Mr. End or Mr.
Livesay for the reason that everything requested was
already there. Cf. Hillman Br. 8, n.3; Hearing Tr. 213-
14, 225.
30. Dr. Akinrolabu at one point asserted that he
had told Mr. End at the survey (apparently referencing
the April 5, 1995 survey) that Hillman only kept a few
copies for billing purposes to get information such as
patient name and Medicare number, but when asked if he
also reported this policy in writing to Mr. End, he
claimed that he had in the letters referenced above. Cf.
Hearing Tr. 208, 212-23. Yet, as noted above, Hillman's
letters said nothing about limiting the monthly updating
to a "few copies" with only some identifying information.
In fact, Dr. Akinrolabu testified that Mr. End had told
him before sending HCFA Exhibit 8, the post-certification
report in February, that "the only way they are going to
certify me for this year was that I should send a letter
... saying that I will make photocopies of all the files
in the various locations that I have and keep them in the
central office." Hearing Tr. 210-11 (emphasis added).
Dr. Akinrolabu testified that that letter was what is now
in the records as HCFA Exhibit 10. Thus, Hillman's
"policy" insofar as it was communicated to the State
survey agency was of transmitting copies of all files
within a month, while maintaining the current records at
the LTCs, not of creating separate billing files with
only selected records.
31. In fact, Hillman asserted that Dr.
Akinrolabu told Mr. End prior to the April survey that
"the clinical records are forwarded periodically to
Hillman's Lakewood billing office for centralized filing
and also for use in billing Aetna." Hillman Br. at 4
(emphasis added). This description clearly indicates
that Hillman was not merely forwarding a subset of
records solely to obtain billing information but also
purported to be compiling centralized files of its
clinical records.
32. HCFA objected to the admission of this list
as a new exhibit because no good cause was shown for
Hillman's failure to offer it earlier, but did not
dispute that it was the list presented by Mr. Livesay at
the survey. HCFA Reply Memorandum of Law at 3-8. HCFA
argued that it would be prejudicial to admit the list as
evidence without permitting HCFA an opportunity to offer
testimony interpreting and explaining the significance of
it. Id. at 6. We note that it is impossible on the
record before us to connect the service dates reflected
on the list with specific patient records in either
party's exhibits. HCFA contended, based on its review,
that the Aetna claims denial documents included with the
patient treatment records in Hillman's own exhibits show
that Aetna requested records that were dated outside the
listed dates of service. Id. at 6-7. On remand, the ALJ
should determine whether to admit this list as an exhibit
and whether to permit an opportunity for testimony from
either party to clarify its use at the survey and its
relation to the patient records in the parties' exhibits.
33. This is not a situation where a surveyor
found documents during a survey which were complete but
for some missing dates. In the present case, the
signatures at issue were not on the copies of documents
which were produced at the survey. Irrespective of what
was requested at the survey, this fact clearly places an
added burden on the proponent of the completed documents
to establish when the signatures were affixed.
34. Thus, the ALJ wrote that he "would regard
the records introduced by Petitioner as self-serving
exhibits to which I would attach little or no probative
value if I were to conclude that HCFA's version of what
Petitioner produced on April 5, 1995 is credible,"
whereas they became "potentially very significant" if
Hillman's "version of what happened on April 5, 1995 is
credible." ALJ Decision at 16. Once the ALJ found
Hillman's version more credible, he based his conclusions
on Hillman's compliance entirely on Hillman's exhibits
and not on "the excerpts of medical records which HCFA
introduced," finding that Hillman's versions would be the
"best evidence of the extent to which Petitioner complied
with Medicare conditions of participation on that date."
Id.
35. As an appellate body, we do not lightly
overturn a fact-finder's assessment of the credibility of
witnesses since we do not have the opportunity to observe
the testimony directly. However, the fact-finder must
give adequate reasons to explain what weight was given to
the factors considered and why conflicting testimony was
unpersuasive.
36. There is some question regarding whether
Hillman raised this defense in a timely manner. Nothing
in Hillman's appeal letter, dated July 5, 1995, makes it
clear that Hillman was alleging, in effect, that no
survey of its clinical records occurred on April 5th or
that the records produced were not the complete records
that were readily accessible at the time. Instead,
Hillman's appeal was based on the assertion that HCFA had
failed properly to evaluate the records produced, and
asserted only that the surveyor's visit on April 5th was
"confusing" and that the request for patient charts was
made only by the Aetna surveyor. Nothing in the pre-
hearing order indicates that Hillman was challenging the
procedural validity of the survey or claiming that what
it had been requested to produce on April 5th was
something different from complete clinical records for
the 20 patients. This failing arguably prejudiced HCFA.
If Hillman had made clear prior to the hearing that it
intended to prove that Aetna had requested records
different from what Hillman would have produced if it
thought HCFA was surveying it for compliance with the
clinical records requirement, the ALJ could not properly
have excluded as irrelevant testimony from Mr. End
concerning what Aetna had requested. The ALJ
subsequently permitted testimony by Dr. Akinrolabu on
this very issue.
37. The ALJ regarded as "telling" the fact that
the documents produced on April 5th do not have "the
appearance" of faxed documents, in that Dr. Akinrolabu
testified that Hillman's fax machine would have left an
imprint. ALJ Decision at 19. There was no basis
established to show that Mr. End knew that Hillman's fax
machine always left imprints. Although he testified that
he was aware of the phenomenon of fax imprints, this does
not suffice to show that such imprints are always left by
all fax machines or cannot be removed by, for example,
photocopying (and it is undisputed that these documents
were copied by Hillman staff for the surveyors). Thus,
even if Mr. End noticed the absence of fax imprints when
the documents were produced at the survey, he may have
reasonably assumed that their absence was not
inconsistent with Dr. Akinrolabu's assertion that the
documents had been faxed to the Lakewood office.
38. It is not clear here if the ALJ meant
"complete" in the sense of all records for any treatments
provided to these patients or in the sense of being the
full record of the clinical treatment during particular
time periods.
39. Courts have generally recognized that an ALJ
decision cannot be adequately reviewed unless it contains
"not only an expression of the evidence s/he considered
which supports the result, but also some indication of
the evidence which was rejected . . . [in order to
determine] if significant probative evidence was not
credited or simply ignored." Cotter v. Harris, 642 F.2d
700, 705 (3rd Cir. 1981); see also Walker v. Mathews, 546
F.2d 814, 818 (9th Cir. 1976).
40. The ALJ's ruling to sustain an objection to
Mr. End's testimony on direct about Mr. Livesay's
purposes apparently led HCFA to understand that no
information about the Aetna surveyor's actual requests at
the survey would be admitted, even after Hillman put the
events of the survey and the nature of the documents
requested then directly at issue in its case. HCFA Br.
at 39-40, and n.13, citing Hearing Tr. 71. It is not
clear that the ALJ's ruling was intended so broadly. His
concern appears to have been that HCFA should not use the
testimony of Mr. End to raise issues of billing fraud
which were not related to the bases for termination and
were not alleged in the termination letter. Obviously,
it does not follow that Mr. Livesay's testimony on
rebuttal to corroborate events as described by Mr. End
would have been excluded. However, HCFA may have been
prejudiced by the confusion about this ruling if HCFA
believed it was precluded from presenting evidence to
rebut Hillman's attack on the regularity of the survey.
41. The ALJ did not find, and we would not
accept any claim, that physicians' orders for evaluation
of the need for physical therapy are adequate as
certifications of the need for the particular physical
therapy services that were in fact provided. Hillman did
not expressly assert such a claim but some of the
documents to which it cited as evidence of signed
physicians' orders for treatment were in fact merely
orders for evaluations. See P. Exs. 9, at 6 and 19, at
3.
42. Under the Deficit Reduction Act of 1984,
Pub. L. No. 98-369, OPT plans of care may be established
by either a physician or a qualified PT. AT-57 reflects
this change.
43. We note that HCFA did not contend that the
provider was required to use any specific form or
document to evidence physician involvement, so long as a
surveyor could determine from the records that the
requirements were met. HCFA Br. at 68-69.
44. For example, HCFA Exhibit 17 contained a
physician's order for evaluation and treatment dated
December 27, 1994, and no subsequent review signed by
physician during treatment which continued at least
through the end of January with an indication that
services would continue. HCFA Exhibit 19 contained an
unsigned order for OPT for 84 days beginning December 13,
1994 and no other signed review for service dates
January 1 through 13. HCFA Exhibit 23 has an unsigned
order for an evaluation, no order for therapy, and no
evidence of physician review. The other examples
similarly either lacked any signed physician orders, had
orders only for evaluations, or showed care extending
beyond 30 days without evidence of a review. While some
forms containing plans of treatment have entries in boxes
indicating that signatures for physician certifications
(sometimes with the time period indicated, sometimes not)
were on file, the purported certifications were not
produced and no basis appears on this record to conclude
that these entries evidence the required physician
reviews.
45. Hillman did not appeal this finding, so it
is now undisputed that Hillman was not in compliance with
the standard of participation at 42 C.F.R. § 405.1722(c).
However, the question of whether its noncompliance
constituted a condition-level deficiency under 42 C.F.R.
§ 488.24(a) remains in dispute before us.
46. The ALJ noted, however, other documents in
the same file that did contain dated physician
signatures, which he characterized as orders for OPT.
However, we find on review that one orders only
evaluation and the other refers to but does not contain
physician orders for OPT (or occupational or speech
therapy). P. Ex. 9, at 5, 6.
47. Even when the actual therapy is provided by
arrangement with outside contractors, rather than by
employees, the provider remains responsible, as part of
professional supervision, for adequate controls,
including among other things maintenance of "a complete
and timely clinical record of the patient which includes
diagnosis, medical history, physician's orders, and
progress notes," assuring "that the required plan of
treatment is periodically reviewed by the physician," and
securing "from the physician the required certification
and recertifications." AT-57, at 2. In addition, the
contract arranging for provision of services must provide
"for the preparation of treatment records, with progress
notes and observations, and for their prompt
incorporation into the clinical records of the
rehabilitation agency." Id. at 2-3.
48. We note that Petitioner's exhibit 10 in the
record before us appears to be missing one page (numbered
24) to which reference was made by the parties. On
remand, the ALJ may request that Petitioner resubmit the
missing page.
(..continued)