2000.04.05 CR658 Ophthalmology Ltd. Eye Surgery vs. HCFA

The issue in this case is whether HCFA properly certified Petitioner to participate in the Medicare program effective March 18, 1999.

The parties have offered arguments which address this issue. HCFA argues that, when a prospective provider applies to participate in Medicare, the first date that HCFA may certify the prospective provider as being qualified to participate is the date of a compliance survey at which it is found to comply with all applicable participation requirements. 42 C.F.R. � 489.13(b). If a prospective provider fails to meet all participation requirements at the initial survey, then, according to HCFA, the earliest subsequent date that it may certify the prospective provider to participate is the date on which it submits to HCFA an acceptable plan of correction which explains how it will correct the deficiencies that were identified at the initial survey. 42 C.F.R.

HCFA contends that, in order to be certified for participation, Petitioner was required to comply with the participation requirements that govern an ASC and which are set forth at 42 C.F.R. Part 416. These requirements include the requirement that an ASC comply with the provisions of the Life Safety Code of the National Fire Protection Association (Life Safety Code) that are applicable to an ASC. 42 C.F.R. �� 416.44(b)(1); 489.13(b). HCFA contends that Petitioner was found, at the initial compliance survey, not to meet all Life Safety Code requirements. HCFA argues that, consequently, it could not certify Petitioner to participate as of the date of that survey. HCFA avers that Petitioner submitted an acceptable plan of correction on March 18, 1999. HCFA certified Petitioner on that date which, according to HCFA, is the earliest date that it could have certified Petitioner to participate.

Petitioner does not disagree with HCFA's general statement of the law. Petitioner argues that, notwithstanding its failure to comply with all the provisions of the Life Safety Code, HCFA should have certified it to participate in Medicare effective February 24, 1999, the date on which Petitioner was first surveyed for compliance with federal participation requirements. See HCFA Ex. 4. Petitioner argues that HCFA is authorized to waive the requirement that an ASC comply with all provisions of the Life Safety Code. 42 C.F.R. � 416.44(b)(2). According to Petitioner, HCFA should waive such requirements where Life Safety Code deficiencies are minor and technical and where the deficiencies cause no significant risk of harm to patients. Petitioner asserts that HCFA's failure to waive the Life Safety Code compliance requirements in this case is an abuse of discretion by HCFA. Petitioner characterizes the fire prevention and safety problems that were identified at the February 24, 1999 survey as being "minor" and "technical" in nature. Moreover, according to Petitioner, these problems were situated in parts of the building in which Petitioner is located that are outside of the premises that are operated and controlled by Petitioner. Petitioner contends that the Life Safety Code deficiencies that were identified on February 24, 1999 had no direct impact on the health and safety of Petitioner's patients.

Additionally, Petitioner asserts that it was, in fact, in full compliance with Life Safety Code requirements as of February 24, 1999. Therefore, according to Petitioner, the findings of deficiency are incorrect and Petitioner ought to have been certified as a Medicare participant effective February 24, 1999.

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 separately numbered heading. I discuss each Finding in detail.

1. I do not have the authority to compel HCFA
to waive Life Safety Code requirements.

Petitioner relies on 42 C.F.R. � 416.44(b)(2) as support for its assertion that HCFA should be directed to waive the requirement that Petitioner be in compliance with all the provisions of the Life Safety Code as a prerequisite to being certified to participate in Medicare. This section provides that:

In consideration of a recommendation by the State survey agency, HCFA may waive, for periods deemed appropriate, specific provisions of the Life Safety Code which, if rigidly applied, would result in unreasonable hardship upon an ASC, but only if the waiver will not adversely affect the health and safety of the patients.

Petitioner argues that, in this case, the Life Safety Code was applied rigidly with resulting unreasonable hardship on Petitioner. It argues that a waiver for the period between February 24, 1999 and March 18, 1999 would not have adversely affected the health and safety of Petitioner's patients. Therefore, according to Petitioner, HCFA abused its discretion by not waiving the requirement that Petitioner comply with the Life Safety Code.

I have no authority to hear and decide an issue where no right to a hearing exists as to that issue. I do not have the authority to decide whether HCFA ought to have waived the requirement that Petitioner comply with every aspect of the Life Safety Code. HCFA's authority to grant or deny a waiver pursuant to 42 C.F.R. � 416.44(b)(2) is discretionary authority. HCFA's alleged failure to exercise its discretion to waive a participation requirement is not an act which gives a prospective provider a right to a hearing.

The right of a prospective provider to a hearing in a case involving a determination by HCFA as to certification is set forth at 42 C.F.R. � 498.5(a)(2). That section provides that a prospective provider that is dissatisfied with a reconsidered determination by HCFA is entitled to a hearing. The only permissible subject matter for a reconsidered determination in a case involving denial of certification to a prospective provider is whether the prospective provider qualifies as a provider. 42 C.F.R. � 498.5(b)(1).

I have the authority in this case to hear and decide the question of whether Petitioner satisfied participation requirements for certification as an ASC during the period which ran from February 24, 1999 until March 18, 1999. HCFA determined that Petitioner qualified as a provider effective March 18, 1999. Petitioner contends that HCFA should have determined that Petitioner qualified as a provider effective February 24, 1999. HCFA's determination that Petitioner qualified as a provider as of March 18, 1999 is, effectively, a determination that Petitioner did not qualify as a provider prior to that date.

But, HCFA's decision to waive or not to waive the requirement that an ASC satisfy all of the Life Safety Code requirements is separate from, and not a part of, its determination whether the ASC satisfies all participation requirements. A decision to grant a waiver from a compliance requirement is not a determination that a prospective provider satisfies participation requirements. Rather, it is a decision by HCFA to allow a provider to participate despite HCFA's conclusion that in some minor respect the provider does not satisfy all participation requirements.

Furthermore, the evidence does not establish that the criteria for granting a waiver were present in this case. HCFA may waive the requirement that an ASC meet all Life Safety Code requirements only where a State survey agency recommends that the requirements be waived. 42 C.F.R. � 416.44(b)(2). Petitioner has not established that the South Dakota State survey agency made such a recommendation to HCFA in this case.

2. Petitioner did not prove that it satisfied all of the Life Safety
Code requirements between February 24, 1999 and March 18, 1999.

The surveyors who conducted the February 24, 1999 survey found that Petitioner failed in two respects to satisfy Life Safety Code requirements. The deficiencies are as follows:

� Petitioner failed to comply with a Life Safety Code requirement that corridor doors resist the passage of smoke. The surveyors found that doors in the north/south basement exit corridor of the building in which Petitioner is located were not smoke tight. Two corridor doors to storage rooms and one corridor door to a janitor closet had louvered grills which permitted the passage of smoke.

� Petitioner failed to comply with a Life Safety Code requirement that the building in which Petitioner is located have a complete automatic sprinkler system. The surveyors found that the south exit stair enclosure that opens to the basement level and the first and second floor levels in the building in which Petitioner is located had no sprinkler installed at the top of the shaft to provide sprinkler coverage at the second floor landing

Petitioner does not deny the accuracy of the findings that corridor doors were louvered and not smoke tight or that there was no sprinkler at the top of the exit shaft. Nor does Petitioner deny that these findings establish that the building in which Petitioner is located did not, as of February 24, 1999, contain all of the fire prevention features that are described in the Life Safety Code. Petitioner asserts, however, that it was in compliance with the Life Safety Code for several reasons.

First, Petitioner argues that HCFA may not find that Life Safety Code deficiencies were present - despite the unchallenged accuracy of the surveyors' findings - because the building in which Petitioner is located was maintained to the satisfaction of local fire safety officials. Petitioner contends that, under the unique circumstances that pertain to it, local fire safety officials have the authority to determine whether the building in which it is located complies with the Life Safety Code. Petitioner asserts that a determination by the local fire inspector that the building met fire safety requirements divested HCFA of the authority to determine Life Safety Code compliance.

As authority for this argument Petitioner cites to Section 12-6.1.6.5 of the Life Safety Code. HCFA Ex. 11. This section states that:

When new ambulatory health care centers are located in existing buildings, the authority having jurisdiction may accept construction systems of lesser fire resistance than required . . . if it can be demonstrated to its satisfaction that in cases of fire, prompt evacuation of the center can be made or that the exposing occupancies and materials of construction present no threat of fire penetration from such occupancy into the ambulatory health care center or collapse of the structure.

Petitioner argues that the term "authority having jurisdiction" is defined in the Life Safety Code to mean the "organization, office, or individual responsible for 'approving' equipment, an installation, or a procedure." P. Ex. 7. Petitioner asserts that the term is explained further at Section A-3-2 of the Life Safety Code as follows:

Where public safety is primary, the "authority having jurisdiction" may be a federal, state, local, or other regional department or individual such as a fire chief, fire marshal, chief of fire prevention bureau, labor department, health department, building official, electrical inspector, or others having statutory authority.

From this, Petitioner reasons that the "authority having jurisdiction" in this case is not HCFA, but is in fact, the local fire inspector. Petitioner asserts that the local fire inspector inspected the building in which Petitioner is located and found it to be in compliance with fire and safety requirements. See P. Ex. 6. Therefore, according to Petitioner, the building in which Petitioner is located - and Petitioner - were complying with Life Safety Code requirements as of February 24, 1999.

I disagree with Petitioner's premise that HCFA is required to defer to the judgment of local officials as to whether Petitioner is in compliance with the Life Safety Code. Under 42 C.F.R. � 416.44(b) it is HCFA - and not local officials - which must ultimately determine whether an ASC is complying with the requirements of the Life Safety Code.

The provisions of the Life Safety Code that Petitioner cites in support of its argument do not suggest that HCFA is divested of its responsibility to make such a determination in this case. HCFA has the responsibility for approving participation in Medicare of an ASC. HCFA is an "approving official" for purposes of approving Petitioner's request to participate. The fact that a local fire inspector may also be an approving official for purposes of determining whether an entity, including an ASC complies with local or even State laws does not divest HCFA of its responsibility as an "approving official" for purposes of determining whether an ASC satisfies participation requirements.

Additionally, there is no evidence that the local fire inspector ever functioned as an "approving official" to determine Petitioner's compliance with the Life Safety Code. Petitioner has not submitted anything which shows that the local fire inspector inspected Petitioner's operations and concluded that Petitioner operated as an ASC in compliance with Life Safety Code requirements.

The evidence that Petitioner submitted shows only that the local fire inspector inspected the building in which Petitioner subsequently became located, at some point prior to Petitioner becoming established in that building, and found the structure to be in compliance with local fire safety requirements. Petitioner was established after the date of the local fire safety inspection on which Petitioner relies as evidence of its asserted compliance with the Life Safety Code. The building in which Petitioner is located was inspected for compliance with fire safety requirements on June 1 - 3, 1998. P. Ex. 6. Petitioner did not establish its facility in the building until sometime after June 3, 1998. That is made evident by the fact that Petitioner submitted plans for its facility to the South Dakota Department of Health on June 29, 1998. HCFA Ex. 14.

Petitioner's second argument is that it cannot be held responsible for deficiencies which are not under its direct control. Petitioner asserts that the Life Safety Code deficiencies that were identified at the February 24, 1999 survey of Petitioner were found in parts of the building in which Petitioner is located over which Petitioner exercises no control.

I am not persuaded by this argument. HCFA's responsibility is to assure that providers operate in a manner which protects the safety of Medicare beneficiaries. HCFA may not have the authority to direct the owner of a structure to bring that structure into compliance with the requirements of the Life Safety Code. But, HCFA may condition a provider's participation in Medicare on that provider being located in a structure that complies with Life Safety Code requirements whether or not the provider is in control of the entire premises of that structure. A prospective provider may not locate itself in a noncompliant building and then assert that it is entitled to be certified to participate on the grounds that the building's deficiencies are located in areas that are outside of the prospective provider's control.

Petitioner's third argument is that the South Dakota State survey agency surveyors misread the Life Safety Code to require incorrectly that all of the corridors in a building have fire resistant doors. Petitioner asserts that the Life Safety Code should be read to require that only those corridors which actually are used as exit corridors have fire resistant doors. From this, Petitioner contends that the louvered doors that were identified at the February 24, 1999 survey were not in violation of the Life Safety Code inasmuch as the corridor in which the doors were located is only one of three possible exit corridors from Petitioner's facility.

As support for this argument, Petitioner relies on Section 26-3.6.1 of the Life Safety Code which states that: "Where access to exits is limited to corridors, such corridors hall be separated from use areas by partitions having a fire resistance rating of at least 1 hour." HCFA Ex. 10. Petitioner reads Section 26-3.6.1 to mean that, where access to an exit is limited to a particular corridor, then that corridor must be separated from use areas by doors which meet Life Safety Code requirements pertaining to fire resistance. Under Petitioner's analysis other corridors would be exempt from Life Safety Code requirements.

Petitioner misreads the requirements of the Life Safety Code. Section 26-3.6.1 does not suggest that a corridor is exempt from Life Safety Code requirements if alternate corridors may be used as exits. I read the phrase "where access is limited to corridors" to mean, literally, that where the only access to a facility consists of corridors, then all of those corridors must have doors which meet fire resistance standards. The section plainly is intended to distinguish the situation where a facility opens directly to the outside from the situation where a facility opens to interior corridors. It does not suggest that, where access is limited to several corridors some, but not all of them, must have fire resistant doors.

Moreover, failure to comply with the fire resistance requirements of Section 26-3.6.1 was not a basis for the Life Safety Code citation in the report of the February 24, 1999 survey. The surveyors issued a citation under Sections 12-3.6.3 and 13-3.6.3 of the Life Safety Code. These sections address the need to make corridor doors smoke resistant. A citation was issued because louvered doors would allow the passage of smoke into corridors. Smoke may penetrate throughout a building from a fire source. The fact that other corridors may not have had louvered doors in them would not necessarily provide protection to patients who are exposed to smoke which emanates from behind a louvered door in another corridor. If patients were to attempt to exit the building through corridors which did not have louvered doors they could be affected by smoke which passed through louvered doors in another corridor.

Petitioner's final argument is that the louvered corridor doors and the absent sprinkler affected parts of the building in which Petitioner is located which are remote from Petitioner's operation. Petitioner asserts that the Life Safety Code was not intended to apply to deficiencies that are so remote from an ASC's operation as Petitioner contends these to be.

This argument rests on unsupported assertions. The record of this case does not show that the deficiencies that were identified by the South Dakota State survey agency surveyors were so remote from Petitioner's operation as to have no significant potential effect on Petitioner and its patients in the event of a fire. Nor has Petitioner identified language in the Life Safety Code which may be read reasonably as saying that the deficiencies that were identified in this case are so trivial as to be inconsequential.

3. I am without authority to decide that HCFA is estopped from
certifying Petitioner to participate in Medicare effective March 18, 1999.

Petitioner does not expressly make an estoppel argument. However, many of its allegations come close to being an assertion that, under principals of estoppel, HCFA should be directed to certify Petitioner to participate in Medicare effective February 24, 1999. In effect, Petitioner is arguing that the South Dakota State survey agency surveyors told its representatives at the end of the February 24, 1999 survey that Petitioner was in compliance with all participation requirements. Petitioner contends that it relied to its detriment on these representations by beginning to treat patients immediately thereafter.

The issue of whether principles of estoppel apply to HCFA is one that I have addressed in several cases. In GranCare Home Health Service & Hospice, DAB CR464 (1997), I held that the regulations which govern provider certification do not authorize me to disregard or supersede their specific requirements based on principles of estoppel. I reached similar holdings in The Rivers HealthCare Resources, Inc., DAB CR446 (1996) and in SRA Inc., D/B/A St. Mary Parish Dialysis Center, DAB CR341 (1994). Petitioner has not offered anything here which would cause me to reconsider these holdings.