SUBJECT: Concourse Nursing Home,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Concourse Nursing Home (Concourse) appealed a July 2, 2002 decision by Administrative Law Judge (ALJ) Carolyn Cozad Hughes. Concourse Nursing Home, DAB CR927 (2002) (ALJ Decision). The ALJ Decision granted the Centers for Medicare & Medicaid Services's (CMS) ⁽¹⁾ Motion to Dismiss Concourse's request for hearing as not timely filed pursuant to 42 C.F.R. � 498.40(c).

Based on the analysis below, we affirm the ALJ Decision.

Background

The following summary of the undisputed facts is intended to provide a general framework for understanding the decision and is not intended to substitute for the ALJ's findings.

Concourse is a nursing facility certified to participate in the Medicare and Medicaid programs as a provider of services. On March 21, 2001, the New York State Department of Health (State Agency) surveyed Concourse to assess its compliance with federal program requirements for nursing homes. The State Agency found that Concourse was not in substantial compliance with those requirements. A July 7, 2001 post-survey revisit found "isolated deficiencies that constitute no actual harm with potential for more than minimal harm that is not immediate jeopardy whereby . . . [Concourse] was not in substantial compliance . . . ." CMS accepted the State Agency's findings and, in a letter dated July 27, 2001, notified Concourse that CMS would impose a denial of payment for new admissions beginning August 8, 2001, to remain in effect until substantial compliance was achieved. Additionally, the notice informed Concourse that, if Concourse had not achieved substantial compliance by September 17, 2001, its provider agreement would be terminated. CMS Ex. A at 1.

CMS's July 27^th notice further stated:

If you disagree with this determination, you or your legal representative may request a hearing before an administrative law judge of the Department of Health and Human Services, Departmental Appeals Board. Procedures governing this process are set out in 42 CFR 498.40, et seq. A written request for a hearing must be filed no later than 60 days from the date of receipt of this letter. . . .

Id. at 2.

After an August 20, 2001 post-survey revisit, CMS determined that Concourse had achieved substantial compliance. Consequently, effective August 20^th, CMS lifted the denial of payment for new admissions remedy and rescinded the proposed termination of Concourse's Provider Agreement. CMS Ex. B.

By letter dated December 4, 2001, Concourse appealed CMS's July 27^th notice. See CMS Ex. C. There, Concourse recounted that it had been surveyed by the State Agency on March 21 and July 15, 2001 ⁽²⁾, that it had received and responded to Statements of Deficiencies in connection with those surveys and that it had devised plans of correction which had been accepted by the State Agency. Concourse continued:

Because the facility disagreed with the statement of deficiencies filed by the . . . [State Agency] it had earlier filed requests for Informal Dispute Resolution ("IDR") with the . . . [State Agency] for each of these surveys. The facility believed that the deficiencies were inaccurate and should not have been cited. The . . . [State Agency] also re-surveyed the facility and caused the removal of the suspension and termination notice in the interim while the IDR's were pending. Because of the pendency of the IDR's, the facility took no action in response to . . . [CMS's Determination], since if the underlying deficiencies were rescinded the whole issue of denial of payment for new admissions and scheduled termination would similarly be withdrawn.

Concourse Request for Hearing at 1.

Analysis ⁽³⁾

Our standard of review of an ALJ decision on a disputed issue of law is whether the ALJ decision is erroneous. Our standard of 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. See, e.g., Beechwood Sanitarium, DAB No. 1824 (2002); Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs, http://wwww.hhs.gov/dab/guidelines/prov.html.

The ALJ characterized the case before her as presenting the narrow question of whether -

a revised Statement of Deficiencies, issued following Petitioner's completion of a State Informal Dispute Resolution (IDR) process, constitutes a "reconsidered or revised determination" within the meaning of 42 C.F.R.
� 498.5, creating an additional right to hearing and triggering anew the 60-day time limit for filing an appeal.

ALJ Decision at 1.

Generally, Concourse asserted that: (1) the revised Statement of Deficiencies issued by the State Agency following the IDR process was a reconsidered or revised determination by CMS which restarted the 60-day appeal period; and (2) in any event, there existed good cause sufficient to extend Concourse's deadline for filing a request for a hearing. Concourse Br. at 1-2. Additionally, Concourse asserted that the ALJ committed a procedural error by issuing her decision without allowing Concourse the opportunity to file a reply brief. Id. at 30.

The ALJ Decision was based on three findings of fact and conclusions of law (FFCLs). Concourse argued that each FFCL was erroneous. Below, we address the FFCLs and Concourse's arguments relative to each, and then address Concourse's allegation that the ALJ committed a procedural error in issuing her decision on CMS's Motion to Dismiss prior to Concourse's submission of a second brief.

1. Petitioner failed to file its hearing request within 60 days of its receipt of CMS's notice as required by statute and regulation.

The ALJ concluded that section 205(b) of the Social Security Act (Act) was made applicable by section 1866(h) of the Act, and requires that a hearing request be filed within 60 days after receipt of CMS's determination. The ALJ also noted that the regulation at 42 C.F.R. � 498.40(a) reflects the statutory requirement while adding the possibility of an extension of the filing period. ALJ Decision at 3.

The ALJ found that Concourse did not dispute receipt of CMS's July 27^th determination and that Concourse's request for a hearing was filed "well after 60 days had elapsed." The ALJ also found that the language in CMS's determination was clear and unconditional and that Concourse had made a conscious decision to focus its efforts on pursuing IDR, rather than requesting an ALJ hearing. Citing Board decisions with similar facts (Cary Health and Rehabilitation Center, DAB No. 1771 (2001) and Nursing Inn of Menlo Park, DAB No. 1812 (2002)), the ALJ determined that Concourse's hearing request was untimely on its face. ALJ Decision at 4.

Although Concourse asserted generally that each FFCL was "erroneous", Concourse did not specifically challenge the ALJ's determination in this FFCL that Concourse's request for hearing was untimely on its face with respect to the July 27, 2001 notice. Rather, the essence of Concourse's appeal and its case before the ALJ was that the IDR process tolled the 60-day filing deadline, an argument that is addressed by the ALJ in FFCL 2. FFCL 1 is consistent with the clear statutory and regulatory requirements as well as the undisputed fact (see Concourse Br. at 8) that Concourse did not request a hearing until well after the 60-day period following receipt of CMS's July 27^th notice had passed. See Cary. Accordingly, we affirm and adopt FFCL 1.

2. The revised Statement of Deficiencies issued following completion of the State IDR process does not constitute a "reconsideration or revised determination" within the meaning of 42 C.F.R. � 498.5 and creates no new appeal rights.

The ALJ found:

After receiving the July 27, 2001 notice letter, . . . [Concourse] submitted its Plan of Correction and Request for IDR. On November 26, 2001, the State agency sent . . . [Concourse] its IDR determination, which included a revision to the Statement of Deficiencies. . . . [Concourse] filed its hearing request eight days later. The crux of . . . [Concourse's] argument is that the revised Statement of Deficiencies, issued following IDR, constituted a "reconsidered" or "revised" determination within the meaning of 42 C.F.R. � 480.40(a)(2), which states that the affected party must file its hearing request within 60 days from receipt of the notice of the "initial, reconsidered, or revised determination."

ALJ Decision at 4.

The ALJ addressed the relevant regulatory requirements for requesting a hearing before an ALJ and examined the binding nature of an initial determination unless reconsidered, revised or modified pursuant to the program regulations. See 42 C.F.R. �� 498.24; 498.78; 498.32; 498.100; 498.20(b); 498.22(a) and 498.30. ALJ Decision at 4-5.

The ALJ reasoned:

The IDR provisions are completely independent of these provisions. The regulations mandate that a facility be provided the opportunity for informal dispute resolution, at the facility's request, to dispute state survey findings with the State survey agency. 42 C.F.R. � 488.331. The IDR regulations specifically provide that failure to complete IDR cannot delay the effective date of any enforcement action against the facility and that the facility may not delay any enforcement action against it because IDR has not been completed. 42 C.F.R. � 488.331(b). Pointing to these provisions, the appellate panel in Nursing Inn of Menlo Park characterized as "unconvincing" the facility's reliance on its participation in the IDR process as an explanation for its failure to request a hearing timely. Nursing Inn of Menlo Park, at 7-8. Similarly, the panel in Cary ruled that a petitioner is not justified in believing that IDR process somehow tolls the requirement to file a timely federal hearing request. Cary, at 28. That the regulations require states to institute a separate IDR procedure does not turn that procedure into a "reconsidered or revised determination," determinations that are specifically defined elsewhere in the regulations.

ALJ Decision at 5.

On appeal, Concourse contended that the State Agency was CMS's agent throughout the survey process; otherwise, the July 27, 2001 notice from CMS was defective since it did not include the findings and conclusions required to be responded to "and other requirements that CMS argues should have been met." Concourse Br. at 16. Concourse reasoned that in both instances the Statement of Deficiencies came from the State Agency, in its capacity as agent for CMS, and it reiterated that the ALJ could not reasonably conclude that Concourse was obligated to respond to the State Agency's first Statement of Deficiencies but that the second Statement of Deficiencies did not generate a right of appeal. Concourse Br. at 20. Thus, Concourse insisted, its request for review, filed within two weeks of receipt of this "revised Statement of Deficiencies," was timely filed.

As an initial matter, there is no merit in Concourse's argument that CMS's July 27^th Notice was deficient because it did not itemize the deficiencies upon which the proposed remedies were based. The Board has previously addressed this issue in Birchwood Manor Nursing Center, DAB No. 1669 (1998). There, the Board determined:

Section 498.20(a) provides that HCFA will mail notice of an initial determination "setting forth the basis or reasons for the determination, the effect of the determination, and the party's right to reconsideration, if applicable, or to a hearing." In its August 23, 1996 letter, HCFA stated that it concurred with the survey findings listed on the statement of deficiencies. The letter noted that the survey report . . . had been forwarded to Petitioner. . . . The survey report describes the surveyors' specific findings with respect to individual residents on which the overall finding of non-compliance was based. Based on this information, Petitioner could easily have identified any findings it was contesting as well as given reasons for contesting these findings. Petitioner did not point to any finding in the Statement of Deficiencies as unclear. Thus, HCFA's notice of its initial determination clearly satisfied the requirements of section 498.20(a).

Id. at 14-15 (footnotes omitted).

Here, CMS's July 27^th notice plainly referenced both the March 21, 2001 survey and the July 7^th revisit as well as the deficiencies revealed in those surveys. Concourse could easily identify the deficiencies in issue and, apparently, had done so by initiating the IDR process. CMS independently assessed the deficiencies found by the State Agency and issued the July 27^th notice imposing penalties on CMS's, not the State Agency's, authority. Thus, the July 27^th notice was sufficient as an initial determination that started the 60-day period within which Concourse was required to file its request for hearing. ⁽⁴⁾

Concourse also maintained that the ALJ's reliance on Cary and Menlo Park, as support for her conclusion that the second Statement of Deficiencies was not a revised determination giving rise to a new appeal right, was erroneous. Citing 42 U.S.C. � 1395ff(b)(1), Concourse asserted that the ALJ was "wholly off the mark" when she determined that there is no right of appeal after the IDR process as well as when she determined that reconsideration occurs only if CMS reopens its decision.

Concourse's reliance on 42 U.S.C. � 1395ff(b)(1) (section 1869(b)(1) of the Act) is entirely misplaced. Section 1869 does not apply to providers such as Concourse who are found to be not in substantial compliance with program requirements. Rather, section 1869 is concerned with "determinations of whether an individual is entitled to benefits under part A or part B" of the Medicare program.

In addition, we reject Concourse's assertion regarding the rationales of Cary and Menlo Park. Specifically, the Board in Cary found that participation in a state IDR process does not toll the federal appeal process. The Board noted and affirmed the ALJ's determination that the state IDR process was separate from and in addition to the appeal rights provided to facilities under federal regulations. Thus, the petitioner in Cary could not reasonably conclude that participation in the state process somehow tolled the federal appeal process. Cary at 28. Further, as the Board in Menlo Park noted, the federal regulation at 42 C.F.R. � 488.331(b)(1) explicitly provides that "failure . . . to complete informal dispute resolution timely cannot delay the effective date of any enforcement action against the facility." Consequently, participation in an IDR process did not toll the time for filing a request for a hearing. Menlo Park at 8. ⁽⁵⁾

We also reject Concourse's assertion that the Statement of Deficiencies received after the state IDR process constituted "a revised Statement of Deficiencies" for purposes of tolling the deadline for its request for a hearing. As the ALJ noted, the initial determination is the triggering document in the appeal process. The ALJ recognized that the IDR process, which here gave rise to the document Concourse is depicting as a "revised determination" -

is separate from and independent of the initial and reconsidered determinations which give rise to hearing before an ALJ. 42 C.F.R. � 498.40(a) affords "an affected party entitled to hearing under � 498.5" the right to file a request for hearing. Section 498.5 sets out a party's appeal rights, including the right to appeal an initial determination, but the appeal must be filed within 60 days of the party's receipt of the notice of the initial determination. 42 C.F.R . � 498.40(a)(2). Petitioner concedes that the July 27^th notice letter was an initial determination. . . . Subpart B of 42 C.F.R. Part 498 addresses those "Initial, Reconsidered, and Revised Determinations" which give rise to appeal rights. An initial determination is binding unless reconsidered in accordance with 42 C.F.R. � 498.24, reversed or modified by hearing decision in accordance with 42 C.F.R. � 498.78, or revised in accordance with 42 C.F.R. �� 498.32 or 498.100. 42 C.F.R. � 498.20(b). Only certain types of initial determinations, not applicable here, may be reconsidered:

any initial determination that affects a prospective provider or supplier, or a hospital seeking to qualify to claim payment for all emergency hospital services. . . .

42 C.F.R. � 498.22(a). With respect to "revised determinations," the regulations authorize CMS, on its own initiative, to reopen an initial or reconsidered determination within 12 months of the date of notice of the initial determination. 42 C.F.R. � 498.30. The determination issued following the reopening is then referred to as a "revised determination."

ALJ Decision at 4-5.

Concourse failed to provide any cogent reason why the ALJ's analysis of this issue is erroneous. In particular, none of Concourse's arguments on appeal explain its failure to file a timely request for hearing in response to the July 27, 2001 determination, which identified itself as an initial determination and set forth the clear and unambiguous regulatory requirements for filing such a request for hearing.

Accordingly, we affirm and adopt FFCL 2.

3. Petitioner did not show good cause for its untimely appeal.

Before the ALJ, Concourse argued that it should have been granted an extension of time to file its request for a hearing because its misinterpretation of the regulation constituted good cause for its untimely filing. The ALJ noted that the Board in Cary had rejected a similar argument, ruling that inaction in filing a request for hearing was not justified where the regulatory timeframe for appeal was clear and the notice letter spelled out in detail the facility's appeal rights. Further, in Menlo Park, the Board held that explicit, unambiguous language rendered unpersuasive the facility's argument that it had been confused by CMS's action. Here, the ALJ found that Concourse was no more justified in its mistaken beliefs (regarding the timing of an appeal given its involvement in the IDR process) than the petitioners in Cary and Menlo Park. Consequently, the ALJ found no good cause for an extension of Concourse's opportunity to file its request for a hearing. ALJ Decision at 5-6.

On appeal, Concourse asserted that its choice to not file a request for hearing until after the reconsidered determination was received was made with an eye toward sparing the government a potentially unnecessary appeal. Further, Concourse characterized its delay as consistent with judicial economy, specifically the notion of not filing an appeal of an action still pending in a lower forum. Concourse stated that "it would be unfair to have a unique and special system of multiple jurisdiction in matters pending in the CMS Departmental Appeals Board (sic) as a special area of practice different than the practice in all other federal agencies and courts." ⁽⁶⁾ Concourse Br. at 25-26.

Concourse contended that the -

only argument that is being made is that the filing of the request for a hearing being made after the end of the IDR process should be considered timely since . . . [Concourse] participated in a federally provided process which should either actually toll the time to file the formal appeal, or equitably toll the sixty day period to file the formal appeal to CMS. This is no different than is extant in many different contexts. Statutes of Limitation are routinely tolled while authorized processes are in place in the matter.

Concourse Br. at 26-27 (emphasis in original).

Concourse concluded by arguing:

There is no appropriate public policy basis to engraft on these proceedings, procedures that are alien to the manner and procedure of civil proceedings in this country so as to have to make unnecessary filings when the system contemplates each process to take place in a coordinated manner.

Concourse Br. at 29.

In effect, Concourse's arguments here are merely a general restatement of its earlier arguments for tolling the time for an appeal. There is no need to revisit extensively our analysis of those arguments. While there is merit to the concept that IDR may narrow disputed issues and/or avoid the need for a more formal hearing, the regulation sought to balance this with the concern that IDR not be used to delay enforcement. 54 Fed. Reg. At 56,224 (November 14, 1994). Moreover, both interests can be accommodated by granting reasonable but short delays of ALJ proceedings where it appears IDR might be productive, after a timely appeal has been filed. As we have discussed above, Concourse's participation in an IDR process did not toll the time for filing a request for hearing. CMS's July 27^th Notice was not defective and explicitly provided Concourse with a definitive time frame in which to request a hearing. Concourse failed to take advantage of this opportunity either by requesting a hearing or requesting an extension of the time in which to file such a request. Accordingly, we affirm and adopt FFCL 3.

Concourse Was Not Denied Due Process

Concourse argued it had been denied due process because the ALJ had issued her decision on July 2, 2002, seven days before Concourse was allegedly due to file a brief responding to CMS's reply brief. Concourse cited a May 31, 2002 letter to the ALJ in which counsel for Concourse summarized an agreement between the parties whereby Concourse would have an additional 30 days from June 9, 2002 to file a reply brief. Concourse Appeal Ex. 1. Concourse maintained that, in the past, the ALJ had always accepted the briefing schedules worked out by the parties including adjustments to such schedules. Concourse Br. at 30.

On January 18, 2002, the ALJ issued her initial Order in this case. On March 19, 2002, CMS filed its Motion to Dismiss Concourse's appeal as untimely. Concourse answered and CMS, as the moving party, replied.

We have found no evidence in the record before us, nor has Concourse cited any evidence, that the ALJ established a formal briefing process for the CMS Motion to Dismiss. ⁽⁷⁾ Moreover, nothing in the applicable regulations provides for a reply to a reply brief. Consequently, we have no basis for determining that Concourse was entitled to an opportunity to reply to CMS's reply to Concourse's response to the Motion to Dismiss, much less that there was a due date of July 9^th for such a reply.

Moreover, even if CMS consented to Concourse's filing a sur-reply, Concourse could not reasonably assume that the ALJ agreed with the parties' proposed briefing schedule. Concourse had already had an opportunity to respond to the CMS Motion. The timeliness question was a limited legal issue, upon which the ALJ could be expected to act quickly. While it may have been better practice for the ALJ to issue her decision after receiving Concourse's sur-reply (or to notify the parties that she did not accept their proposed briefing schedule), Concourse was not denied due process when she failed to wait for its unsolicited brief prior to issuing her decision.

Conclusion

Based on the preceding analysis, we sustain the ALJ Decision in its entirety and affirm and adopt FFCLs 1-3.

Judith A. Ballard

Donald F. Garrett

M. Terry Johnson
Presiding Panel Member

1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001). We use "CMS" in this decision unless quoting documents that refer to HCFA.

2. CMS's July 27^th Notice stated the date of the resurvey as July 7^th. The ALJ Decision used that date as well. See CMS Ex. A; ALJ Decision at 1-2.

3. In reviewing this case, although we did not discuss in detail every aspect of every single argument presented, we have nevertheless considered all of the points in the parties' briefs in reaching the conclusions set forth here.

4. Concourse also argued generally that the CMS notice and instructions in its July 27, 2001 letter were so "woefully inadequate" that they violated Concourse's due process rights. Concourse Br. at 19. As our discussion above indicates, we reject Concourse's characterization of the notice provided by the July 27, 2001 letter and, consequently, we reject its due process argument as well.

5. Concourse also characterized the Act as an ambiguous "patchwork" and argued that the ALJ committed error by failing to construe the ambiguities in the Act and implementing regulations that she allegedly found against CMS, as creator of the ambiguities. Concourse Br. at 14-16. However, Concourse did not point to any part of the ALJ Decision in which the ALJ stated that the statute or regulations were ambiguous. As our discussion above reflects, the ALJ found the applicable legal standards to be unambiguous.

6. Concourse misstates the Departmental Appeals Board's status within the United States Department of Health and Human Services. The Departmental Appeals Board is in the Immediate Office of the Office of the Secretary and Board Members are appointed by the Secretary to provide an impartial, independent review of disputes arising in a wide range of Department programs. CMS is a distinct sub-agency within the Department and has no authority over the Board.

7. The March 19, 2002 cover letter accompanying the CMS Motion to Dismiss referenced the ALJ's initial Order (where, at � 2, the ALJ noted that within 60 days of the Order, the parties could file any of a variety of documents, including a Motion to Dismiss). CMS's letter continued, stating that the parties had agreed that Concourse would have 30 days to answer the Motion and CMS would then have 15 days to reply.