SUBJECT:

Castle Pine Health & Rehabilitation Center,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION DISMISSING

REQUEST FOR HEARING

I dismiss the hearing request filed by Petitioner, Castle Pines Health & Rehabilitation Center. This dismissal is mandated by 42 C.F.R. � 498.70(b). Petitioner has no right to a hearing to challenge the remedy that is at issue in this case, the imposition of a denial of payment for new admissions (DPNA), during the period that ran from April 14, 2004 through June 3, 2004.

I. Background and undisputed facts

The facts that I recite in this background section are undisputed. Petitioner is a skilled nursing facility in Lufkin, Texas. It participates in the Medicare program. Its participation in Medicare is governed by sections 1819 and 1866 of the Social Security Act. Its participation in Medicare also is governed by federal regulations at 42 C.F.R. Parts 483 and 488. The hearing in this case is governed by regulations at 42 C.F.R. Part 498.

Petitioner was surveyed for compliance with Medicare participation requirements on January 13, 2004 (January survey). The surveyors found Petitioner not to be complying with one participation requirement. The Centers for Medicare & Medicaid Services (CMS) concurred in the surveyors' findings. CMS informed Petitioner that it would impose DPNA if Petitioner did not attain compliance with all participation requirements by April 14, 2004. CMS Ex. 1. ⁽¹⁾ Additionally, CMS advised Petitioner that it had a right to request a hearing to challenge the noncompliance finding that was made at the January survey. Id.

Petitioner did not file a hearing request challenging the January survey noncompliance finding. Consequently, that finding became administratively final.

Petitioner was again surveyed on April 2, 2004 (April survey). ⁽²⁾ On that occasion the surveyors found Petitioner not to be complying with 12 distinct participation requirements. CMS Ex. 5. CMS concurred in the surveyors' findings. On April 16, 2004, CMS notified Petitioner that its participation in Medicare would be terminated unless Petitioner attained compliance with all participation requirements by July 13, 2004. CMS Ex. 2. CMS also advised Petitioner that DPNA became effective on April 14, 2004 as a consequence of Petitioner's continuing noncompliance with participation requirements. Id. Finally, CMS advised Petitioner that it had a right to request a hearing to challenge the findings of noncompliance that were made at the April survey. Id.

CMS subsequently found Petitioner to have attained compliance with all participation requirements effective June 3, 2004. Consequently, CMS did not terminate Petitioner's participation in Medicare and the DPNA ceased after June 3, 2004.

Petitioner filed a hearing request on June 15, 2004. Petitioner's hearing request (Hearing request). In its request, Petitioner contested 11 of the 12 deficiency findings that were identified in the report of the April survey. Id. Specifically, it contested deficiency findings that are made at Tags 157, 221, 272, 279, 280, 314, 325, 327, 329, 426, and 514 of the report of the April survey. Id.; see CMS Ex. 5. Petitioner did not contest the deficiency finding that is made at Tag 282 of the report of the April survey. Hearing request; see CMS Ex. 5, at 23 - 29.

The case was assigned to me for a hearing and a decision. On August 2, 2004, I issued an initial pre-hearing order to the parties. That order established deadlines by which the parties were required to file pre-hearing exchanges. The exchanges described in the order consisted of copies of proposed exhibits, including the written direct testimony of proposed witnesses, and pre-hearing briefs. The order instructed each party to brief all issues and facts that the party relied on to support its case. CMS filed its exchange on November 24, 2004. Petitioner filed its exchange on December 23, 2004.

CMS filed exhibits, including written declarations of proposed witnesses, that addressed all 12 of the alleged deficiencies that were cited in the report of the April survey. Petitioner filed an exchange, including a pre-hearing brief, that addressed the 11 alleged deficiencies that Petitioner challenged in its hearing request. It did not address the alleged deficiency that is cited at Tag 282 of the report of the April survey. Petitioner's pre-hearing brief.

On April 21, 2005, CMS filed a motion to dismiss Petitioner's hearing request. Petitioner responded to the motion. At my direction, CMS filed a reply to the response.

II. Issue, findings of fact and conclusions of law

A. Issue

The issue in this case is whether I must dismiss Petitioner's hearing request on the ground that Petitioner has no right to a hearing.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding, below, as a separate heading. I discuss each Finding in detail.

1. The deficiency finding made at Tag 282 of the April survey became administratively final as a consequence of Petitioner's failure to contest it.

As I discuss at Part I of this decision, the surveyors who conducted the April survey and subsequently, CMS, found that Petitioner had failed to comply substantially with 12 distinct participation requirements. CMS Ex. 5. Petitioner filed a hearing request challenging only 11 of these deficiency findings. It subsequently failed to offer either evidence or argument pertaining to the 12^th deficiency finding. I conclude from Petitioner's omissions that it did not challenge this finding, made at Tag 282 of the report of the April survey. CMS Ex. 5, at 23-29. Consequently, that finding of noncompliance is administratively final.

Petitioner's hearing request is quite explicit. Petitioner asserts that it:

disagrees with all CMS' legal and factual contentions (as set forth in the [April] survey report) regarding the F157, 221, 272, 279, 280, 314, 325, 327, 329, 426, and 514. . . .

Hearing request at 1-2. Petitioner then addresses each of these deficiency citations in detail, providing both a factual and legal analysis as to each of its contentions. Nowhere in the hearing request does Petitioner mention the allegations at Tag 282 of the report of the April survey.

Petitioner also argues extensively in its pre-hearing brief about the 11 deficiency findings that it challenged in its hearing request. But, it says nothing in that brief about Tag 282. This is striking given that CMS addressed Tag 282 in considerable detail in its pre-hearing brief, which it filed a month before Petitioner was due to file a response. CMS pre-hearing brief at 17 - 21. Petitioner thus knew that CMS was relying on the deficiency finding made at Tag 282 to support its remedy determination in this case yet chose not to respond to it.

2. CMS is authorized to impose DPNA against Petitioner.

Regulations governing imposition of remedies by CMS against a skilled nursing facility such as Petitioner describe circumstances under which CMS must or may impose DPNA. CMS must impose DPNA where a facility is not in substantial compliance with a participation requirement or requirements three months after the last day of a previous survey at which substantial noncompliance is determined to have occurred. 42 C.F.R. � 488.417(b)(1). ⁽³⁾ CMS may impose DPNA whenever a facility is not complying substantially with a Medicare participation requirement. 42 C.F.R. � 488.417(a)(1). In other words, DPNA is mandatory whenever a facility is not complying substantially with a participation requirement or requirements three months after a survey in which noncompliance was found. But, CMS also has the authority to impose DPNA at any time against a facility whenever that facility is found to be out of compliance with even one participation requirement.

CMS was authorized to impose DPNA against Petitioner beginning April 14, 2004. As I discuss above, at Finding 1, the April survey, completed on April 2, 2003, resulted in 12 findings of deficiency of which Petitioner challenged only 11. The 12^th deficiency finding became administratively final because Petitioner failed to contest it. Consequently, there was an extant deficiency finding as of April 14, 2004, and that gave CMS authority to impose DPNA pursuant to 42 C.F.R. � 488.417(a)(1).

Not only did CMS have discretion to impose DPNA pursuant to 42 C.F.R. � 488.417(a)(1) but it was required to do so pursuant to 42 C.F.R. � 488.417(b)(1). DPNA was mandatory in this case because Petitioner was found to be noncompliant at a survey that was three months subsequent to the January survey. ⁽⁴⁾

CMS had no choice but to impose DPNA. In this case there are two administratively final findings of noncompliance. Petitioner did not request a hearing to contest the finding of noncompliance that was made at the January survey. That finding of noncompliance became final by virtue of Petitioner's failure to contest it. And, as I have just discussed, Petitioner failed to challenge one of the findings of noncompliance that was made at the April survey. That finding, too, is administratively final. These findings were separated by a time span exceeding three months. ⁽⁵⁾

Petitioner appears to argue that the mandatory DPNA requirement is not triggered absent proof of continuous noncompliance over a three month period. That is not a correct reading of the regulation. The regulation does not require unbroken compliance with a single Medicare participation requirement or a continuous period during which a facility is not complying with various, albeit shifting, participation requirements. All that the regulation requires is two events of noncompliance separated by a period of at least three months. The regulation states that DPNA must be imposed where a facility is not in substantial compliance:

3 months after the last day of the survey identifying the noncompliance . . . .

42 C.F.R. � 488.417(b)(1). (Emphasis added).

Petitioner also appears to argue that the noncompliance finding made at the January survey was nullified by subsequent events relating to the February survey. From this, Petitioner contends that there was not noncompliance, either for a period of three continuous months, or in two events separated by three months.

I find this argument to be without merit. The events surrounding the February survey do not nullify the finding of noncompliance that was made - and not challenged by Petitioner - at the January survey.

To begin with, the February survey was not a Medicare compliance survey at all but was a survey to certify Petitioner's eligibility for renewal of its State nursing home license. The results of that survey are irrelevant to this case because they do not specifically address Petitioner's compliance with Medicare participation requirements. A document relating to the February survey filed by Petitioner refers to deficiency findings by a letter prefix of "N." P. Ex. 2. I take notice that, as CMS contends, the use of the "N" prefix by Texas State authorities in documents pertaining to the survey identifies the deficiency findings made at the February survey as relating to licensing standards, and not Medicare participation requirements. Findings of Medicare compliance deficiencies generally are proceeded with the letter designation "F" and not "N." See State Operations Manual, Appendix P, Chapter IV. Petitioner has not argued, much less has it offered evidence, to show that the "N" deficiencies found in February were made using identical standards or survey techniques as are used to evaluate compliance with Medicare participation requirements.

Second, informal dispute resolution (IDR) findings that deleted some of the deficiencies found at the February survey do not - notwithstanding arguments made by Petitioner - nullify the unchallenged finding of noncompliance that was made at the January survey. In their report of the February survey, the surveyors found that Petitioner was not complying substantially with a pharmacy services requirement. Petitioner's Response to CMS's Motion to Dismiss (P. Response) at 2. ⁽⁶⁾ As Petitioner describes the surveyors' findings:

The 2/19/04 pharmacy services citation did not reference the same incident as that referenced in the January 2004 survey, but instead cited two completely separate examples.

Id. After receiving its copy of the report, Petitioner contested its findings through a State IDR proceeding. At IDR it was found that there was insufficient evidence to sustain the particular pharmacy services deficiency that was at issue (although it was also found that the evidence sustained deficiency findings made under other citations). Id; P. Response Ex. 2, at 4.

Petitioner argues that it was not necessary for it to have requested a hearing concerning the pharmacy services citation made at the January survey because "that citation had already been cleared prior to the date the denial of payment took effect." P. Response at 2. But, in fact, IDR deletion of some of the February survey findings would not vitiate CMS's authority to impose DPNA even if the February survey findings addressed issues of Medicare compliance. As Petitioner acknowledges, the February pharmacy services citation involves different facts and events than those which underlie the deficiency finding made in January. The two deficiency findings thus involve distinct and separate episodes of noncompliance. "Clearance" of the February deficiency as a consequence of deletion after IDR does not suggest that the findings made in January are invalid. Nothing happened subsequent to January 2004 that "cleared" the finding of noncompliance that was made at the January survey.

Finally, the IDR findings made about the February survey - assuming for argument's sake that the February survey findings addressed Medicare compliance issues - do not support a conclusion that there was a time between January and April 2004 during which Petitioner was deficiency free. The IDR findings deleted only some of the noncompliance findings that were made at the February survey. P. Response Ex. 2. Others were sustained, and were not appealed further by Petitioner. Consequently, there were findings of noncompliance made at all three surveys (January, February, and April) that were not appealed by Petitioner and which became administratively final. These administratively final findings demonstrate that, even under Petitioner's theory of when mandatory DPNA must be imposed, there was an unbroken period of more than three months during which Petitioner was noncompliant.

3. CMS is authorized to impose DPNA against Petitioner during the period that began on April 14, 2004, and which ran through June 3, 2004.

Petitioner has offered neither persuasive argument nor facts that counter CMS's determination that the period during which DPNA should be imposed ran from April 14, 2004 through June 3, 2004.

Petitioner argues that, if DPNA is authorized, its duration should end on April 28, 2004. Petitioner argues that the State of Texas determined that Petitioner had attained compliance by that date, referring to a letter of that date, attached to Petitioner's opposition to CMS's motion as P. Response Ex. 1.

I find this allegation to be irrelevant. Petitioner not only failed to contest the deficiency finding that is cited at Tag 282 of the April survey report, but it failed to assert in its hearing request or in its pre-hearing brief that it attained compliance with the requirement that underlies that finding earlier than June 3, 2004. The issue of duration is an issue that Petitioner could have raised in its hearing request and which Petitioner failed to raise. It is simply too late for Petitioner to raise the issue at this time.

Furthermore, P. Response Ex. 1 provides no support for Petitioner's duration argument. The document is a "Survey/Inspection Summary Report" that refers to a survey/inspection conducted on April 28, 2004. P. Response Ex. 1, at 1. The document states that Petitioner was found on that date to be in compliance with two "health code" requirements (Quality of Care and Administration). But, it does not certify that Petitioner was found to be in compliance with all participation requirements on that date. To the contrary, the document specifically warns that there may be other pending deficiencies. Id. Petitioner has not provided a copy of any survey report that was made of a survey conducted on April 28 that might explain the complete findings of the surveyors who conducted that survey.

Moreover, the document supplied by Petitioner does not refer explicitly to the noncompliance finding made at the April survey that Petitioner failed to contest. It is impossible to say from the face of the document whether Petitioner was found on April 28 to have attained compliance with the participation requirement that underlies that finding.

4. Petitioner has no right to a hearing and I must dismiss its hearing request.

Pursuant to 42 C.F.R. � 498.70(b), an administrative law judge must dismiss a hearing request where a party has no right to a hearing. Petitioner has no right to a hearing in this case because CMS is authorized to impose DPNA against it regardless of any findings that I might make concerning the 11 deficiency findings that were made at the April survey that were contested by Petitioner. CMS is authorized to impose DPNA against Petitioner as a consequence of Petitioner's failure to contest one of the deficiency findings that were made at the April survey. And, DPNA is mandated in this case because Petitioner's uncontested deficiencies occurred at an interval of more than three months.

Steven T. Kessel

Administrative Law Judge

1. CMS filed proposed exhibits (Exs.) consisting of CMS Ex. 1 - CMS Ex. 29. Petitioner filed proposed exhibits consisting of P. Ex. 1 - P. Ex. 13. I am receiving all of the parties' proposed exhibits into the record of this case.

2. Petitioner also was surveyed for State license renewal in February 2004 (February survey). At Finding 2, I discuss the February survey and its relationship to this case.

3. Additionally, but not relevant here, CMS must impose DPNA where a State survey agency has cited a facility with substandard quality of care at three consecutive standard surveys. 42 C.F.R. � 483.417(b)(2).

4. Whether DPNA is mandatory is, in a sense, academic because CMS had the discretion to impose DPNA once the uncontested deficiency at Tag 282 of the report of the April survey became administratively final.

5. The January survey was completed on January 13, 2004, and the April survey was completed on April 2, 2004. The two surveys were completed in a period of less than three months. However, the unchallenged finding of noncompliance made at Tag 282 of the report of the April survey was one of continuing noncompliance. Petitioner offered nothing to show that it had corrected that deficiency by April 14, 2004, three months after completion of the January survey.

6. Petitioner's Response to CMS's Motion to Dismiss included attachments that were labeled as exhibits. These exhibits will be labeled as "P. Response Ex."