GAB Decision 267
March 25, 1982 Tennessee Department of Public Health -- Shady Lawn
Health Care Center; Docket Nos. 81-88-TN-HC, 82-23-TN-HC Ford, Cecilia;
Garrett, Donald Settle, Norval
In these cases the Tennessee Department of Public Health (State,
Tennessee) appealed determinations by the Health Care Financing
Administration (HCFA) that Tennessee was not entitled to federal
financial participation (FFP) in payments to Shady Lawn Health Care
Center (Shady Lawn) for services to Medicaid recipients during periods
when that facility was not validly certified as a provider under the
Medicaid statute and regulations. /1/ These cases are sequels to Docket
No. 80-96-TN-HC, where we held that Tennessee had issued an invalid
certification to Shady Lawn for the period April 1, 1979 to September
30, 1979. Decision No. 143, January 26, 1981.
The Board did not know at the time it issued Decision No. 143 that on
September 10, 1979, Tennessee had notified Shady Lawn that the State
proposed to cancel Shady Lawn's certification. The State reviewed the
proposed cancellation under the administrative process required by State
law, and the Commissioner of Public Health cancelled the certification,
effective June 15, 1980.
In No. 81-88-TN-HC, the State appealed the disallowance of $143,250
in FFP for the period October 1, 1979 through June 26, 1980. On January
20, 1982, HCFA modified both this disallowance and also the one which
was appealed in No. 80-96. /2/ HCFA conceded tha the State was entitled
to FFP during the period of administrative review from September 10,
1979 through March 31, 1980. Conversely, HCFA continued (2) to disallow
FFP during the period April 1, 1979 through September 9, 1979 and April
1, 1980 through June 26, 1980. In No. 82-23-TN-HC, the State appealed
that part of HCFA's determination which in essence disallowed FFP during
the period April 1-September 9, 1979.This was also part of the period
involved in No. 80-96.
These appeals concern the availability of FFP for payments by
Tennessee to Shady Lawn during periods when its cancellation was or
might have been undergoing the administrative review process. HCFA
having agreed to pay FFP from October 1, 1979-March 31, 1980, the
remaining issue in No. 81-88 was whether Tennessee was entitled to FFP
for the period April 1, 1980 through June 15, 1980. /3/ In No. 82-23,
there were two issues: 1) whether the Board can again review a
disallowance it previously upheld, since HCFA had modified the
disallowance based on information not known to the Board at the tiem of
its prior decision; and, if so, 2) whether Tennessee was entitled to
FFP for the period April 1, 1979 through September 9, 1979.
The Board detemines that it can review the issues raised in No.
82-23. The Board upholds the disallowances at issue in both appeals.
In No. 81-88, this decision is based on the State's appeal; responses
by HCFA to the appeal and by both parties to the Board's request for
briefing on the applicability of Ohio Department of Public Welfare,
Decision No. 173, April 30, 1981, and Colorado Department of Social
Services, Decision No. 187, May 31, 1981; the State's reply brief, and
a further reply by HCFA dated February 25, 1982. In No. 82-23, there is
only the State's appeal. The parties did not object to the
consolidation of the two cases in this decision. /4/
Discussion
Board review of disallowance previously upheld
HCFA contended that review of the earlier disallowance upheld in No.
80-96, even as modified (which is the determination at issue in (3)
82-83), was barred by administrative res judicata because of the Board's
January 1981 decision (No. 143). Response in No. 81-88, p. 5.
Tennessee argued that by its modification HCFA had reopened the earlier
disallowance. As for res judicata, Tennessee contended that the Board
could reject or qualify that doctrine if fairness or public policy
required, as here.
The regulations under which the Board has operated since September
30, 1981 empower us to reconsider a Board decision where a party
promptly alleges a clear error of fact or law. 46 Fed. Reg. 43816,
43820 (August 31, 1981). Prior to that, the regulations did not
explicitly provide that the Board could reconsider its own decisions,
but the Board Chair declared that the Board had inherent discretionary
authority to do so in exceptional circumstances, considering factors
such as the nature of the error or omission prompting the
reconsideration request, the length of time since the original decision
was issued, and any harm that might be caused by reliance on the
decision. Ruling of September 11, 1980, granting request for
reconsideration of the June 17, 1980 decision in Florida Department of
Health and Rehabilitative Services, Docket Nos. 79-68-FL-HC and
80-88-FL-HC. For example, in Florida, reconsideration was justified
based on HCFA's post-decision memorandum informing the Board that Agency
policy had not been accurately presented by HCFA during the appeal.
We find the January 20, 1982 modification to be analogous to HCFA's
post-decision memorandum in Florida. Had the Board known of the
decertification appeal prior to issuing Decision No. 143, it would have
had to deal with the impact of that appeal on the issue of FFP during
the period April 1, 1979 through September 9, 1979.
Accordingly, we have reviewed the parties' contentions with respect
to the period April 1, 1979 through September 9, 1979. Our discussion
on the merits follows.
FFP prior to decertification appeal
Tennessee argued that it should be allowed FFP for the period prior
to notifying Shady Lawn of the proposed cancellation of its
certification (April 1-September 9, 1979) because during most of that
period Tennessee believed the certification to be valid. Tennessee
claimed this belief persisted until July 1979 at which time HCFA made
clear that it was going to disallow for the period from April 1 because
the certification was invalid. Tennessee alleged it needed the time
from July to September 10 to prepare a 14 page Notice of Proposed
Cancellation. Tennessee also contended that because State Law required
a hearing prior to termination, it could not have discontinued payments
until it issued the notice, providing a hearing to Shady Lawn. (4) HCFA
countered that Tennessee was constructively charged with the knowledge
that its certification of Shady Lawn on April 1, 1979 was invalid.
Thus, HCFA argued, Tennessee did not act promptly to initiate
administrative review of the non-valid certification status of Shady
Lawn which began April 1, 1979.
We find that there is no basis for the State to receive FFP for a
period when Shady Lawn was not validly certified and its proposed
decertification was not in the process of administrative review
(appeal). This is consistent with MSA-PRG-11, the basis of the Board's
decisions in Ohio and Colorado, supra. /5/ PRG-11 makes FFP available
where certification has not been renewed provided State law continues
certification pending appeal. In a situation such as this, where a
state has improperly certified a facility, PRG-11 is not operative until
a state begins the administrative review process. See, e.g., another
Colorado case, Decision No. 225, October 30, 1981, where the Board
denied FFP for a period when Colorado had issued an extension of a
facility's certification and that extension was subsequently determined
to be invalid. Page 8. Colorado and Tennessee have similar state laws
regarding administrative review.
Accordingly, we uphold the disallowance for the period April 1, 1979
to September 10, 1979.
FFP after 12 months
In No. 81-88, Tennessee asserted that it was entitled to FFP from
April 1, 1979 through June 15, 1980 -- a total of 14 months (actually,
only the period from October 1, 1980 through June 15, 1980 was at issue
in No. 81-88). At the same time, it acknowledged that the Board had
decided in Ohio and Colorado (Decisions No. 173 and 187) that FFP was
available for a maximum of 12 months from nonrenewal or termination.
Accordingly, here FFP would not be available beyond March 31, 1980, the
end of the 12 month period from the expiration of the last valid
certification. Tennessee did not attempt to distinguish this case from
those earlier ones, and did not even suggest that the earlier rulings
were not correct.
Accordingly, we uphold the disallowance for the period April 1, 1980
to June 26, 1980. /6/
(5) Conclusion
For the foregoing reasons, we uphold the disallowances in both
appeals as modified by HCFA's letter of January 20, 1982. /1/ Since
1965, HCFA has been authorized under Title XIX of the Social
Security Act to pay FFP for care of and services to Medicaid recipients
by duly certified facilities (providers). Section 1902(a) of Title XIX,
42 U.S.C. 1396a. The statutory requirements are implemented in 42 CFR
Parts 431, 441, and 442. /2/ The date typed on the HCFA letter
is January 20, 1981, and the Tennessee appeal also refers to that date,
but from the context is it obvious that the correct date is January 20,
1982. See also Tennessee's Reply Brief in Docket No. 81-88-TN-HC, which
uses the 1982 date. /3/ Tennessee at first appeared to be
appealing the entire disallowance, but when it filed its completed
appeal it limited itself to the period April 1, 1980 through June 15,
1980 (effective date of the decision by its Commissioner of Public
Health cancelling Shady Lawn's certification). /4/ Counsel for the
State expressed the reservation that by agreeing to
consolidation the State did not waive any rights it might have. The
issue on the merits in No. 82-23 was briefed by both sides during the
progress of No. 81-88. When asked if the State had any additional
arguments, counsel for Tennessee indicated that there were none.
/5/ PRG-11 is a Program Regulation Guide for the Medical Services
Administration issued by HCFA's predecessor in December 1971. /6/ The
State already conceded that it was not entitled to FFP after
June 15, 1980.
OCTOBER 22, 1983