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                              Loma Linda University Children's Hospital, DAB CR5713 (2020)
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Loma Linda University Children's Hospital, DAB CR5713 (2020)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Loma Linda University Children’s Hospital,
	(CCN: 052406),
	Petitioner,
v.
Centers for Medicare & Medicaid Services.
Docket No. C-18-957Decision No. CR5713September 18, 2020

        
              
    

      DECISION
Petitioner, Loma Linda University Children’s Hospital (Children’s Hospital), is an end stage renal dialysis (ESRD) facility, located in Loma Linda, California.  The Centers for Medicare & Medicaid Services (CMS) approved its application to participate in the Medicare program, effective June 28, 2017.  Petitioner now challenges that effective date.  The parties have filed cross-motions for summary judgment.
I grant CMS’s motion and deny Petitioner’s.  The undisputed evidence establishes that Petitioner first met all Medicare participation requirements on June 28, 2017, which is, therefore, the correct effective date of coverage.
Background
In a letter dated December 6, 2017, CMS advised Children’s Hospital that it approved its request to participate in the Medicare program with a June 28, 2017 effective date of coverage.  CMS Ex. 8.  Children’s Hospital sought reconsideration, asking that its effective date be changed to November 1, 2015.  It argued that it was entitled to the earlier effective date because it provided necessary services; it incurred significant costs in providing those services; and CMS’s policies unduly delayed its survey, which is required for an ESRD facility’s enrollment.  CMS Ex. 9.
Page 2
In a reconsidered determination, dated April 3, 2018, CMS affirmed the June 28, 2017 effective date.  CMS Ex. 10.  Children’s Hospital requested review by an administrative law judge.  In its appeal, Petitioner conceded that, *under the “general rule,” the appropriate effective date of enrollment is June 28, 2017*.  Nevertheless, it argued that applying the general rule would be inequitable, given the facility’s good-faith efforts to serve a vulnerable population and its long wait for a survey.  Hearing Request, docket #1 (filed May 30, 2018).
The parties have filed cross-motions for summary judgment and briefs in support.  (CMS Br.; P. Br.).  CMS submits 12 exhibits (CMS Exs. 1-12).  Petitioner submits three exhibits (P. Exs. 1-3).1
  Responding to Petitioner’s submissions, CMS filed objections (CMS Objection).
Discussion
***CMS is entitled to summary judgment because the undisputed evidence establishes that Petitioner, Children’s Hospital,******first met all Medicare participation requirements on June 28, 2017, which is, therefore, the correct effective date of its Medicare approval.***2
**Summary judgment**.  To grant summary judgment, I must draw all reasonable inferences in the light most favorable to the non-moving party and find that the case presents no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.  *Donald W. Hayes, D.P.M*., DAB No. 2862 at 8 (2018); *1866ICPayday.com, L.L.C.*, DAB No. 2289 at 2-3 (2009); *Illinois Knights Templar Home*, DAB No. 2274 at 3-4 (2009), and cases cited therein.
**Program requirements**.  Section 1881 of the Social Security Act (Act) extends Medicare coverage to ESRD patients.  The Act establishes the general scheme by which participating individuals qualify and facilities deliver ESRD services.  Implementing regulations fill in the details and are found at 42 C.F.R. part 494.
To participate in and receive payment from Medicare, an ESRD facility must satisfy all the provisions of section 1881 of the Act, and it must be in substantial compliance with the conditions for coverage set forth in part 494.  42 C.F.R. § 488.3(a).  A “condition
Page 3
for coverage” represents a broad category of services.  Each condition is contained in a single regulation, which is divided into subparts called standards.  *See*42 C.F.R. § 488.26(b); *Angel Kidney Care of Inglewood, Inc.*, DAB No. 2795 at 1 (2017).  With one exception,3
 the failure of an ESRD supplier to meet one or more of the conditions for coverage set forth in part 494 will result in termination of Medicare coverage for the services furnished.  42 C.F.R. § 488.604(a).
If a facility is deficient with respect to one or more *standards*, it may participate in the Medicare program only if:  a) it has submitted a plan of correction for achieving compliance within a reasonable period of time acceptable to CMS; and b) the deficiencies “neither jeopardize the health and safety of patients nor are of such character as to seriously limit the provider’s capacity to render adequate care.”  42 C.F.R. § 488.28.  If the facility meets these criteria, the state agency or CMS may grant it a “reasonable time” in which to achieve substantial compliance.  Ordinarily that amount of time is 60 days, but that depends on the nature of the deficiency and the survey agency’s judgment as to the capabilities of the facility to provide adequate and safe care.  42 C.F.R. § 488.28(c)-(d).  Nothing in this or any other regulation authorizes a period of correction where a facility is found out of compliance at the condition level.
To monitor compliance, CMS contracts with state agencies that periodically survey dialysis facilities.  Act § 1864(a); 42 C.F.R. § 488.10.  Each facility must be surveyed as often as CMS deems necessary.  42 C.F.R. § 488.20(a).
**ESRD enrollment**.  Like all suppliers, an ESRD facility must complete and submit an application in order to enroll in the Medicare program.  42 C.F.R. § 424.510(a)(1), (d)(1); *see* 42 C.F.R. § 498.2.  It must then be surveyed and must demonstrate that it meets all conditions for coverage.  42 C.F.R. §§ 424.510(a), 488.3(a), 494.1(b).  If, at the time of the survey, it does not meet all health and safety standards, the effective date of its approval is the date it is found to meet all conditions for coverage, and CMS or the state agency receives an acceptable plan of correction.  42 C.F.R. § 489.13(c)(2)(ii)(A).
**The effective date of approval for Children’s Hospital**.  Here, for many years, Petitioner, Children’s Hospital, was a component of Loma Linda University Medical Center (Medical Center), and Medical Center billed the Medicare program for its services.  Effective November 16, 2014, Children’s Hospital obtained a license as a separate hospital.  CMS Ex. 2 at 146, 154.  In a letter dated November 20, 2014, Loma Linda University Adventist Health Sciences Center, which owns both Medical Center and Children’s Hospital, advised the California Department of Public Health (state agency)
Page 4
that Children’s Hospital had been licensed as a separate hospital facility.  CMS Ex. 1; *see* CMS Ex. 2 at 30, 31.
On December 3, 2014, Children’s Hospital applied to enroll in the Medicare program *as a new enrollee* by submitting an application (CMS-855) to Noridian Healthcare Solutions, the Medicare contractor.  CMS Ex. 2; *see* CMS Ex. 2 at 7, 130, 154.
In a letter dated January 27, 2015, the contractor advised Children’s Hospital that it had forwarded the application to the state survey agency, with a copy to CMS’s regional office.  The letter explained that the “next step” in the process would be “a survey or site visit” conducted by a state survey agency or a CMS-approved accrediting organization, to ensure that the ESRD met the required “conditions of participation” (sic).4
  When the CMS regional office confirmed that the conditions were met, the Medicare contractor would advise Children’s Hospital of its decision.  CMS Ex. 3.
Significantly, until November 1, 2015, Medical Center continued to submit Medicare claims for the dialysis services, and those claims were paid.  Effective November 1, that billing stopped, and claims for dialysis services provided by Children’s Hospital were held “pending the CMS Certification Number (CCN)” for Children’s Hospital.  CMS Ex. 9 at 2.
Thereafter, in a letter dated February 25, 2016, the state agency acknowledged receiving the request for “initial certification towards survey” of Children’s Hospital.  The letter advised that “there is no [a]ccrediting [o]rganization . . . option for ESRD [i]nitial Medicare certification at this time.”  It cautioned that “longstanding CMS policy” directs the state agencies to give survey priority to complaint investigations, recertifications, and “core infrastructure work” for existing providers.  Initial certification surveys were given lower priority, although providers and suppliers could apply to the state agency and CMS for an exception to its low priority status.  The supplier would have to show that the lack of Medicare certification “would cause significant access-to-care problems” for the beneficiaries it served.  The letter also warned that exceptions would be infrequent.  CMS Ex. 4; *see* CMS Ex. 5.
On March 2, 2016, Children’s Hospital asked the state agency for “an expedited initial survey,” although its letter was erroneously dated November 2, 2015.  CMS Ex. 6; CMS Ex. 9 at 3.
The state agency surveyed Children’s Hospital from May 30 through June 2, 2017, and found multiple standard-level deficiencies:  sanitary environment (42 C.F.R. § 494.30); disinfecting surfaces (42 C.F.R. § 494.30(a)(4)(ii)); privacy/confidentiality (42 C.F.R.
Page 5
§ 494.70(a)(4)); appropriateness of dialysis prescription (42 C.F.R. § 494.80(a)(2)); quality assessment and performance improvement program (42 C.F.R. § 494.110); and complete, accurate, and accessible medical records (42 C.F.R. § 494.170).  CMS Ex. 7.  Children’s Hospital does not dispute these findings.
Children’s Hospital submitted its plan of correction on June 28, 2017, which CMS approved.  CMS Ex. 7 at 1, 2.  Thus, **June 28, 2017** – the date Children’s Hospital submitted an acceptable plan of correction – is the earliest possible effective date of approval.  42 C.F.R. § 489.13(c)(2)(ii)(A).
**Petitioner’s previous arguments**.  As noted above, throughout the early stages of administrative review, Children’s Hospital based its appeal on purely equitable claims:  it provides a necessary service to a vulnerable population, and CMS policies unfairly delayed its survey.
These are not successful arguments, as Petitioner seems to recognize.  *See* Hearing Request, docket #1 (filed May 30, 2018) (conceding that, under the “general rule,” the appropriate effective date of enrollment is June 28, 2017).  I have no authority to grant Petitioner an earlier effective date based on equitable or policy arguments.  *Howard M. Sokoloff, DPM, MS, Inc.*, DAB No. 2972 at 9 (2019); *US Ultrasound*, DAB No. 2302 at 8 (2010).
Nor may Petitioner, as a prospective supplier, appeal based on the contention that its survey should have been conducted earlier.  57 Fed. Reg. 46,362-363 (Oct. 8, 1992). *See Forest Glen Skilled Nursing & Rehab. Ctr.*, DAB No. 1887 at 10 (2003) (holding that the state survey agency’s delay in conducting a survey “is not a proper basis for appeal under 42 C.F.R. Part 498, nor do the regulations . . . permit an ALJ . . . to set an earlier effective date . . . based solely on equitable considerations . . . .”).
**Petitioner’s new evidence – the previously “overlooked” surveys**.  Remarkably, after filing this appeal, Petitioner now claims that, yes, in fact, it *was* surveyed earlier than June 2017.  It seems very odd to have forgotten (until now) the potentially dispositive factor for ensuring itself an earlier effective date, but perhaps that is because Children’s Hospital was *not* surveyed any earlier than June 2017; its predecessor organization, Medical Center, was.
**New exhibits**.  At this level of review, Petitioner presents, for the first time, as proposed exhibits, survey report forms for surveys completed on August 19, 2015 (P. Ex. 1 at 6‐25), and October 19, 2015 (P. Ex. 1 at 28-29), along with an October 21, 2015 letter from the state agency to Medical Center regarding its October 19 survey.  P. Ex. 1 at 27.  Citing 42 C.F.R. § 498.56(e) and my initial order in this case, CMS objects to my admitting this new documentary evidence because it was not submitted at the reconsideration level.  For provider and supplier enrollment appeals, I may admit new
Page 6
documentary evidence if I find good cause for Petitioner’s failing to submit it at the reconsideration level.  42 C.F.R. § 498.56(e).  In my prehearing order, I instructed Petitioner to identify specifically any new evidence and to explain in its brief why good cause exists for me to receive it.  Acknowledgment and Prehearing Order at 4 (¶ 6) (June 4, 2018).
If, in fact, section 498.56(e) applies to this particular supplier enrollment case, Petitioner has not satisfied the good cause requirement.  It points to the contents of CMS’s December 6, 2017 notice, which advised Children’s Hospital that it could request reconsideration, in accordance with 42 C.F.R. § 498.22, but did not advise the supplier that it must submit its documents at the reconsideration level or lose the right to do so.  CMS Ex. 8.  Petitioner cites my decision in *Gibraltar Healthcare Supplies, LLC*, DAB CR3422 (2014).  There, as in other cases, I expressed concern about a notice that did not include an effective section 498.56(e) warning.5
  However, in none of those cases did I find good cause based on an inadequate notice.  In *Gibraltar*, I admitted the documents for other reasons.  *Gibraltar*, DAB CR3422 at 3 (noting that the petitioner, who was not represented by counsel, did not submit the documents because it reasonably believed that the contractor already had them).  In other cases, I declined to admit the proffered documents.  *Cornerstone Med., Inc.*, DAB CR3022 (2013), *remanded on other grounds*, DAB No. 2585 (2014).6
As CMS points out, Petitioner has not claimed that it didn’t know to submit its documentary evidence at the reconsideration level.  In fact, it submitted five documents with its request.  At a minimum, Petitioner should explain how it failed to include the documents that it now claims are critical to its case, and it has not done so.  CMS Objection at 7.
In any event, the Board has resolved the issue.  In *Mohammad Nawaz, M.D.*,DAB No. 2687 at 12-13 (2016), *aff’d*,*Nawaz v. Price*, 2017 WL 2798230 (E.D. Tex. 2017), *aff'd sub nom.* *Shah v. Azar*, 920 F.3d 987 (5th Cir. 2019), it found that the ALJ did not abuse his discretion when he did not find good cause to admit documents not offered at reconsideration.  The Board acknowledged the contractor’s “ambiguous” notice letter, but held that “[t]he regulation itself provided adequate notice of the requirement to provide all documents on reconsideration . . . .”  The petitioner there, who was represented by counsel, did not explain why she could not have complied and, in any event, she was
Page 7
“charged with the responsibility of reading and understanding governing regulations [and] should have known what her responsibilities were . . . .”  *Nawaz*,DAB No. 2687 at 13.
Here, Petitioner, who has been represented by counsel throughout, should have known to submit, at the reconsideration level, any potentially dispositive documents, and, assuming they are relevant (although they are not), no good cause could justify its failing to do so.
In the alternative, Children’s Hospital suggests that it may not even be subject to the restrictions of section 498.56(e).  Petitioner cites the Board decision in *Wills Eye Hosp.*, DAB No. 2743 at 10 (2016), for the proposition that the good cause requirement of section 498.56(e) is limited to appeals involving denials or revocations of Medicare enrollment “because only those categories of appeals afford providers an earlier opportunity to present all evidence in front of a hearing officer.”  P. Br. at 10 n.2.  This doesn’t seem like a strong argument for Petitioner inasmuch as it was afforded that earlier opportunity to present evidence (but, then again, so was the petitioner in *Wills Eye*).
The issue in *Wills Eye* was whether a prospective provider (a hospital) qualified as a provider, which is an initial determination that may be appealed.  42 C.F.R. § 498.3(b)(1).  Although the Board acknowledged that such an appeal concerned some part of the enrollment process, it did not consider an initial determination under section 498.3(b)(1) a “provider enrollment appeal” within the meaning of section 498.56.  Rather, the Board held, section 498.56(e) refers to “provider and supplier enrollment appeals” of initial determinations under section 498.3(b)(17):  whether to deny or revoke a provider or supplier’s Medicare enrollment in accordance with sections 424.530 or 424.535.  *Wills Eye*, DAB No. 2743 at 10-11.
So what to make of this case, an initial determination under section 498.3(b)(15):  the effective date of Medicare supplier approval?  Approval of enrollment with a particular effective date is, “in essence[,] a denial of enrollment for an earlier period.”  *Victor Alvarez, M.D.*, DAB No. 2325 at 3, 12 (2010).  Some effective date cases will plainly be provider/supplier enrollment cases, as was *Alvarez*.  Others, such as survey and certification cases, will not.  I see two possible approaches here:  this is a denial of enrollment under section 424.530(a)(1), which would be subject to section 498.56(e); or it is a determination that Children’s Hospital did not meet conditions for coverage, an initial determination under section 498.3(b)(5), which would not be subject to section 498.56(e).  Either:
1) This is not a determination under section 498.3(b)(5), because it is not the appeal of a determination that the supplier didn’t meet the conditions for coverage.  Petitioner has not challenged any determination as to whether it met the conditions for coverage.  Instead, this is an enrollment appeal under section 424.530(a)(1).  Enrollment involves a checklist of requirements – found at 42 C.F.R. § 424.510 –
Page 8
that must be met before the supplier can enroll.  Completing a survey was one item on that checklist.  This comports with Petitioner’s argument that it completed its survey months earlier than the effective date here.
Or,
2) Because it hadn’t demonstrated, by means of a survey, that it met the conditions for coverage, this is effectively a section 498.3(b)(5) appeal.  When it set the effective date, CMS essentially determined that the supplier did not meet the conditions for coverage prior to June 28, 2017.
And there may be other considerations that I have missed.  The issue has not been fully developed here.  Although the parties raised the issue, they did so in footnotes.
**Medical Center’s final surveys**.  Fortunately, my decision here does not rest on whether, under section 498.56(e), Petitioner can submit the August and October 2015 survey documents at this stage of the administrative review process.  The documents would not be admitted because they are irrelevant.  They are not the initial surveys of Children’s Hospital; they are recertification surveys of a prior entity, Medical Center.
As of August 2015, Medical Center continued to operate the ESRD facility and to bill the Medicare program for its services.  CMS Ex. 9 at 2; CMS Ex. 11.  On August 19, 2015, the state agency completed Medical Center’s recertification survey.  CMS Ex. 11; CMS Ex. 12 at 1; P. Ex. 1 at 6-25, 28-29;*compare*, *e.g.*, P. Ex. 1 at 6 *with* P. Ex. 2 at 7 (showing Medical Center’s CMS certification number (CCN) and the address of Medical Center’s ESRD; a note explains that the address was changed “to differentiate between Medical Center and Children’s Hospital.”).
The August survey findings were disturbing.  Medical Center’s ESRD facility did not meet two conditions for coverage:  infection control and physical environment.  The surveyors concluded that “[t]he cumulative effect of these systemic practices had the potential to create the risk of infection and other serious health conditions for all patients, staff, and the public.”  P. Ex. 1 at 6, 15.  In a letter dated September 28, 2015, the state agency advised Medical Center of the survey results.  CMS Ex. 12 at 1-2.
Medical Center did not – and Petitioner here does not – challenge those survey findings.
In correspondence to the state agency, dated August 27, 2015, the owner of both entities, Loma Linda University Health, confirmed that the ESRD facility’s tax identification number, national provider identifier (NPI), and provider transaction access number (PTAN) were Medical Center’s.  It explained that its “objective” was to enroll the ESRD facility in the Medicare program under Children’s Hospital, not Medical Center.  P. Ex. 2 at 5 (“The objective is that Pediatric Chronic Dialysis . . . *will be enrolled* with Medicare
Page 9
as an ESRD . . . under Children’s Hospital . . . (not the adult hospital – [Medical Center]).”).
On October 19, 2015, state surveyors returned to the ESRD facility – still identified as Medical Center, with the Medical Center’s identification numbers – and determined that the deficiencies had been corrected.  P. Ex. 1 at 28-29.  In a letter dated October 21, 2015, the state agency advised Loma Linda University Medical that, based on the October 19 survey, the ESRD facility was in compliance with Medicare participation requirements.  CMS Ex. 12 at 3; P. Ex. 1 at 27.
Children’s Hospital plainly recognized that the August and October 2015 surveys were not the surveys it needed for its own enrollment because, as noted above, on March 2, 2016, it asked the state agency for an “expedited initial survey[,]” which obviously would have been unnecessary if that survey had already occurred.  CMS Ex. 6; CMS Ex. 9 at 3.
On June 19, 2018, Children’s Hospital advised the state agency that it no longer used Medical Center’s CCN and asked that it be terminated retroactive to November 2015, which CMS did, effective *November 1, 2015*.  CMS Ex. 11.  Thus, in August and October 2015, the state agency surveyed Medical Center, not Children’s Hospital.  CMS Ex. 9 at 2.
I reject Petitioner’s argument that, because the physical location and staff were the same, it should be able to adopt the results of Medical Center’s surveys.  When the owner of Children’s Hospital decided that it should become a separate legal entity and operate as a newly-enrolled supplier, it was subject to the same rules as any prospective supplier.  Its motivations for doing so are simply irrelevant.  *See* *Forest Glen*, DAB No. 1887 (finding that CMS had no discretion to adopt the results of a Life Safety Code survey conducted while the facility was owned by someone else, where the new owner elected to be treated as a new prospective provider); *Everett Rehab. & Med. Ctr.*, DAB No. 1628 (1997) (holding that, because Medicare certification did not transfer, the provider was effectively a new facility, requiring an initial survey).
Conclusion
I grant CMS’s motion for summary judgment and deny Petitioner’s.  The undisputed evidence establishes that Petitioner first met all Medicare participation requirements on June 28, 2017, and CMS therefore properly approved its Medicare enrollment effective that date.


          /s/
        Carolyn Cozad Hughes

                      Administrative Law Judge
      1. Petitioner’s exhibits include the written declarations of witnesses.  Initially, these declarations were unsigned and undated.  CMS objected, and Petitioner subsequently substituted written declarations that were signed, dated, and made under penalty of perjury. back to note 1
                      2. I make this one finding of fact/conclusion of law. back to note 2
                      3. Where a dialysis facility does not participate in and pursue the goals of its ESRD network, as required by 42 C.F.R. § 494.180(i), CMS may impose an alternative sanction.  42 C.F.R. § 488.606(b). back to note 3
                      4. The regulations refer to ESRD requirements as conditions for coverage.  42 C.F.R. part 494. back to note 4
                      5. Those older notices, which I have not seen in recent years, were arguably misleading.  Although they mentioned that the party might submit documentary evidence with its reconsideration request, they juxtaposed that language with language emphasizing that certain other actions were imperative. back to note 5
                      6. Of course, aside from the parties to the case, an ALJ decision binds no one, not even the judge who wrote it.  See, e.g., Monique Barbour, M.D., DAB No. 2958 at 16 (2019). back to note 6 Back to top
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