GAB Decision 489
Docket No. 83-83
December 30, 1983
Indiana Department of Public Welfare;
Ballard, Judith; Garrett, Donald Ford, Cecilia
The Indiana Department of Public Welfare (State) appealed a
disallowance of $181,290.52 taken by the Health Care Financing
Administration (Agency) under section 1903(g) of the Social Security Act
(the Act). The Agency based the disallowance on its determination that
the State failed to meet the statutory and regulatory utilization
control requirements for certain Medicaid patients in skilled nursing
and intermediate care facilities during the period April 1, 1982 through
June 30, 1982. The Agency alleged that there were violations of the
requirements for timely and valid physician certifications and
recertifications and for timely establishment and updating of plans of
care. Sections 1903(g)(1) (A) and (B).
During the pendency of this appeal, the State submitted documentation
for some of the patients for which the Agency had alleged violations and
the Agency then withdrew the portion of the disallowance for patients in
three facilities, reducing the amount of the disallowance to
$112,446.42.
We conclude that the disallowance should be sustained in the amount
as reduced. Our reasons are provided below. This decision is based on
the written record, including the State's response to the Board's Order
to Show Cause and a transcript of oral arguments made by the parties in
a telephone conference call.
Statutory and Regulatory Background
Section 1903(g) of the Act requires that the state agency responsible
for the administration of a state's Medicaid plan under Title XIX of the
Act show to the satisfaction of the Secretary that the state has an
"effective program of control over utilization of" long-term inpatient
services in certain facilities. This showing must be made for each
quarter, or the federal medical assistance percentage (FMAP) requested
for amounts paid by the state of long-term care services will be
decreased according to the formula set out in section 1903(g)(5).
Section 1903(g) provides that the showing must include evidence that --
(2) (A) in each case for which payment is made under the State plan,
a physician certifies at the time of admission . . . (and recertifies,
where such services are furnished over a period of time, in such cases,
at least every 60 days . . .) that such services are or were required to
be given on an inpatient basis because the individual needs . . . such
services; and
(B) in each such case, such services were furnished under a plan
established and periodically reviewed and evaluated by a physician;
* * *
These statutory requirements were implemented at 42 CFR 456.260 and
456.280 (1981) for skilled nursing facilities (SNFs). In addition,
section 456.652 specifies how states can make a satisfactory showing.
Section 456.655 provides for validation of the showing by the Agency, as
required by section 1903(g)(2), and says that the showing will not be
satisfactory if the validation survey demonstrates that any of the
requirements of sections 456.652(a)(1) through (4) were not met during
the quarter for which the showing was made.
Statement of the Issues
The State's arguments raised the following issues:
whether there were violations of the section 1903(g) requirements;
whether the State has an "effective program" of utilization control
regardless of any violations shown to exist;
whether the disallowance should be reversed because the Agency failed
to notify the State at the time of the preliminary findings about all
the violations later included in the disallowance;
whether alleged deficiencies in the process followed by the federal
reviewers when conducting the validation survey are a basis for
reversing the disallowance;
whether the Board should provide the State with an opportunity for
discovery and with an opportunity for an evidentiary hearing;
whether the State should receive a hearing before an Administrative
Law Judge (ALJ) under 5 U.S.C. 556;
whether the recalculation of the penalty should be upheld.
(3) Discussion
Whether there were violations of the section 1903(g) requirements
Federal reviewers performed a validation survey of 10 SNFs during
September 1982. The notice of disallowance included a list of the
facilities and the names of the patients for whom the Agency alleged
violations of sections 1903(g)(1)(A) and (B). The list also noted
briefly the nature of the violation for each patient. In June 1983 two
State employees retraced the steps taken by the federal reviewers during
September 1982. The State personnel went to each of the facilities
included in the federal survey and reviewed the facilities' records;
the State personnel concluded that there were only eight violations
rather than about 50, as the Agency alleged. State's Brief, pp. 5-6.
The State alleged that there is a factual dispute about these
violations. The State submitted as part of its appeal file affidavits
from the State personnel, the survey reports created by the State
personnel, and patient records from the facilities which allegedly
supported the State personnel's conclusions.
The Agency reviewed the State's submission and withdrew three
facilities from the disallowance on the basis of the State's
documentation. The Agency, however, maintained that a disallowance
should be taken for violations in six facilities because the State had
admitted violations in two facilities, and the Agency believed that the
patient records submitted by the State for four facilities did not show
compliance with the statutory requirements. The Agency provided
specific reasons why it did not accept the validity of the records.
In its Reply Brief and response to an Order to Show Cause issued by
the Board, the State did not respond specifically to the Agency's
reasons, but alleged generally that the documentation it had submitted
with its appeal file showed that the recertifications and plans of care
were timely and valid. The State did not specifically rebut the
statements made by the Agency, nor did the State make any arguments
about why the documents it submitted met the utilization control
requirements. During the oral arguments, the Board specifically asked
the State what facts it believed were in dispute. The State pointed to
the conclusions made by its own personnel that there were no violations,
but still did not explain how the conclusions were supported by the
patient records. Although the State said during the oral arguments that
the affidavits of the State personnel indicated "patient by patient
where the federal surveyors were in error" (Transcript of Oral Argument,
p. 7), the affidavits simply allege generally for each of the four
facilities that the violations did not exist. For example, for Patient
Clara V. in Americana Healthcare facility, the Agency stated that the
pertinent recertifications were invalid. The Agency's specific reason
was that the recertifications did not clearly show what level of care
was being certified because (4) SNF had been crossed out, ICF entered by
hand, and then crossed out also, leaving no statement of the level of
care. The States provided a copy of the recertifications, an
examination of which verifies the Agency's allegation about the level of
care being unclear. The State reviewers' report simply says "timely."
The State did not explain why the alterations were made or argue that
anything on the recertifications showed what level of care the patient
should receive.
We compared the Agency's specific statements about why it did not
accept the documentation for the alleged violations in the four
facilities with the documents submitted by the State. The State did not
provide specific arguments about why these documents were sufficient for
any of the patients in dispute. We find that, for at least one patient
in each facility, the patient records submitted by the State do not meet
statutory and regulatory requirements for timely and valid
certifications and recertifications and plans of care. /1/ Our specific
findings are set out in Appendix A. In addition, the State admitted
that there were violations in two facilities. State's Brief, p. 5;
Exhibits G and N. Therefore, we conclude that the record in this appeal
supports the Agency's findings that at least one violation occurred in
each of six facilities.
(5) Whether the State has an "effective program" of utilization control
regardless of any violations shown to exist
The State argued that the Agency is too rigid in taking a position
that the State has not made a satisfactory showing if there is even one
violation of the requirements of section 1903(g), and that the existence
of violations does not mean that the State does not have an "effective
program" of utilization control. Moreover, the State argued that the
Agency's policy has no relation to patent needs or proper management of
long-term care costs, and that nothing in the statute's legislative
history equates "perfection" in meeting the requirements with whether
the State has an effective system of utilization control. State's Reply
Brief, pp. 1-3.
This Board has consistently upheld as a reasonable interpretation of
the statute the Agency's position that the Secretary lacks the
discretion to waive a penalty for violations of section 1903(g). The
Board based this conclusion on clear statutory language, the statute's
legislative history, and the fact that the Agency has consistently
interpreted the statute in this manner. North Carolina Department of
Human Resources, Decision No. 273, March 31, 1982, p. 5. /2/
(6) The statute sets out a relationship between the requirements and
patient needs. For example, section 1903(g)(1)(A) requires a physician
to certify and recertify "in each case" that the services provided
were
required because the "individual needs . . . such services." This
requirement is not ambiguous and nothing in the legislative history
contradicts the statutory language. /3/ Although we might speculate
about what the word "effective" should mean, Congress has stated what
it
meant when it enacted language in section 1903(g)(1) saying that a
satisfactory showing that a state has an effective program "must include
evidence that in each case" certain requirements are met. Moreover, the
statute provides that the Secretary make regulations setting out how
fulfillment of the requirements must (7) be documented. Section
1903(g)(1)(A). The Agency's regulation at 42 CFR 456.652(a) implements
the statute by specifically stating that the requirements must be met
for each recipient in order for there to be a satisfactory showing. /4/
The State argued that the alleged errors were in documents generated
by the SNFs rather than by the State itself, and therefore the State
should not be held to such a strict standard. However, this Board his
considered such arguments in the past, Idaho Department of Health and
Welfare, Decision No. 250, January 28, 1982, and rejected them.
Congress placed the responsibility on the states to maintain programs
which controlled utilization of long-term services. As the Agency
argued here, the states must have methods which serve as incentive to
the facilities to meet the requirements of section 1903(g) and maintain
the appropriate documentation. Transcript, p. 4.
Thus, in the face of an Agency policy which is based on a reasonable
interpretation of the statute and which has been consistently
implemented by the Agency, and because we find that there was at least
one violation in each of six facilities, we conclude that the State did
not make a satisfactory showing this is had an effective program of
utilization control during the quarter ending June 30, 1982.
Whether the disallowance should be reversed because the Agency failed to
notify the State at the time of the preliminary findings about all the
violations later included in the disallowance
The Agency notified the State by letter dated November 29, 1982 of
preliminary findings resulting from the validation survey conducted by
the federal reviewers in June 1982. That letter listed violations for
four patients in three facilities. The letter indicated that it
contained preliminary findings and that they were subject to change.
The letter also informed the State that the findings had been submitted
to the Central Office for "further analysis" and a final determination
of non-compliance. State's Exhibit C. The Agency issued a notice of
disallowance on March 30, 1983, and listed about 50 violations for
persons in nine facilities. State's Exhibit E.
(8) The State alleged that it undertook corrective action with the
facilities listed in the preliminary findings and that the Agency's
failure to notify the State about the other violations prevented the
State from taking corrective action in the additional facilities.
State's Brief, pp. 4-5. Instead, the State argued, it was "hit with a
financial penalty for matters occurring a year before." State's Response
to Order to Show Cause, pp. 3-4. The State argued that in taking
corrective action for the facilities identified in the preliminary
findings, the State had shown "good faith and due diligence," and
that
it had even recommended to the Agency that one of the facilities be
decertified.
As we noted above, the record shows that there were violations of
section 1903(g) in six facilities. The State argued that its good faith
efforts to correct the facilities' prospective actions should be a basis
for waiving the penalty. In support of this thesis, the State pointed
to 42 CFR 456.653, which implements section 1903(g)(4)(B), and provides
acceptable reasons for not meeting the section 1903(g)(1)(D) requirement
that states conduct annual on-site reviews. Section 1903( g)(4)(B)
provides, in part, for a showing of good faith and due diligence in
connection with the annual reviews. However, neither the statute nor
the regulation provides that a showing of good faith and due diligence
is a basis for waiving the other statutory requirements set out in
sections 1903(g)(1)(A) through (C). Therefore, while the State's good
faith and due diligence are commendable and should improve the State's
program, this is not a statutory or regulatory basis for waiving the
penalty. Moreover, nothing in the statute or regulations provides that
the Agency is responsible through its validation surveys for notifying
the states of deficiencies in their programs for corrective purposes.
The focus of section 1903(g) is on penalties for violations of the
requirements and corrective action does not alter either the State's
responsibility for meeting the requirements or the Secretary's
responsibility for disallowing based on violations found during the
surveys.
Finally, nothing in the statute or regulations requires that the
Agency provide a state with preliminary findings, and the record does
not show that the State was prejudiced by the addition of violations to
the final notice of disallowance. The State has not shown that the
Agency's failure to include all of the violations in its preliminary
findings is in any way related to its ability to produce documentation
showing that violations did not exist. The letter indicating the
preliminary findings clearly noted that it was not the final
determination. The State had an opportunity during the pendency of this
appeal to submit additional evidence that the Agency's findings were
wrong. The State took the opportunity to submit documentation and
received a response from the Agency, which included a reduction in the
disallowance. The State has indicated that it has no further
documentation to produce. Transcript, p. 8. Therefore, we conclude
that the Agency's actions in notifying the State about violations are
not a basis for reversing the disallowance.
(9) Whether alleged deficiencies in the process followed by the federal
reviewers when conducting the validation survey are a basis for
reversing the disallowance
The State alleged that in June 1983 two State employees retraced the
steps taken by the federal reviewers and that these employees found
considerably fewer violations than the disallowance had indicated. The
State argued that the federal findings were erroneous and that this was
due to deficiencies in the reviewers' procedures. /5/ The State alleged
that the federal reviewers failed to follow certain steps set out in the
Agency's Transmittal 82-2, dated September 1982, which outlined
instructions to federal reviewers on how to conduct the validation
surveys for the quarter ending June 30, 1982. State's Exhibit A.
Transmittal 82-2 instructed the reviewers to notify the states, in
writing, about the reviewers' schedule of planned on-site visits, and to
hold exit interviews with the facilities' administrators (or designees)
to inform them of unacceptable or missing documentation. The State
alleged that the federal reviewers failed to inform the State of
specific dates for visits to particular facilities and failed to hold
exit interviews at the facilities.
This Board has previously concluded that the Agency's mere failure to
follow its own procedures for conducting validation surveys does not
relieve the State of the burden of demonstrating its compliance with the
applicable requirements. Hawaii Department of Social Services and
Housing, Decision No. 295, May 7, 1982, p. 5; Oklahoma Department of
Institutions, Decision No. 318, August 12, 1982, p. 4. The Agency's
procedures for conducting surveys are set out in instructions to the
reviewers and are not promulgated as regulations. The statute does not
set out any specific methods for conducting the validation surveys but
merely requires the Secretary to conduct surveys. Here, we concluded
above that there is at least one violation in each of six facilities.
The record does not show that the State has been prejudiced in any way
by the alleged deficiencies in the validation survey process. (10)
Finally, even if the Agency's alleged failure to follow its own
procedures were relevant here, we cannot conclude that such a failure
did occur. The Agency submitted copies of letters sent by the State to
each facility (Agency Exhibits 3-12) which show that the State knew that
the visits would occur within a ten-day span between September 20 and
September 29, 1982. One federal reviewer's affidavit indicates that he
made specific arrangements with each facility by telephone. Agency
Exhibit 14. Furthermore, the affidavits from the federal reviewers
state that they did conduct exit interviews, and the affidavits provide
the names and/or titles of the persons with whom they held the
interviews. Exhibits 14, 15 and 16. The State has not rebutted this
evidence or even offered to do so.
Thus, we conclude that the Agency's procedures in conducting the
validation survey are not a basis for reversing the disallowance.
Whether the Board should provide the State with an opportunity for
discovery
The State requested by motion dated August 9, 1983 that the State be
allowed to depose the federal reviewers. The Agency refused to make the
reviewers available for such depositions, but provided the notations and
workpapers created by the reviewers and submitted affidavits from the
reviewers about their actions during the validation survey. In a
telephone conference call with the parties, the Board noted that its
procedures do not specifically provide for discovery. The Board
requested that the parties engage in voluntary discovery to the extent
they could and also requested that the Agency, as part of its
submission, provide information about how it made its findings. The
Board instructed the State to point out in its reply brief which facts
were still in dispute and why they were relevant to the issues in the
appeal, and to provide reasons why additional discovery was necessary.
Although the State generally alleged that there was a factual dispute
about the existence of the violations, the State has not pointed to any
specific facts in dispute, nor shown why the facts cannot be determined
from the patient records submitted. The State argued that the
difference in conclusions reached by the Agency and the State reviewers
about whether the documents showed the existence of violations was a
factual dispute. The State has not pointed to any reasons why the
Agency's conclusions are wrong and the State's are right. Since we have
already concluded that the existence of violations can be determined
from the patient records submitted by the State during this appeal, we
cannot conclude that there are facts still in dispute. Moreover, the
qualifications of the federal reviewers and the procedures they followed
are irrelevant to the issues before the Board. As the Agency indicated
in oral argument, the State must document through patient records
compliance with the 1903(g) requirements. Thus, we see no reason to
encourage or make provision for depositions of the federal reviewers.
(11) The State argued that the Secretary has been inconsistent in
providing for discovery procedures in State plan conformity proceedings
under 45 CFR 213.23a, and not in proceedings before the Board under 45
CFR Part 16. The State argued that there is no rationale for such
inconsistency, and that the State should have the opportunity for
discovery. The Secretary has discretion, however, about the extent of
discovery to offer in administrative proceedings, since neither the
Social Security Act nor the Administrative Procedures Act, 5 U.S.C. 551
et seq., require discovery at all, and due process does not require
discovery in every case. /6/ McClelland v. Andrus, 606 F.2d 1278, 1286
(D.C. Cir. 1979); Dixon v. Love, 431 U.S. 105, 115 (1977); Electromec
Design & Development Co. v. NLRB, 409 F.2d 631 (9th Cir. 1960). In any
event, Board procedures provide considerable flexibility for acquisition
of information and voluntary discovery between parties.
Here we conclude that the State's request for the opportunity to
depose the federal reviewers need not have been granted since the
information sought was not relevant to the questions of whether there
were violations and whether the Agency could take a disallowance.
Deposing the federal reviewers would prolong the proceedings when there
is no reason to believe that such information would aid the Board in
resolving this dispute.
Whether the Board should provide the State with an evidentiary hearing
The State requested an evidentiary hearing under 45 CFR 16.11. The
State alleged that a factual dispute existed and requested the
opportunity to examine the federal reviewers to determine how their
findings contributed to the allegedly erroneous conclusions reached by
the Agency. The State indicated that it wanted an evidentiary hearing
in order to clarify such facts as the reviewers' experience and
training, the clarity of the Agency's instructions to the reviewers, and
to determine whether the reviewers erred in the dates they found.
The Board's regulation, section 16.11, provides that the Board will
provide an evidentiary hearing,
if it finds there are complex issues or material facts in dispute the
resolution of which would be significantly aided by a hearing, or if the
Board determines that its decisionmaking otherwise would be enhanced by
oral presentations and arguments in an adversary, evidentiary hearing.
The Board will also provide a hearing if otherwise required by law or
regulation.
(12) As we discussed above, the State has not pointed to any specific
disputes about what the patient records it submitted showed. We
concluded above that the resolution of the dispute about whether
violations existed could be made by examining the patient records
submitted by the State, and that the experience and training of the
reviewers is irrelevant.
The State argued that the difference in conclusions reached by the
Agency and the State reviewers about whether the documents showed the
existence of violations was a factual dispute requiring an evidentiary
hearing. However, the evidence the State offered to present at a
hearing went only to what the reviewers did and not to the Agency's
conclusions that the documents showed the existence of violations. The
Agency's conclusions involved application of the regulations and Agency
interpretations of the regulations to the facts as shown by the
documents. Resolution of such a dispute can be based on legal arguments
concerning what the regulations and the statute require and whether the
documents show that the requirements have been met. Thus, we see
nothing which can be resolved by any evidence the State has offered to
produce at a hearing.
The State also attempted to characterize as factual the issue of
whether the existence of some violations meant that the State did not
have an effective program of utilization control. Again, this is not a
factual issue, but rather a legal one involving interpretation of the
statute. We concluded above that the statute requires specific showings
"in each case" and that the State had not made these showings for
patients in six facilities.
The State has had several opportunities to make a showing that an
evidentiary hearing was necessary, including after the Board set out its
tentative analysis in its Order to Show Cause and during oral argument.
We have concluded that there are no complex issues or material facts in
dispute which an evidentiary hearing would help resolve. There is no
requirement here for any particular type of "hearing." See Gray Panthers
v. Schweiker, 652 F.2d 146 (D.C. Cir. 1980), as modified on rehearing,
March 18, 1981. Although the Board generally grants requests for oral
presentation, the information the State wished to present would have
been of no utility in resolving the issues presented here. We did offer
an opportunity for oral argument; the State waived an opportunity for an
in-person presentation and elected instead to present its arguments in a
telephone conference call. /7/
(13) Whether the State should receive a hearing before an Administrative
Law Judge (ALJ) under 5 U.S.C. 556
The State alleged that it should receive a hearing before an ALJ
under 5 U.S.C. 556 because the Board is biased on behalf of the Agency
and because the Board acted unfairly toward the State. The State's
reasons are that the Board --
* accepted the Agency's findings on their face,
* failed to properly weigh the evidence before it, and
* refused to permit discovery and grant an evidentiary hearing.
Response to Order to Show Cause, p. 5.
In our Order to Show Cause, we tentatively accepted the Agency's
responses to the documentation submitted by the State because the State
did not rebut those responses in a specific manner and on their face the
Agency's findings about that additional documentation were supported by
the documents themselves. After the State responded to our Order to
Show Cause, we examined the documentation in detail and considered the
parties' arguments about the documents, applying the law set out in the
statute and Agency regulations. We concluded that for at least one
patient in each facility, there was a violation. See Appendix A.
The Board has analysed each issue raised by the State, not only in
the Order to Show Cause, but also in this decision, and provided reasons
why the Board reached its conclusions. If the Board has erred in these
conclusions, the errors can be determined by a reviewing court, based on
the record. Erroneous conclusions on the part of the Board are not in
themselves evidence of bias. Thus, without a more specific allegation
of how the Board failed to properly weigh the evidence before it, there
is no indication of bias.
This Board provided the State with several opportunities to explain
the need for an evidentiary hearing and to show the relevancy of the
information it wanted to develop at a hearing. The Board concluded that
the information would not help it resolve the dispute before it and
denied that request. The Board's analysis is clearly set out above, and
is based on the record and the standard for when a hearing is provided
set out at 45 CFR 16.11. Thus, there is no reason to believe that the
Board's decision not to grant the State's request for an evidentiary
hearing is in itself evidence of bias.
The State alleged generally that the Board's failure to permit the
State to examine witnesses and evidence through discovery and to permit
the State an opportunity for an evidentiary hearing lacks basic elements
of fair play. Response to Order to Show Cause, p. 6. We think that the
conclusions offered above and the analysis provided by the Board for
those conclusions shows that the State has not been denied (14) due
process and that the Board weighed the allegations and information in
the record in a fair manner. The procedures offered to an appellant in
an administrative adjudication (particularly one not required to be held
under 5 U.S.C. 556) may vary, depending upon the nature of the facts in
dispute, the interest affected, the probable value of additional
procedural safeguards, and the fiscal and administrative burdens that
the additional procedures would entail. Mathews v. Eldridge, 424 U.S.
319, 347-48 (1976); Gray Panthers v. Schweiker, 652 F.2d 146, 165
(D.C. Cir. 1980), as modified on rehearing, March 18, 1981.
An examination of federal case law leads us to conclude that there is
no evidence of Board bias in this appeal. Federal courts have developed
certain basic principles about when a hearing officer or tribunal should
be disqualified for bias. See discussion in K. C. Davis,
Administrative Law Treatise, 2d Ed., Vol. 3, Chapter 19, pp. 371-398,
1980. Evidence of partiality may exist if:
1) the hearing officer has prejudged the issues of fact in the case,
Cinderella Career & Finishing Schools Inc. v. FTC, 425 F.2d 583 (D.C.
Cir. 1970);
2) the hearing officer has a personal bias or prejudice for or
against a party which would prevent the hearing officer from judging the
issues of fact fairly, Withrow v. Larkin, 421 U.S. 35 (1975);
3) the hearing officer has a personal interest where the officer
stands to gain from the decision made, Gibson v. Berryhill, 411 U.S.
564 (1973).
The State has not alleged that the Board has prejudged the facts of
this case. Bias in favor of the Agency refers to personal favoritism or
dislike. Impersonal prejudice about policy or law, resulting from
background or experience, is not by itself disqualifying. Eisler v.
United States, 170 F.2d 272, 278 (D.C. Cir. 1948), cert. dism., 338 U.
S. 833 (1949); FTC v. Cement Institute, 333 U.S. 683 (1948). Finally,
there is no direct pecuniary interest involved here that would
constitute bias on the part of the Board. See Gibson v. Berryhill,
supra; Ward v. Village of Monroeville, 409 U.S. 57 (1973), and Tumey v.
Ohio, 273 U.S. 510 (1927). The mere contention that an employee of a
federal agency would be biased in favor of that agency has been held
insufficient to show prejudice without evidence that the employee would
not reverse an Agency decision for that reason. Mechanics National Bank
v. HUD, 522 F. Supp. 25 (D.D.C. 1981), aff'd without opinion, 675 F.2d
1340 (D.C. Cir. 1982); Overlook Nursing Home, Inc. v. United States,
556 F.2d 500 (Ct. Cl. 1977). There is no evidence here that the Agency
has in any way influenced the Board to decide appeals in its favor, and
in fact, this Board has overturned or modified the decisions of many
component agencies of the Department in appeals before the Board.
(15) Here, we have concluded that the basic disputes are legal issues
and do not involve the underlying facts, and that the probable value of
an evidentiary hearing is therefore minimal. Holding an evidentiary
hearing and requiring from one to five federal employees, as well as
State employees, to travel from the Midwest for such a hearing would
place considerable fiscal burden on both parties and would prolong this
proceeding. Balancing the factors identified in this case, we cannot
conclude that the State has been treated in an unfair manner by being
denied an opportunity to depose potential witnesses and an opportunity
for an evidentiary hearing on the issue identified by the State. In any
event, the State did receive an opportunity to make an oral presentation
to the Board.
Whether the recalculation of the penalty should be upheld
At the time that the Agency withdrew the portion of the disallowance
pertaining to three facilities, it reduced the amount of the
disallowance as a result. The Agency counsel incorporated the amount
recalculated by the Central Office into the Agency's response. Later
the Agency counsel submitted information noting that he had erred by
assuming that the recalculation involved the entire amount of the
disallowance. See Letter of November 14, 1983. Instead, he noted, the
recalculation had been performed only for a portion of the disallowance,
that pertaining to the skilled nursing facilities. The portion of the
disallowance pertaining to intermediate care facilities remained the
same and he indicated that the two figures should have been added to
reach the total disallowed amount. Thus, instead of a disallowance in
the amount of $87,204.66, as the Agency's brief had indicated, the total
amount should have included $25,241.76 for ICFs as well as $87,204.66
for SNFs. Thus, the disallowance amount should have been $112,446.42.
The State objected to this modification, arguing that the amendments
indicated a "haphazard approach" to the disallowance. Response to
Order
to Show Cause, p. 4. The Agency noted, however, that the first
recalculation was performed in the State's favor in order to take into
account a reduction in the number of violations found. The second
recalculation was due simply to an incorrect assumption on the part of
Agency counsel about what figures should be included in the total
amount. The State has not alleged that the recalculation was performed
incorrectly or that the figures were inaccurate. We see no prejudice to
the State and note that recalculations are appropriate where new
documentation leads to changes in the findings. Therefore, the amount
of the disallowance as indicated in the Agency's letter of November 14,
1983 should be accepted as the correct total without some evidence that
it is inaccurate.
(16) Conclusion
We conclude, for the reasons stated above, that the disallowance
should be upheld for violations in six facilities, in the amount of
$112,446.42. We further conclude that the State received adequate due
process and that the Board was not biased in deciding this appeal.
(1) APPENDIX A
BOARD CONCLUSIONS ABOUT THE DOCUMENTATION SUBMITTED BY THE STATE FOR
PATIENTS IN FOUR FACILITIES
Americana North, Exhibit I
Patient Clara V.: The Agency considered this recertification a
violation because no ascertainable level of care was specified. Upon
examining the documentation in the appeal file, we noted that earlier
recertifications for the patient indicated SNF level of care, but that
the the recertifications for the period in question did not indicate the
level of care because SNF had been crossed out, ICF written in and also
marked out. The statute and regulations require that a physician
certify that the appropriate level of care received was needed. We
cannot regard as valid a recertification that does not indicate the
level of care. Thus, we sustain the Agency's conclusion for this
patient.
Patients James O., Frances O.,
Mae S. and Mabel T.: These patients' plans of care were considered
violations because they did not show that a physician reviewed the plans
in a timely manner. The Agency stated that it accepts four different
means of verifying that a physician reviewed the plans, but that none of
these forms of evidence existed. We examined the documents submitted
and noted that nowhere on the documents is there a physician's
signature, a nurse's notation that a physician had updated the plan,
e.g., over the telephone, or any other evidence of physician review.
The record elsewhere does not contain any allegations or evidence that a
physician did review the plans of care in a timely manner, as required
by 42 CFR 456.280(c). See fn. 1 above. Thus, we sustain the Agency's
conclusions for these patients.
Miller's Merry Manor, Exhibit K
Patient Mildred K.: The Agency accepted the State's documentation for
this patient.
Patient Louise S.: The patient record submitted by the State as
evidence of a valid recertification was identical to that obtained by
the federal reviewers, with one exception. The Agency's copy does not
have a physician's signature and date for the required period. The
State's copy does.
(2) Patient Louise S., cont.: The State did not explain the
discrepancy between the document submitted by the State and the copy
obtained by the Agency, nor did the State submit any other evidence that
the physician did sign the recertification in a timely fashion.
Moreover, both the State and Agency copies were marked through with two
large Xs. We think that the Xs make the validity of the records
questionable. In these circumstances, we conclude that there was no
valid recertification and, therefore, we uphold the Agency's conclusion
for this patient.
Patient Martha H.: The record does not show any evidence that a
physician reviewed the plan of care. As discussed in fn. 1, without
some proof that the regulation was met, such as a signature, we cannot
find that this is a valid updating of the plan of care.
Ross Care Center, Exhibit L
Patient Willie B.: The Agency accepted the State's documentation for
this patient.
Patients Stanley P., Myrna J. and Joyce R.: The Agency stated that
the information it had on these patients was insufficient to reach a
conclusion; the notes made by the State personnel show that these
patients either died or were discharged during the period in question.
The Agency did not deny the truth of these statements, and the
recertifications and plans of care appear to be timely up to the point
where the patients were no longer in the facility. Thus, we reverse the
Agency's conclusions for these patients and determine that there were no
violations.
Patient Ophelia McC.: The documents submitted by the State are not
signed by a physician, nor is there any other evidence that the plan of
care was established by a physician in a timely fashion. Only one
document was dated and that date was five days after the patient's
admission. Thus, we have no evidence that this plan of care was
established by a physician on or before admission, as required by 45 CFR
456.280(a). Therefore, we uphold the Agency's findings of a violation.
(3) Patient Thomas M.: The documents for this patient show that
portions of the plan of care were established between two and seven days
after the patient's admission, and there is no evidence in the record
about who established the plan of care. Thus, we cannot find that the
requirements were met and we uphold the Agency's finding of a violation.
Northside Healthcare Center, Exhibit O
Patient George S.: The documentation submitted by the State does not
show any evidence of a recertification between May 15, 1982 and August
14, 1982. A recertification would have been due in July, 1982.
Although the record does not show a recertification until August, which
is a period of more than 60 days and clearly violates the regulatory and
statutory requirements, the violation did not occur in the quarter for
which this disallowance was taken, April 1 - June 30, 1982. Therefore,
we do not think that the Agency can include this violation in the
disallowance for this quarter.
Patient Virlan R.: The documents submitted by the State for this
patient are illegible. Although the Agency specifically noted this
after reviewing the submission, the State presented nothing to assist in
the interpretation of the documents. Thus, we cannot find that the
requirements were met and we uphold the Agency's conclusions about a
violation. /1/ 42 CFR 456.260 sets out the requirements for
certifications and recertifications. The regulation provides
that a physician must certify the patient's need for SNF services at the
time of admission and must recertify that need at least every 60 days
thereafter. Medicaid Action Transmittal 80-68, September 1980, sets out
the Agency's interpretation of the statute and regulation. We apply
these requirements in making the findings set out in Appendix A. 42 CFR
456.280(a) requires that the attending physician establish a written
plan of care for each patient before admission or before authorization
for payment. Section 456.280(c) requires the attending or staff
physician to review the plan of care at least every 60 days. In a recent
decision, Nevada Department of Human Resources, Decision No. 471,
October 31, 1983, this Board concluded that a physician had timely
established the plan of care where the plan was established by telephone
orders by the physician on the date of admission. The physician's
orders were recorded, signed, and dated by a nurse on the date of
admission and the physician actually initialed the plan one day after
the patient's admission. The Board concluded that the statute and
regulation required the timely establishment of a written plan by a
physician and that the documents submitted demonstrated that this has
occurred. The Agency interpreted that requirement in an internal
memorandum to federal surveyors, Regional Letter 82-2, September 30,
1982. That memorandum indicated that there must be a signature (or
initials) by a physician and a date entered on plan of care on or before
the date of admission. However, the Board concluded that the State did
not have notice of Regional Letter 82-2 and concluded that the documents
showed that a physician had timely established the plan of care, even
though the physician had not actually signed the plan of care until
after the date of admission. We think this same analysis can be applied
to the requirement for timely review of the plan. Here, we are not
aware that the State had notice of any specific means by which it must
prove compliance, so, consistent with our approach in Decision No. 471,
we examined the documentation and the rest of the record for evidence
that a physician had timely established or reviewed the plans of care in
question. Our findings in Appendix A indicate that we did not find any
evidence that a physician either established or reviewed the plans of
care in a timely manner, as the specific case required. Thus, we
concluded that the State did not show that it had complied with the
requirements for the patients in question. /2/ The State argued
that the "ultimate source" of the Board's conclusions was a Comptroller
General decision which concluded that the Secretary has no discretion to
waive the penalty for even one violation. However, as discussed above,
the Board based its conclusion on the statute itself, and merely noted
that the Comptroller General's opinion supported the Board's decision.
/3/ The State pointed to a Congressional conference report which
accompanied H.R. 3913, enacted October 31, 1983 as Pub. L. 98-139. The
conference report (H.R. Rep. 98-422, 98th Cong., 1st Sess., October 19,
1983) expressed concern about the current Departmental policy for
disallowing erroneous payments in the AFDC and Medicaid programs under
the Quality Control program. The State pointed out that the Report
indicated that the Secretary should consider suspension of the fiscal
sanctions in both the AFDC and Medicaid programs. The State argued that
this statement also applied to the fiscal sanctions provided for under
section 1903(g). Transcript, p. 6. The conference report referred to
interim final rules issued June 24, 1983. Those rules provided for
disallowance of federal financial participation to states whose
eligibility payment error rate for Medicaid, as measured by the Medicaid
Quality Control system, exceeded a certain percentage. 48 Fed. Reg.
29450, June 24, 1983. The rules specifically say that the Medicaid
Quality Control system was designed to reduce erroneous expenditures in
medical assistance payments by monitoring eligibility determinations,
third-party liability activities, and claims processing. 42 CFR
431.800(a)(2) and 431.803; 48 Fed. Reg. 29450, June 24, 1983. Thus, the
conference report specifically addressed only the error rates in
eligibility decisions for the AFDC and Medicaid programs. The fiscal
sanctions mentioned in the conference report are only those based upon
the Quality Control system. See p. 11 of the conference report. The
utilization control program set out by section 1903(g), on the other
hand, refers to whether certain Medicaid patients already deemed
eligible for Medicaid are receiving the proper level of long-term care.
Thus, the Quality Control and utilization control programs affect
different aspects of Medicaid and there is no direct relationship
between the two programs. Thus, we see no reason to think that the
conferees were suggesting that the Secretary not issue disallowances
under section 1903(g) for utilization control violations. /4/
This Board has previously concluded that a state's showing is not
satisfactory if a subsequent validation survey discloses the existence
of violations. Colorado Department of Social Services, Decision No.
218, September 30, 1981. This conclusion was upheld by the United
States District Court for the District of Colorado in a memorandum
opinion and order issued January 25, 1983 (Civ. Act. No. 82-M-281), pp.
18-19. The Agency's regulation, 42 CFR 652.655(b), also clearly states
this policy. /5/ The State also pointed to a federal reviewer's
affidavit which offered reasons why the federal reviewers' conclusions
as noted in the preliminary findings were different from the conclusions
reached by the Central Office, which formed the basis for the
disallowance. The State alleged that such factors as the reviewers'
inexperience, ineptitude, or other characteristics made the federal
findings wrong. The federal reviewers, however, did not make the final
determinations about whether the documentation showed evidence of
violations. The State submitted its own documentation, including
patient records, during this appeal, for each violation it disputes.
The State does not argue that the patient records reviewed by the Agency
during this appeal are inaccurate. The reviewers' conclusions are not
relevant because the Central Office made the final determination to
disallow, based on its own conclusions that there were violations and
because, during this appeal, the dispute has centered on patient records
submitted by the State and reviewed by the Agency. /6/ Even the
new amendments to the Federal Rules of Civil Procedure provide that
limitations may be placed on discovery to ensure that the information
sought is relevant and acquisition of the information will not cause
undue delay of the proceedings. Fed. R. Civ. Proc. 26, as amended April
28, 1983. /7/ This telephone conference call was transcribed and
included in the record.
NOVEMBER 14, 1984