Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Hillman Rehabilitation Center, DATE: May 22, 1996
Petitioner,

Docket No. C-95-159
Decision No. CR419

-v-

Health Care Financing
Administration.

DECISION

In this decision I conclude that the Health Care
Financing Administration (HCFA) did not establish a basis
for terminating Petitioner’s participation in the
Medicare program. HCFA failed to prove by a
preponderance of the evidence that Petitioner was not
complying with a condition of participation in Medicare.

I. Background

The following background facts and law are not disputed
by the parties. Petitioner is a provider of outpatient
physical therapy and rehabilitation services. Its
business office is in Lakewood, New Jersey. Petitioner
treats a few patients at its Lakewood address. It
provides the vast majority of its treatments to patients
at eight long-term care facilities that are located
throughout the State of New Jersey. Petitioner rents
office space from these facilities. It employs
therapists who provide treatment at the long-term care
facilities. Petitioner maintains its original patient
records at the long-term care facilities and not at its
Lakewood address.

Petitioner's administrator is Dr. Benjamin Akinrolabu.
Dr. Akinrolabu holds both master's and doctorate degrees
in physical therapy.

The Medicare program reimburses a qualified entity for
providing outpatient physical therapy services to an
eligible beneficiary, if that entity is certified by HCFA
as a provider of care, pursuant to the provisions of
2

section 1861(p) of the Social Security Act (Act) and
implementing regulations. Petitioner was certified by
HCFA in or about 1985 to participate in Medicare as a
provider of outpatient physical therapy services. -

The conditions of participation for entities who provide
outpatient physical therapy services are stated in
section 1861(p) of the Act and in 42 C.F.R. §§ 405.1701 -
405.1726. A provider may participate in Medicare only if
the provider complies with applicable conditions of
participation and other participation requirements. 42
C.F.R. § 489.13. HCFA may terminate a provider’s
participation in Medicare for failing to comply with an
applicable condition of participation. See 42 C.F.R. §
488.24(a).'

HCFA directs that a periodic compliance survey be
conducted of a participating provider to assure that the
provider is complying with applicable participation
requirements. HCFA contracts with agencies of State
governments (State Agencies) to perform compliance
surveys. Act, section 1864(a); 42 C.F.R. §§ 488.10 -
488.12, 488.20 - 488.24. HCFA makes compliance
determinations based on recommendations made by State
Agency surveyors. Id. In New Jersey, the State Agency
is the New Jersey Department of Health.

Petitioner was visited by a surveyor employed by the New
Jersey State Agency on January 13, 1995, February 22,
1995, and April 5, 1995. On the occasion of each visit,
the surveyor, Charles End, R.N., visited Petitioner’s
Lakewood, New Jersey business office.’ On none of these
occasions did Mr. End or any other representative of the
New Jersey State Agency visit Petitioner at any of the
eight long-term care facilities at which Petitioner
provides outpatient physical therapy and rehabilitation
services.

' The regulations governing survey, certification,
and enforcement procedures were revised, effective July
1995. 59 Fed. Reg. 56116, 56237 (1994). My citations to
survey, certification, and enforcement regulations in
this decision, including regulations in 42 C.F.R. Part
488, are to regulations which were in effect before July
1995, inasmuch as the actions at issue occurred prior to
that date. However, the revised regulations would not
appear to direct a different outcome.

? Mr. End testified at the hearing of this case.
Tr. at 41 - 159.
3

Using the surveyor’s findings from the January 13, 1995
survey, HCFA determined that Petitioner was not complying
with several conditions of participation. At the
February 22, 1995 survey, Petitioner was found to be
complying with all conditions of participation. However,
after the April 5, 1995 visit by the surveyor, HCFA
determined that Petitioner was not complying with two
conditions of participation. These conditions of
participation are stated in 42 C.F.R. § 405.1717 (plan of
care and physician involvement) and in 42 C.F.R. §
405.1722 (clinical records). HCFA terminated
Petitioner’s participation in Medicare, effective July 5,
1995,

Petitioner requested a hearing. I held a hearing in
Trenton, New Jersey, on February 13, 1996. I base my
decision on the record of the hearing and on the
applicable law.

II. Issues, findings of fact and conclusions of law

The issue in this case is whether HCFA proved that, on
April 5, 1995, Petitioner was not complying with a
condition of participation in Medicare. If I were to
find that HCFA proved that Petitioner was not complying
with a condition of participation, then I would sustain
HCFA’s determination to terminate Petitioner's
participation in Medicare.

HCFA asserts that, as of April 5, 1995, Petitioner was
not complying with two conditions of participation.
These are the condition governing plans of care and
physician involvement in the planning and delivery of
care contained in 42 C.F.R.

§ 405.1717 and the condition governing clinical records
contained in 42 C.F.R. § 405.1722.

In concluding that HCFA did not establish grounds for
terminating Petitioner's participation in Medicare, I
make the following findings of fact and conclusions of
law (Findings). I discuss each of these findings in
detail, below.

1. HCFA has the burden of proving that Petitioner
failed to comply with a condition of participation
in Medicare.

2. The Act and regulations require Petitioner to
maintain clinical records that are completely and
accurately documented, readily accessible, and
systematically organized to facilitate retrieving
and compiling information.
4

3. Petitioner is not obligated to maintain at its
Lakewood, New Jersey, business office complete and
contemporaneous copies of records of treatments that
it provides at eight long-term care centers.

4. The account by the New Jersey State Agency
surveyor of his April 5, 1995 visit to Petitioner is
not credible.

5. HCFA did not prove that Petitioner failed to
comply with the condition of participation governing
plans of care and physician involvement in the
planning and delivery of care contained in 42 C.F.R.
§ 405.1717.

6. HCFA did not prove that Petitioner failed to
comply with the condition of participation governing
clinical records contained in 42 C.F.R. § 405.1722.

III. Discussion

A. HCFA’s burden of persuasion (Finding 1)
1. Allocation of the burden of persuasion to
HCFA

I conclude here, as I have in other cases involving
termination of a provider’s participation in Medicare,
that HCFA has the burden of proving that there is a basis
for terminating Petitioner's participation in Medicare.
Nazareno Medical Hospice Fajardo, Cagquas, Cayey, DAB
CR386, at 6 - 19 (1995); Hospicio en el Hogar de Utuado,
DAB CR371, at 6 - 10 (1995); Hospicio en el Hogar de
Lajas, DAB CR366, at 6 - 8 (1995); Arecibo Medical
Hospice Care, DAB CR363, at 8 - 13 (1995). Neither the
Act nor regulations state who has the burden of
persuasion in a case involving termination of a
provider's certification to participate in Medicare. The
regulations which govern a hearing in such a case give
the administrative law judge discretion to allocate the
burden of persuasion as is appropriate. 42 C.F.R.

§ 498.60(b)(1) and (3). It is both consistent with due
process requirements and efficient to assign the burden
to HCFA.

HCFA has obtained the evidence that it believes justifies
its determination to terminate Petitioner’s
participation. Therefore, it is entirely reasonable to
put HCFA to the test of proving that its determination is
supported by the preponderance of the evidence.

In a case involving termination, it is generally not
reasonable to require the provider to prove a negative
proposition -- that it did not fail to comply with a
5

condition of participation -- in the absence of proof
that it failed to comply with that condition of
participation. As I found in Nazareno, to require a
provider to prove the negative proposition in the absence
of affirmative proof from HCFA would invite a massive and
unfocused presentation of evidence by the provider.
Nazareno, at 8. In the absence of a prima facie case
that the provider had failed to comply with a condition
of participation, the provider might have to guess at the
evidence necessary to prove that it had not failed to
comply with the condition.

HCFA avers that it is willing to assume the burden of
first coming forward with evidence of Petitioner’s
failure to comply with a condition of participation, thus
giving Petitioner notice of what it needs to rebut. HCFA
made the same offer in Nazareno. I did not understand
the logic of that offer there, nor do I understand it
here.

If HCFA has a burden of coming forward with evidence, but
no burden of persuasion, then HCFA has neither an
obligation nor an incentive to make even a prima facie
case to justify its determination to terminate
Petitioner’s participation. Indeed, under HCFA’s theory,
Petitioner could offer evidence which might rebut
completely whatever evidence HCFA opts to offer, but
which would fail to overcome the presumption of validity
which HCFA asserts attaches to its determination to
terminate Petitioner's participation in Medicare.

My conclusion that the burden of persuasion should be
assigned to HCFA in this case does not mean that it
should be assigned to HCFA in every case. I will
continue to evaluate the issue of burden of persuasion on
a case-by-case basis, although, generally, and for the
reasons I have stated above, I would be likely to assign
it to HCFA in a case where HCFA terminates a provider's
participation in Medicare.

In Nazareno, I noted that there may be circumstances
where identical considerations of due process and
efficiency as apply here support allocation of the burden
of persuasion to the provider, and not to HCFA. A good
example of such a case is the case where a provider
challenges HCFA's determination of the effective date of
that provider's participation in Medicare. In that case,
the provider, and not HCFA, is most likely to be in
possession of evidence proving that it qualified to
participate in Medicare at an earlier date than the date
determined by HCFA. Nazareno, at 7 n.5; SRA, Inc., D/B/A
St. Mary Parish Dialysis Center, DAB CR341, at 5 (1994).

6

In arguing that the burden of persuasion must be
allocated to Petitioner, HCFA makes the same arguments
here that it made in Nazareno, Utuado, Lajas, and
Arecibo. In those decisions, I addressed these arguments
at length. It is unnecessary for me to address them
again here, in great detail. I summarize HCFA’s
arguments, along with my reasons for finding them to be
without merit.

HCFA does not deny that I have discretion to allocate the
burden of persuasion to a party, nor does HCFA assert
that it is unreasonable for me to allocate the burden of
persuasion to HCFA. Instead, HCFA asserts that, under
various principles of administrative law, the burden of
persuasion must be allocated to Petitioner.

First, HCFA asserts that Petitioner is a mere “applicant”
for benefits with no right to due process. HCFA
posthearing memorandum at 21. HCFA argues that,
traditionally, an applicant has the burden of proving
that it is eligible for the benefits that it seeks.

A participating provider is not merely an “applicant” for
benefits. It is the recipient of a privilege. The law
does not mandate that the burden of persuasion be imposed
at all times on the recipient of a government benefit or
privilege where the government seeks to terminate the
benefit or privilege. In cases involving termination of
Social Security benefits, and in exclusion cases brought
under section 1128 of the Act, the burden of persuasion
on ultimate issues has been allocated to the government,
and not to the beneficiaries or recipients of privileges
whose benefits or privileges the government seeks to
terminate.

Second, HCFA argues that its termination of Petitioner's
participation is a final agency action which must be
presumed to be valid, even if challenged by a request for
a hearing. HCFA misapplies the presumption of validity
which attaches to a final government agency action that
is challenged in a court of law. Nazareno, at 12.°

There is no presumption of validity which necessarily

3 HCFA cites my decision in SRA, Inc. as support
for this argument. HCFA posthearing memorandum at 20.
It does so, notwithstanding that the case is
distinguishable from this case, and also notwithstanding
that I noted the distinction in my Nazareno decision. In
SRA, Inc., an applicant to participate as a supplier of
Medicare services challenged HCFA’s determination of the
effective date of its participation. The case did not
involve termination of participation, as was the case in
Nazareno, and is the case here.

7

attaches to determinations that are challenged in
administrative hearings.

Under a number of regulations which govern determinations
made by agencies of the United States Department of
Health and Human Services, an agency determination
becomes final unless a hearing is requested. Even so,
the burden of persuasion often is assigned to the agency
whose determination is challenged. For example, a
determination by the Social Security Administration to
terminate a beneficiary’s Social Security disability
benefits becomes final unless the beneficiary requests a
hearing. However, if the beneficiary requests a hearing,
then the burden is on the Social Security Administration
to prove that the beneficiary's medical condition has
improved.

In the case of an exclusion determination made by the
Inspector General (I.G.) pursuant to section 1128 of the
Act, the determination becomes final unless a hearing is
requested. However, if a hearing is requested, the I.G.
is assigned the burdens of proving that she has the
authority to impose an exclusion and that the exclusion
is reasonable. See 42 C.F.R. § 1005.15(c). Similarly,
the burden of persuasion is assigned to the I.G. where a
request for a hearing is made from a determination made
by the I.G. pursuant to the Civil Money Penalty Act,
section 1128A of the Act. 42 C.F.R. § 1005.15(b). That
same assignment of burden occurs where a hearing is
requested from an I.G. determination to exclude pursuant
to section 1156 of the Act. Id.

2. The elements of HCFA’s burden of
persuasion

In Nazareno, I identified the three elements of HCFA’s
burden of persuasion in a case involving termination of a
provider’s participation in Medicare. Nazareno, at 14 -
17. I restate them here, briefly.

First, HCFA must identify the legal criteria to which it
seeks to hold the provider accountable. Nazareno, at

14 - 15. In doing so, HCFA must identify the specific
language in the Act or regulations on which it is
relying. HCFA must prove that its interpretation of the
Act or a regulation is reasonable, where HCFA advocates
an interpretation that is not apparent from the plain
meaning of the Act or regulation. However, HCFA is
entitled to deference if its interpretation of the Act or
a regulation is one of more than one reasonable
alternative interpretations. Where HCFA relies on an
interpretation, albeit reasonable, that is not apparent
from the plain meaning of the Act or of a regulation, it
8

must prove that it gave the provider notice of its
interpretation before holding the provider accountable to
it.

Second, HCFA must prove by a simple preponderance of the
evidence that its assertions of fact are true. Nazareno,
at 15. The evidence which HCFA might rely on to
establish those facts may consist of the testimony of a
surveyor or surveyors, or of exhibits.

Third, where HCFA alleges a failure by a provider to
comply with a condition of participation as a basis for
termination of that provider’s participation in Medicare,
HCFA must prove, by a preponderance of the evidence, that
the provider’s failure to comply with participation
requirements meets the definition of a condition-level
deficiency stated in 42 C.F.R. § 488.24(a). In order to
be a condition-level deficiency, a failure to comply with
participation requirements must be:

of such character as to substantially limit the
provider’s . . . capacity to render adequate
care or which adversely affect(s] the health
and safety of patients; ...

Id.

In establishing the degree of a deficiency, HCFA may rely
on the qualified testimony of a surveyor. However, the
surveyor’s testimony will not be presumed to be true or
authoritative. The testimony of the surveyor will be
accorded the weight that it ought to receive, based on
the experience and background of the surveyor, and the
credibility of the surveyor’s testimony.

B. Petitioner's obligation to maintain records of
the physical therapy it provides to patients
(Findings 2~3)

HCFA premises its case against Petitioner on HCFA’s
assessment of the excerpts from patient treatment records
that the New Jersey State Agency surveyor reviewed at
Petitioner’s Lakewood, New Jersey office on April 5,
1995. HCFA Ex. 12, 17 - 35; Tr. at 72 - 74. HCFA’s
allegations that Petitioner was not complying with
conditions of participation result from the surveyor’s
and HCFA’s conclusions that these records were incomplete
or inadequate. HCFA Ex. 12. The surveyor never visited
the eight facilities at which Petitioner provided
outpatient physical therapy and rehabilitation services
and made no effort to ascertain whether the patient
records that Petitioner maintained at these facilities
were incomplete or inadequate. Tr. at 122 - 124.

9

At the hearing, Petitioner produced records which it
asserts to be complete copies of the original records
that were maintained at the long-term care facilities.

P. Ex. 9 - 28. Petitioner asserts that these exhibits
rebut fully any inference that might be drawn from the
records obtained by HCFA on April 5, 1995 that Petitioner
was not complying with Medicare conditions of
participation. The parties agree that these exhibits are
not records that Petitioner had at its Lakewood office on
April 5, 1995. HCFA argues that these records are
irrelevant, because they were not present at Lakewood on
April 5, 1995, nor were they provided to HCFA’s surveyor
on that date.

HCFA asserts that Petitioner had a duty to maintain
complete and contemporaneous copies of patient treatment
records at its Lakewood office. HCFA argues that
Petitioner could not comply with Medicare participation
requirements by maintaining such records only at the
facilities at which Petitioner provided treatment to
patients. HCFA asserts that because Petitioner was
obligated to maintain contemporaneous copies of patient
records at Lakewood, HCFA could draw dispositive
inferences and conclusions about Petitioner’s compliance
with participation requirements from the records that the
surveyor reviewed at the Lakewood office.

However, even as HCFA argues that it is essential that
Petitioner maintain complete and contemporaneous copies
of its treatment records at its headquarters, HCFA
maintains that it is not really holding Petitioner to the
asserted requirement in this case. HCFA states that the
“entire question of whether . . . [Petitioner] was
required to maintain copies of the clinical records at
its certified location is just smoke and mirrors.” HCFA
posthearing memorandum at 16. According to HCFA, it did
not terminate Petitioner's participation because
Petitioner failed to keep copies of its records at the
Lakewood office. HCFA argues that it terminated
Petitioner’s participation only because the records that
Petitioner produced on April 5 at its Lakewood office
proved that Petitioner was not complying with conditions
of participation.

Contrary to HCFA's argument, HCFA’s contentions about
Petitioner’s record-keeping obligations are central to
HCFA’s case against Petitioner. HCFA relies on its
argument that Petitioner was required to maintain
complete contemporaneous copies of its treatment records
at its Lakewood office as a basis to assert that I should
not find the treatment records that Petitioner introduced
into evidence at the hearing to be relevant. HCFA
posthearing memorandum at 24 - 25; see P. Ex. 9 - 28.
Furthermore, HCFA argues that an aspect of Petitioner's
10

alleged failure to comply with the record-keeping
requirements of 42 C.F.R. § 405.1722 is Petitioner’s
failure to maintain complete contemporaneous copies of
all of its treatment records at its Lakewood office.
HCFA posthearing memorandum at 25 - 29, 45 - 46, 53.

The Act and regulations require Petitioner to maintain
complete records of the treatments it provides to
patients. These records must be systematically organized
and easily accessible. Petitioner is obliged to produce
those records for HCFA’s review and inspection, on
reasonable notice by HCFA. However, there is no
requirement in the Act or in the regulations that
Petitioner retain either original treatment records or
contemporaneous copies of those records at its business
office. HCFA's argument that Petitioner is precluded
from offering records obtained from the long-term care
facilities as evidence that it complied with Medicare
participation requirements, simply because those records
were not present at Lakewood during the April 5, 1995
visit by the surveyor, is not persuasive.

The Act does not contain any requirement that would
direct an outpatient physical therapy and rehabilitation
provider which offers its services at more than one site,
such as Petitioner, to centralize complete
contemporaneous copies of all of its patient treatment
records. It requires only that the provider maintain
clinical records on all of its patients. Act, section
1861(p) (4) (A) (iii).

Nor do the regulations contain language which directs an
outpatient physical therapy and rehabilitation provider
to centralize its records at one address. There is no
requirement in 42 C.F.R. § 405.1722 that directs an
outpatient physical therapy and rehabilitation provider
that furnishes care at multiple sites to maintain its
original treatment records, or contemporaneous copies of
those records, at a central repository. The regulation
requires explicitly that records be: complete, accurate,
systematically organized, conveniently located, and
readily retrievable. The regulation leaves it to the
provider to design a record-keeping system that satisfies
these requirements. The regulation thus permits a
provider, such as Petitioner, to maintain its treatment
records at the sites where treatment is furnished, so
long as the provider is able to access the records, and
to retrieve information in those records, or copies of
them, promptly when necessary.

My conclusion as to the meaning of the Act and
regulations means that records produced by Petitioner of
the treatments it provided to patients which were not
available to the surveyor on April 5, 1995, are relevant
11

in deciding whether HCFA proved that Petitioner was in
fact, deficient in complying with those conditions of
participation that HCFA cited in its determination to
terminate Petitioner's participation in Medicare. See P.
Ex. 9 - 28. However, my conclusion that neither the Act
nor regulations require Petitioner to retain
contemporaneous copies of its treatment records at its
Lakewood office is not a finding that Petitioner
maintained its records pursuant to the requirements of
the Act or regulations. HCFA did not determine, as a
basis for terminating Petitioner’s participation in
Medicare, that Petitioner failed to maintain a system of
records required by the Act or regulations. Therefore,
it is not necessary for me to make a finding that
Petitioner either maintained or did not maintain such a
system.

HCFA acknowledges that the asserted requirement that an
outpatient physical therapy and rehabilitation provider
centralize contemporaneous copies of all records is not
stated in either the Act or in regulations. HCFA’s post-
hearing memorandum at 25. But, according to HCFA, the
asserted requirement is “the only reasonable
interpretation possible” of the Act and regulations. Id.
HCFA claims that to be so for several reasons. Id. at
25 - 29. I am not persuaded by HCFA’s arguments that the
Act or regulations may be interpreted reasonably to
require Petitioner to maintain contemporaneous copies of
its treatment records at a centralized location. These
arguments do not overcome the fact that the Act and
regulations do not contain the requirement asserted by
HCFA. I find also that, individually, and collectively,
HCFA’s arguments are not persuasive.

First, HCFA argues that the regulations state
requirements that must be met by providers and not by the
therapists who are employed by providers. Therefore,
according to HCFA, it makes sense to read the record-
keeping requirements of the regulations as mandating
Petitioner to maintain a centralized records system. I
agree with HCFA that the regulations impose requirements
on the provider of care and not on the therapists who are
employed by the provider. But that begs the question of
whether the regulations tell the provider that it must
maintain a central records system of contemporaneous
copies of all treatment records.

Second, HCFA cites language in the regulations which
requires a provider to perform specific tasks, including
performing research and administrative actions. See 42
C.F.R. § 405.1722(e). HCFA argues that a provider, such
as Petitioner, that furnishes care at more than one site
must centralize its records in order to perform these
research and administrative actions. I do not agree that
12

this contention is, in fact, correct. HCFA has not
persuaded me that a provider must centralize its records
in order to perform the tasks mandated by the
regulations. Nor do the regulations cited by HCFA
contain any requirement that the records be centralized.
The regulations provide only that the records be readily
accessible and systematically organized. HCFA has not
shown, nor do I otherwise have in this case any basis to
find, that a provider could not perform the tasks
mandated by the regulations so long as it maintains
records accurately and systematically, in adequate
facilities that are conveniently located, and is able to
retrieve information from those records promptly.

Third, HCFA argues that the regulations require that all
records must be readily accessible to a surveyor.
According to HCFA, it is not acceptable for Petitioner to
have treatment records only at the location where the
patient is receiving physical therapy. Instead, HCFA
maintains that Petitioner must have all records necessary
for HCFA's review located at its headquarters location.
HCFA asserts that the New Jersey State Agency surveyor
had no obligation to visit any of the facilities at which
Petitioner provided care in order to survey Petitioner's
compliance with participation requirements. HCFA argues
that, because Petitioner provides services in disparate
locations, the only way in which Petitioner could have
complied with the asserted requirement that it make
records readily accessible to the surveyor was to have
centralized contemporaneous copies of all records
available to surveyors at Petitioner's central office
location.

I agree with HCFA that there is an implied requirement in
the regulations that a provider maintain records in a way
that enables a surveyor to have access to them. However,
HCFA did not prove that the requirement that a provider
maintain its records in a way that enables a surveyor to
have access to them means that a provider must maintain
its records, or contemporaneous copies of those records,
in a central location.

‘4 HCFA asserts that Petitioner builds its case
around the argument that HCFA's surveyor should have
visited the eight long-term care facilities to review
Petitioner's treatment records at those facilities. HCFA
posthearing memorandum at 45. This does not characterize
accurately Petitioner’s argument. Petitioner is basing
its evidentiary case on its allegation that HCFA's
surveyor did not ask to review Petitioner's patient
treatment records on April 5, 1995. Below, part III.c.
of this decision, I discuss this issue and explain why I
find Petitioner's allegation to be credible.
13

HCFA is not obligated to conduct surveys at multiple
caregiving sites, where a provider has decentralized
operations.*’ It would not be inappropriate for the New
Jersey State Agency surveyor to visit Petitioner’s
business office in Lakewood, New Jersey, and to request
that Petitioner produce its records at that location, for
review by the surveyor. However, that does not mean that
a provider must maintain complete, contemporaneous copies
of its records in one location to facilitate a survey.
The regulation requires only that the provider be able to
produce its records if a surveyor requests to see them.
Conceivably, a provider could fax or express mail copies
of its records to a single site, if a surveyor requests
to review them at that site.*

Fourth, HCFA argues that Petitioner was certified to be a
provider only at its Lakewood, New Jersey business
address. Therefore, according to HCFA, the only location
at which Petitioner was certified to maintain treatment
records was at the Lakewood address. I do not agree with
this assertion. I do not read the regulations as
requiring a provider to maintain its patient treatment
records, or contemporaneous copies of its records, at the
office at which it is certified. There is simply no such
requirement in the regulations.

Fifth, according to HCFA, accepted professional standards
and practices are that providers centralize their
records. HCFA bases this argument on the testimony of
Mr. End, that seems to indicate that he had performed
hundreds of surveys and had never encountered a health
care facility that did not maintain copies of its records
at its main office. Tr. at 56.

* However, the surveyor might have performed a more
thorough survey of Petitioner had he visited at least one
of the facilities at which Petitioner furnishes care. I
take notice of
the fact that one of the facilities at which Petitioner
provides care, Mercer County Geriatric Center, is located
in the same county in New Jersey as is the offices of the
New Jersey
Department of Health.

® At part III.c. of this decision, I discuss HCFA’s
allegation that, on April 5, 1995, the State Agency
surveyor requested Petitioner to fax treatment records
from the eight long-term care facilities to Petitioner's
Lakewood office for review by the surveyor. I discuss
also my reasons for concluding that the allegation is not
credible.
14

I do not find that HCFA proved through the anecdotal
testimony of Mr. End that professionally accepted
standards of practice require an outpatient physical
therapy and rehabilitation provider that furnishes care
at multiple sites to maintain its treatment records, or
contemporaneous copies of its records, centrally. Mr.
End is not a physical therapist or a specialist in
rehabilitation. He did not testify as to accepted
standards of practice which apply to an outpatient
physical therapy and rehabilitation provider. Mr. End
did not testify explicitly that providers who furnished
care at multiple sites adhered to a practice of
maintaining records centrally. It is logical that a
hospital or a laboratory or other provider housed under a
single roof maintain its treatment records at that
location. But, I am not convinced from Mr. End's
testimony that what might be standard practice for such
entities necessarily is followed by entities that are
decentralized.

HCFA argues that Petitioner agreed to maintain
contemporaneous copies of its treatment records at
Lakewood. HCFA reply brief at 7. I am not persuaded by
the evidence offered by HCFA that Petitioner made this
asserted promise. HCFA bases its assertion in part on
the contents of a plan of correction which Petitioner
executed which allegedly contains the asserted promise.
Tr. at 61 - 63. However, HCFA did not introduce the plan
of correction into evidence. Tr. at 62. Instead, it
asked Mr. End to paraphrase the plan in his testimony.
Tr. at 61 - 63. As I advised the parties at the hearing,
having a witness paraphrase a document which could have
been introduced into evidence is not an acceptable
substitute for introducing the document itself. Tr. at
64 - 66. I do not find Mr. End's paraphrasing of the
plan of correction to be a credible statement of what the
plan contains.

The credible evidence does not establish that Petitioner
promised to maintain at its Lakewood office
contemporaneous copies of its treatment records. To the
contrary, it proves at most that Petitioner promised that
it would maintain such records at its Lakewood office,
updated at 30-day intervals. HCFA Ex. 10; P. Ex. 2.’

Finally, if HCFA thought it important that Petitioner
maintain contemporaneous copies of its treatment records
at Lakewood, it did not make that asserted requirement

7 HCFA does not contend that it reviewed

Petitioner’s treatment files in order to ascertain
whether Petitioner complied with this promise.
15

plain to Petitioner. Mr. End testified that, although
Petitioner was not complying with the asserted record-
keeping requirement as of a February 22, 1995 survey,
concluded that Petitioner was complying with all
conditions of participation. Tr. at 68 - 69.*
Furthermore, Petitioner expressly advised HCFA of its
intent to update treatment records at Lakewood at 30-day
intervals. HCFA Ex. 10; P. Ex. 2. There is no evidence
that either the State agency or HCFA expressed any
dissatisfaction to Petitioner about this proposed record-
keeping system.

he

Cc. The credibility of HCFA’s account of the April

5, 1995 survey of Petitioner (Finding 4)

In evidence are two different versions of the same
patient records and two conflicting versions of how these
records came to be made. HCFA asserts that the patient
records it introduced as HCFA Ex. 17 - 35 comprise the
documentation of Petitioner's patient treatments and
record-keeping that Petitioner presented to HCFA’s
surveyor on April 5, 1995, in response to a request for a
production of records made by the surveyor on that date.
Petitioner avers that HCFA Ex. 17 - 35 consist only of
excerpts of patient records from Petitioner's claims
files that it provided on April 5, 1995 in response to a
claims inquiry. It alleges that HCFA’s surveyor did not
ask Petitioner to produce treatment records on April 5,
1995. Petitioner asserts that P. Ex. 9 - 28, which are a
different version of the records contained in HCFA Ex. 17
- 35, comprise Petitioner’s actual patient treatment
records.® Petitioner asserts that it did not present the
records contained in P. Ex. 9 - 28 to the surveyor on
April 5, 1995, because the surveyor did not ask for them.

* HCFA offers no explanation for the surveyor's

finding.

° The different versions of treatment records

correspond as follows: HCFA Ex. 17 - P. Ex. 17; HCFA Ex.
18 - P. Ex. 27; HCFA Ex. 19 - P. Ex. 20; HCFA Ex. 20 - P.
Ex. 28; HCFA Ex. 21 - P. Ex. 10; HCFA Ex. 22 - P. Ex. 21;
HCFA Ex. 23 - P. Ex. 22; HCFA Ex. 24 - P. Ex. 15; HCFA
Ex. 25 - P. Ex. 12; HCFA Ex. 26 - P. Ex. 9; HCFA Ex. 27 -
P. Ex. 26; HCFA Ex. 28 - P. Ex. 25; HCFA Ex. 29 - P. Ex.
24; HCFA Ex. 30 - P. Ex. 18; HCFA Ex. 31 - P. Ex. 16;
HCFA Ex. 32 - P. Ex. 23; HCFA Ex. 33 - P. Ex. 14; HCFA
Ex. 34 - P. Ex. 13; and HCFA Ex. 35 - P. Ex. 19.

Petitioner also

there is no corresponding HCFA exhibit--P. Ex.

introduced a treatment record for

11.

which
16

The differences between HCFA Ex. 17 - 35 and P. Ex. 9 -
28 lie mainly in the completeness of the records. For
example, HCFA Ex. 17 - 35 all contain plans of care for
physical therapy for individual patients. These plans,
by and large, are signed by the physical therapist who
created them, but not by the physician who supervised the
providing of care. By contrast, the same plans of care
in P. Ex. 9 - 28 are signed by physical therapists, and
also by physicians. HCFA Ex. 17 - 35 mostly lack
physicians’ orders for physical therapy, whereas P. Ex. 9
- 28 mostly contain those orders.

As I conclude at Part III.B. of this decision, Petitioner
is not precluded from introducing patient treatment
records from the eight long-term care facilities at which
it furnished care to rebut HCFA’s assertion that it was
not complying with Medicare participation requirements.
That conclusion does not resolve the question of the
evidentiary weight that I should give to the records
introduced by Petitioner.

HCFA asserts that the records contained in P. Ex. 9 - 28,
to the extent that they contain documents or signatures
not contained in HCFA Ex. 17 - 35, were fabricated by
Petitioner after the April 5, 1995 surveyor'’s visit to
Petitioner’s Lakewood, New Jersey office, in order to
make it look as if Petitioner was complying with
participation requirements. HCFA argues that the only
credible evidence of the state of Petitioner's records as
of April 5, 1995 is in HCFA Ex. 17 - 35.

I would regard the records introduced by Petitioner as
self-serving exhibits to which I would attach little or
no probative value if I were to conclude that HCFA’s
version of what Petitioner produced on April 5, 1995 is
credible. On the other hand, the exhibits introduced by
Petitioner become potentially very significant to my
evaluation of Petitioner's compliance with conditions of
participation if I decide that Petitioner’s version of
what happened on April 5, 1995 is credible. Then, the
exhibits must be regarded as the best evidence of the
extent to which Petitioner complied with Medicare
conditions of participation on that date.

Petitioner’s account of the events that occurred on April
5, 1995 is the more credible account of those events.

The most reliable evidence of the care provided by
Petitioner and the way in which it kept treatment records
as of April 5, 1995 consists of the medical records which
are in evidence as P. Ex. 9 - 28. Therefore, I base my
conclusions as to HCFA’s allegations that Petitioner was
not complying with conditions of participation on P. Ex 9
- 28, and not on the excerpts of medical records which
HCFA introduced as HCFA Ex. 17 - 35.
17

HCFA asserts that, on April 5, 1995, Mr. End demanded
Petitioner provide him with the complete records of 20
specified patients. According to HCFA, Petitioner
represented to Mr. End that the documents that it
furnished to him on that date comprised Petitioner’s
complete treatment records of the 20 patients. See HCFA
Ex. 17 - 35.

Mr. End testified that, on April 5, 1995, he visited
Petitioner's Lakewood office in the company of another
individual, Jerry Livesay, a representative of Aetna
Insurance Company, the Medicare intermediary. Tr. at
71.10

According to Mr. End, Mr. Livesay was performing an
inquiry into some billing problems that the intermediary
had with Petitioner. Id. Mr. End testified that Mr.
Livesay brought with him a list of 20 patients about whom
there were billing problems. Id. at 72. Mr. End
asserted that he relied on this list to ask for
Petitioner’s treatment records. Id.

Mr. End testified that he met with Dr. Akinrolabu, and
asked Dr. Akinrolabu to produce the treatment records for
the 20 patients. Tr. at 72. Mr. End testified that he
requested to be present when the records were taken from
Petitioner’s files. Id. According to Mr. End, he and
Dr. Akinrolabu went to Petitioner’s files, to discover
that the records were not present there. Id. Mr. End
asserted that the records which are in evidence as HCFA
Ex. 17 - 35 were faxed into Petitioner’s Lakewood office,
piecemeal, over a period of two or three hours.

Dr. Akinrolabu testified that, on April 5, 1995, Mr.
Livesay and Mr. End visited Petitioner’s Lakewood office.
Tr. at 211. According to Dr. Akinrolabu, all of the
discussion that occurred on April 5, 1995 was between
himself and Mr. Livesay. Id. at 212. Dr. Akinrolabu
testified that Mr. Livesay informed him that he and Mr.
End were doing a claims integrity check. Tr. at 212 -
213. Dr. Akinrolabu testified that Mr. Livesay informed
him that he wanted to see specific claims-related
documents which pertained to the patients on the list of
patients that Mr. Livesay had brought to Petitioner’s
Lakewood office. Id. at 213.

10 Mr. Livesay did not testify in this case, nor did

HCFA introduce into evidence a statement by Mr. Livesay.

Therefore, Mr. End's testimony, and also the testimony of
Dr. Akinrolabu, is not corroborated by that of any other

witness.
18

Dr. Akinrolabu asserted that he complied with Mr.
Livesay’s request by having an employee obtain documents
that Petitioner maintained for claims purposes. Id. Dr.
Akinrolabu denied that he was asked by either Mr. Livesay
or Mr. End to obtain documents from the long-term care
facilities at which Petitioner provided treatments. Id.
at 214. He denied that documents were faxed to the
Lakewood office on April 5, 1995 to be provided to Mr.
Livesay or to Mr. End. Id. at 213, 216 - 217.

Dr. Akinrolabu explained the differences between HCFA Ex.
17 - 35 and P. Ex. 9 - 28 by asserting that Petitioner
would obtain partially executed treatment records from
the long-term care facilities in order to create a record
for claims purposes. Frequently, those records had not
been completed when they were submitted, because
Petitioner viewed it as unnecessary to have them fully
executed in order to memorialize for claims purposes the
services that Petitioners’ employees provided. Tr. at
228 - 232.

On its face, the testimony of Mr. End and that of Dr.
Akinrolabu is credible. I do not find from the demeanor
of either witness that the witness was not credible.
Yet, obviously, the testimony of the two witnesses is
directly contradictory on major points. There is no
witness who corroborates the testimony of either Mr. End
or Dr. Akinrolabu. Thus, I cannot make credibility
conclusions concerning these witnesses’ conflicting
testimony from corroborating testimony or impeachment
testimony by a third party witness. I must evaluate the
relative credibility of the witnesses’ testimony by
measuring that testimony against whatever facts are in
evidence that supports it or contradicts it.

Dr. Akinrolabu’s version of what happened on April 5,
1995 is the more credible version. I base my conclusion
on the following: (1) the primary purpose of the April 5,
1995 visit to Petitioner's Lakewood office was not to
conduct a Medicare compliance survey, but to review
Petitioner's billing records to satisfy questions raised
by the Medicare intermediary, and Petitioner’s assertion
that it produced only billing records on that date is
consistent with that purpose; (2) Mr. End's testimony
that Petitioner faxed documents to its Lakewood office on
April 5, 1995 is not credible; and (3) on their face, the
records which Petitioner introduced at the hearing are
consistent with what Petitioner purports them to be,
which is complete treatment records of the 20 patients
whose records are at issue here.

Mr. End and Dr. Akinrolabu agree on one point, that being
that the primary purpose of the April 5, 1995 visit to
Petitioner's Lakewood office was for the intermediary’s
19

representative, Mr. Livesay, to conduct an inquiry
related to Petitioner’s claims. It was Mr. Livesay who
brought the list of patients whose records were to be
reviewed. I am persuaded that the most likely records to
be sought on that date would have been records related to
Petitioner’s reimbursement claims. This substantiates
Dr. Akinrolabu’s assertion that the documents which were
requested on April 5 were claims documents. It also
provides some support for Dr. Akinrolabu’s assertion that
his interactions on that date were with Mr. Livesay, and
not Mr. End.

Mr. End’s assertion that, on April 5, 1995, Petitioner
had records faxed to its Lakewood office from the long-
term care facilities is not supported by any credible
evidence, and is in key respects, contradicted by the
evidence of record. Mr. End admitted that he did not
personally witness any document being faxed to
Petitioner’s Lakewood office. Tr. at 119 - 120. More
telling, none of the documents that comprise HCFA Ex.

17 - 35 have the appearance of documents that were faxed
to Petitioner. Dr. Akinrolabu testified, without
contradiction, that Petitioner's fax machine at Lakewood
would have left an imprint on each document that was
faxed to that machine. Tr. at 217. None of the pages of
HCFA Ex. 17 - 35 contain fax imprints.

The exhibits which comprise P. Ex. 9 - 28 have the
appearance of patient records. They contain plans of
care, physicians’ order forms, and records of treatment.
They are signed by the individuals who provided care to
the patients, including physicians and physical
therapists. There are numerous individuals whose
signatures appear on the exhibits. The exhibits have
every appearance of being what they are offered as --
genuine treatment records of patients -- and not of self-
serving or fabricated documents.

D. HCFA’s allegation that Petitioner did not
comply with the condition of participation
governing plans of care contained in 42 C.F.R.
§ 405.1717 (Finding 5)

I have evaluated HCFA’s allegation that Petitioner did
not comply with the condition of participation governing
plans of care contained in 42 C.F.R. § 405.1717 by
measuring the credible evidence and the arguments offered
by HCFA against the three elements of HCFA’s burden of
persuasion which I outlined at part III.A.2. of this
decision. I conclude that HCFA failed in several
respects to prove that Petitioner did not comply with the
condition of participation stated in the regulation.
First, HCFA’s asserted interpretation of the regulation
is not consistent with the language of either the
20

regulation or of the Act, and is not reasonable. Second,
even if I accept HCFA’s interpretation of the regulation,
and use that interpretation as a basis for evaluating
Petitioner’s compliance, the weight of the evidence fails
to substantiate HCFA'’s assertion that Petitioner did not
comply with the requirements of the regulation. Third,
HCFA has not proven that Petitioner’s asserted failure to
comply with the regulation is a condition level
deficiency.

1. The requirements of the plan of care
regulation

HCFA would read the plan of care regulation to require
the physician to approve the details of physical therapy
before therapy is initiated by the physical therapist. I
find this asserted interpretation is inconsistent with
the requirements of section 1861(p) of the Act and
exceeds the plain meaning of the plan of care regulation.
Although a physician must order physical therapy as a
prerequisite to initiation of therapy, both the Act and
the plan of care regulation plainly permit a physical
therapist to prepare a plan of care and to initiate the
therapy pursuant to a physician’s order without first
having the details of that therapy approved by a
physician. Administration of physical therapy must be
reviewed by a physician no less than 30 days from
initiation of therapy.

Section 1861(p)(2) of the Act permits either a physician
or a physical therapist to establish the care that is
provided to a patient. It requires that the therapy be
periodically reviewed by a physician. The Act provides
for coverage for physical therapy for a Medicare
beneficiary:

with respect to whom a plan prescribing the
type, amount and duration of physical therapy

services that are to be furnished . . . has
been established by a physician... or by a
qualified physical therapist and is
periodically reviewed by a physician. .. .

Act, section 1861(p)(2) (emphasis added).

Although there is no explicit requirement in section
1861(p) of the Act or regulation that physical therapy
not be administered unless first ordered by a physician,
the conditions of coverage under Part B of the Medicare
program would not permit reimbursement for physical
therapy that is not certified as necessary by a
physician. Act, section 1814(a)(2). When section
1814(a)(2) is read together with section 1861(p), it is
apparent that the Act mandates that physical therapy be
21

ordered by a physician, although the physician does not
have to participate in the planning of the details of the
therapy and in the initial administration of the
therapy.11

The plan of care regulation, 42 C.F.R. § 405.1717, is
consistent with section 1861(p) of the Act. It permits
either a physician or a physical therapist to prepare a
plan of care and to initiate care. It requires that a
physician review the administration of care, at least
once every 30 days. The regulation states the following
general condition of participation:

For each patient in need of outpatient physical
therapy or speech pathology services there is a
written plan of care established and
periodically reviewed by a physician, or by a
physical therapist or speech pathologist,
respectively.

42 C.F.R. § 405.1717. A standard contained in the
regulation provides, in relevant part that:

The plan of care and results of treatment are
reviewed by the physician or by the individual
who established the plan at least as often as
the patient's condition requires, and the
indicated action is taken. (For Medicare
patients, the plan must be reviewed by a
physician in accordance with § 424.25(e) of
this chapter.)

42 C.F.R. § 405.1717(b) (3).

The reference to 42 C.F.R. § 424.25(e) is inaccurate.
The section has been superseded by 42 C.F.R. § 410.61(e).
This section states as follows:

(e) Review of the plan:

(1) The physician reviews the plan [of care] as
often as the individual’s condition requires,
but at least every 30 days.

(2) Each review is signed and dated by the
physician who performs it.

HCFA asserts that 42 C.F.R. § 405.1717, read with 42
C.F.R. § 410.61(e), must be interpreted to require that
each plan of care that is created by an outpatient

HCFA did not discuss the implications of section
1814(a) of the Act.
22

physical therapy and rehabilitation provider must be
approved and signed and dated at the inception of the
plan of care, by the physician on whose orders the plan
is made. HCFA asserts also that 42 C.F.R. § 405.1717
requires an outpatient physical therapy and
rehabilitation provider obtain a written order by a
physician, in addition to having the plan of care
reviewed and approved and signed and dated by the
physician, before providing physical therapy to a
patient. HCFA posthearing memorandum at 34 - 35.

The regulation contains no language which suggests that a
physician must review, approve, sign and date a plan of
care prior to the initiation of therapy. The regulation
explicitly authorizes a physical therapist to implement
treatment pursuant to a plan of care prepared by the
physical therapist. The plain meaning of the regulation
is that, in the case of a Medicare beneficiary, a
physician must review the plan of care at some point, but
no later than 30 days, after inception of treatment.

This reading is entirely consistent with the regulation’s
language permitting a physical therapist to establish a
plan of care. It is consistent also with the
requirements of section 1861(p) of the Act.

Furthermore, I do not agree with HCFA’s contention that
the patient’s record must contain both an order for
physical therapy signed by a physician and an initial
plan of care signed by the physician and by the physical
therapist. The physician's signature on a plan of care
alone is ample evidence that the physician ordered and
approved that care. Thus, a physician’s approval of the
administration of physical therapy to a patient would be
evidenced either by a physician's order for physical
therapy, or by a physician's signature on the initial
plan of care for physical therapy.

2. The evidence of Petitioner's compliance
with the plan of care regulation

Although I do not agree with HCFA’s interpretation of 42
C.F.R. § 405.1717, I have used that interpretation to
weigh the credible evidence of Petitioner's conduct.

HCFA has not proved that Petitioner failed to comply with
HCFA’s interpretation of the regulation.

HCFA contends that evidence, consisting of HCFA Ex. 17 -
35, proves that Petitioner did not comply with HCFA’s
interpretation of the plan of care regulation. It
alleges that in 19 of the 20 records reviewed by Mr. End,
the initial plan of care was not signed by a physician.
It alleges also that in 10 of the 20 records reviewed by
Mr. End there was no physician order for physical therapy
predating the inception of treatment.
23

That may be so. However, as I conclude at part III.c. of
this decision, the more credible evidence of Petitioner’s
performance under the conditions of participation is P.
Ex. 9 - 28. These exhibits are the best evidence of the
care that was provided to Petitioner’s patients. They
prove that Petitioner was complying with HCFA’s
interpretation of the plan of care regulation. Every one
of these exhibits contains a plan of care signed by a
physician. P. Ex. 9 at 3; P. Ex. 10 at 3; P. Ex. 11 at
4; P. Ex. 12 at 3; P. Ex. 13 at 3; P. Ex. 14 at 3; P. Ex.
15 at 3; P. Ex. 16 at 3; P. Ex. 17 at 2; P. Ex. 18 at 2;
P. Ex. 19 at 2; P. Ex. 20 at 3; P. Ex. 21 at 3; P. Ex. 22
at 3; P. Ex. 23 at 3; P. Ex. 24 at 3; P. Ex. 25 at 3 - 4;
P. Ex. 26 at 2; P. Ex. 27 at 2; P. Ex. 28 at 3. As TI
explain below, there is no requirement that there be both
a physician's approval of the initial plan of care and a
physician's order for physical therapy. However, nearly
all of these exhibits also contain a written order for
physical therapy.

I conclude from P. Ex. 9 - 28 that Petitioner was
providing physical therapy to its patients pursuant to
the approval and direction of physicians. I conclude
also that the plans of care for physical therapy that
were developed by therapists employed by Petitioner were
reviewed and approved by physicians.

3. Evidence as to the level of deficiency

As I find at part III.A.2. of this decision, in order to
prove a condition level deficiency, HCFA must prove that
a deficiency is of such character as to substantially
limit the Petitioner’s capacity to render adequate care
or that it adversely affects the health and safety of
patients. 42 C.F.R. § 488.24(a). However, there can be
no finding of a condition level deficiency where the
evidence does not prove any deficiency. Inasmuch as HCFA
did not prove that Petitioner failed to comply with the
plan of care regulation, it follows that HCFA failed to
prove that Petitioner did not comply with the condition
of participation that is stated in that regulation.

I would note, however, that HCFA’s assertion of a
condition level deficiency is premised on Mr. End’s
conclusion that Petitioner was not providing physical
therapy to its patients under the direction of a
physician. Tr. at 118. I agree with HCFA that the Act
and regulations contemplate that a physician will
exercise control over the physical therapy that is
provided to a beneficiary. However, the evidence in this
case does not prove that Petitioner failed to assure
physician direction and control over the physical therapy
that it provided to beneficiaries.
24

E. HCFA’s allegation that Petitioner did not
comply with the condition of participation
governing clinical records contained in 42
C.F.R. § 405.1722 (Finding 6)

I have evaluated HCFA’s allegation that Petitioner did
not comply with the condition of participation governing
clinical records contained in 42 C.F.R. § 405.1722
pursuant to the three elements of HCFA’s burden of
persuasion. HCFA proved that, in some respects,
Petitioner did not comply with a standard in the
regulation which requires that medical records be
completed promptly. However, HCFA did not prove that the
failure by Petitioner to comply with this standard was so
egregious as to contravene a condition of participation.
42 C.F.R. § 488.24(a).

1. The requirements of the clinical records
regulation

HCFA argues that the clinical records regulation contains
two requirements that are relevant here. First, HCFA
argues that the regulation implicitly requires an
outpatient physical therapy and rehabilitation provider
to maintain its treatment records, or at least
contemporaneous copies of those records, at a central
location. HCFA asserts that, in this case, the central
location is Petitioner’s Lakewood, New Jersey office. I
addressed HCFA's argument that Petitioner must centralize
copies of its records at part III.B. of this decision and
found it not to be persuasive.

Second, HCFA argues that the regulation requires an
outpatient physical therapy and rehabilitation provider
to complete its patient records promptly. I agree with
HCFA that there is a standard in the regulation which
requires a provider to complete all clinical records
promptly.

The Act does not set forth detailed clinical records
requirements for outpatient physical therapy and
rehabilitation providers. It provides only that such
providers must maintain clinical records. Act, section
1861(p) (4) (A) (iii). The clinical records regulation is
intended to implement this statutory requirement. It
provides, as a condition of participation, that an
outpatient physical therapy and rehabilitation provider
must maintain:

clinical records on all patients in accordance
with accepted professional standards, and
practices. The clinical records are completely
and accurately documented, readily accessible,
25

and systematically organized to facilitate
retrieving and compiling information.

42 C.F.R. § 405.1722.

A standard of this regulation requires that an outpatient
physical therapy and rehabilitation provider must assure
that clinical records are “completed promptly.” 42
C.F.R. § 405.1722(c).

HCFA interprets the prompt completion requirement of 42
C.F.R. § 405.1722(c) to mean that a clinical record must
be signed by a physician, where a physician’s signature
is required, within 14 days from generation of the
record. HCFA posthearing memorandum at 32. HCFA bases
this argument on Mr. End's experience, both as a nurse
and as a surveyor, and on New Jersey regulations which
govern physical therapy. Tr. at 88; N.J. Admin. Code
tit. 13, § 39A-2.1. Petitioner has not offered evidence
to contradict that on which HCFA relies. I find that
HCFA proved that the accepted practice is to complete a
clinical record within 14 days of its generation. Where
completion means a signature, then the record must be
signed within 14 days of its generation. Therefore, I
agree with HCFA’s interpretation of the prompt completion
requirement of 42 C.F.R. § 405.1722(c).

HCFA argues that the regulation requires that, where a
physician's signature appears in a clinical record, that
signature must be dated. I do not read this general
requirement into the regulation. There is a requirement
that a progress review of a plan of care be signed and
dated by the physician who performs the review. 42 C.F.R.
§ 405.1717(b) (3), incorporating 42 C.F.R. § 410.61(e) (2).
But that requirement does not attach to other records
that are signed by a physician. The regulation states
only that: “Each physician's entries into the clinical
record are signed by the appropriate physician.” 42
C.F.R. § 405.1722(c)

2. Petitioner's records

HCFA asserts that Petitioner failed, systematically, to
comply with the prompt completion requirement of 42
C.F.R. § 405.1722(c). HCFA bases its assertion on its
analysis of HCFA Ex. 17 - 35. HCFA contends that these
exhibits establish a general failure by physicians to
sign plans of care or orders for physical therapy.

As I hold above, the more credible evidence of
Petitioner’s records is in P. Ex. 9 - 28. I have
examined these records in light of the requirements of 42
C.F.R. § 405.1722(c). These records establish that: (1)
in some instances, physicians signed records more than 14
26

days after their creation; (2) in many instances,
physicians signed records and dated their signatures; and
(3) in many other instances, physicians signed records
without dating their signatures. There also are records
in some exhibits which appear not to have been signed by
physicians, although they should have been. However, in
no exhibit do I find a pattern of failure by the treating
physician to sign requisite records.

For example, in P. Ex. 9 (the corresponding HCFA exhibit
is HCFA Ex. 26), the physician signed and dated an order
for physical therapy. P. Ex. 9 at 2 (the date of the
signature is illegible). The physician signed and dated
the initial plan of care for physical therapy. Id. at 3.
However, the plan is dated January 25, 1995, and the
physician signed it on March 7, 1995. Id. The
physician signed and dated a transfer for the patient
from a hospital to a nursing home. Id. at 5. This
document includes directions for administration of
physical therapy to the patient. Id. The physician also
signed and dated various physician’s orders. Id. at 6.
Finally, the physician signed and dated a plan of
treatment for outpatient rehabilitation. Id. at 7 - 8.
The date of the physician’s signature on this document is
not clear, but it appears to be April 20, 1995. Id.

The plan of treatment was executed by the physical
therapist on January 25, 1995. Id.

The other exhibits introduced by Petitioner as examples
of its records contain a similar pattern of signatures.
P. Ex. 10 - 28. I conclude from my review of these
exhibits that Petitioner failed to comply with the
standard of participation contained in 42 C.F.R. §
405.1722(c), in that there are a substantial number of
instances in which physicians signed documents more than
14 days after their creation. That is evident from the
dates of the physicians’ signatures, to the extent that
the signatures are dated. P. Ex. 9 at 3. I do not
conclude, however, that these exhibits prove a wholesale
failure by physicians to sign their orders or to review
the treatments provided by physical therapists. To the
contrary, the records demonstrate physician involvement
in the physical therapy provided to the patients treated
by Petitioner.

3. Evidence as to the level of deficiency

HCFA proved that Petitioner did not comply with the
standard of participation in 42 C.F.R. § 405.1722(c). It
does not follow, necessarily, that Petitioner’s failure
to comply with a standard of participation is also a
failure by Petitioner to comply with the condition of
participation which includes the standard. Where HCFA
proves that a provider fails to comply with a standard of
27

participation, HCFA must prove that the deficiency is so
serious as to comprise a condition level deficiency,
within the meaningtof 42 C.F.R. § 488.24(a). Nazareno
Medical Hospice Fajardo, Caguas, Cayey, DAB CR386, at

15 - 16 (1995); Hospicio en el Hogar de Utuado, DAB
CR371, at 12 (1995).

HCFA asserts that it is reasonable to infer from
Petitioner's failure to assure that its records were
completed promptly, that physicians were derelict in
their responsibility to oversee and monitor the physical
therapy that Petitioner was providing to beneficiaries.
HCFA posthearing memorandum at 44 ~ 45. From this, it
argues that beneficiaries were being provided physical
therapy that either might not be beneficial to them, or
which placed them at risk. Id.

I agree with HCFA that, if the evidence in this case
proved a failure by Petitioner to assure that physicians
oversee and monitor the physical therapy that Petitioner
was providing to beneficiaries, that failure would be a
condition-level deficiency. In enacting section 1861(p)
of the Act, Congress thought it necessary that the
administration of physical therapy be monitored by a
physician. However, I do not find that HCFA proved the
premise of its assertion that Petitioner failed to comply
with a condition of participation. As I conclude at Part
III.E.2. of this decision, the failures of physicians to
sign or date all clinical records in some instances do
not establish a pattern of dereliction of responsibility
by physicians. To the contrary, the clinical records in
evidence as P. Ex. 9 ~ 28 show a substantial degree of
involvement by a physician in each case.

IV. Conclusion
I conclude that HCFA did not prove that Petitioner failed
to comply with a condition of participation. Therefore,

HCFA did not establish a basis for terminating
Petitioner's participation in Medicare.

/s/

Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Julio M. Soto, M.D., DATE: April 18, 1996
Petitioner,

Docket No. C-96-104
Decision No. CR418

-v-

The Inspector General.

DECISION

I dismiss Petitioner's request for a hearing. Petitioner
has no right to a hearing because his request for a
hearing is untimely. Petitioner has not shown good cause
for not having made his request timely.

I. Ba round

On May 17, 1991, the Inspector General (I.G.) sent a
notice to Petitioner advising Petitioner that he was
being excluded from participating in Medicare and other
federally funded health care programs, including
Medicaid. I.G. Ex. 2.! Petitioner did not request a
hearing to challenge the exclusion until January 26,
1996. In his request for a hearing, Petitioner averred
that he did not receive a copy of the I.G.'s notice of
exclusion until January 16, 1996.

1 The I.G. submitted five exhibits (I.G. Exs. 1 -
5) to support her motion to dismiss Petitioner’s request
for a hearing. Petitioner submitted an affidavit from
Petitioner and an affidavit from Petitioner’s wife, Alice
Soto, in opposition to the motion. Petitioner did not
designate these affidavits as exhibits. I am designating
the affidavit of Petitioner as P. Ex. 1,and the affidavit
of Petitioner’s wife as P. Ex. 2. I am receiving into
evidence I.G. Exs. 1 - 5 and P. Exs. 1, 2 on the issues
of whether the I.G. provided Petitioner with notice of
his exclusion, and whether Petitioner established good
cause for not requesting a hearing timely.
2

The I.G. moved to dismiss Petitioner's hearing request on
the grounds that Petitioner did not request a hearing
timely and that Petitioner has not demonstrated good
cause for failing to make his request timely. Petitioner
opposed the motion.

II. Issues, findings of fact and conclusions of law

There are two issues in this case. First, is Petitioner
entitled to a hearing? Second, if Petitioner is not
entitled to a hearing because he did not make a timely
request for a hearing, has he established good cause for
not making a timely request? In concluding that
Petitioner has not established any basis to be given a
hearing, I make the following findings of fact and
conclusions of law (Findings). I discuss my findings in
detail, below.

1. Petitioner would be entitled to a hearing if he
had made a request for a hearing within 60 days of
his receipt of the I.G.'s notice of exclusion.

2. An excluded individual is presumed to have
received a notice of exclusion that is delivered to
the excluded individual's address.

3. Petitioner received the I.G.'s notice of
exclusion on May 25, 1991.

4. Petitioner did not make a request for a hearing
within 60 days of his receipt of the I.G.'s notice
of exclusion and, therefore, is not entitled to a
hearing in this case.

5. Petitioner has not shown good cause for failing
to make a timely request for a hearing in this case.

III. Discussion

A. The circumstances under which Petitioner would
be entitled to a hearing (Finding 1)

The I.G. excluded Petitioner pursuant to section
1128(b) (4) of the Social Security Act (Act). An
individual who is excluded under any of the subsections
of section 1128 of the Act has a right to an
administrative hearing to challenge the I.G.'s authority
to impose the exclusion and the length of the exclusion.
Act, section 1128(f); see Act, section 205(b).
3

However, the right to a hearing is conditioned on the
excluded individual making a timely request for a hearing
after receiving notice of the I.G.'s exclusion
determination. An excluded individual or entity who
fails to request a hearing timely loses the right to a
hearing. Under the regulations which were in effect in
1991, when Petitioner was excluded, an administrative law
judge may dismiss a request for hearing that is not made
by an individual within 60 days from receipt by the
individual of the I.G.'s notice letter. 42 C.F.R. §§
498.40(a), 498.70(c) .*

B. The presumption that an excluded individual has
received a notice of exclusion that is
delivered to that individual's address (Finding
2)

The Act imposes on the I.G. the duty to provide an
excluded individual with “reasonable notice” of that
person's exclusion. Act, section 1128(f). The duty to
provide an individual with reasonable notice of an
exclusion is not a duty to serve that individual
personally with the notice of exclusion. It is a duty to
take reasonable steps to assure that the notice is
delivered to the excluded individual. That duty is
discharged by sending the notice in the United States
mail to the excluded individual's mailing address. Sunil

R. Lahiri, M.D., DAB CR296, at 16 (1993); Charles K.
Angelo, Jr., M.D., DAB CR290, at 13 (1993); see Louis W.

DeInnocentes, Jr., M.D., DAB CR247, at 36 - 40 (1992).

In opting to require the I.G. to provide an excluded
individual with reasonable notice of his or her
exclusion, Congress made a policy decision that it would
be inappropriate to impose on the I.G. the more demanding
burden of obtaining personal service on the excluded
individual. The overriding purpose of the exclusion law
is to protect federally funded health care programs and
their beneficiaries and recipients from untrustworthy
individuals. It might frustrate the purpose of the law
to impose a personal service requirement on the I.G.,
because in some cases, clever or lucky individuals could
avoid an exclusion by evading personal service, or by
being unavailable to be served. Lahirj at 17;
DeInnocentes at 38 - 39.

2? Regulations which became effective in 1992, and
which apply to exclusions imposed after the regulations
became effective, also give an excluded individual 60
days from receipt of the I.G.'s notice to request a
hearing. 42 C.F.R. § 1005.2(c).
4

Delivery of a notice of exclusion to an excluded
individual's address is all but conclusive evidence that
the individual received the notice. Lahiri at 14 - 15.
Conceivably, there might be a circumstance where an
excluded individual proves that he or she did not receive
a notice, despite it having been delivered to his or her
address. For example, an excluded individual might prove
that the person who physically received the notice
destroyed it without advising the excluded person that
the notice was received. But the burden lies on the
excluded individual to prove the existence of an
extraordinary event to rebut the heavy presumption of
receipt that follows from the fact of delivery of a
notice to the excluded individual's address. Id.

A simple denial by an excluded individual that he or she
received a notice, in the face of proof that the notice
was delivered to that individual's address, will not
suffice to overcome the presumption of receipt that flows
from proof of delivery of a notice. If the presumption
could be overcome merely by the excluded individual
denying receipt of the notice, then the presumption of
receipt would be meaningless. In most circumstances
where an excluded individual denies receipt of an
exclusion notice despite proof of delivery of the notice
to that individual's address, the I.G. would be unable to
adduce evidence that would rebut the denial of receipt.

c. Petitioner's receipt of the I.G.'s exclusion
notice and his failure to request a hearing
timely (Findings 3, 4)

I find that Petitioner received the I.G.'s exclusion
notice on May 25, 1991. JI base my conclusion on: (1) the
presumption of receipt that results from the I.G. having
proved that the notice was delivered to Petitioner's
address on May 25, 1991 and (2) Petitioner's failure to
overcome the presumption of receipt. Petitioner had 60
days from May 25, 1991 to request a hearing in this case.
He failed to exercise his right to request a hearing
within the 60-day period.

The I.G. sent the notice of exclusion to Petitioner on
May 17, 1991. The I.G. sent the notice to Petitioner's
address. The address on the notice, 124 Scarsdale Road,
Crestwood, New York 10707, is an address to which notices
were sent to Petitioner by the I.G., the New York State
Department of Social Services, and the Commissioner of
Education of the State of New York. I.G. Exs. 1, 2, 4,
5. Petitioner has not denied that the 124 Scarsdale Road
address was an address at which he received mail in 1991.
Indeed, the I.G. had previously sent Petitioner a notice
5

of the I.G.'s intent to impose an exclusion at the 124
Scarsdale Road mailing address, and Petitioner does not
deny having received this previous notice. I.G. Ex. 1.

The I.G. sent the notice of the exclusion to Petitioner's
address by certified mail, return receipt requested.

I.G. Ex. 3. An individual at Petitioner's address signed
for the notice on May 25, 1991, thus proving delivery of

the notice to Petitioner's address on that date. Id.

Petitioner avers that neither he, his wife, nor their
children signed the return receipt for the notice. P.
Exs. 1, 2. Both Petitioner and Petitioner's wife deny
seeing the notice until years after the date of the
notice. Id. Petitioner argues that his January 26, 1996
hearing request is timely, based on his contention that
he did not see the I.G.'s notice of exclusion until years
after it was delivered to his address.

For purposes of this decision, I accept as true the
assertions by Petitioner and his wife that neither of
them nor any of their children signed the return receipt
for the notice. But the fact that someone other than
Petitioner, his wife, or their children may have signed
the return receipt does not vitiate the proof, in the
form of the return receipt, that the notice was delivered
to Petitioner's address on May 25, 1991.

The proof of delivery establishes a presumption that
Petitioner received the notice on May 25, 1991. The
denial by Petitioner and his wife, without elaboration or
explanation, that neither of them saw the notice until
years after its delivery is insufficient to overcome this
presumption. Petitioner has not offered any evidence of
extraordinary circumstances which precluded him from
seeing the notice after delivery of the notice to
Petitioner's address.

Moreover, Petitioner's denial that he received the notice
is not credible. He has offered inconsistent statements
as to when he first saw the I.G.'s exclusion notice.
Petitioner has not attempted to explain the discrepancies
in the various recitations which he has offered, or which
have been offered on his behalf, of the date when
Petitioner first saw the I.G.'s May 17, 1991 exclusion
notice. In his request for a hearing, Petitioner avers
that he first saw the May 17, 1991 exclusion notice on
January 16, 1996. He asserts that he received a copy of
the notice only after making numerous calls to various
Medicare offices. However, in his affidavit, Petitioner
does not recite when he first saw the I.G.'s exclusion
notice, except to say that he “never saw the letter in
6

question until years . . . [after it was mailed to him].”
P. Ex. 1. In her affidavit, Petitioner's wife says that
Petitioner first showed her a copy of the I.G.'s
exclusion notice in 1995. P. EX. 2.

D. The absence of good cause for Petitioner's
failure to request a hearing timely (Finding 5)

Under regulations which applied when Petitioner received
the I.G.'s notice of exclusion, an administrative law
judge can extend a deadline for filing a hearing request
where the excluded individual establishes good cause for
not making the request timely. 42 C.F.R. § 498.40(c).?

The term “good cause” is not defined in the regulations.
It has been held to mean circumstances beyond an excluded
individual's ability to control which prevent that

individual from requesting a hearing timely. Hospicio
San Martin, DAB 1554, at 5 (1996).*

Petitioner has not established the presence of good cause
for his failure to timely request a hearing in this case.
He has not made any showing that he was prevented from
requesting a hearing timely by circumstances that were
beyond his ability to control. He has not offered a
meaningful explanation for his assertion that he did not
see the I.G.'s exclusion notice when it was delivered to
his address.

Furthermore, Petitioner's assertion that he did not
request a hearing until January 1996, because he was not
aware until then that he had been excluded from
participating in Medicare is not credible. Even if
Petitioner misplaced or did not read the exclusion notice

3 Arguably, under the regulations which replaced
the Part 498 regulations for cases involving the I.G.,
and which became effective in 1992, an administrative law
judge would not have the authority to extend a deadline
for making a hearing request. The current regulations
provide that an administrative law judge “will” dismiss a
request for a hearing where the request is not made
timely. 42 C.F.R. § 1005.2(e) (1).

+ Although the Hospicio San Martin case involves
the Health Care Financing Administration (HCFA), and not
the I.G., it is applicable here because the Part 498
regulations continue to govern cases involving HCFA.
Hospicio San Martin and this case therefore involve
application of the same regulation, 42 C.F.R. §
498.40(c), in analogous circumstances.
which he received on May 25, 1991, he received additional
notice of the Medicare exclusion, within a few months
from May 25, 1991.

After the I.G. sent the exclusion notice to Petitioner,
the New York Department of Social Services advised
Petitioner that he was being excluded from participating
in the New York Medicaid program. I.G. Ex. 4. The exact
date of that notice is unclear, inasmuch as the copy
offered by the I.G. as evidence in this case is undated.
However, the copy bears the date stamp of the HHS Office
of Investigations, New York Field Office, and the date
stamped on the copy is September 27, 1991. Id. at l.
From this, I conclude that Petitioner was sent the New
York Department of Social Services notice on or before
September 27, 1991.

The New York Department of Social Services notice advised
Petitioner that:

+ + you have been excluded from participation
in the Medicare program by the Office of
Inspector General, Department of Health & Human
Services.

I.G. Ex. 4 at 1. It advised Petitioner further that:

{t]his determination was made based upon the
written notice previously issued to you by the
Department of Health & Human Services on
05/17/91.

Id. Petitioner has not denied receiving this additional
notice.

IV. Conclusion

I conclude that Petitioner did not request a hearing
timely, and therefore, is not entitled to a hearing. I
conclude also that Petitioner has not established good
cause for his failure to request a hearing timely.
Therefore, I dismiss Petitioner's request for a hearing.

/s/

Steven T. Kessel
Administrative Law Judge