Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:

Carmel Convalescent DATE: August 25, 1995

Hospital,
Petitioner,
Docket No. C-95~-008
=v. Decision No. CR389

Health Care Financing
Administration,

DECISION
I. BACKGROUND

The above-captioned action was brought by Petitioner, a
skilled nursing facility, to challenge the decision of
the Health Care Financing Administration (HCFA) to
terminate Petitioner's Medicare provider agreement
effective June 25, 1994. As I will discuss below, HCFA
has issued three notices concerning the termination of
Petitioner's provider agreement:

1. HCFA's letter dated January 24, 1994
informed Petitioner that its provider
agreement would terminate on February 5,
1994 because Petitioner had failed to
submit a plan of correction to address
the deficiencies found during a Life
Safety Code survey conducted on November
16, 1993;

2. HCFA's letter dated May 25, 1994
informed Petitioner that HCFA had
reviewed the findings of deficiencies
from the November 16, 1993 Life Safety
Code survey, reviewed Petitioner's plan
of correction, denied Petitioner's
request for waiver of some of the
deficiencies, and concluded that the date
for terminating Petitioner's provider
2

agreement should be changed from February
5 to June 25, 1994;

3. HCFA's letter dated July 7, 1994
informed Petitioner that HCFA had upheld
its May 25, 1994 determination to
terminate Petitioner's provider agreement
on June 25, 1994. HCFA stated as its
rationale for upholding its May 25, 1994
determination that it had considered the
evidence upon which its earlier
termination decision was based, as well
as additional new information such as the
results of a resurvey conducted on June
16, 1994, which indicated that the
deficiencies had not been corrected.

Petitioner filed a hearing request on August 22, 1994,
which stated:

We are asking for an appeals hearing
based on the fact that all work [to
correct deficiencies] had been completed
by 6-25-94.

HCFA moved to dismiss Petitioner's hearing request as
untimely filed because it had not been filed within 60
days after receipt of HCFA's May 25, 1994 notice.
Petitioner opposed HCFA's motion. In response to an
order from me, the parties submitted supplemental briefs
addressing both the timeliness issue and the question of
whether Petitioner's hearing request stated a claim on
which I could grant relief. For the reasons stated
below, I conclude that Petitioner's hearing request was
timely filed after receipt of HCFA's July 7, 1994 letter.
However, I also conclude that the law and the uncontested
facts demonstrate that HCFA was authorized to terminate
Petitioner's provider agreement. Petitioner's letter
requesting a hearing has not raised any issue on which
Petitioner might be entitled to relief. Therefore, I am
granting HCFA's motion to dismiss.

II. SUMMARY OF FINDINGS AND CONCLUSIONS

I am granting HCFA's motion to dismiss pursuant to the
following findings and conclusions detailed in the text
below: .

1. HCFA's letter of January 24, 1994 was
HCFA's initial determination. Pages 10 -
11.
3

2. HCFA's May 25, 1994 letter was HCFA's
revised determination. Pages 11 - 12.

3.  HCFA's July 7, 1994 letter was also a
revised determination. Pages 12 - 14.

4. Petitioner's hearing request dated
August 22, 1994 was timely filed. Page
14.

5. In accordance with governing
regulations, HCFA made its decision to
terminate Petitioner's provider agreement
on June 25, 1994 based on the results of
surveys conducted on November 16, 1993
and June 16, 1994. Pages 17 - 18.

6. In challenging HCFA's determination
that Petitioner's provider agreement
should terminate on June 25, 1994, the
only matter raised by Petitioner in its
hearing request is the contention that
all work to correct the deficiencies
found during the November 16, 1993 and
June 16, 1994 surveys had been completed
by June 25, 1994. Pages 15 - 16.

7. After filing its hearing request,
Petitioner admitted that it had not
completed all the remedial work by June
25, 1994, as alleged in its hearing
request. Pages 18 - 20.

8. Even if true, Petitioner's asserted
completion of all remedial work after
HCFA's last survey and by the date of
termination does not raise any material
issue for hearing. Pages 16 - 18.

9. Even if true, Petitioner's asserted
completion of remedial work after HCFA's
last survey and by the date of
termination fails to raise any matter on
which relief may be granted. Pages 18 -
21.

10. Based only upon the contents of
Petitioner's hearing request, HCFA's
notices attached to the hearing request,
and the relevant regulations, HCFA is
entitled to prevail on its motion to
dismiss Petitioner's hearing request
4

under 42 C.F.R. § 498.70(b). Pages 14 -
17; Findings 6, 8, and 9.

11. As of the June 16, 1994 survey, and through
at least June 25, 1994, Petitioner was out of
compliance with the condition of participation
for physical environment. Pages 18 ~ 21.

12. Based on the pleadings and the
evidence of record before me, HCFA is
entitled to summary judgment in its favor
on the issue of whether the termination
of Petitioner's provider agreement was
proper. Pages 18 - 21.

III. APPLICABLE AUTHORITY

To participate in the Medicare program, long-term care
facilities such as skilled nursing facilities (SNFs) and
nursing facilities (NFs) must meet certain requirements
which are imposed by the Medicare statutes and which the
Secretary of Health and Human Services has determined to
be necessary for the health and safety of individuals to
whom services are furnished in the facilities. 42 C.F.R.
§ 483.1. The survey process is the means by which HCFA
and its agents assess providers' compliance with federal
health, safety, and quality standards. 42 C.F.R. §
488.26(b)(1). The regulations contained in 42 C.F.R.
Part 483, Subpart B, serve as the basis for survey
activities. 42 C.F.R. § 483.1(b). HCFA may terminate an
agreement with any provider if HCFA finds that the
provider "no longer meets the appropriate conditions of
participation or requirements (for SNFs and NFs) .. .
42 C.F.R. § 489.53(a)(3). HCFA's termination of a
provider agreement is defined as an "initial
determination." 42 C.F.R. § 498.3(b) (7).

A provider within the meaning of the regulation is not
entitled to have HCFA reconsider its initial
determination to end the provider agreement. 42 C.F.R.
§§ 498.2, 498.22. Under the regulations, HCFA's initial
determination to terminate a provider agreement remains
binding unless (a) the provider obtains a hearing
decision from an administrative law judge that reverses
or modifies the initial determination, or (b) the initial
determination is revised by HCFA in accordance with 42
C.F.R. §§ 498.32 or 498.100. 42 C.F.R. § 498.20(b).

HCFA has the discretion to reopen and revise any initial
determination within 12 months after the date of the
initial determination. 42 C.F.R. §§ 498.30, 498.32.
5

Like an initial determination to terminate a provider
agreement, HCFA's revised determination on the
termination of a provider agreement is also binding
unless the affected party requests a hearing before an
administrative law judge and obtains a hearing decision
that reverses or modifies the revised determination, or
HCFA further revises the revised determination on its own
initiative. 42 C.F.R. § 498.32(b).

Any provider dissatisfied with HCFA's initial or revised
determination to terminate its provider agreement is
entitled to a hearing before an administrative law judge.
42 C.F.R. § 498.5(b). The regulation codified at 42
C.F.R. § 498.40 specifies the time limit for requesting a
hearing to challenge HCFA's initial determination or
revised determination:

(a) (2) The affected party or its legal
representative or other authorized
official must file the request in writing
within 60 days from receipt of the notice
of initial . . . or revised determination
unless that period is extended in
accordance with paragraph (c) of this
section.

(c) Extension of time for filing a

request for hearing. If the request was
not filed within 60 days --

(1) The affected party or its
legal representative or other authorized
official may file with the ALJ a written
request for extension of time stating the
reasons why the request was not filed
timely.

(2) For good cause shown, the ALJ
may extend the time for filing the
request for hearing.

42 C.F.R. § 498.40(a) (2) and (c).

The regulations authorize an administrative law judge to
dismiss a hearing request if the hearing request was not
timely filed and if the administrative law judge does not
find good cause for extending the filing period. 42
C.F.R. §§ 498.40(c), 498.70(c). An administrative law
judge also may dismiss the hearing request if a party
requesting a hearing is not a proper party or "does not
otherwise have a right to a hearing." 42 C.F.R. §
498.70(b).
6
Iv. THE PARTIES' SUBMISSIONS

A. HCFA's motion to dismiss the hearing request
for untimeliness under HCFA's May 25, 1994 notice letter
and Petitioner's request for extending the 60-day filing
period for good cause

On March 31, 1995, HCFA filed a Motion to Dismiss,
pursuant to 42 C.F.R. § 498.70(c).' According to HCFA,
Petitioner's hearing request dated August 22, 1994 was
untimely filed because HCFA's notice of termination was
dated and sent on May 25, 1994, and Petitioner received
the notice on May 26, 1994. HCFA Mem. 1 - 2; HCFA Exs.
1 - 4. HCFA's letter dated May 25, 1994 contained
notification to Petitioner of its hearing rights, the
time period within which a hearing should be requested,
and the information that must be contained in a hearing
request. HCFA Ex. 1.

Petitioner did not dispute that HCFA's termination notice
dated May 25, 1994 was received at Petitioner's facility
on May 26, 1994. Instead, Petitioner argued that I
should extend the filing period because Petitioner had
good causes for having failed to request a hearing within
60 days of its receiving the May 25, 1994 termination
notice. According to Petitioner, it was not until August
22, 1994 that Petitioner received HCFA's letter dated
July 7, 1994, in which HCFA stated also that Petitioner's
provider agreement had been terminated on June 25, 1994.
P. Mem. 5. Petitioner noted that the July 7, 1994 letter
did not contain Petitioner's post office box number and,
consequently, that letter was not delivered until August
22, 1994. Id. See also P. Ex. 1 at 7.

Petitioner argued, inter alia, that, until it received
HCFA's July 7, 1994 letter on August 22, 1994, it was
operating under the assumption that HCFA was
reconsidering the termination decision dated May 25, 1994
and, therefore, there was no need to file an appeal until

‘ HCFA filed a Memorandum in Support of Motion to
Dismiss Petitioner's Untimely Hearing Request (HCFA Mem.)
accompanied by eight exhibits (HCFA Exs. 1 - 8).
Petitioner filed a Memorandum of Points and Authorities
in Support of Opposition to Motion to Dismiss (P. Mem.)
accompanied by four declarations by witnesses and
documentary evidence. I have marked the declarations and
documents as Petitioner's Exhibits (P. Exs.) 1 - 12.

HCFA filed a reply accompanied by HCFA Exs. 9 - 19.
Neither party objected to any of the exhibits.
Accordingly, I have admitted them into evidence.
7

Petitioner obtained a subsequent response from HCFA. P.
Mem. 5 - 6, 10. Petitioner said it formed its
assumptions on the basis of its prior dealings with HCFA,
when HCFA had changed its mind after notifying Petitioner
by letter dated January 24, 1994 that its provider
agreement would be terminated on February 5, 1994. P.
Mem. 5 - 6. Petitioner argued also that I should find
good cause for extending the filing period in order to
avoid an inequitable result. P. Mem. 11 - 14. According
to Petitioner, it had completed all required work except
for placing flame retardant curtains in 50 percent of the
patient rooms by the date of termination. P. Ex. 1 at

5 - 6.

B. The parties' supplemental submissions on the
legal effect of HCFA's other notice letters, on whether
Petitioner's August 22, 1994 letter constitutes a valid
hearing request, and on whether the reason for
Petitioner's seeking a hearing has been rendered invalid
by its own admissions

Having reviewed the parties' arguments and evidence,
especially as they pertained to the three notice letters
from HCFA concerning the termination of Petitioner's
provider agreement (HCFA's letter dated January 24, 1994,
HCFA's letter dated May 25, 1994, and HCFA's letter dated
July 7, 1994), I directed the parties to file additional
briefs and evidence to address the following issues:

1. Which (if any) of HCFA's three
termination notices to Petitioner should
be considered a revised determination or
a further revision of a revised
determination by HCFA.

2. Whether Petitioner's August 22, 1994
hearing request should be considered
timely filed within the 60 days specified
by 42 C.F.R. § 498.40(a) because HCFA's
July 7, 1994 notice letter constituted a
revised determination (or a further
revision of a revised determination) by
HCFA.

3. Whether Petitioner's statement in its
August 22, 1994 hearing request ("We are
asking for an appeals hearing based on
the fact that all work had been completed
by 6-25-94") meets the criteria of 42
C.F.R. § 498.40(b), which specifies that
a hearing request must --
8

(1) Identify the specific
issues, and the findings of
fact and conclusions of law
with which the affected
party disagrees; and

(2) Specify the basis for
contending that the
findings and conclusions
are incorrect.

4. Whether the reason for Petitioner's
requesting a hearing to challenge the
termination of its provider agreement on
June 25, 1994 (i.e., "We are asking for
an appeals hearing based on the fact that
all work has been completed by 6-25~94")
has been rendered invalid or obviated by
Petitioner's admission that the required
flame retardant curtains had not been
installed in 50 percent of the patient
rooms by June 25, 1994.

Order Directing Parties to File Additional Arguments and
Evidence (June 7, 1995). My reasons for raising these
issues were fully explained in my order. The parties
filed additional submissions by the deadline I had set.’

In its supplemental memorandum, HCFA argues that its
January 25, 1994 notice was its initial determination,
that its May 25, 1994 notice was either an initial
determination or a revised determination, and that its
July 7, 1994 notice was merely a statement of
reaffirmation which did not revise its earlier
determination. HCFA Supp. Mem. 2. Based on the
foregoing characterization of the notices and its
previous arguments, HCFA maintains that the Petitioner's
hearing request should be dismissed for untimeliness.
HCFA Supp. Mem. 2 ~ 8. HCFA argues also that Petitioner
has no right to a hearing because Petitioner's August 22,
1994 letter did not meet the content requirements of a

2? HCFA filed a Supplemental Memorandum in Support
of HCFA's Motion to Dismiss Petitioner's Untimely Hearing
Request (HCFA Supp. Mem.) accompanied by HCFA Ex. 20.
Petitioner filed its Response to Order Directing Parties
to File Additional Arguments and Evidence (P. Supp. Mem.)
accompanied by supplemental declarations and documents.

I have marked these as P. Exs. 13 and 14. In the absence
of objection, I have admitted the additional exhibits
submitted by the parties.
9

hearing request, and Petitioner, through its admissions
that the work on flame retardant curtains was only 50
percent completed by June 25, 1994, has no legitimate
basis for further disputing HCFA's termination action.
HCFA Supp. Mem. 8 - 12.

Petitioner argues in its supplemental memorandum that
HCFA's letter dated July 7, 1994, by its incorporation of
new evidence from the June 16, 1994 resurvey, constituted
a revised determination and triggered a new 60-day period
for filing a hearing request. P. Supp. Mem. 3 - 5.
Therefore, Petitioner contends that its August 22, 1994
hearing request was timely filed. Id. Petitioner is
also of the view that its letter dated August 22, 1994
suffices as a hearing request because the letter "clearly
gave HCFA adequate notice of Petitioner's allegations so
that HCFA could respond{,)" Petitioner was not
represented by legal counsel at the time, and HCFA has
accepted Petitioner's letter as an adequate hearing
request. P. Supp. Mem. 5 - 7.

In addition, Petitioner argues that it has a legitimate
basis for disputing HCFA's decision to terminate the
provider agreement, notwithstanding the admissions made
on Petitioner's behalf. According to Petitioner, having
50 percent or less non-flame retardant patient room
curtains “is a legally insufficient reason upon which to
base termination of a provider agreement(,]" and
termination of the provider agreement is a "draconian
sanction given the relative seriousness of the
infraction." P. Supp. Mem. 8 (emphasis in original).
Petitioner reasons that having no flame retardant
curtains in patient rooms cannot be construed as posing a
serious and immediate threat to patient safety because
the situation is not specifically identified as a fire
hazard in the Medicare and Medicaid Guide, which includes
as an example of crisis situations where there is
“(fjailure to maintain the integrity of fire and smoke
barriers, such as removal of stairway doors and major
unprotected openings in corridor walls." P. Supp. Mem.
8-9.

According to Petitioner and the Supplemental Declaration
of Floyd Hardcastle, Petitioner hired a seamstress in

3 Floyd Hardcastle is Petitioner's Administrator
and owner. HCFA Ex. 13 at 1. He stated, "As of June 25,
1994, the facility had completed the process of
installing flame retardant curtains in approximately
fifty percent (50%) of the patient rooms." P. Ex. 1 at
6.
10

November of 1993 to begin making new curtains out of
inherently noncombustible material even though Petitioner
was not required to do so under the law. P. Ex. 13 at

2 - 3. Mr. Hardcastle, the facility's Administrator,
stated that the same curtains had been hanging in the
patient rooms for at least 10 years before a 1992 survey
found them to be deficient. Id. at 3. Mr. Hardcastle
thought it would have been acceptable to dip these old
curtains in a flame retardant substance.‘ After the
seamstress had completed only 50 percent of the new
curtains around June of 1994, she broke her arm. Mr.
Hardcastle said he then directed that the remaining old
curtains be dipped in a flame retardant substance. Id.
at 2. Mr. Hardcastle said he learned after August 22,
1994 that the dipping process had not been completed by
June 25, 1994. Id. at 2 - 3.

Vv. THE MERITS OF HCFA'S MOTION TO DISMISS AND RELATED
ISSUES

A. HCFA's letter of January 24, 1994

There is no dispute between the parties that HCFA's
letter of January 24, 1994 was an initial determination.
The letter notified Petitioner that, effective February
5, 1994, Petitioner would no longer have the right to
participate in the Medicare program as a skilled nursing
facility. As stated in the letter, HCFA made this
initial determination on the basis of deficiencies found
during the November 16, 1993 survey and Petitioner's
failure to submit a plan of correction to address those
deficiencies. HCFA Ex. 20. HCFA informed Petitioner in
its January 24, 1994 letter, "Federal regulations at 42
C.F.R. § 488.28 state that a provider found to be
deficient in one or more level B requirements may

4 I note that HCFA's surveyors did not require
new curtains made of flame retardant materials. The Life
Safety Code relied upon by HCFA during both the November
16, 1993 and June 16, 1994 surveys specified only that
all combustible curtains and drapes shall be “rendered
and maintained flame retardant." HCFA Exs. 7, 12 at 4 -
5. Thus, there is no real issue as to whether Petitioner
could have dipped its existing curtains in a flame
retardant substance. Petitioner could have done so and
satisfied the requirement of the Life Safety Code relied
upon by HCFA.
11

participate in the Medicare program only if an acceptable
plan of correction is submitted." HCFA Ex. 20 at 1.5

There is no dispute that Petitioner filed no hearing
request in response to HCFA's January 24, 1994 letter.
Instead of requesting a hearing to challenge the results
of the November 16, 1993 survey, Petitioner submitted a
plan of correction and requested waiver of certain
requirements. P. Ex. 1 at 2 - 3; P. Ex. 3.

B. HCFA's letter of May 25, 1994

I agree with the parties that HCFA's May 25, 1994 letter
constituted a revised determination. In this letter,
HCFA changed the effective date of termination from
February 5, 1994 to June 25, 1994. More importantly,
HCFA made known for the first time in the May 25, 1994
letter its conclusion that the deficiencies from the
November 16, 1993 survey were seriously jeopardizing the
health and safety of Petitioner's patients, and the
"Level A requirement found at the C.F.R. 483.70 (Physical
Environment) is not met." P. Ex. 3. These conclusions
revised HCFA's earlier solicitation of a plan of
correction under 42 C.F.R. § 488.28, which governs
situations where a provider has been deficient only in
Level B requirements which do not jeopardize the health
and safety of patients. See 42 C.F.R. § 488.28(a).

There is no dispute that Petitioner did not file a
hearing request within 60 days of having received HCFA's
May 25, 1994 letter. I do not find it necessary to
determine whether Petitioner had good cause for not
filing a hearing request until August 22, 1994. As I
will discuss below, HCFA issued a further revision of its
May 25, 1994 letter on July 7, 1994, and Petitioner's
hearing request dated August 22, 1994 was timely filed
with respect to HCFA's revised determination of July 7,
1994. Petitioner filed its August 22, 1994 hearing
request in response to HCFA's July 7, 1994 letter, as
evidenced by Petitioner's statement at the beginning

‘The regulation cited by HCFA specifies also
that, in order for a skilled nursing facility deficient
in one or more level B requirements to continue
participating in the Medicare program with an acceptable
plan of correction, its level B deficiencies should
"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(a).
12

of the hearing request, "One [letter] dated May 25, 1994
+ . . we did not appeal because we talked to your staff
and let them know we would have the {corrective] work
done before June 25, 1994." HCFA Ex. 6. In addition,
the outcome would be the same whether Petitioner's basis
for requesting a hearing (i.e., its assertion that "all
work had been completed by 6-25-94") was directed to
HCFA's May 25, 1994 determination referencing the
November 16, 1993 survey, or to HCFA's July 7, 1994
revised determination referencing both the November 16,
1993 and June 16, 1994 surveys.

Cc. HCFA's letter of July 7, 1994 and the
timeliness of Petitioner's hearing request dated August
22, 1994

As noted above, HCFA has the discretion to reopen and
revise its initial determinations or revised
determinations within 12 months after the date of such
determinations. 42 C.F.R. §§ 498.30, 498.32. In this
case, less than 12 months after issuing its determination
in the May 25, 1994 letter, HCFA issued another letter to
Petitioner on July 7, 1994. On its face, HCFA's letter
dated July 7, 1994 revised the bases of the determination
contained in the May 25, 1994 letter. HCFA stated in its
July 7, 1994 letter that it had reviewed the evidence
upon which the May 25, 1994 determination was based, "as
well as additional evidence submitted since our initial
determination, including evidence gathered from a survey
of your facility completed on June 16, 1994." P. Ex. 7.
Therefore, until it received the July 7, 1994 letter,
Petitioner could not have known of HCFA's conclusions
with respect to the "additional evidence submitted" since
HCFA's May 25, 1994 determination or the results of the
June 16, 1994 survey. Until it received the July 7, 1994
letter, Petitioner lacked the opportunity and basis for
disputing HCFA's termination action grounded on events,
observations, or conclusions that were not a part of
HCFA's May 25, 1994 determination.

I do not find persuasive HCFA's argument that its July 7,
1994 letter cannot be viewed as a revision of the May 25,
1994 determination because HCFA did not change the
previously stated effective date of termination or
rescind its termination action. See HCFA Supp. Mem. 6 -
7. Without doubt, HCFA may change the effective date of
terminations or reverse itself altogether when it issues
a revised determination. But not doing so and changing
only the factual basis and rationale of its determination
still constitute material revisions which afford the
provider with an opportunity to appeal. See 42 C.F.R. §
498.40(a) (2).
13

The regulations on reopening and revisions do not require
that HCFA modify, reverse, or rescind every aspect of its
preceding determination. Whether HCFA should have
changed the effective date of termination when it issued
its July 7, 1994 letter is beyond the scope of the
disputes before me.® HCFA's failure to rescind its
termination action based upon the new information HCFA
chose to consider may constitute a basis for a valid
hearing request. For example, a provider may choose not
to appeal an initial determination because the provider
agreed with the findings from the first survey and agreed
that it should correct the deficiencies cited by HCFA in
order to avoid the termination of its provider agreement.
However, if HCFA subsequently surveys the corrective
actions allegedly undertaken by the provider and again
concludes that the provider agreement should be
terminated due to outstanding deficiencies, these
additional actions by HCFA may give rise to a legitimate
dispute over matters such as whether HCFA's subsequent
survey should have found the provider in compliance with
Medicare requirements as a result of the provider's
corrective actions. The opportunity to appeal a revised
determination by HCFA exists by regulatory fiat even
when, as in this case, HCFA did not inform Petitioner
that it had 60 days within which to challenge the
contents of HCFA's July 7, 1994 letter.

Nor was I persuaded by HCFA's argument that its July 7,
1994 letter is not a revised determination because the
letter is an example of good government, which resulted
from the courtesy extended by a public official who
wished to keep Petitioner well-informed. HCFA Supp. Mem.
7. Whatever his motives may have been, the author of the
July 7, 1994 letter relayed material new information and
conclusions on behalf of HCFA. His motives and the
principles of good government cannot legitimately bar the
affected provider from disputing material new matters
contained in HCFA's letter.

HCFA argues also that construing documents such as its
July 7, 1994 letter as revised determinations is likely
to result in extending a provider's appeal rights
indefinitely. HCFA Supp. Mem. 7. I share HCFA's concern

6 Petitioner's hearing request does not contain

any allegation that, based upon HCFA's issuance of a
revised determination on July 7, 1994, HCFA should have
also changed the effective date for terminating the
provider agreement. Nor has Petitioner made such an
argument in its other submissions to me. At this point,
I deem the matter waived by Petitioner.
14

but note that HCFA holds the solution to the problem it
fears. Nothing requires HCFA to conduct follow-up
surveys,-solicit new information, or issue new findings
after it has determined initially to terminate a provider
agreement. While there is nothing improper with HCFA's
efforts to further buttress or re-verify its initial
conclusions with additional facts and analysis, HCFA
cannot also nullify the affected provider's right to
challenge those additional facts or rationales asserted
by HCFA.

For the foregoing reasons, I conclude that HCFA's July 7,
1994 letter constituted a revised determination (i.e., a
further revision of the revised determination dated May
25, 1994), and, therefore, Petitioner's hearing request
dated August 22, 1994 was timely filed under 42 C.F.R. §
498.40(a)(2) with respect to HCFA's July 7, 1994 revised
determination.

D. The failure of Petitioner's hearing request
to raise any matter which entitles it to a hearing or for

which relief may be granted

Having found that Petitioner's request for hearing dated
August 22, 1994 was timely filed with respect to HCFA's
July 7, 1994 revised determination, I now reach the
question of whether Petitioner's request has placed
before me any issue which should be adjudicated pursuant
to a hearing or which can result in relief for
Petitioner. HCFA has argued that Petitioner's hearing
request, even if timely filed, should be dismissed
because Petitioner "does not otherwise have a right to a
hearing." 42 C.F.R. § 498.70(b).

In substance, HCFA's motion is the equivalent of either a
motion for judgment on the pleadings or a motion to
dismiss for failure of the pleading to state a claim upon
which relief can be granted. See Fed. R. Civ. P. 12

(b) (6) and 12(c). Using the Federal Rules as guidance, I
note that when matters outside the pleadings are used in
support of such motions, the motions should be treated as
motions for summary judgment. Id. Accordingly, I have
evaluated the pleadings (consisting of Petitioner's
request for hearing and HCFA's notices of termination
attached to Petitioner's request), as well as the
evidence outside of the pleadings the parties cite, ina
light most favorable to Petitioner as the nonmoving party
in deciding whether Petitioner's August 22, 1994 hearing
request states a cause of action upon which relief can be
granted or whether HCFA is entitled to prevail as a
matter of law. For the reasons that follow, I conclude
that, based on the pleadings alone, Petitioner "does not
15

otherwise have a right to a hearing," and, therefore,
Petitioner's hearing request should be dismissed.
Alternatively, when I evaluate the evidence submitted in
addition to the pleadings, I conclude that there are no
material issues of fact in dispute and HCFA is entitled
to judgment as a matter of law.

The regulation specifies that a hearing request must --

(1) Identify the specific issues, and the
findings of fact and conclusions of law
with which the affected party disagrees;
and

(2) Specify the basis for contending that
the findings and conclusions are
incorrect.

42 C.F.R. § 498.40(b). Even though HCFA's July 7, 1994
letter did not state the foregoing requirements, it
referred Petitioner to the appeal rights stated in HCFA's
May 25, 1994 letter. P. Ex. 7. The top of HCFA's May
25, 1994 letter contained the advice "IMPORTANT NOTICE -
PLEASE READ CAREFULLY," and the body of the letter
informed Petitioner that "(t]he hearing request must
state the specific issues, or findings of fact, and
conclusions of law with which you disagree and your
rationale." HCFA Ex. 1.

In the letter dated August 22, 1994, Petitioner, by its
Administrator and owner, Floyd Hardcastle, stated only as
follows:

We are asking for an appeals hearing
based on the fact that all work had been
completed by 6-25-94.

P. Ex. 8; HCFA Ex. 13 at 1.

Mr. Hardcastle stated no other basis for seeking a
hearing to dispute HCFA's decision to terminate the
provider agreement. Even though Petitioner alleges that
Mr. Hardcastle was not represented by counsel in August
of 1994 (P. Supp. Mem. 6), nothing before me establishes
that Mr. Hardcastle was unable to read, understand, or
follow the very simple instructions provided by HCFA on
what to place into a hearing request. Nor do I believe
that Mr. Hardcastle, as Petitioner's owner and operator
(HCFA Ex. 13), lacked the intelligence or resources to
obtain the assistance of counsel if he were uncertain
about what to place in Petitioner's hearing request or
what could be placed in the hearing request. Therefore,
16

I conclude that the sole basis for the hearing sought by
Petitioner is Petitioner's assertion of "the fact" that
it had completed all work by June 25, 1994.

Petitioner argues that Mr. Hardcastle's statement
suffices as a valid hearing request because HCFA accepted
the August 22, 1994 letter as a hearing request. P.
Supp. Mem. 6. As should be clear from the regulations,
it is not within HCFA's authority to either accept or
dismiss requests for hearings. 42 C.F.R. § 498.70.
Moreover, HCFA's motion to dismiss the hearing request is
proof that HCFA does not accept Petitioner's August 22,
1994 letter as a valid hearing request.

Petitioner argues also that Mr. Hardcastle's statement
suffices as a valid hearing request because it placed
HCFA on notice as to what HCFA needed to defend against.
P. Supp. Mem. 6. I agree that under the principle of
notice pleading, Petitioner's August 22, 1994 letter
imparted adequate notice of the fact which Petitioner
wished to prove at hearing and against which Petitioner
believes HCFA should defend. However, I find that the
adequacy of Petitioner's notice does not provide
Petitioner with a right to be heard on an assertion of a
fact that is false by Petitioner's own admissions and
which, even if assumed to be true in the absence of
Petitioner's admissions, cannot make invalid HCFA's
decision to terminate Petitioner's provider agreement.
These conclusions apply equally whether the contents of
Petitioner's August 22, 1994 letter are evaluated in
light of HCFA's May 25, 1994 notice or HCFA's July 7,
1994 notice.

HCFA correctly points out that Petitioner's merely
stating in its hearing request that all work had been
completed by the date of termination, June 25, 1994, does
not provide Petitioner with a valid basis for a hearing.
HCFA Supp. Mem. 9. By asserting that the completion of
all work by June 25, 1994 was the sole issue of fact it
wished to pursue at hearing, Petitioner waived its right
to challenge the deficiencies found by HCFA during the
November 16, 1993 and June 16, 1994 surveys. In essence,
Petitioner's hearing request is an admission that the
deficiencies HCFA relied on in its July 7, 1994 revised
determination were in existence on June 16, 1994, as
found by the survey. See P. Ex. 7.

The June 16, 1994 survey found Petitioner out of
compliance with four Life Safety Code requirements: (1)
failure to meet minimum construction standards for a two-
story structure, in that the facility was not constructed
of two-hour fire resistive materials; (2) failure to have
17

one-hour fire resistive walls in a basement storage room;
(3) failure to have a smoke barrier on each floor; and
(4) failure to have flame retardant curtains in all
patient rooms. HCFA Ex. 8. By failing to challenge
these findings in its hearing request, Petitioner
admitted their existence, as of the survey date.

I note that with respect to the first of these
deficiencies from the June 16, 1994 survey, evidence
introduced into the record suggests that, in 1995, the
Fire Marshall may have granted a waiver request, which
exempted Petitioner from having to meet the Code's
requirement on the use of two-hour fire resistive
construction materials in two-story structures. See HCFA
Ex. 15. However, there is no evidence or allegation that
Petitioner had been granted such a waiver when Petitioner
was surveyed, when its provider agreement was terminated,
or when it filed its hearing request. According to other
evidence generated or submitted by Petitioner, Petitioner
did not seek a waiver for this requirement (HCFA Prefix
Tag #K12) until December 26, 1994. HCFA Exs. 1, 13; P.
Ex. 3.

Petitioner has also argued in its brief that the Fire
Marshall confirmed after a survey that the facility has
always had a smoke barrier in place. P. Mem. 13. This
argument is misleading because the Fire Marshall stated
that, as of March 31, 1995, he verified that a smoke
barrier existed, but that it showed evidence of recent
repair. HCFA Ex. 18. The Fire Marshall's statement is
in accord with the information Petitioner provided to
HCFA by letter dated December 26, 1994, stating that
Petitioner was still awaiting a construction permit for
the “construction and/or repairs to the existing second
floor smoke barrier wall" at that time. HCFA Ex. 13 at
1.

Notwithstanding the foregoing evidence and arguments
added to the record by the parties, the fact remains that
Petitioner's hearing request did not challenge the
existence of any deficiency found by HCFA. Therefore,
the deficiencies cited in HCFA's July 7, 1994 revised
determination remain binding upon Petitioner. 42 C.F.R.
§§ 498.20(b), 498.32(b). Based on the relevant
regulations and Petitioner's failure to challenge the
deficiencies found during the June 16, 1994 survey, HCFA
is entitled to dismissal of the hearing request.

HCFA used the results of the June 16, 1994 survey to
determine that Petitioner was not in compliance with the
Life Safety Code. P. Ex. 7. As Petitioner is aware, the
survey found Petitioner out of compliance with a
18

requirement of participation for "physical environment,"
which incorporates the Life Safety Code requirements. P.
Supp. Mem. 9 - 10; P. Ex. 14. "Physical environment" is
contained in Subpart B of 42 C.F.R. § 483, which lists
all of the requirements an institution must meet in order
to qualify to participate as a SNF in the Medicare
program or as a NF in the Medicaid program. See 42
C.F.R. § 483.1(b). Regulations such as the one governing
"physical environment" also serve as a basis for the
surveying activities which determine whether a facility
meets the requirements for participation in Medicare and
Medicaid. Id. When the survey shows that a SNF or NF is
no longer meeting the appropriate requirements for
participation, HCFA has the authority to terminate the
provider agreement. 42 C.F.R. §§ 483.1(b), 488.26(a) (1),
489.53(a)(1). For these reasons, HCFA's rationale for
terminating Petitioner's provider agreement is valid on
its face and is in accord with the relevant regulations.

HCFA has never used the status of Petitioner's work
completion as of June 25, 1994 or the conditions at
Petitioner's facility on June 25, 1994 as grounds for its
termination action. Thus, Petitioner's claim that it had
completed all work by that date can have no impact on the
validity of HCFA's termination decision. Nor does
Petitioner's asserted fact constitute a valid affirmative
argument. As a matter of law, Petitioner's claim of work
completion by June 25, 1994 does not constitute a valid
basis for relief or affirmative defense because the
regulations specify that surveys shall be the means by
which HCFA assesses providers' compliance with federal
health, safety, and quality standards. 42 C.F.R. §
488.26(a)(1). HCFA conducted no additional survey after
June 16, 1994 and before terminating Petitioner's
provider agreement on June 25, 1994. No law or
regulation compelled HCFA to conduct another survey after
finding deficiencies on June 16, 1994 and before actually
effectuating its termination decision. Thus, it is
immaterial whether Petitioner then completed all work to
correct the deficiencies after the June 16, 1994 survey.
HCFA's prima facie valid termination of Petitioner's
provider agreement cannot be set aside on the basis of
the conditions at Petitioner's facility post-survey.

Additionally, HCFA is entitled to summary judgment in its
favor when the pleadings are considered together with the
evidence of record. It will not be possible for
Petitioner to prove its alleged completion of all work by
June 25, 1994, even if such a fact were relevant or could
constitute a valid affirmative claim for relief.
Petitioner's owner and operator, Floyd Hardcastle,
recently admitted that, on June 25, 1994, 50 percent of
19

the patient room curtains were not made of a flame
retardant material and not all of the remaining curtains
had been-treated with a flame retardant substance. P.
Ex. 13 at 2 - 3.’ His admissions make untrue his earlier
contention in the hearing request: "the fact that all
work had been completed by 6-25-94." In both the
November 16, 1993 and June 16, 1994 surveys, HCFA found
the same violation under the same Life Safety Code
section (LSC 17-4151) because "patient room curtains are
not flame retardant." HCFA Exs. 7, 12.* Even setting
aside Petitioner's additional admissions that all of its
patient rooms have had the same non-flame retardant
curtains for at least 10 years prior to 1992 and that
Petitioner's owner and operator failed to discover until
after August 22, 1994 that not all patient room curtains
had been made flame retardant as of June 25, 1994, the
fact remains that Petitioner had not succeeded in making
all of its patient room curtains flame retardant during
the seven month period between being cited for the
deficiency in November of 1993 and having its provider
agreement terminated on June 25, 1994. P. Ex. 13 at 1 -
3.

7 {I note that Mr. Hardcastle did not mention in
his initial declaration that Petitioner was hanging up
new curtains made of flame retardant material as well as
dipping old curtains in a flame retardant substance.
What he stated in his initial declaration was, "the
facility had completed the process of installing flame
retardant curtains in approximately fifty percent (50%)
of the patient rooms" and, by June 25, 1994, Petitioner
had completed all items of work "except 50% of the
curtains. ..." BP. Ex. 1 at 6. However, for the
purposes of deciding HCFA's motion to dismiss and whether
HCFA is entitled to summary judgment, I have assumed all
of the facts asserted by Mr. Hardcastle to be true and
construed them in a light most favorable to Petitioner.

* According to the evidence of record, the
requirements for Life Safety Code 17-4151 is as follows:

All combustible draperies, cubicle curtains,
and curtains for decorative and acoustical
purposes shall be rendered and maintained
flame retardant.

HCFA Exs. 7, 12; P. Ex. 14.
20

With respect to other deficiencies cited by HCFA pursuant
to the November 16, 1993 and June 16, 1994 surveys, the
evidence shows that Petitioner informed HCFA on December
26, 1994 that the work on constructing or repairing its
second floor smoke barrier wall would begin as soon as
Petitioner received a construction permit. HCFA Exs. 8,
13. Petitioner has been told since the November 16, 1993
survey that it failed to meet the requirement for a smoke
barrier wall on each floor and that Petitioner should
obtain the necessary construction permit. HCFA Ex. 8 at
4; HCFA Ex. 13 at 4 - 5. Yet, Petitioner's December 26,
1994 letter to HCFA indicates that, more than one year
after the deficiency was noted, Petitioner was making
phone inquiries concerning the issuance of a construction
permit. HCFA Ex. 13 at 1. Whatever the merits of
Petitioner's reasons for the delay,’ Petitioner had not
yet constructed or repaired a second floor fire barrier
wall by December 26, 1994. Id. Therefore, I conclude
that the information contained in Petitioner's December
26, 1994 letter to HCFA also makes untrue Petitioner's
August 22, 1994 contention that all remedial work had
been completed by June 25, 1994.

There is no legitimate reason why this case should
proceed to a hearing for the purpose stated in
Petitioner's hearing request: for Petitioner to prove
the fact that all work had been completed by June 25,
1994. Such proof does not exist, according to
Petitioner's admissions. With respect to the four
deficiencies still in existence as of the June 16, 1994
survey, Petitioner will not be able to prove that "all
work had been completed by 6-25-94" even if Petitioner
could prove the truth of his statements that a
seamstress' broken arm had caused the work-stoppage, that
Mr. Hardcastle's subordinate had disregarded his
directive to dip the remaining old curtains in a flame
retardant by June 25, 1994, or that construction or
repair work had not begun on the second floor fire

° The November 16, 1993 and June 16, 1994 survey
reports cited a deficiency under the requirement for a
smoke barrier wall on each floor used for sleeping rooms
“for more than 30 institutional occupants." HCFA Ex. 8
at 4. Petitioner's December 26, 1994 letter claimed that
Mr. Hardcastle did not associate the deficiency with the
second floor because he thought the November 16, 1993
survey found a deficiency with the fire wall on the first
floor, which housed less than 30 patients. HCFA Ex. 13
at 1. Petitioner did not dispute the need to construct
or repair a fire barrier wall on its second floor. HCFA
Ex. 13.
21

barrier wall by December 26, 1994 due to Petitioner's
failure to seek a construction permit at an earlier time.
See P. Ex. 13 at 2 - 3; HCFA Ex. 13. Moreover, as noted
earlier, in 1995, Petitioner sought a waiver of Code
requirements in order to resolve the cited deficiency on
construction materials required of a two-story building.
See HCFA Exs. 13, 15. In its brief and the supporting
declaration of Mr. Hardcastle, Petitioner does not claim
to have done any work to correct the construction
materials deficiency because the building was erected in
1929 and strict compliance with Code requirements would
“require that the building be demolished and rebuilt."
P. Ex. 1 at 5; P. Mem. 12. At best, Petitioner had
completed the work to remedy only one of the four cited
deficiencies by June 25, 1994: the failure to have one-
hour fire resistive walls in a basement storage room.
E.g., P. Exs. 1, 5.

I find also that, even if the conditions at Petitioner's
facility on June 25, 1994 were relevant, no genuine issue
of material fact is raised by Petitioner's arguments that
the absence of flame retardant curtains in all patient
rooms posed only minor safety risks to patients and
therefore cannot legally justify HCFA's "draconian
sanction" of terminating Petitioner's provider agreement.
See P. Supp. Mem. 8 - 9. First, the Life Safety Code
provision submitted by Petitioner in support of its
arguments states plainly that "All combustible draperies,
cubicle curtains, and curtains for decorative and
acoustical purposes shall _ be rendered and maintained
flame retardant." P. Ex. 14. (emphasis added). More
importantly, Petitioner's arguments incorrectly suggest
that the lack of flame retardant curtains was the only
deficiency still in existence at the date of termination.
As noted above, Petitioner had not corrected the smoke
barrier wall deficiency on its second floor even when it
corresponded with HCFA on December 26, 1994, and there is
no allegation or evidence that the requirement for using
two-hour fire resistive construction materials had been
waived on or before June 25, 1994. HCFA Exs. 8, 13, 15,
18. Even though Petitioner minimizes the importance of
flame retardant curtains in patient rooms, Petitioner
acknowledges that the alleged noncompliance with smoke
barrier walls and construction materials (neither of
which allegation was disputed in Petitioner's hearing
request) posed serious threats to patient care. P. Supp.
Mem. 9. Thus, if conditions at Petitioner's facility on
June 25, 1994 were relevant, I would still conclude that
HCFA's decision to terminate Petitioner's provider
agreement is valid irrespective of the merits of
Petitioner's arguments concerning its failure to replace
or dip all patient room curtains.
22
VI. CONCLUSION

Based only upon the pleading and the relevant regulations
discussed above, I grant HCFA's motion to dismiss
Petitioner's hearing request under 42 C.F.R. § 498.70(b)
for Petitioner's failure to raise any claim for which
relief may be granted. Further, based on the pleadings
and other evidence of record before me, I conclude that
HCFA is entitled to summary judgment as a matter of law.

/s/
Mimi Hwang Leahy

Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Hospicio San Martin, Date: August 22, 1995
Petitioner,

Docket No. C-95-149
Decision No. CR387

-v-

Health Care Financing
Administration.

DECISION

I am dismissing the request for hearing that Petitioner made
in this case. Petitioner made the request untimely and has
no right to a hearing. Furthermore, Petitioner has not shown
good cause for making the untimely request.

I. Background

On June 27, 1995, Petitioner submitted a request for an
extension of time in which to file a hearing request with the
Civil Remedies Division of the Departmental Appeals Board
(DAB). I have determined to treat this document as a request
for a hearing. On July 21, 1995, I held a prehearing
conference. The Health Care Financing Administration (HCFA)
advised me that it wished to move to dismiss Petitioner's
request for a hearing. I directed HCFA and Petitioner to
file briefs and exhibits addressing the issue of whether I
should grant a hearing to Petitioner. HCFA and Petitioner
each filed a memorandum, accompanied by exhibits.!

' HCFA submitted seven exhibits with its motion to
dismiss (HCFA Exs. 1 - 6, 8). HCFA did not submit an exhibit
that it designated as HCFA Ex. 7. HCFA did not submit any
exhibits with its "Reply to Petitioner's Motion in Compliance

of Order." Petitioner submitted seven exhibits with its
"Motion in Compliance of Order." It designated these
exhibits as exhibits "A" through "G." I have redesignated

these exhibits as P. Exs. 1 - 7. I hereby admit into
evidence HCFA Exs. 1 - 6 and 8, and P. Exs. 1 - 7.
2
Il. ssue findi fact and ions w

The issues in this case are whether Petitioner made its
request for a hearing timely, and whether, assuming
Petitioner did not make its request timely, good cause exists
to grant Petitioner a hearing. I make the following findings
of fact and conclusions of law. After each finding or
conclusion, I cite to the page or pages in this decision at
which I discuss the finding or conclusion in detail.

1. Petitioner would have had a right to a hearing in
this case had it made its request by May 4, 1995, within 65
days from the date it received a notice from HCFA that HCFA
was terminating Petitioner's participation in the Medicare
program. Pages 5 - 6.

2. Petitioner did not make its request for a hearing by
May 4, 1995. Pages 5 - 6.

3. Petitioner does not have a right to a hearing. Pages
5 - 6.

4. Petitioner did not prove that it was misled by HCFA
into making its request for a hearing out of time.
Pages 6 - 8.

5. Petitioner did not prove that it was prevented from
making a timely request for a hearing by circumstances beyond
its ability or control. Pages 6 - 8.

6. Petitioner did not establish good cause for making
its request for a hearing out of time. Pages 6 - 8.

III. Analysis
A. Governing law

The process by which a provider that is affected by a
determination made by HCFA may request a hearing from that
determination is governed by regulations contained in 42
C.F.R. Part 498. In order to be entitled to a hearing, an
affected provider must make its request within 60 days from
the date that the provider receives notice from HCFA of
HCFA's determination. 42 C.F.R. § 498.40(a)(2). A provider
who does not make a timely hearing request is not entitled to
a hearing.

A provider is presumed to have received a notice of a
determination by HCFA five days from the date of the notice,
unless there is a showing that the provider actually received
the notice at an earlier or later date. 42 C.F.R. §§
3

498.22(b) (3); 498.40(a)(2). Thus, absent proof that a
provider actually received notice earlier or later than five
days from the date of the notice letter, the provider must
make its request for a hearing within 65 days of the notice,
in order to be entitled to a hearing.

An administrative law judge has limited discretion to extend
the time within which a provider may file a request for a
hearing. 42 C.F.R. § 498.40(c)(1),(2). An extension may be
granted based only on proof by the provider that good cause
exists for not having made a hearing request on time. Id.

The regulations do not define the term "good cause." The
term has been held to mean circumstances beyond the ability
of the provider to control, which intervened to prevent the
provider from making a timely hearing request. See Mira
Tomesevic, DAB CR17 (1989).

In its brief, Petitioner appears to argue that the standard
for good cause is contained in 42 C.F.R. § 473.22. This
regulation governs requests for hearings from determinations
made by peer review organizations, and not HCFA. It is not
directly applicable to this case. However, the examples of
what constitutes good cause contained in 42 C.F.R. §
473.22(b)(1) ~ (8) all are examples of circumstances that
would be beyond the ability of a party requesting a hearing
to control, and which would prevent that party from
requesting a hearing in time. Thus, these examples are
consistent with the definition of good cause that I found in
Tomesevic, and which I apply here.

B. Summary of the relevant facts

I summarize the relevant facts as follows. On March 1, 1995,
HCFA notified Petitioner that it was terminating Petitioner's
participation in the Medicare program. HCFA Ex. 1; P. Ex. 1.
In that letter, HCFA advised Petitioner that Petitioner could
request a hearing before an administrative law judge, if it
believed that HCFA's determination was not correct. HCFA Ex.
1; P. Ex. 1 at 2. HCFA advised Petitioner that the
regulations that governed the hearing process are at 42
C.F.R. § 498.40 et seq. Id. HCFA advised Petitioner also
that Petitioner must file a written request for a hearing no
later than 60 days from Petitioner's receipt of the notice
letter. Id.

Petitioner does not deny receiving the notice letter from
HCFA. Indeed, by making its copy of the letter an exhibit,
Petitioner admits having received it. See P. Ex. 1.
Petitioner has not acknowledged the date on which it received
the letter. Petitioner does not deny that it made its
4

request for a hearing more than 60 days from the date it
received the notice of termination from HCFA.

In the weeks following Petitioner's receipt of the notice of
termination, Petitioner communicated with HCFA, both in
writing and in conversations between Petitioner's director,
Edwin Arroyo, M.D., and HCFA's representatives. The written
communications are in the exhibits which I have received into
evidence. For purposes of deciding this case, I am accepting
as true Petitioner's representations concerning the
conversations that Dr. Arroyo had with HCFA's
representatives.

On March 16, 1995, Dr. Arroyo visited HCFA's regional office
in New York. HCFA Ex. 2; P. Exs. 2, 3. Dr. Arroyo was not
told by HCFA's representatives that he could make a hearing
request in person, on behalf of Petitioner, during his visit.

On May 16, 1995, Dr. Arroyo wrote to HCFA's regional office.
HCFA Ex. 4; P. Ex. 4. In that letter, Dr. Arroyo noted that,
on March 20, 1995, after his visit to the New York regional
office, HCFA's representatives had advised him by telephone
that they had reviewed documents supplied to HCFA by
Petitioner. HCFA Ex. 4; P. Ex. 4 at 1. He acknowledged
that, on that date, HCFA's representatives had told him that
the determination to terminate Petitioner's participation in
Medicare remained in effect. Id.

Dr. Arroyo stated that "we did not take the decision of

appeal, because . . . [HCFA's representatives) indicated [to]
us that our hospice had a priority position in being revised
(sic) at this time for a new certification." HCFA Ex. 4 at

2; P. Ex. 4 at 2. He stated further that, on May 15, 1995,
he had called HCFA's representative to request a new survey,
but had been advised that a new survey was not scheduled,
"because HCFA considered the revisit of 26th of January as
the last chance, and that our hospice was the last one of the
survey list." Id. Dr. Arroyo again stated that Petitioner
had corrected outstanding deficiencies. He complained also
about the way in which HCFA had conducted its last survey of
Petitioner. Finally, Dr. Arroyo requested that HCFA's
representative analyze Petitioner's situation, and in essence
requested that HCFA schedule a new survey of Petitioner. Id.

On May 30, 1995, Dr. Arroyo wrote to HCFA, on behalf of
Petitioner, requesting an extension of time within which to
request a hearing. HCFA Ex. 5. In that letter, Dr. Arroyo
asserted two reasons for Petitioner not making a timely
request for a hearing. First, Dr. Arroyo asserted that,
since early 1995, Petitioner had attempted to convince HCFA
that there were errors in both the survey process and in the
findings on which HCFA based its determination to terminate
5

Petitioner's participation in Medicare. Id. Dr. Arroyo
asserted that Petitioner had been unable to find information
that was relevant to its assertions about HCFA's
determination to terminate Petitioner's participation in
Medicare, until recently. Id.

Second, Dr. Arroyo asserted that he had been suffering from
an old cardiac condition which had kept him out of his
office. HCFA Ex. 5 at 1. Dr. Arroyo averred that the person
whom he had left in charge in his absence had left his
position in April 1995 without locating the information with
which Petitioner could demonstrate the alleged errors in the
survey process and findings. Id.

On June 21, 1995, HCFA responded to Dr. Arroyo's May 30, 1995
letter requesting an extension of time to submit a hearing
request. HCFA Ex. 6; P. Ex. 7. In that letter, HCFA advised
Petitioner that HCFA was unaware of provisions in the
regulations permitting an extension of time for requesting a
hearing. HCFA advised Petitioner to request a hearing with
an administrative law judge and to request the administrative
law judge to grant Petitioner a hearing, notwithstanding the
fact that the request would be untimely. Id.

On June 27, 1995, Dr. Arroyo wrote to the DAB on behalf of
Petitioner, requesting an extension of time within which to
make a request for a hearing. In that letter, Dr. Arroyo
asserted four reasons for not making a hearing request
timely. First, he reiterated that Petitioner had experienced
difficulties in compiling information to demonstrate that
HCFA had made errors in its determination to terminate
Petitioner's participation in Medicare. Second, Dr. Arroyo
asserted again that Petitioner had been hampered in its
efforts to identify the alleged errors by Dr. Arroyo's
medical condition and by the departure in April of the
individual whom Dr. Arroyo had designated as his replacement.
Third, Dr. Arroyo asserted that, as of the date of his
letter, Petitioner had information to show that HCFA had
erred in its determination to terminate Petitioner's
participation in Medicare. Finally, Dr. Arroyo asserted that
Petitioner had been delayed in requesting a hearing by the
failure of HCFA to respond quickly to Dr. Arroyo's May 30,
1995 letter to HCFA.

c. Analysis e facts and

From the foregoing facts and law, I conclude that Petitioner
is not entitled to a hearing because it did not make its
request for a hearing timely. I conclude also that
Petitioner has not shown that it was prevented from making a
timely request for a hearing by circumstances that were
beyond its ability to control. Therefore, I conclude that
6

Petitioner has not established good cause to extend the
period within which it may make a request for a hearing.

Pursuant to 42 C.F.R. § 498.40, Petitioner would have been
entitled to a hearing had it made its request by May 4, 1995.
That date is 65 days from the date of HCFA's notice of
termination. Petitioner did not do so. Even if I construe
Petitioner's May 30, 1995 letter to HCFA as constituting a
hearing request, Petitioner made that request more than three
weeks after the deadline for requesting a hearing.

Petitioner has not demonstrated that it was prevented from
making a timely hearing request by circumstances beyond its
ability to control. In deciding that Petitioner has not
demonstrated good cause, I have considered two arguments that
Petitioner makes to justify its untimely request for a
hearing. These are that Petitioner was:

© misled by HCFA into believing that it would be
granted an extension of time to make its request for a
hearing.

© unable to make a timely hearing request because of
the health problems of its director, Dr. Arroyo.

The notice which HCFA sent to Petitioner on March 1, 1995
explicitly told Petitioner that it had 60 days to request a
hearing. HCFA Ex. 1; P Ex. 1. There is nothing ambiguous or
misleading about the notice.

There were no communications between HCFA and Petitioner
after March 1, 1995 which might have misled Petitioner into
believing that it should defer making its hearing request
beyond 60 days or that it would be granted an extension of
time within which to request a hearing. The communications
which Petitioner identified as having occurred in March 1995
did not address the issues of whether or when Petitioner
should make a hearing request.

Dr. Arroyo's May 16, 1995 letter to HCFA, which he wrote
after the deadline for requesting a hearing had passed, does
not demonstrate that Petitioner was misled by HCFA into not
requesting a timely hearing. In that letter, Dr. Arroyo
asserts that Petitioner had not requested a hearing,
allegedly because HCFA had assured Petitioner that it enjoyed
a priority for a survey to determine whether it met Medicare
participation requirements. Dr. Arroyo neither states nor
suggests that HCFA told Petitioner that it should not make a
request for a hearing, or that it would be recertified. At
most, Dr. Arroyo's statement suggests that Petitioner may
7

have elected to forego making a request for a hearing because
it thought that HCFA would resurvey it promptly.”

Assuming that Dr. Arroyo's characterization of what he was
told by HCFA is true, that does not establish that HCFA
misled Petitioner into believing that it should not request a
hearing. HCFA did not encourage Petitioner to forego
requesting a hearing. HCFA did not provide any assurances to
Petitioner that Petitioner would be recertified at an early
date if it did not request a hearing. Even if HCFA may have
misled Petitioner into concluding that it enjoyed a priority
for a resurvey, HCFA did not assure Petitioner that it would
be recertified or that there would be any benefit accruing to
Petitioner in not timely requesting a hearing.

The first communication which Petitioner has identified as
addressing the subject of an extension of time within which
to request a hearing was Dr. Arroyo's May 30, 1995 letter.
Dr. Arroyo wrote that letter more than three weeks after 60
days from the date that HCFA sent the notice of termination
to Petitioner. The letter does not contain anything to
support a conclusion that Petitioner had been misled into
believing that it did not have to make a timely request for a
hearing.

The June 21, 1995 letter, which HCFA sent to Petitioner in
response to Dr. Arroyo's May 30, 1995 letter, did not mislead
Petitioner into delaying its request for a hearing. HCFA
sent that letter to Petitioner many weeks after the deadline
for requesting a hearing had elapsed. The letter responded
to Petitioner's acknowledgment that Petitioner had failed to
make a timely hearing request. The letter advised Petitioner
to address its request for an extension of time to an
administrative law judge. Petitioner responded to that
advice by promptly making a request to the DAB for an
extension of time.

2? Dr. Arroyo's May 16, 1995 letter does suggest some
confusion as to HCFA's survey and certification process. It
is apparent from the letter that HCFA communicated to
Petitioner that it would not resurvey Petitioner to determine
whether Petitioner had corrected outstanding deficiencies,
because HCFA had terminated Petitioner's participation in
Medicare. However, HCFA's decision to not reopen its
determination to terminate Petitioner's participation by
conducting a resurvey, does not preclude Petitioner from
making a new application to HCFA to be certified as a
provider.
8

Petitioner has not shown that Dr. Arroyo's illness prevented
Petitioner from making a timely request for a hearing. Based
on Dr. Arroyo's assertions concerning the effects of his
illness, it would appear that his illness may have hampered
Petitioner's efforts to develop evidence refuting HCFA's
conclusion that termination was appropriate. But Petitioner
has not shown (or even asserted) that Dr. Arroyo's illness
waS so severe as to prevent Petitioner from making a request
for a hearing. Indeed, Dr. Arroyo personally visited HCFA's
New York regional office in March 1995, after having received
the notice of termination. Thus, Dr. Arroyo's activities
after having received the termination notice from HCFA
suggest that he was capable of assisting Petitioner in making
a request for a hearing.

III. Conclusion

I conclude that Petitioner is not entitled to a hearing.
Petitioner has not shown good cause for failing to make a
timely hearing request. Therefore, I dismiss Petitioner's
request for a hearing.

/s/

Steven T. Kessel
Administrative Law Judge