SUBJECT: Fountain Lake Health & Rehabilitation, Inc.,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Fountain Lake Health & Rehabilitation, Inc. (Fountain Lake) appealed the October 14, 2004 decision of Administrative Law Judge (ALJ) Steven T. Kessel dismissing Fountain Lake's hearing request. Fountain Lake Health & Rehab, DAB CR1232 (2004) (ALJ Decision). The ALJ concluded that Fountain Lake had no right to a hearing because, after Fountain Lake filed its hearing request, the Centers for Medicare & Medicaid Services (CMS) rescinded the only remedy it had imposed, a civil money penalty (CMP). ALJ Decision at 2-4.

Fountain Lake argues that it has a right to a hearing because, under state regulations, CMS's finding of an immediate jeopardy level deficiency impedes Fountain Lake's ability to expand its facility.

For the reasons explained below, we affirm the ALJ Decision.

Standard of Review

The only issue before the Board is a disputed issue of law. The applicable standard for review of questions of law is whether the ALJ decision is erroneous. See, e.g., Lake Cook Terrace Nursing Center, DAB No. 1745 (2000).

Factual Background

On December 19, 2003, the state survey agency conducted a survey of Fountain Lake, a skilled nursing facility (SNF). Based on the state survey agency's finding, CMS notified Fountain Lake that CMS was imposing a per instance CMP of $7,500 for alleged past noncompliance with 42 C.F.R. �� 483.25 (tag F309, quality of care) and 483.75 (tag F490, administration). CMS letter of February 17, 2004 attached to Fountain Lake's Request for Hearing. The resulting deficiencies were cited under F698, the tag for past noncompliance. State Operations Manual (SOM) � 7510(B). CMS cited each of these deficiencies at the "J" level of noncompliance, i.e., isolated immediate jeopardy.

On April 5, 2004, Fountain Lake requested an ALJ hearing.

On September 17, 2004, CMS notified Fountain Lake that it was rescinding the CMP and reducing the level of noncompliance for tag F698/F309 (quality of care) from "J" to "G" (isolated actual harm that is not immediate jeopardy). ⁽¹⁾ CMS letter of September 17, 2004, attached to CMS Motion to Dismiss. CMS did not reduce its level of noncompliance finding for tag F698/F409 (administration); thus, that finding remained at the immediate jeopardy level.

CMS moved to dismiss Fountain Lake's hearing request on the ground that the only remedy imposed had been rescinded. The ALJ granted CMS's motion. ⁽²⁾

Fountain Lake excepted to all three FFCLs in the ALJ Decision, which are set out below:

1. No right to a hearing exists where there is no remedy determination.

2. Petitioner has no right to a hearing because CMS rescinded its remedy determination.

3. I dismiss Petitioner's hearing request because Petitioner has no right to a hearing.

ALJ Decision at 2-3.

The ALJ concluded that Fountain Lake had no right to a hearing because CMS had rescinded all appealable remedies. The ALJ noted that administrative law judges and the Board have repeatedly ruled that nursing facilities have no right to a hearing on a finding of noncompliance if CMS has rescinded the remedies previously imposed. ALJ Decision at 3 citing Lakewood Plaza Nursing Center, DAB No. 1767 (2001); Schowalter Villa, DAB No. 1688 (1999); Arcadia Acres, DAB No. 1607 (1997); Rafael Convalescent Hospital, DAB No. 1616 (1997).

These decisions are based on the statutes and regulations governing hearings for SNFs and nursing facilities (NFs). Under section 1819(h) of the Social Security Act (Act), the Secretary may terminate a provider agreement and/or impose alternative remedies, such as CMPs and denial of payment for new admissions (DPNA), when a SNF fails to meet applicable legal requirements. Section 1866(h)(2) of the Act provides a right to a hearing, inter alia, for a provider dissatisfied with a determination by the Secretary under section 1866(b)(2) to terminate its provider agreement in certain circumstances, including where the Secretary has determined that "the provider fails to comply substantially" with the provisions of its agreement or with applicable legal requirements.

In 42 C.F.R. Parts 488 and 498, CMS extended the actions giving rise to a right to a hearing under section 1866(h)(2) of the Act to include findings of noncompliance leading to the imposition of alternative remedies. 59 Fed. Reg. 56,116, 56,158 (November 10, 1994); 42 C.F.R. �� 488.408(g); 498.3. Section 488.408(g) provides that "a facility may appeal a certification of noncompliance leading to an enforcement remedy." Simultaneously, CMS promulgated regulatory provisions defining what constitutes an appealable administrative action and an enforcement remedy for SNFs and NFs. Under section 498.3 providers are entitled to request a hearing where CMS has made an adverse initial determination of a kind specified in 42 C.F.R. � 498.3(b). 42 C.F.R. � 498.3(a)(1). Section 498.3(b)(13) defines as an initial determination --

[w]ith respect to a SNF or NF, a finding of noncompliance that results in the imposition of a remedy specified in � 488.406 of this chapter, except the State monitoring remedy.

Among the enforcement remedies specified in section 488.406 are CMPs. 42 C.F.R. � 488.406(a)(3). Section 498.3(d)(10)(ii) describes actions that are not initial determinations including "a determination by CMS as to the facility's level of noncompliance." ⁽³⁾

In Schowalter Villa, DAB No. 1688, CMS (then the Health Care Financing Administration) rescinded a CMP and a DPNA after Schowalter had requested a hearing. The facility pressed its request for a hearing on the ground that it was concerned about the effect of the deficiency citations on its compliance record. The Board quoted with approval the ALJ's conclusion that the express language of the regulation at section 498.3(b)(13) had resulted in uniform holdings that "a petitioner loses its right to a hearing if HCFA rescinds the remedies it previously imposed" and that no right to a hearing survives merely to "correct [a] compliance record" upon rescission of all remedies listed in 42 C.F.R. � 488.406. Schowalter Villa, DAB No. 1688, at 2, quoting Schowalter Villa, DAB CR568, at 2-3 (1999); see also, The Lutheran Home - Caledonia, DAB No. 1753 (2000); Country Club Center II, DAB No. 1614 (1997).

In the preamble to its enforcement regulations, CMS expressly rejected comments requesting hearings for facilities found not to be in substantial compliance where no remedy (or only a minor remedy such as state monitoring) was imposed. 59 Fed. Reg. at 56,158. CMS concluded that, absent a remedy being imposed, the deficiency findings alone do not result in harm such as to create a right to hearing. Id.

On appeal, Fountain Lake asserts that CMS did impose a remedy on it. Fountain Lake points to consequences under state law resulting from CMS's immediate jeopardy citation for noncompliance with 42 C.F.R. � 483.75. P. Br. at 5. Fountain Lake explains that Arkansas regulations provide:

No Nursing Home will be awarded a permit of approval if the existing facility has had an H level or higher deficiency according to the Office of Long Term Care in any inspection within the last 12 months preceding the date the application is placed under review or from the date the application is placed under review until the final decision of the Health Services Commission.

P. Appeal Br. at 5 citing http://www.arhspa.org/rules_regs.html.

Fountain Lake alleges that -

[it] has purchased land and is in the processing of bidding for the new construction of a facility. This facility will not be awarded a permit of approval due to the H level or higher deficiency of this survey.

Id.

Fountain Lake's argument lacks merit. Even if we assume that Fountain Lake suffered specific adverse consequences ancillary to CMS's imposition of a deficiency citation at the immediate jeopardy level, Fountain Lake has not shown how such a consequence constitutes "the imposition of a remedy specified in � 488.406." Section 488.406 describes remedies such as temporary management, denial of payment, CMPs, DPNAs, transfer of residents, closure of the facility, and directed plans of correction or in-service trainings. Section 488.406(a)(9) refers to "alternative and additional state remedies approved by CMS," but section 488.406(c) provides that such additional state remedies must be specified in the state's title XIX state plan. Fountain Lake did not show or even allege that the cited provision of the Arkansas administrative code was part of its state plan and, therefore, we do not reach the question of whether the operation of such a code provision would constitute the imposition of a remedy specified in section 488.406.

Conclusion

For the reasons discussed in our analysis, we affirm the ALJ Decision and affirm and adopt FFCL Nos. 1 through 3 set out therein.

Judith A. Ballard

Cecilia Sparks Ford

Donald F. Garrett
Presiding Board Member

1. Section 7510A of the State Operations Manual provides, "If past noncompliance is cited, a civil money penalty must be imposed; past noncompliance may not be cited if a civil money penalty is not imposed." One of the purposes of the SOM is to assure the uniform application of survey standards and remedies. See, 42 C.F.R. � 488.26(c)(4). In response to our inquiry about the relevance of this provision, CMS relied on 42 C.F.R. � 488.430 and 42 U.S.C. � 1395i-3(h)(1)-(2). It stated that these provisions give it discretion to impose (or not impose) a CMP for past noncompliance and "[take] precedence over the SOM." Because Fountain Lake has no right to a hearing, we do not reach this issue.

2. The heading for the ALJ Decision referred to two cases: C-04-286 and C-04-339. Docket No. C-04-286 concerned the survey discussed in the ALJ Decision. Docket No. C-04-339 concerned alleged present noncompliance identified in surveys conducted February 11, March 11, and March 31, 2004. The ALJ consolidated these cases. ALJ Order dated June 9, 2004. The parties settled the issues presented in C-04-339 prior to the issuance of the ALJ Decision. CMS letter to Board dated May 25, 2005.

3. Section 498.3(d)(10)(ii) does not preclude a hearing under the circumstances described in 42 C.F.R. � 498.3(b)(14), which defines as an initial determination "the level of noncompliance found by CMS in a SNF or NF but only if a successful challenge on this issue would affect (i) the range of civil money penalty amounts that CMS could collect . . . or (ii) a finding of substandard quality of care that results in the loss of approval for a SNF or NF of its nurse aide training program." Since there is no CMP at issue here and Fountain Lake has not indicated that the deficiency citation has resulted in the loss of a nurse aide training progrm, this exception is not applicable.