SUBJECT:

Briarcliff Nursing and Rehabilitation Center,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

This matter is before me on the Motion to Dismiss filed by the Center for Medicare and Medicaid Services (CMS) on July 6, 2004. By my Order of June 23, 2004, this matter has been consolidated with Briarcliff Nursing and Rehabilitation Center v. CMS, C-04-323, under the instant style and docket number. I have determined that Briarcliff Nursing and Rehabilitation Center, the Petitioner herein, is not entitled to a hearing in this case, and for that reason I grant the Motion and dismiss Petitioner's requests for hearing.

My decision to dismiss Petitioner's requests for hearing is based on the memoranda and other pleading filed by both parties, and on the documents attached to CMS' memorandum, which, in the absence of objection from Petitioner, I have admitted to the record. CMS submitted four attachments, marked as CMS Exhibits A, B, C, and D, with its Motion and supporting memorandum on July 6, 2004; I have admitted them with that designation rather than remarking them with numbers to conform to the usual practice in this forum.

I. BACKGROUND

Petitioner is a skilled nursing facility located in McAllen, Texas. During all times material to this discussion, Petitioner was certified to participate in the Medicare and Medicaid programs as a provider of services, and had a provider agreement with CMS to do so. On August 30, 2003, the Texas Department of Human Services (TDHS) conducted an abbreviated complaint-based survey of Petitioner's facility. This survey was the first in a cycle identified as ENF-04-0020.

The results of the first survey on August 30, 2003 alleged Petitioner's noncompliance with the requirements set out at 42 C.F.R. � 483.13(c), and led CMS on October 14, 2003 to impose a per-instance civil money penalty (CMP) of $2,000.00, a denial of payment for new Medicare and Medicaid admissions (DPNA) effective November 30, 2003, and a proposed termination of Petitioner's provider agreement on January 30, 2004 unless Petitioner had achieved substantial compliance with all program requirements by that date. CMS Ex. A, at 1-2.

CMS's October 14, 2003 letter also notified Petitioner that applicable statutes prohibit the approval of "Nurse Aid Training and Competency Evaluation Programs (NATCEP) and Competency Evaluation Programs (CEP) offered by or in any facility which within the previous two years . . . was subjected to an extended or partially extended survey (determination of Substandard Quality of Care) . . . ." CMS Ex. A, at 2. Noncompliance with the terms of 42 C.F.R. � 483.13(c) is defined as "substandard quality of care" at 42 C.F.R. � 488.301.

Although the survey cycle had not yet concluded and Petitioner was then subject to revisit surveys, Petitioner acted to perfect its appeal from CMS's October 14, 2003 determination and filed its request for hearing on December 3, 2003. Its request for hearing specifically appealed all of the proposed remedies: the CMP, the DPNA, and the proposed termination of its provider agreement were all explicitly challenged in the hearing request. The request also contended that the loss of approval of NATCEP and CEP "is not reasonable or proper." The December 3, 2003 request was docketed as C-04-112.

As part of survey cycle ENF-04-0020, TDHS completed a revisit survey of Petitioner's facility on November 7, 2003. The results of this revisit survey appear in detail in a standard survey report Form 2567. Several alleged deficiencies were cited in the Form 2567, including continued noncompliance with the terms of 42 C.F.R. � 483.13(c) at a scope-and severity rating of "F," indicating a deficiency with a widespread potential for more than minimal harm. CMS Ex. C.

For almost five months, neither of the two consolidated cases reflects action by CMS in response to this November 7, 2003 survey, or to a third survey in cycle ENF-04-0020 conducted by TDHS on or about November 28, 2003. On March 31, 2004, CMS wrote to Petitioner and announced that the TDHS survey of November 28, 2003 showed that the facility had corrected its deficiencies and was in substantial compliance with program requirements as of that date. Based on Petitioner's having achieved substantial compliance, CMS rescinded the CMP, the DPNA, and the proposed termination of Petitioner's provider agreement. CMS's letter made no direct allusion to NATCEP or CEP programs at Petitioner's facility. CMS Ex. B.

Petitioner filed its request for hearing in response to CMS's March 31, 2004 letter on May 3, 2004. In this request, Petitioner acknowledged that CMS had rescinded the CMP, the DPNA, and the proposed termination, but asserted that "issues regarding the survey cycle still exist that could affect the facility's NATCEP and CEP programs, and therefore, Briarcliff . . . files this appeal to preserve the facility's appeal rights regarding those programs." The May 3, 2004 request for hearing was docketed as C-04-323.

Petitioner filed its Motion to Consolidate C-04-112 and C-04-323 on June 11, 2004, and correctly represented that the two requests for hearing arose from the same survey cycle, ENF-04-0020. In an Order on June 23, 2004, I consolidated the cases as C-04-112, noted that the status of Petitioner's NATCEP and CEP programs might require further attention, and scheduled a telephonic prehearing conference for June 30, 2004.

My Order of June 30, 2004 reflects the results of that prehearing conference.

Since a facility may appeal a CMS finding that "leads to the loss�of its nurse aid training program," Petitioner asserted that it was entitled to contest the citation based on 42 C.F.R. � 483.13(c). CMS asserted that Petitioner was not entitled to contest the citation because it had no approved NATCEP or CEP in operation, and proposed to file a Motion to Dismiss. A briefing schedule on the anticipated Motion was established; all memoranda and exhibits have now been submitted, and the record is complete.

II. ISSUE

The single legal issue before me is whether Petitioner has a right to a hearing, pursuant to 42 C.F.R. � 498.3(b)(16), to contest the citation of deficiency based on 42 C.F.R. � 483.13(c), in light of the fact that it had no approved NATCEP or CEP program in operation at any material time.

As the following discussion will show, Petitioner has no such right to a hearing. The regulation permits a facility to appeal a citation that leads to the loss of approval of an existing NATCEP or CEP. It does not permit or authorize an appeal from such a citation when the cited facility has no approved NATCEP or CEP program in existence, and CMS proposes no other remedies.

III. CONTROLLING STATUTES AND REGULATIONS

NATCEPs and CEPs are programs of practical education and training conducted by long-term care facilities. They are programs supervised and approved in the first instance by the states. See generally sections 1819(e)(1)(A) and 1919(e)(1)(A) of the Act, 42 U.S.C. �� 1395i-3(e)(1)(A) and 1396r(e)(1)(A). The common aim of the two programs is to insure the competence of caregivers employed in facilities that provide services to the Medicare and Medicaid programs. Such facilities may not employ on a full-time basis, or for more than four months, any person who has not completed a state-approved NATCEP or CEP. Sections 1819(b)(5)(A) and 1919(b)(5)(A) of the Act, 42 U.S.C. �� 1395i-3(b)(5)(A) and 1396r(b)(5)(a).

The Secretary of the Department of Health and Human Services (Secretary), acting though CMS, is authorized to prohibit a state from approving a facility's NATCEP or CEP under certain circumstances. When CMS proposes to prohibit approval of a facility's NATCEP or CEP program, it relies on statutory language to be found at sections 1819(f)(2)(B)(iii), 42 U.S.C. � 1395i-3(f)(2)(B), when a Medicare-participating facility is involved, and section 1919(f)(2)(B)(iii) of the Act, 42 U.S.C. � 1396r(f)(2)(B), as to Medicaid providers. The specific statutory provisions that control in the context of this discussion are for all immediate purposes identical; those of section 1819(f)(2)(B)(iii) are set out below. They require that the Secretary acting through CMS "shall prohibit approval" of any NATCEP or CEP program if it is:

(I) offered by or in a skilled nursing facility which, within the previous 2 years--

(b) has been subject to an extended survey (or partial extended survey) under subsection (g)(2)(B)(i) . . . ;

Subsection (b) above refers to extended surveys or partial extended surveys prompted by a "substandard quality of care" finding. The term "substandard quality of care" is defined at 42 C.F.R. �488.301 to include:

[o]ne or more deficiencies related to participation requirements under � 483.13, Resident behavior and facility practices . . . which constitute . . . a widespread potential for more than minimal harm . . . .

Thus, the finding of a deficiency with the widespread potential for more than minimal harm under 42 C.F.R. � 483.13(c)--or other regulations not relevant to this case--will trigger a partial extended survey. That is what happened in this case during the first survey on August 30, 2003, and it resulted in the revisit surveys of November 7, 2003 and November 28, 2003.

Appeals from the imposition of remedies are permitted under the circumstances set out in 42 C.F.R. �� 498.3 and 498.5. The fundamental requirement of any appeal is that it be from an "initial determination" by CMS. A facility may appeal an initial determination of noncompliance if it results in the imposition of a remedy such as a CMP, DPNA, or other remedies including the extreme remedies of closure or temporary government management, 42 C.F.R. �� 488.406, 498.3(b)(13).

Since 1999, 42 C.F.R. �� 498.3(b)(16) has specifically defined an "initial determination" by CMS, and therefore a determination from which an appeal may be taken, to include:

(16) The finding of substandard quality of care that leads to the loss by a SNF (skilled nursing facility) or NF (nursing facility) of the approval of its nurse aide training program.

A facility may appeal the level at which CMS determines to assess the noncompliance only if a successful appeal would affect the range of civil money penalty imposed and collected, 42 C.F.R. �� 498.3(b)(14)(i), or would affect a CMS "finding of substandard quality of care that results in the loss of approval for" a NATCEP or CEP. 42 C.F.R. �� 498.3(b)(14)(ii).

IV. FINDINGS OF FACT AND CONCLUSIONS OF LAW

I find and conclude as follows:

1. Petitioner is a skilled nursing facility located in McAllen, Texas, and at all material times was certified to participate in the Medicare and Medicaid programs as a provider of services, pursuant to provider agreement 67-5162. CMS Exs. A, B, C.

2. At no time material to this case did Petitioner have an approved NATCEP or CEP in existence at its facility. CMS Ex. D.

3. On August 30, 2003, TDHS conducted an abbreviated complaint-based survey of Petitioner's facility, the first in survey cycle ENF-04-0020. The survey findings alleged Petitioner's noncompliance with the requirements set out at 42 C.F.R. � 483.13(c), and later assessed that noncompliance as widespread, with a potential for more than minimal harm. CMS Exs. A, C.

4. Based on the survey findings, on October 14, 2003 CMS announced that it would impose a per-instance CMP of $2,000.00, a DPNA effective November 30, 2003, and termination of Petitioner's provider agreement on January 30, 2004 unless Petitioner had achieved substantial compliance with all program requirements by that date. CMS Ex. A, at 1-2.

5. Noncompliance with the requirements of 42 C.F.R. � 483.13(c) with a widespread potential for more than minimal harm is defined as a finding of "substandard quality of care." 42 C.F.R. � 488.301.

6. Because Petitioner was found to be noncompliant with Medicare and Medicaid program requirements at a "substandard quality of care" level it became subject to additional partial extended surveys in survey cycle ENF-04-0020 on November 7, 2003 and November 28, 2003, and in consequence the Secretary was required to prohibit approval of any NATCEP or CEP offered by or in Petitioner's facility within the previous two years. Sections 1819(f)(2)(B)(iii) and 1919(f)(2)(B)(iii) of the Act, 42 U.S.C. �� 1395i-3(f)(2)(B) and 1396r(f)(2)(B).

7. On March 31, 2004, CMS announced that the TDHS survey of November 28, 2003 showed that Petitioner's facility had corrected its deficiencies and was in substantial compliance with program requirements as of that date. Based on Petitioner's having achieved substantial compliance, CMS rescinded the CMP, the DPNA, and the proposed termination of Petitioner's provider agreement. CMS Ex. B.

8. The rescission of the CMP, DPNA, and the proposed termination of Petitioner's provider agreement left no remedies in effect against Petitioner as the result of survey cycle ENF-04-0020. CMS Ex. B.

9. The controlling regulation permits a facility to appeal a citation that leads to the loss of approval of an existing NATCEP or CEP. It does not permit and does not authorize an appeal from such a citation when the cited facility has no approved NATCEP or CEP program in existence and CMS imposes no other remedies. 42 C.F.R. � 498.3(b)(16).

10. On the facts of this case, where there is no remedy in effect to affirm or reverse, Petitioner has no right to a hearing, and its requests for hearing must be dismissed. 42 C.F.R. ��498.3, 498.5, 498.70(b).

V. DISCUSSION

There is one fact central to the disposition of this appeal, and that fact is established without contradiction: at no time material to this case did Petitioner have an approved NATCEP or CEP in operation at its facility. CMS has asserted that fact through CMS Ex. D, the affidavit of the TDHS official responsible for administering NATCEP and CEP approval and for maintaining TDHS' records of such programs. Petitioner has accepted and incorporated all CMS exhibits, including CMS Ex. D, in its August 17, 2004 Response. Pet. Response, at 2.

It is therefore beyond genuine dispute that Petitioner "[P]rovider # 675162, Briarcliff Nursing & Rehabilitation (Texas Vendor ID 5321) is not now and has never been approved for a nurse aide training program under the name of Briarcliff Nursing & Rehabilitation." CMS Ex. D, at 2. That fact is to be understood in the context of CMS's announced decision to rescind all other remedies it once proposed to invoke against Petitioner. CMS Ex. B, at 2. Petitioner no longer faces the imposition and collection of a monetary penalty. It no longer is to be denied program payments for newly-admitted program-eligible patients. Its provider agreement is no longer in jeopardy of termination. It has never had an approved NATCEP or CEP program, and it does not have one now approved and in jeopardy of disapproval because of the deficiency cited against it by CMS. Thus, as this case now presents itself for examination, there is no remedy in place based on survey cycle ENF-04-0020 by which Petitioner is affected, burdened, or aggrieved.

Four decisions by the Departmental Appeals Board (Board) established the fundamental principle by which this case must be decided. Each decision addressed a situation in which a remedy proposed at one time by CMS had become nugatory, and, in each decision, the Board enunciated the basic rule that no right to a hearing exists pursuant to 42 C.F.R. �� 498.3(b) and 498.40 unless CMS determines to impose, and then actually imposes, one of the specified remedies within its authority. In Arcadia Acres Inc., DAB No. 1607 (1997), the Board held that the regulations did not require that the petitioner be allowed a hearing after the only remedies it faced--DPNA and provider-agreement termination--had been rescinded. In Schowalter Villa, DAB No. 1688 (1999), the Board addressed the effect of rescission of both CMP and DPNA, and followed the rule it had announced two years before. In The Lutheran Home-Caledonia, DAB No. 1753 (2000), the Board elucidated its holdings in Schowalter Villa, supra, and Arcadia Acres, supra, to emphasize that CMS's reduction of a proposed CMP to zero operated to the same effect as an outright rescission of the CMP. The Board considered the rescission of CMP and DPNA in slightly different circumstances in Lakewood Plaza Nursing Center, DAB No. 1767 (2001), and reached the same result it had reached in Schowalter Villa, supra. Although the Board did not refer in those four cases to the history of the regulatory language there interpreted, the Board's conclusions were in every way consistent with the Secretary's stated purpose in adopting the regulation:

Comment: Several commentators wanted a right to appeal all deficiencies even if no remedy was imposed.

Response: We are not accepting this suggestion because if no remedy is imposed, the provider has suffered no injury calling for an appeal . . . .

59 Fed. Reg. 56,158 (1994) (emphasis added).

The four Board decisions described above have been applied by the Administrative Law Judges (ALJs) of this forum in a variety of factual or procedural settings, and always with uniform result: it is CMS's practical imposition of one or more of the remedies specified at 42 C.F.R. � 488.406, and not its citation of a deficiency, that generates the right to a hearing. Bethel Health Care Center, DAB CR1067 (2003); Collins Health Care Center, DAB CR933 (2002); Eaglecare, Inc, d/b/a Beech Grove Meadows, DAB CR923 (2002); Lakeland Lodge Nursing Center, DAB CR893 (2002); Walker Methodist Health Center, DAB CR869 (2002); Charlesgate Nursing Center, DAB CR868 (2002); D.C. Association for Retarded Citizens, DAB CR776 (2001); Alpine Inn Care, Inc., d/b/a Ansley Pavilion, DAB CR728 (2001); Woodland Care Center, DAB CR659 (2000). In each of these cases, the inability or the failure of the petitioner to demonstrate that the challenged survey findings and deficiency citations had resulted in a remedy actually in effect was fatal to its appeal.

It should be noted that the ALJs have approached the question pragmatically, and have concerned themselves with the practical imposition and concrete effect of a remedy, and not with the speculative or duplicative effects a citation might bring. Thus, when petitioners have left citations sufficient to sustain an imposed remedy unappealed, ALJs have held that no right to hearing exists on the remaining citations. Bethel Health Care Center, supra; Eaglecare, supra. When petitioners have argued that a rescission of remedies has left them unable to protect their reputations and administrative records for compliance, ALJs have held that no right to hearing exists on such grievances. Lakewood Lodge Nursing Center, supra; Walker Methodist Health Center, supra; Charlesgate Nursing Center, supra; see also Schowalter, supra. When a NATCEP suspension has actually taken effect before being rescinded, the rescission has been held to vitiate the right to hearing even though the petitioner may have sustained some measurable injury during the period of suspension. Collins Health Care Center, supra; see also Lakewood Plaza, supra, and Arcadia Acres, supra. The rationale common to these cases would suggest very strongly, if not dictate explicitly, the conclusion that no real remedy has been imposed against Petitioner here.

In fact, that rationale and those cases recently have led another ALJ of this forum to that precise conclusion. In St. Charles Health Care, DAB CR1182 (2004), material facts virtually identical to those at bar lay before Judge Anne E. Blair. The facility in question had been cited for a "substandard quality of care" deficiency. It did not have an approved NATCEP or CEP in place and had not for eight years. CMS proposed remedies: although it did not attempt to impose a CMP, it did threaten to impose a termination of the facility's provider agreement and a DPNA. CMS's notice letter informed the facility that sections 1819(f)(2)(B) and 1918(f)(2)(B) of the Act would prohibit approval of any NATCEP or CEP it might operate. Approximately six weeks after the facility filed its hearing request, CMS determined that the facility was back in substantial compliance and announced that the termination remedy and the DPNA remedy were both suspended. Judge Blair discussed those facts and the authorities I have described above, and ruled:

Petitioner does not have a right to a hearing. The undisputed facts establish that CMS determined that Petitioner was deficient and warned Petitioner that it would impose remedies. Petitioner achieved substantial compliance resulting in CMS rescinding the proposed remedies of termination and DPNA . . . The loss of approval of a NATCEP/CEP program was not rescinded. However, since Petitioner did not currently have a NATCEP/CEP program in place, and has not had a NATCEP/CEP program in place for eight years, Petitioner did not incur the loss of approval of an existing program . . . Therefore, Petitioner did not suffer an injury for which relief can be granted and has no right to an appeal.

St. Charles Health Care, supra, at 3.

Judge Blair acknowledged, as I do, that actual loss of a facility's NATCEP or CEP approval is appealable by the terms of 42 C.F.R. � 498.3(b)(16), but she looked closely at the regulation's language:

The plain language of the regulations makes it clear that a substandard quality of care finding is appealable when it results in a facility's loss of a NATCEP/CEP currently in existence.

In the instant case, where Petitioner does not have a NATCEP/CEP program in existence, Petitioner has not suffered such a loss and there is simply nothing to litigate. If Petitioner were allowed to proceed and it prevailed in the merits of the case, there would be no relief that I could grant.

St. Charles Health Care, supra, at 4.

Petitioner concedes Judge Blair's ruling, but asserts that it is mistaken. The kernel of Petitioner's objection lies in what it believes should be a "prospective view when NATCEP provisions are viewed in context." Pet. Response, at 10. By this "prospective view," Petitioner means its asserted right to TDHS's approval of a future, unplanned, yet-to-be-instituted, and entirely hypothetical NATCEP or CEP. Petitioner's principal comfort in this position is its belief that it enjoys some form of property right in the option of creating and obtaining approval of a future NATCEP or CEP within the two years following the citation of deficiency. In support of this theory, Petitioner relies on language found in a United States District Court decision, Ivy Hall Geriatric and Rehabilitation Center, Inc. v. Shalala, 50 F. Supp. 2d 447 (D. Maryland 1999).

The difficulty in Petitioner's reliance on Ivy Hall, supra, is that the cited language in that case was directed at a perceived regulatory inequity that simply no longer exists. The enforcement action reviewed in Ivy Hall arose at a time when 42 C.F.R. � 498.3(b) did not permit facilities to appeal findings that resulted only in the withdrawal of approval from their NATCEPs or CEPs. Facilities with such programs in place were jurisdictionally without recourse if they found themselves cited for deficiencies that could lead to withdrawal of NATCEP or CEP approval, but were not faced with the imposition of any other remedies. It was in that jurisdictional context that the District Court in Ivy Hall wrote of a facility's limited property interest in its NATCEP.

But as the Board pointed out in Lakewood Plaza Nursing Center, supra, 42 C.F.R. � 498.3(b) was amended in 1999. The Secretary corrected the perceived regulatory inequity on July 23, 1999 by issuing an interim final regulation permitting appeals of loss of NATCEP approval based on an extended or partial extended survey triggered by findings of substandard quality of care. The Secretary acknowledged that "previous regulations have provided only for an informal hearing when facilities lose training programs and do not otherwise face enforcement remedies under the Medicare and Medicaid programs." 64 Fed. Reg. 39,934 (1999). The Secretary explained that experience had shown that the loss of NATCEP could have a serious impact on some facilities, given existing constraints in availability of nurse aides and training programs, and that 42 C.F.R. � 498.3(b) should be revised to provide full hearings to review the underlying factual basis of the substandard quality of care findings, even where no other remedy was being imposed. 64 Fed. Reg. at 39,935 (1999). That revision took the form of a new provision now set out at 42 C.F.R. � 498.3(b)(16). With that revision in effect and controlling this litigation, the central theory in Ivy Hall is seen to be irrelevant, and Petitioner's reliance on it to be misplaced.

There is another complex of reasons why Petitioner's "prospective view" of its property right in a future NATCEP or CEP must be rejected, and the first of that complex can be found in the absence from this record of any indication whatsoever that Petitioner has any interest, plan, or expectation of attempting to gain approval of a NATCEP or CEP. It has been shown to have been without any such expectation, interest, or plan throughout its entire history with TDHS. CMS Ex. D. Next, it is simply not possible to speculate on when Petitioner might be able to prepare and submit any NATCEP or CEP plan to TDHS, and so it is impossible to know whether the two-year period of approval-prohibition might still be in effect if it did (it will be noted that half that period has already passed). But the most serious objection to Petitioner's claiming a property right to the approval of a future NATCEP or CEP can be found in the requirements for approval themselves. Those requirements are found at 42 C.F.R. �� 483.151-155. They are rigorous, detailed, and global. They require, as a conditional of approval, that a NATCEP or CEP meet certain "class-hours" minima in a range of clinical topics and interpersonal skills such as, inter alia, basic nursing skills, patient personal-care skills, skills needed in giving care to the dying, mental health and social service skills, awareness of and respect for a broad range of patients' rights, the unique skills required to care for cognitively-impaired patients, and the skills employed in basic restorative services. The specifically-identified subtopics required to be addressed before NATCEP or CEP approval can be granted are myriad. There are, moreover, detailed standards established for the qualifications of the instructors who would teach these topics. It should be obvious that Petitioner cannot simply assume TDHS's perfunctory approval of whatever proposal for NATCEP or CEP it might submit. Petitioner's claim of a property right in a future NATCEP or CEP so attenuated by the complex of reasons I have outlined here is, at the very best, so speculative as to be untenable. I reject it as unsupported by fact or law.

The facts in this appeal and the law that controls it lead me to complete agreement with the conclusions and result reached by Judge Blair in St. Charles Health Care, supra. Petitioner has no right to a hearing, and its hearing request must be dismissed pursuant to 42 C.F.R. � 498.70(b).

VI. CONCLUSION

For all of the reason set forth above, I grant CMS's Motion to Dismiss. The requests for hearing filed by Petitioner on December 3, 2003 and May 3, 2004 and consolidated in this case by my Order of June 23, 2004 must be, and are, dismissed.

Richard J. Smith

Administrative Law Judge