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

In the Case of:

Date: December 31, 2007

United Medical Home Care, Inc.,
(CCN: 55-7683),

Petitioner, Decision No. CR1713

)
)
)
)
)
) Docket No. C-06-251
)
)
)
)
Centers for Medicare & Medicaid Services. )

DECISION

Petitioner’s Home Health Agency (HHA) provider agreement is terminated effective
August 30, 2005.

I. Background

Petitioner, United Medical Home Care, Inc., Panorama City, California, requested a
hearing by an administrative law judge (ALJ) by letter dated February 3, 2006. Petitioner
seeks to challenge a determination of the Centers for Medicare & Medicaid Services
(CMS), reflected in its August 15, 2005 letter to Petitioner, that Petitioner voluntarily
terminated its Medicare provider agreement by ceasing to provide services to the
community in February 2005. The CMS letter cites as the basis for its conclusion the
regulation at 42 C.F.R. § 489.52(b)(3), which provides that “[a] cessation of business is
deemed to be a termination by the provider, effective with the date on which it stopped
providing services to the community.” The case was assigned to me for hearing and
decision on February 22, 2006, and a Notice of Case Assignment and Prehearing Case
Development Order was issued at my direction.

2

On March 10, 2006, CMS moved to dismiss Petitioner’s request for hearing pursuant to
42 C.F.R. § 498.70(b), arguing that Petitioner had no right to a hearing because a
“voluntary termination” is not an initial determination of the Secretary subject to appeal
and review. On March 21, 2006, Petitioner filed its rebuttal or opposition to the CMS
motion to dismiss, arguing that while it ceased providing services for a period, it did not
cease doing business and it never voluntarily terminated its provider agreement.

After review of the pleadings, the pertinent provisions of the Social Security Act (the
Act), and the applicable regulations, I concluded that additional clarification of the
parties’ legal positions was required. By Order dated April 3, 2006, I directed that the
parties brief four specific issues. Petitioner filed briefs on the issues on May 2 and May
19, 2006, and CMS filed briefs addressing the issues on May 5 and May 30, 2006. On
October 26, 2006, I denied the CMS motion to dismiss, lifted the stay, and reestablished
the schedule to hearing. In my Ruling dated October 26, 2006, I concluded that CMS had
mischaracterized the nature of the termination in this case and that CMS had involuntarily
terminated Petitioner’s provider agreement pursuant to 42 C.F.R. § 489.53. Thus, I
concluded that Petitioner had a right to a hearing pursuant to 42 C.F.R. § 498.5(b). The
general issue remaining for decision is whether or not CMS has a basis for the
termination of Petitioner’s provider agreement. I advised the parties by my Ruling that
there remained an issue of the adequacy of the August 15, 2005 CMS notice letter as a
notice of involuntary termination, and that I would address that specific issue in my
decision on the merits.

On November 21, 2006, I notified the parties that the case was set for hearing on
December 21, 2006. On December 6, 2006, Petitioner filed a written waiver of the right
to appear and present evidence at an oral hearing. On December 7, 2006, I issued an
order accepting Petitioner’s waiver of oral hearing, and cancelled the scheduled oral
hearing, resolved various evidentiary matters, and established a briefing schedule.

Petitioner filed its prehearing brief, which I treat as its opening brief (P. Brief), on
November 28, 2006. Petitioner filed its reply brief (P. Reply) with its proposed findings
of fact and conclusions of law, and its revised exhibit list of 16 exhibits, on January 18,
2007. CMS filed its prehearing brief, which I also treat as its opening brief (CMS Brief),
on November 30, 2006. CMS filed its Brief in Rebuttal (CMS Reply) on January 19,
2007, with its proposed findings of fact and conclusions of law, its list of proposed
exhibits and its exhibits 1 through 5. On March 13, 2007, Petitioner offered another
exhibit. Although I find many of the exhibits offered by both parties to be of minimal
relevance given the issues remaining for resolution in this case, CMS exhibits (CMS Ex.)
1 through 5 and Petitioner exhibits (P. Ex.) 1 through 17 are admitted.
II. Discussion

A. Findings of Fact

The findings of fact are based upon the exhibits admitted, the parties’ joint stipulations of
facts, and the undisputed statements of fact in the pleadings of the parties. Citations not
provided here may be found in the analysis section of this decision.

1.

Petitioner did not have any patients for a period from February 9, 2005 to August
23, 2005 (the relevant period). CMS Exs. 1-4; P. Reply at 2-3, 8-9; P. Proposed
Findings of Fact at 2-3.

Because Petitioner did not have any patients, during the relevant period, Petitioner
was not primarily engaged in providing skilled nursing and other therapeutic
services to patients.

CMS sent Petitioner a letter dated August 15, 2005, advising Petitioner that CMS
considered Petitioner’s provider agreement voluntarily terminated because
Petitioner ceased providing services in February 2005. CMS Ex. 1.

CMS’s letter dated August 15, 2005, is the first notice to Petitioner that CMS
considered Petitioner’s provider agreement terminated.

B. Conclusions of Law

An entity must meet the statutory definition of an HHA at section 1861(0) of the
Act to qualify as a Medicare provider under the Act. 42 C.F.R. § 488.3.

The statutory definition of an HHA at section 1861(0) of the Act requires that an
HHA be primarily engaged in providing skilled nursing services and other
therapeutic services.

During the relevant period, Petitioner did not meet the definition of an HHA, as it
was not primarily engaged in providing skilled nursing and other therapeutic
services, because it was not providing such services to patients.

CMS has the discretion to terminate a provider when the provider no longer meets
the definition of an HHA. 42 C.F.R. § 489.53(a)(1).
4

5. CMS was authorized to terminate Petitioner’s provider agreement effective August
30, 2005, 15 days after its notice dated August 15, 2005. 42 C.F.R. § 489.53(c).

6. Petitioner received adequate notice of involuntary termination.
C. Issues

Whether there was a basis for termination of Petitioner’s HHA provider
agreement.

Whether the CMS notice of termination was sufficient.
D. Applicable Law

Pursuant to section 1861(m) of the Act, Medicare covers “home health services” provided
by an HHA as defined in section 1861(0). Section 1861(0)(1) requires that the HHA be
“primarily engaged in providing skilled nursing services and other therapeutic services.”
The Secretary of Health and Human Services (the Secretary) has promulgated regulations
at 42 C.F.R. Part 484, which govern the participation of HHAs in the Medicare program.
42 C.F.R. § 484.1(a)(1) states that “[s]ections 1861(0) and 1891 establish the conditions
that an HHA must meet in order to participate in Medicare.” The provisions in 42 C.F.R.
§§ 484.10-484.55 set forth the requirements for Medicare participation of HHAs and
establish conditions of participation for these entities. The regulations prescribe the
conditions of participation which include specific standards of participation.

CMS, on behalf of the Secretary, is required to determine whether a Medicare provider of
services, including an HHA, is complying substantially with the Medicare participation
requirements established by the Act and regulations. Act, section 1866(b)(2). A
provider’s participation agreement may be terminated if CMS determines that “the
provider fails substantially to meet the applicable provisions of section 1861.” Act,
section 1866(b)(2)(B).

In order to remain certified as a Medicare provider, an HHA must remain in substantial
compliance with all conditions of participation. 42 C.F.R. §§ 489.53(a)(1) and (3). The
process and criteria for determining whether a provider is complying substantially with
Medicare participation requirements are established by regulations at 42 C.F.R. Part 488.
CMS has entered into agreements with state survey agencies to conduct periodic surveys
of providers, including HHAs, in order to ascertain whether the providers are complying
with Medicare participation requirements. Act, section 1864(a); 42 C.F.R. §§ 488.10,
488.11, and 488.20. State survey agencies conduct surveys of HHAs and make
recommendations to CMS as to whether such facilities meet federal participation
5

requirements for the Medicare program. Act, section 1864(a); 42 C.F.R. §§ 488.10,
488.11, and 488.20. CMS considers survey results from the state survey agencies as the
basis for its determination regarding the initial or continued participation of an HHA in
the Medicare program. 42 C.F.R. §§ 488.11 and 488.12.

In determining whether a provider complies with a particular condition of participation,
the state survey agency evaluates the manner and degree of the provider’s satisfaction of
the various standards within each condition. 42 C.F.R. § 488.26(b). The state survey
agency also makes a recommendation to CMS as to whether there is a basis for
termination. CMS may accept or reject the recommendation after reviewing the survey
findings. 42 C.F.R. § 488.12.

CMS may terminate participation in Medicare when it determines, either on its own
initiative or based on a state survey agency report, that a provider is not complying with
one or more Medicare conditions of participation. Act, section 1866(b)(2)(A); 42 C.F.R.
§§ 488.20, 488.24, 488.26, and 489.53(a)(1) and (3). Failure to comply with a condition
of participation occurs where deficiencies, either individually or in combination, are “of
such character as to substantially limit the provider’s . . . capacity to furnish adequate care
or which adversely affect the health and safety of patients ....” 42 C.F.R. § 488.24(b).

A provider whose participation in Medicare is terminated may request a hearing by an
ALJ in accordance with 42 C.F.R. Part 498. 42 C.F.R. § 489.53(d).

E. Analysis
1. Petitioner received adequate notice of involuntary termination.

I left open the question of the adequacy of CMS’s notice to Petitioner in my Ruling dated
October 26, 2006. There is no question that the notice (CMS Ex. 1) does not satisfy the
regulatory requirements for involuntary termination. 42 C.F.R. §§ 489.53(c) and (d).
However, in this case, the notice did advise Petitioner that CMS considered its provider
agreement terminated and informed Petitioner of the basis for the termination. The fact
that Petitioner’s appeal rights were not specifically listed is cured by CMS’s waiver of
Petitioner’s late filing and the administrative process accorded Petitioner in this case.
Petitioner has had a full and fair opportunity to present its position.

2. CMS had sufficient grounds on which to terminate Petitioner’s
provider agreement.

The facts pertinent to the issues before me are few and undisputed. There is no dispute
that Petitioner did not have any patients for a period from February 9, 2005 to August 23,
2005. There is no dispute that CMS sent Petitioner a letter dated August 15, 2005, which
6

advised Petitioner that CMS considered Petitioner’s provider agreement voluntarily
terminated because Petitioner had ceased providing services in February 2005. There is
no dispute that CMS’s letter of August 15, 2005, is the first notice to Petitioner that CMS
considered Petitioner’s provider agreement terminated. Jt. Stip.; CMS Ex. 1-4; CMS
Brief at 8-9; P. Reply at 2-3; P. Proposed Findings of Fact at 1-5. Thus, the only issues
for resolution in this case are issues of law.

I note first that this case does not involve whether Petitioner failed to comply with
participation requirements found during a state survey. Instead, the case turns on whether
Petitioner continued to meet the statutory definition of an HHA. The regulation at

42 C.F.R. § 488.3(a) states that to be approved for participation, a prospective provider or
supplier must meet the applicable statutory definitions in (among other sections) section
1861. The Departmental Appeals Board (Board) has observed that:

The ALJ’s holding that Petitioner was required to meet the definition at section
1861 is consistent with the Board’s observation that determining whether an entity
qualifies as a provider within the meaning of the Act and regulations is not limited
to determining whether it meets the quality of care or health and safety
requirements, and that meeting any aspect of the statutory definition of a hospital
or other entity that may be a provider of services is a prerequisite to qualifying as a
provider. ...

Arizona Surgical Hospital, LLC, DAB No. 1890, at 9 (2003); Specialty Hospital of
Southern California-La Mirada, DAB No. 1730, at 8-9, n. 9 (2000), aff'd, Specialty
Healthcare Servs. v. Thompson, No. 00-08438-ABC (CTX) (S.D.Ca. Aug. 1, 2001).
Although an HHA was not the type of provider involved in Arizona, the reasoning
regarding the requirement to meet the definition at section 1861 remains the same. To
remain a provider, Petitioner must meet the statutory definition of its particular type of
provider - in its case it must meet the definition of an HHA. The statutory definition of
an HHA at section 1861(0) requires that Petitioner be “primarily engaged in providing
skilled nursing services and other therapeutic services.” Act, section 1861(0)(1). During
the relevant period, a period lasting more than six months, Petitioner was not engaged in
providing such services.

Section 1866(b)(2)(B) gives the Secretary, and his delegee, CMS, the discretion to
terminate when a provider no longer meets the definition of an HHA at section
1861(0)(1). 42 C.F.R. § 489.53(a)(1). And, CMS has the discretion to decide how long a
cessation of services is too long. Petitioner admits that “during the period of February 9,
2005 to August 23, 2005, [it] did not provide patient services,” reinforcing the fact that
during a six month period it was not so primarily engaged. P. Reply at 8-9. Although
Petitioner argues that temporarily suspending services for six months was not a
“substantial” violation of section 1861(0)(1) ( P. Reply at 6), I disagree. A six month

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cessation of the provision of such services is not a temporary or emergency cessation. It
is reasonable for CMS to determine that an HHA which is not providing skilled nursing
services and other therapeutic services to patients for six months does not continue to
meet the definition of an HHA.

Petitioner argues in defense of its failure to provide patient services during the relevant
period that it was “a compliant home health agency forced into a situation of temporary
noncompliance due to .. . financial suspension” by CMS’s agent and that it was otherwise
maintaining its staff, office, and had a California license (P. Reply at 8-9). Petitioner
asserts that it was forced to temporarily suspend its patient services due to a circumstance
beyond its control (the suspension) and that its involuntary termination would violate
public policy (P. Reply at 16). Petitioner is essentially arguing that CMS should be
estopped from terminating its provider agreement due to this extraordinary circumstance -
- the suspension of program reimbursement.

The suspension of program payment is not an extraordinary circumstance. Petitioner had
the ability to continue providing services during the suspension, which could be
reimbursed when the suspension ended, or voluntarily terminate its participation and
reapply when it was ready to provide services to patients. Moreover, my jurisdiction in
cases involving CMS is limited to hearing and deciding those issues which the Secretary
has delegated authority for me to hear and decide, as set forth at 42 C.F.R. §§ 498.3 and
498.5. The regulations authorize me only to hear and decide cases involving specified
initial determinations by CMS. I have no authority to determine that CMS’s actions
would violate public policy and no authority to award damages or fashion extraordinary
relief. Moreover, I have no authority to hear and decide claims of equitable estoppel
against the Secretary. See, Office of Personnel Management v. Richmond, 496 U.S. 414,
110 S.Ct. 2465, 110 L.Ed.2d 387 (1990); Heckler v. Community Health Services of
Crawford County, Inc., 467 U.S. 51, 104 S.Ct. 2218, 81 L.Ed.2d 42 (1984). While the
Supreme Court has not ruled that estoppel will never lie against the government, the
decisions in these cases make clear that equitable estoppel will not lie against the
government in cases involving benefits to be paid from the Treasury, particularly in the
complicated area of Medicare.

After terminating a provider agreement, CMS can only accept a new provider agreement
if the provider has made satisfactory arrangements to fulfill all of the statutory and
regulatory responsibilities of its previous agreement. 42 C.F.R. § 489.57. Here, even
though Petitioner accepted a new patient after the six month cessation of services, it was
up to CMS to determine whether Petitioner again met the definition of an HHA. It is
irrelevant in this regard that Petitioner maintained its California license as an HHA, as it
was up to CMS, not the state, to decide whether Petitioner met the definition of an HHA
and was otherwise in compliance with participation requirements.
8

3. Petitioner’s termination is effective August 30, 2005.

Petitioner received notice of termination on August 15, 2005. Pursuant to the regulations,
an involuntary termination would be effective 15 days later on August 30, 2005.

42 C.F.R. § 489.53(c). Petitioner asserts that by August 30, 2005, it had cured any
possible violation because it admitted a patient on August 23, 2005, a date before the
involuntary termination effective date of August 30, 2005. However, admitting a patient
after being notified of the termination, but before the effective date, does not mean that
Petitioner was in compliance with the requirements of an HHA, absent a CMS finding
that it was in compliance. CMS made no such finding.

Ill. Conclusion

For the foregoing reasons, Petitioner’s provider agreement is terminated effective August
30, 2005.

/s/
Keith W. Sickendick
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Dennis H. Foos, ) Date: December 14, 2007
)
Petitioner, )
)
-Vv.- ) Docket No. C-08-98
) Decision No. CR1711
Social Security Administration. )
)
DECISION

On September 21, 2007, Dennis H. Foos, Petitioner, filed a request for a hearing to
contest the $21,027.96 salary overpayment debt the Social Security Administration (SSA)
determined he owed. I find that Petitioner failed to meet the filing deadline and has
waived his right to a hearing.

Background

Petitioner was notified of the indebtedness to SSA by letter dated June 7, 2007. Due to an
administrative error, SSA overpaid Petitioner because it failed to deduct Petitioner’s
Federal Employees’ Group Life Insurance (FEGLI) Option B (3x) premiums from his pay
deductions from from July 1997 through June 2006. On June 15, 2007, Petitioner
requested a waiver of the overpayment. On August 24, 2007, the Office of General
Counsel issued the Agency’s final decision denying Petitioner’s request for a waiver of
his salary overpayment. By letter dated September 21, 2007, Petitioner then requested an
administrative hearing with respect to his indebtedness.

This case was received by the Departmental Appeals Board on November 9, 2007 and
assigned to me for hearing pursuant to 5 U.S.C. § 5514.'

' Through a written agreement with SSA, the Departmental Appeals Boards hears SSA
debt collection cases of SSA employees. See also 45 C.F.R. § 30.2 (which defines SSA
as an Operating Division of the Department of Health and Human Services (HHS) for
Findings

The process for an employee to dispute the administrative determination of the existence
or the amount of a debt is set by statute. Pursuant to 5 U.S.C. § 5514, an employee is to
be notified in writing and then has 15 days from the date of the notice to file a request for
a hearing. See also 45 C.F.R. § 30.15(1) (“request [for hearing] must be postmarked no
later than 15 says from the date the notice was mailed”). Pursuant to the statute and 45
C.F.R. § 30.15(1), a debtor who fails to meet the filing deadline or to request an extension
waives the right to a hearing and will be immediately subject to offset of the debt from
any payments to him by SSA. Petitioner was specifically advised of this by Exhibit 6 to
the June 7, 2007 notice letter. That exhibit, entitled “HEARINGS,” describes the hearing
process and instructs Petitioner that his request for hearing “must be postmarked no later
than 15 days from the date of this letter [June 7, 2007].” Therefore, in order for
Petitioner’s hearing request to be considered timely, it had to have been postmarked no
later than June 22, 2007. Clearly, Petitioner failed to meet the required deadline.
Therefore, he has waived his right to a hearing and I cannot hear this matter.

There is no question that Petitioner timely requested a waiver, but a waiver request and a
hearing request are two separate proceedings. Also, a request for a waiver is sent to a
separate office and is entirely discretionary. See Exhibit 5 to June 7, 2007 notice.
Petitioner was clearly informed that there were two separate processes. While a debtor is
not precluded from pursuing both actions simultaneously, doing so does not relieve the
debtor from the mandatory filing deadlines for a hearing request. 45 C.F.R. § 30.15(p).
In this instance, Petitioner chose to pursue a waiver without pursuing a hearing. Only
after he received the final agency decision on August 24, 2007 denying the waiver
request, did Petitioner then pursue requesting a hearing. However, his request for hearing
was dated September 21, 2007. Even if I were to consider the waiver decision as
providing Petitioner a right to request review, his request would still be considered
untimely under the best circumstances because the filing deadline of 15 days from the
August 24 decision would require that his hearing request be postmarked no later than
September 10, 2007.

Finally, even if I were to consider this case on the substantive merits, | would find that
there was a valid debt of $21,027.96 which SSA can collect from Petitioner. In a hearing,
the burden is on a petitioner to show that the debt is invalid or that the amount is
incorrect. Petitioner here has not specifically disputed the validity of the debt. Rather,
Petitioner contends that it was due to SSA’s administrative error. However, I would
agree with the Agency’s August 24, 2007 decision that Petitioner knew or should have

purposes of debt collection matters) and §30.15; 20 C.F.R. § 422.317.
3

known of the overpayment even if it was the result of administrative error. While it is
true that SSA made an administrative error, that error did not excuse Petitioner from a
concurrent responsibility to review his Leave and Earning Statement (LES) each pay
period to determine if the LES was correct. Clearly, Petitioner was in a position to know
or he should have known that an error occurred. All federal employees receive an LES
each pay period. These statements always show what items are being deducted from an
employee’s gross salary and in what amount. Typically, the statement would show under
Deductions the following categories or types of deductions: Retirement, Medicare,
Federal Tax, State Tax, Federal Employees Life Insurance (if an employee has opted for
this), and Health Benefits (usually with the Insurance Carrier’s Benefit Code which
identifies the company and the option chosen) and the amount taken out that pay period
and for the year to date for each of those categories/types. The Agency determined that a
review of his LES clearly indicated that he was paying $230 less per pay period than the
price of the Option B coverage he elected. Petitioner does not dispute the validity or the
accuracy of the agency’s determination.

Conclusions

I conclude that Petitioner did not timely file his hearing request. Therefore, he waived his
right to a hearing. In any event, even if I were to reach the merits of this case, Petitioner
has not rebutted SSA’s determination of an overpayment debt and the debt is valid and
owed to SSA.

/s/
Alfonso J. Montano
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)
Karon Fay Matheny, ) Date: December 13, 2007

)
Petitioner, )
)

-Vv.- ) Docket No. C-07-450

) Decision No. CR1710
The Inspector General. )
)
)

DECISION

I sustain the Inspector General’s (1.G.) determination to exclude Karon Fay Matheny,
Petitioner, from participation in Medicare, Medicaid, and all federal health care programs
pursuant to sections 1128(b)(4) and 1128(c)(3)(E) of the Social Security Act (Act).

I. Background

This case is before me pursuant to a request for hearing dated May 13, 2007, by
Petitioner.

By letter dated April 30, 2007, the I.G. notified Petitioner that she was being excluded
from participating in the Medicare, Medicaid, and all federal health care programs as
defined in section 1128B(f) of the Act. 1G. Exhibit (Ex.) 1. The I.G. further informed
Petitioner that the exclusion was based on section 1128(b)(4) of the Act, in view of the
revocation, suspension, loss, or surrender of her license to practice medicine or provide
health care as a practical nurse in the State of Florida, for reasons bearing on her
professional competence, professional performance, or financial integrity. The exclusion,
the I.G. informed Petitioner, would be in effect until she regained her license as a
practical nurse in the State of Florida and was reinstated by the I.G.
2

The LG. is represented in this case by the Office of Counsel to the Inspector General.

Petitioner of her right to retain counsel, and s!
nasmuch as | concluded that this matter cou
and documentary evidence, I issued an Order

Petitioner appears pro se. At a telephone conference held on July 30, 2007, I informed

he indicated that she understood that right.
d be decided based on written arguments
on August 21, 2007, establishing a briefing

schedule. Pursuant to that order, on August 31, 2007, the I.G. submitted a memorandum

of law accompanied by two proposed exhibits, I.G. Exs. 1-2. In the absence of objection,
admit into evidence I.G. Exs. 1-2. Petitioner prematurely submitted her brief on August
24, 2007, accompanied by eight exhibits, P. Exs. 1-8. In the absence of objection, I admit

t is my decision to sustain the determination
Matheny, from participating in the Medicare,
programs, for a period coterminous with the
provide health care in the State of Florida. I

into evidence P. Exs. 1-8. The 1.G. filed a reply brief on October 16, 2007.

of the I.G. to exclude Petitioner, Karon Fay
Medicaid, and all other federal health care
oss of her license to practice medicine or
ase my decision on the documentary

evidence, the applicable law and regulations, and the arguments of the parties. It is my
finding that Petitioner’s license was suspended by the State of Florida, Board of Nursing,
for reasons bearing on her professional competence, professional performance, or
financial integrity. Additionally, I find that when an exclusion imposed by the IG. runs
concurrent with the remedy imposed by the state licensing authority, such exclusion shall
not be less than the period during which the individual’s license is suspended or revoked.

II. Issues

1. Whether the I.G. had a basis upon which to exclude Petitioner from participating in the
Medicare, Medicaid, and all other federal health care programs.

2. Whether the length of the exclusion imposed and directed against Petitioner by the I.G.
is unreasonable.

Ill. Applicable Law and Regulations

Under section 1128(b) of the Act, the Secretary of Health and Human Services
(Secretary) may exclude individuals from receiving payment for services that would
otherwise be reimbursable under Medicare, Medicaid, or other federal health care
programs.

The Act defines “[f]ederal health care program,” as “(1) any plan or program that
provides health benefits, whether directly, through insurance, or otherwise, which is
funded directly, in whole or in part, by the United States Government . . .; or (2) any State
health care program, as defined in section 1128(h).” Act, section 1128B(f).

3

Section 1128(b)(4) of the Act authorizes the Secretary to exclude an individual whose
license has been lost, suspended, revoked, or surrendered while a formal disciplinary
proceeding is pending before a state licensing authority, and the proceeding concerns the
individual’s professional competence, professional performance, or financial integrity.
According to section 1128(c)(3)(E) of the Act, the minimum term of exclusion of an
individual who is excluded pursuant to section 1128(b)(4) must be coterminous with the
term of loss, suspension, or surrender of that individual’s license to provide health care.

The regulations promulgated at 42 C.F.R. §§ 1001.501 and 1001.1901(b) mirror the
statutory provisions set forth in the Act.

IV. Findings of Fact and Conclusions of Law

1. Petitioner was licensed to provide health care within the meaning of section
1128(b)(4) of the Act as a Practical Nurse in the State of Florida (LPN). I.G. Ex. 2, at 5;
1G. Ex. 1.

2. On or about January 20, 2005, while employed as an LPN at Marianna Dialysis,
located in Marianna, Florida, Petitioner submitted to a “for cause” Petitioner employer-
ordered urine drug screen. I.G. Ex. 2, at 6.

3. On or about February 2, 2005, Petitioner was referred to the Intervention Project for
Nurses (IPN), after the urine drug screen returned positive for amphetamines. I.G. Ex. 2,
at 6.

4. IPN is the impaired nurses program for the Florida Board of Nursing (Board), pursuant
to Section 456.076, Florida Statutes. It is an independent program which monitors the
evaluation, care and treatment of impaired nurses, and oversees random drug screening.
1G. Ex. 2, at 6.

5. Amphetamines are Schedule II controlled substances under Section 893.03, Florida
Statutes. Schedule II substances have a high potential for abuse, which may lead to

severe psychological and physical dependence. IG. Ex. 2, at 6.

6. Petitioner did not have a lawful prescription or legitimate reason for possession of
amphetamines. I.G. Ex. 2, at 7.

7. Petitioner engaged in a two-year IPN monitoring contract. I.G. Ex. 2, at 7.
4
8. On or about December 2, 2005, Petitioner was terminated from IPN due to non-
compliance with the requirements of her IPN Advocacy Contract. I.G. Ex. 2, at 7.

9. In June 2006, the Florida Department of Health (Department) filed an administrative
complaint, seeking disciplinary action against Petitioner’s license on the basis that she
tested positive for amphetamines in January 2005, a substance for which she did not have
a lawful prescription, and was terminated from the IPN for non-compliance with program
requirements. I.G. Ex. 2, at 7-9.

0. The Department determined that Petitioner violated State law and failed to meet
minimal standards of acceptable and prevailing nursing practice. I.G. Ex. 2, at 8, 9.

1. In October 2006, the Board conducted a hearing on the matter of the Department’s
administrative complaint against Petitioner. I.G. Ex. 2, at 1.

2. Petitioner did not respond to the administrative complaint, did not contest the factual
allegations in the complaint, and did not attend the hearing. I.G. Ex. 2, at 1, 2.

3. The Board adopted the findings of the administrative complaint and, based upon
those findings, suspended Petitioner’s license until such time as she entered into the IPN
and complied with any and all terms of that program. I.G. Ex. 2, at 3.

4. The Board directed that Petitioner’s reinstatement as an LPN be contingent upon her
appearance before the Board to demonstrate her ability to engage in the safe practice of

nursing, which would include two years of documented continuous sobriety. I.G. Ex. 2,
at 3.

5. The Board ordered that, should Petitioner enter into the IPN, and comply with any
and all terms imposed by the IPN, the suspension of her license would be stayed as long
as she participated in the rehabilitation program. I.G. Ex. 2, at 3.

6. The Board ordered that failure to comply with all conditions of Petitioner’s IPN
Advocacy Contract would constitute a violation of the Order, resulting in the immediate
lifting of the stay of suspension. I.G. Ex. 2, at 3.

7. As of the date of the Board’s order, October 30, 2006, Petitioner had failed to comply
with IPN requirements and had been terminated from the program. I.G. Ex. 2, at 9.

8. Effective October 31, 2006, the Board suspended Petitioner’s Florida nursing license.
.G. Ex. 2, at 3, 4.

19. Petitioner possessed a license to provide health care within the meaning of section
28(b)(4) of the Act. IG. Ex. 1.

20. Petitioner’s nursing license was suspended by the state licensing authority for the
State of Florida.

21. The Board determined that Petitioner lacked the professional competence to meet the
minimal standards of acceptable and prevailing nursing practice.

22. The Board suspended Petitioner’s nursing license for reasons bearing on her
professional competence and/or professional performance within the meaning of section
28(b)(4) of the Act.

23. Under section 1128(b)(4) of the Act, the I.G. had a legal basis to exclude Petitioner
from participation in federal health care programs, based on the suspension of her license
to practice nursing in the State of Florida.

24. Under section 1128(c)(3)(E) of the Act, the period of exclusion is presumptively
reasonable because it is coterminous with the length of the suspension.

25. Petitioner’s argument that the investigative file the attorney for the Department
offered into evidence, and that the Board found as uncontested facts was not true, lacks
merit inasmuch as it constitutes an impermissible collateral attack on the state
proceedings that resulted in her suspension. 42 C.F.R. § 1001.2007(d).

V. Conclusion

It is my decision that the IG. was authorized to exclude Petitioner pursuant to

section 1128(b) (4) of the Act. Additionally, I conclude that the indefinite period of
exclusion imposed by the I.G. is the minimum period mandated by section 1128(c)(3)(E)
of the Act.

/s/
José A. Anglada
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of: )
)

Social Security Administration, ) Date: December 4, 2007
Office of the Inspector General, )
)

-V.- ) Docket No. C-07-612
) Decision No. CR1708

Betty Lee, )
)
Respondent. )
)

DECISION DISMISSING HEARING REQUEST

Because she has not raised an issue that may properly be addressed in a hearing before
me, I dismiss Respondent Betty Lee’s hearing request.

Discussion

The Inspector General for Social Security (IG) charges that, in her 2004 applications for
Social Security disability insurance benefits (DIB) and Supplemental Security Income
enefits (SSI), Respondent, Betty Lee, repeatedly made false and misleading statements
and/or misrepresentations of material facts that she knew or should have known were
false or misleading, in violation of section 1129 of the Social Security Act (Act).
According to the IG, Respondent Lee repeatedly claimed that she last worked on October
, 2003. She made this claim in her applications, on multiple work history reports, and,
under oath, at two administrative hearings before an administrative law judge. In fact, the
G alleges, Respondent Lee was and continues to be employed at the Holiday Inn Select
in Richmond, Virginia.

The IG SSA proposes imposing a $40,000 civil money penalty (CMP) pursuant to section
129 of the Act, which subjects to penalty any person (including an organization, agency,
or other entity)

2

who makes, or causes to be made, a statement or
representation of a material fact for use in determining any
initial or continuing right to or the amount of... monthly
insurance benefits under title II... . or benefits or payments
under title XVI, that the person knows or should know omits a
material fact or makes such a statement with knowing
disregard for the truth... .

See also 20 C.F.R. § 498.102(a) (authorizing the IG to impose a penalty against any
person who has made a statement or representation of a material fact for use in
determining any initial or continuing right to or amount of Title II or Title XVI benefits,
and who knew, or should have known, that the statement or representation was false or
misleading, or who omitted a material fact, or who made such a statement with “knowing
disregard for the truth.”).

By letter dated June 25, 2007, the IG advised Respondent Lee of its determination and the
proposed penalty. SSA Exhibit (Ex.) 21. Ina letter dated July 16, 2007, Respondent Lee
wrote that she wanted to “appeal the decision you made on my disability case.”

I convened a prehearing conference on August 27, 2007, at which I explained to
Respondent Lee that the issue before me was whether the IG had a basis for imposing the
CMP, and, if so, whether a $40,000 CMP is appropriate. I emphasized during the
conference and in my subsequent written order that:

this matter is not an appeal or re-adjudication of your denial
of disability benefits. Rather, this is a penalty imposed
against you for making false and misleading statements to
SSA which you knew or should have known were false or
misleading.

Order Scheduling Submission of Briefs and Documents (August 27, 2007).

In compliance with my order, the IG submitted its brief and exhibits. Respondent Lee has
filed two brief submissions, dated October 25, 2007, and November 15, 2007. In each,
she continues to discuss her medical condition, and claims that she suffers from Type 2
diabetes which precludes her from living a normal life. She asks that her case be
reviewed by a medical person. Reviewing these submissions, along with her hearing
request, it seems that, notwithstanding the explicit instructions given during the
prehearing conference and in my August 27, 2007 order, Respondent Lee continues to ask
that I review the denial of her claims for disability benefits. She says nothing about the
IG’s charges.

3

Respondent Lee is entitled to review in this forum of the IG’s determinations that she
knowingly made false or misleading statements in her applications for disability benefits.
She is entitled to review in this forum of the reasonableness of the proposed CMP. 20
C.F.R. § 498.202(a). However, I have no authority to review the sole issue that she raises
in her hearing request, and supports in her subsequent submissions — whether her
physical impairments entitle her to disability benefits. She may be entitled to such
review, but not in this forum.

The regulations require that I dismiss a hearing request that fails to raise any issue that
may properly be addressed in a hearing under 20 C.F.R. Part 498. 20 C.F.R.
§ 498.202(f)(3).

Conclusion
Because Respondent Lee has raised no issue that I am authorized to review, her request

for hearing is dismissed.

/s/
Carolyn Cozad Hughes
Administrative Law Judge


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

)
In the Case of: )

) Date: December 3, 2007
Topeka Presbyterian Manor )
(CCN: 17-5297), )

) Docket No. C-05-438
Petitioner, ) Decision No. CR1707

)
v. )
)
Centers for Medicare & Medicaid )
Services. )
_)

DECISION

Petitioner, Presbyterian Manors, Inc., d/b/a Topeka Presbyterian Manor, violated 42
C.F.R. § 483.10(b)(11)' (Tag F157) between about January 4, 2005 and January 10, 2005.
A per instance civil money penalty of $7000 is reasonable.

I. Background

Petitioner is a long-term care facility located in Topeka, Kansas. Petitioner is certified to
participate in the federal Medicare program as a skilled nursing facility (SNF) and in the
Kansas Medicaid program as a nursing facility (NF). From April 25 through April 28,
2005, the Kansas Department of Aging (the state agency) conducted a survey of
Petitioner’s facility finding violations of 42 C.F.R. § 483.10(b)(11) (Tag F157) and 42
C.F.R. § 483.13(c)(1)(i), as reported in the Statement of Deficiencies (Form CMS-2567)
(SOD) dated May 5, 2005. CMS Exhibit (CMS Ex.) 1. The state agency forwarded the
survey to the Centers for Medicare & Medicaid Services (CMS). CMS notified Petitioner
by letter dated May 25, 2005, that based on the deficiencies found by the state agency,
CMS was imposing a per instance civil money penalty (CMP) of $7000, a denial of

' Citations are to the version of the regulation in effect at the time of the survey.
2

payment for new admissions (DPNA) effective May 27, 2005, and termination of
Petitioner’s provider agreement on November 5, 2005, if substantial compliance was not
achieved before that date. CMS further advised Petitioner that it was ineligible to offer a
nurse aide training competency evaluation program (NATCEP) for a period of two years
from the date of the survey.

On or about July 7, 2005, the state agency conducted a revisit survey of Petitioner’s
facility and determined that Petitioner achieved substantial compliance with regulatory
requirements effective May 27, 2005. Asa result of finding Petitioner had returned to
substantial compliance, the DPNA and termination remedies were not effectuated.
Transcript page (Tr.) 273.

Petitioner filed a request for hearing by an administrative law judge (ALJ) on July 8,
2005. The case was assigned to me for hearing and decision on August 2, 2005. I
convened a hearing in Topeka, Kansas on February 8 and 9, 2006. CMS offered exhibits
through 9. CMS exhibits | through 4, 8, and 9 were admitted, but CMS agreed with
Petitioner that CMS exhibits 5, 6, and 7 were not relevant and they were not admitted.
Petitioner offered exhibits (P. Exs.) 1, 4, 5, 6, 9, and 10-17, which were admitted. Tr. 18
and 381. Petitioner’s exhibits 2, 3, 7, and 8, were not offered at hearing. Audrey
Sunderraj and James E. Beery testified for CMS. Petitioner elicited testimony from Tom
Bechtel, Linda M. Finch, Dr. Kevin Sundbye, Tanya Stewart-Vann, and Nancy Pearl
Denham. The parties submitted post hearing briefs and post hearing reply briefs.

II. Discussion
A. Findings of Fact

The following findings of fact are based upon the exhibits admitted and the parties
stipulations of fact. Citations to exhibit numbers related to each finding of fact may be
found in the analysis section of this decision if not indicated here.

1. Resident 900, the resident who is the subject of the deficiencies alleged, was
admitted to Petitioner’s SNF on January 25, 2003. Joint Stipulation of Undisputed
Facts (Jt. Stip.) at 2.

2. Kevin Sundbye, M.D., was Petitioner’s Medical Director and Resident 900’s
primary care physician at the time of the events that form the basis for the
allegations from the survey. Jt. Stip. at 2.
3

3. Resident 900 was an 83-year-old, wheelchair-bound male, with diagnoses of
chronic obstructive pulmonary disease (COPD), hypertension, dementia,
depression, post-polio syndrome, cataracts, and glaucoma, who was moderately
impaired for decision-making, had difficulty finding words or finishing thoughts,
displayed a depressed mood, was verbally abusive, resisted care, needed extensive
assistance or was totally dependent for activities of daily living, required transfers
with a mechanical lift, was at risk for impaired skin integrity because of urinary
and bowel incontinence, and was placed on psychotropic drugs because of
agitation, delusions, and physical and verbal abusive behaviors.’ P. Ex. 10-16.

4. On January 3, 2005,° at approximately 7:17 p.m., Resident 900 was found lying
face down on the floor in his room, with a small skin tear on his left elbow and a
large hematoma or bruise on the left side of his forehead and face. CMS Ex. 4, at
2; P. Ex. 1, at 1.

5. Resident 900 reported to Petitioner’s staff that he fell forward out of his
wheelchair when he reached down to put his foot back on the wheelchair foot rest.
CMS Ex. 4, at 2; P. Ex. 1, at 1.

6. At 7:20 p.m. on January 3, 2005, Resident 900 was assessed by the Licensed
Practical Nurse (LPN) who found among other things that his oxygen saturation on
room air was low at 82 percent, respiration rate was 44 breaths per minute, and he
was breathing with his accessory muscles; also his pupils were constricted and
non-reactive to light. CMS Ex. 4, at 2; P. Ex. 1, at 1.

> Linda Finch, Petitioner’s Director of Nursing (DON), testified that Resident 900
had a history of stroke which continued to impact his right side, yet there is nothing in his
medical records presented to me that indicates that fact or lists that in his history. Tr.
176-77. The quarterly Minimum Data Set (MDS) assessment done on this resident with
and assessment reference date of December 1, 2004, has only “depression” checked under
section Il. “Cerebrovascular accident (stroke)” is not checked off as an active diagnosis.
Furthermore, rather than a limitation of range of motion on the right side, he was assessed
as having a bilateral loss of range of motion in the arms, legs and feet with a partial loss
of voluntary movement in one leg. P. Ex. 10, at 4.

* The parties stipulated that the fall occurred on February 3, 2005 (Jt. Stip. at 3),
clearly in error as there is no question Resident 900 expired on January 10, 2005. Jt. Stip.
at 5.
4

At 7:30 p.m. on January 3, 2005, Resident 900 was assessed again by the LPN
after being placed on oxygen and, among other things, his oxygen saturation level
was up to 86 percent but still low, his respiration rate had dropped to 40 breaths
per minute, his breathing was labored, and he was using accessory muscles to
reath. CMS Ex. 4, at 2; P. Ex. 1, at 1.

Petitioner’s nursing notes indicate that at 7:40 p.m. the LPN paged Dr. McKee, the
physician on call for Dr. Sundbye. Jt. Stip. at 2.

Petitioner’s nursing notes show that Dr. McKee returned the LPN’s call at 7:45
p.m. and Dr. McKee authorized ambulance transport of Resident 900 to the local
ospital emergency room. CMS Ex. 4, at 2-3; P. Ex. 1, at 1-2.

Petitioner’s nursing notes show that Resident 900 left Petitioner’s facility en route
to the emergency room at 8:05 p.m. CMS Ex. 4, at 3, P. Ex. 1, at 2.

The nursing notes show that when Resident 900 left the facility, he was
complaining of left chest pain and a headache. CMS Ex. 4, at 3, P. Ex. 1, at 2.

The nursing notes indicate that Resident 900 was returned by ambulance from the
hospital approximately four hours later, at 1:00 a.m. on January 4, 2005;
Petitioner’s staff began doing regular neurologic checks; the resident had a urinary
or Foley catheter from the hospital; and he was receiving oxygen via nasal cannula
at a rate of three liters. CMS Ex. 4, at 3; P. Ex. 1, at 2.

A nursing note at 2:00 a.m. on January 4, 2005, shows that neurologic checks that
had been conducted every 15 minutes over the past hour were within normal
limits. CMS Ex. 4, at 3; P. Ex. 1, at 2.

The 2:00 a.m. nursing note also shows that the orders received from the hospital
specified the administration of oxygen at the rate of two liters to maintain an
oxygen saturation of greater than 90% but to otherwise continue current orders and
follow-up with Dr. Sundbye in the coming week. CMS Ex. 4, at 1, 3; P. Ex. 1, at
2,9, 13; Jt. Stip. at 4.

A nursing note at 3:00 a.m. shows that the LPN and a nursing assistant (CNA) did
a “head to toe” assessment, electrocardiogram leads were removed, the resident
was alert and oriented and commented that he had a big adventure, he was cold on
return due to weather conditions, his breath sounds were clear with oxygen in
place, but the hospital had noted worsening COPD. P. Ex. 1, at 14.
20.

21.

22.

23.

5

A nurse note at 5:00 a.m. on January 4, 2005, records that the resident slept
periodically and responded to voice and touch. P. Ex. 1, at 14.

A nurse note at 6:00 a.m. on January 5, 2005, states “[rJesident is much less
responsive at this time;” his vital signs remained in normal limits; his pupils were
noted to be equal, round, and reactive to light and accommodation (PERRLA); but
his breath sounds were wheezy bilaterally and he had a “very red face.” P. Ex. 1,
at 14.

The 6:00 a.m. nursing note also states that the nurse asked Resident 900 whether
he wished to return to the hospital but the note does not state why she asked the
resident the question except the note includes that she could not tell whether he
truly could not do hand grasps, nodding, and blinking or whether he was just
deliberately withholding. P. Ex. 1, at 14.

The 6:00 a.m. note records that the nurse knew that one of the hospital diagnosis
was a closed-head injury, but despite the nurse’s question about whether the
resident should be returned to the hospital, the nurse elected to continue oxygen
and continue other medications as ordered and to wait for Dr. Sundbye to appear at
the facility later in the day as scheduled. P. Ex. 1, at 14.

A nursing note at 6:45 a.m. on January 4, 2005, shows that the resident was alert
and oriented to person, but he was no longer oriented to date, time, or place, which
is a decline from his status compared to the 3:00 a.m. nursing note. P. Ex. 1, at 14.

The nursing note at 6:45 a.m. also shows that Resident 900’s face was flushed and
his neurologic checks revealed that his left grip strength was “considerably
weaker” than his right, his left pupil was pinpoint and nonreactive, his right pupil
was sluggish but reactive, he was not answering questions appropriately at times,
all reflecting a decline from his neurologic checks reported at 2:00 a.m., 3:00 a.m.
and 6:00 a.m. P. Ex. 1, at 14-15.

The nursing note at 8:45 a.m. on January 4, 2005, records that on neurologic
check, Resident 900’s left pupil remained pinpoint and his right eye was still
sluggish. P. Ex. 1, at 15.

The nursing note at 10:50 a.m. on January 4, 2005, shows improvement, with the
resident up in bed reading the newspaper, pupils equal and reactive to light,
bilateral grip strength equal, and he answered questions appropriately, but
continued on oxygen via nasal cannula. P. Ex. 1, at 15.
24.

25.

26.

27.

28.

6

Around 11:00 a.m. on January 4, 2005, the nurse records that she spoke to
Resident 900’s brother who holds the resident’s durable power of attorney,’ and he
advised that he wished for the resident to be sent back to the hospital if necessary.
P. Ex. 1, at 15.

The last nursing note on January 4, 2005 at 8:15 p.m. is a summary of the
remainder of the day and includes that the resident’s oxygen saturation was 94
percent on 2 liters of oxygen via nasal cannula, he was not responding to verbal
stimuli but did respond to physical, his neurologic checks every four hours showed
a sluggish right pupil and the left was pinpoint, around 3:00 p.m. staff discontinued
the urinary catheter when they realized that the order from the hospital did not call
for it to be continued. P. Ex. 1, at 15-16.

The nursing notes for January 4, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.

The three nursing notes from January 5, 2005, show that in the early morning
Resident 900 responded to verbal stimuli, his pupils were equal, round, and
reactive to light and accommodation (PERRLA), his vital signs were within
normal limits; in the early afternoon his neurologic signs were normal but his
oxygen saturation was only 84 percent; the note from 11:00 p.m. shows that he
was non-verbal and mumbling responses, he was engaging in abdominal breathing,
was on continuous oxygen at 2 liters with saturation of 91 percent, and was in no
apparent pain. P. Ex. 1, at 16-17.

The nursing notes for January 5, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.

* It is not specified in the nursing notes whether the durable power of attorney was

for health care decisions however the parties stipulated that it was. Jt. Stip. at 4.
Petitioner has not presented evidence that tells me why the durable power was in effect if
the resident was alert and oriented or whether there was a guardianship or other legal
status determination that affected who could make health care decisions for Resident 900.
Tr. 248. However, the absence of this fact does not affect my decision.
29.

30.

31.

32.

33.

7

There are four nursing notes for January 6, 2005, which show that at 6:00 a.m. the
resident’s vital signs were within normal limits and he was alert and oriented in
three spheres, his neurologic checks showed his pupils were equal, round, and
reactive to light and accommodation (PERRLA) and “all other responses are
normal/better than normal,” stated he felt better and smiled, but his breathing was
still “labored;” but the 8:00 a.m. note shows that his breathing had become very
labored with five to ten seconds of apnea (suspension of external breathing), he
was nonresponsive to verbal or physical stimuli, his right pupil was pinpoint and
nonreactive to light, his left pupil was sluggish but reactive; at 8:45 a.m. the nurse
again called the brother with the durable power of attorney, and while what
specifically was said when he called back at 9:15 a.m. is not recorded, the brother
no longer wanted the resident sent to the hospital but that he just be kept
comfortable; the sister was also notified, of what is not recorded, but she and her
husband were at the bedside by 10:45 a.m.; the last note of the day shows that
Resident 900 could respond to questions but he kept looking straight ahead, his
right pupil was fixed, nonreactive and pinpoint, the left pupil was also pinpoint but
there was reaction to light, he continued to use accessory muscles for breathing
and was on continuous oxygen at 2 liters by nasal cannula with 90 percent
saturation, he accepted water but no food. P. Ex. 1, at 17-18.

The nursing notes for January 6, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.

The parties stipulated that Petitioner’s staff did notify Dr. Sundbye’s nurse
practitioner, Kathy Snyder on January 6, 2005, of the brother’s request that
Resident 900 receive only comfort care. Jt. Stip. at 5; P. Ex. 1, at 23; CMS Ex. 4,
at 24.

Three nursing notes on January 7, 2005, show Resident 900 was awake at 3:30
a.m. and hungry, he was breathing with accessory muscles, became winded while
talking, ate a peanut butter and jelly sandwich; at 10:30 a.m. his oxygen saturation
was down to 87 percent with continuous oxygen at 2 liters by nasal cannula but he
tried to remove the oxygen and had to be reminded to keep it on. P. Ex. 1, at 19.

The nursing notes for January 7, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.
34.

35.

36.

37.

38.

39.

40.

4l.

42.

8

Nursing notes from January 8, 2005, show that Resident 900 continued to use
accessory muscles, he was alert with episodes of unresponsiveness, he was
wheezing later in the morning, he was up in his wheelchair for at least two meals,
by 9:30 p.m. he had diminished lung sounds in all fields, but he was responsive to
questions. P. Ex. 1, at 19-20.

The nursing notes for January 8, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.

Nursing notes for January 9, 2005, record Resident 900 as breathing harshly from
the diaphragm, he was alert and oriented in good spirits, he was in his wheelchair
for breakfast but remained in bed for lunch, lung sounds were noted to be
diminished in both lungs, his oxygen saturation was not noted to be below 90
percent. P. Ex. 1, at 20-21.

The nursing notes for January 9, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.

On January 10, 2005 at 5:45 a.m., Resident 900 awoke in good spirits and
reportedly slept well, he was alert and oriented with an oxygen saturation of 92
percent on 2 liters via nasal cannula. P. Ex. 1, at 21.

At 10:00 a.m. on January 10, Resident 900’s oxygen saturation was down to 83
percent with continuous oxygen at 3 liters via a mask, he ate all his breakfast but
his breathing was labored and “diaphramic.” P. Ex. 1, at 21.

At 2:00 p.m. on January 10, his condition was reported as unchanged, he was
responsive to verbal stimuli, he refused lunch, and the family was in to visit. P.
Ex. 1, at 21.

At 6:30 p.m. the nurse initiated pursuant to a standing order, Tylenol 650 mg every
four hours as need for pain because she observed facial grimacing, the resident’s
breathing was labored, his oxygen saturation had dropped to 78 percent on 2 liters
of oxygen delivered by nasal cannula and the nurse switched him to a mask to
improve his oxygen saturation. P. Ex. 1, at 21.

A 9:20 p.m. nursing note show an absence of vital signs and that Dr. Dishman who
was on call for Dr. Sundbye, was notified of Resident 900’s death, as were his
brother and sister.
43.

44.

45.

46.

9

The nursing notes for January 10, 2005, do not show that Resident 900’s primary
care physician, Dr. Sundbye, was contacted or consulted by Petitioner’s staff and
there is no other evidence Dr. Sundbye was consulted. Tr. 373-74.

Prior to his fall on January 3, 2005, Resident 900 did not require administration of
oxygen to maintain his oxygen saturation at or above 90 percent, which is normal;

e did not use accessory muscles for breathing; and he was not noted to experience
shortness of breath or labored breathing. Tr. 178-79, 192-93, 204, 369.

Dr. Sundbye opined at hearing that pleural effusions and possibly a heart attack,
oth conditions he identified from documentation from Resident 900’s
ospitalization on January 3, 2005, contributed significantly to the resident’s

decline and death. Tr. 227-29, 249-50.

Dr. Sundbye testified, that in his opinion, he should have been notified by
Petitioner’s staff the morning of January 4, 2005, regarding Resident 900’s
condition but for the fact he was scheduled to be at the facility that morning. Tr.
225-26.

B. Conclusions of Law
Petitioner violated 42 C.F.R. § 483.10(b)(11) (Tag F157) because it failed to
consult Resident 900's physician about a significant change in Resident 900's

condition.

Petitioner has failed to rebut the CMS prima facie showing of a violation of 42
C.F.R. § 483.10(b)(11).

Petitioner’s violation of 42 C.F.R. § 483.10(b)(11) (Tag F157) is a sufficient basis
for the imposition of a PICMP.

A PICMP of $7000 is reasonable under the facts of this case and considering the
regulatory factors at 42 C.F.R. § 488.438(e).

C. Issues

The issues in this case are:
10

Whether there is a basis for the imposition of an enforcement
remedy; and,

Whether the remedy imposed is reasonable.

The parties agreed at the beginning of the hearing that the only resident involved in the
case before me is Resident 900 and the only alleged deficiencies are violations of 42
C.F.R. § 483.10(b)(11) (Tag F157) and § 483.13(c)(1)(i) (Tag F224). CMS alleges that
the deficiencies posed immediate jeopardy for Resident 900 and Petitioner alleges that the
immediate jeopardy determination is clearly erroneous.

D. Applicable Law

Petitioner is a long-term care facility participating in the federal Medicare program as a
skilled nursing facility (SNF) and in the state Medicaid program as a nursing facility
(NF). The statutory and regulatory requirements for participation by a long-term care
facility are found at sections 1819 and 1919 of the Social Security Act (Act) and at 42
C.F.R. Part 483. Sections 1819 and 1919 of the Act vest the Secretary of Health and
Human Services with authority to impose civil money penalties against a long-term care
facility for failure to comply substantially with federal participation requirements.

Facilities that participate in Medicare may be surveyed on behalf of CMS by state survey
agencies in order to determine whether the facilities are complying with federal
participation requirements. 42 C.F.R. §§ 488.10-488.28, 488.300-488.335. Pursuant to
42 C.F.R. Part 488, CMS may impose a per-instance or per day CMP against a long-term
care facility when a state survey agency concludes that the facility is not complying
substantially with federal participation requirements. 42 C.F.R. §§ 488.406; 488.408;
488.430. The regulations in 42 C.F.R. Part 488 also give CMS a number of other
remedies that can be imposed if a facility is not in compliance with Medicare
requirements.

The regulations specify that a CMP that is imposed against a facility on a per day basis
will fall into one of two broad ranges of penalties. 42 C.F.R. §§ 488.408, 488.438. The
upper range of CMP, from $3050 per day to $10,000 per day, is reserved for deficiencies
that constitute immediate jeopardy to a facility’s residents and, in some circumstances, for
repeated deficiencies. 42 C.F.R. §§ 488.438(a)(1)(i), (d)(2). The lower range of CMP,
from $50 per day to $3000 per day, is reserved for deficiencies that do not constitute
immediate jeopardy, but either cause actual harm to residents, or cause no actual harm,
but have the potential for causing more than minimal harm. 42 C.F.R.

§ 488.438(a)(1)(ii). There is only a single range of $1000 to $10,000 for a PICMP that
applies whether or not immediate jeopardy is present. 42 C.F.R. §§ 488.408(d)(1)(iv);
488.438(a)(2).
11

The Act and regulations make a hearing before an ALJ available to a long-term care
facility against which CMS has determined to impose a CMP. Act, section 1128A(c)(2);
42 C.F.R. §§ 488.408(g); 498.3(b)(13). The hearing before an ALJ is a de novo
proceeding. Anesthesiologists Affiliated, et al, DAB CR65 (1990), aff'd, 941 F.2d 678
(8" Cir. 1991); Emerald Oaks, DAB No. 1800, at 11 (2001); Beechwood Sanitarium,
DAB No. 1906 (2004); Cal Turner Extended Care, DAB No. 2030 (2006); The Residence
at Salem Woods, DAB No. 2052, (2006). A facility has a right to appeal a “certification
of noncompliance leading to an enforcement remedy.” 42 C.F.R. § 488.408(g)(1); see
also, 42 C.F.R. §§ 488.330(e) and 498.3. However, the choice of remedies by CMS or
the factors CMS considered when choosing remedies are not subject to review. 42 C.F.R.
§ 488.408(g)(2). A facility may only challenge the scope and severity level of
noncompliance found by CMS ifa successful challenge would affect the amount of the
CMP that could be collected by CMS or impact upon the facility’s nurse aide training
program. 42 C.F.R. §§ 498.3(b)(14) and (d)(10)(i). CMS’s determination as to the level
of noncompliance “must be upheld unless it is clearly erroneous.” 42 C.F.R.

§ 498.60(c)(2). This includes CMS’s finding of immediate jeopardy. Woodstock Care
Center, DAB No. 1726, at 9, 38 (2000), aff'd, Woodstock Care Center v. Thompson, 363
F.3d 583 (6" Cir. 2003). The Departmental Appeals Board (the Board) has long held that
the net effect of the regulations is that a provider has no right to challenge the scope and
severity level assigned to a noncompliance finding, except in the situation where that
finding was the basis for an immediate jeopardy determination. See, e.g., Ridge Terrace,
DAB No. 1834 (2002); Koester Pavilion, DAB No. 1750 (2000). Review of a CMP by
an ALJ is governed by 42 C.F.R. § 488.438(e).

When a penalty is proposed and appealed, CMS must make a prima facie case that the
facility has failed to comply substantially with federal participation requirements. “Prima
facie” means that the evidence is “(s)ufficient to establish a fact or raise a presumption
unless disproved or rebutted. Black’s Law Dictionary 1228 (8" ed. 2004), see also,
Hillman Rehabilitation Center, DAB No. 1611, at 8 (1997), aff'd Hillman Rehabilitation
Center v. U.S. Dept. of Health and Human Services, No. 98-3789 (D.N.J. May 13, 1999).
To prevail, a long-term care facility must overcome CMS’s showing by a preponderance
of the evidence. Batavia Nursing and Convalescent Center, DAB No. 1904 (2004);
Batavia Nursing and Convalescent Inn, DAB No. 1911 (2004); Emerald Oaks, DAB No.
1800 (2001); Cross Creek Health Care Center, DAB No. 1665 (1998); Evergreene
Nursing Care Center, DAB No. 2069, at 7-8 (2007).
12

E. Analysis
1. Petitioner violated 42 C.F.R. § 483.10(b)(11) (Tag F157).

The surveyors allege in the SOD that Petitioner violated 42 C.F.R. § 483.10(b)(11) (Tag
F157) because Petitioner’s staff failed to notify Resident 900’s physician of the resident’s
declining status prior to his death, placing him in immediate jeopardy.* CMS Ex. 1, at 2.
Section 483.10(b)(11)(i) provides:

(11) Notification of changes. (i) A facility must immediately
inform the resident; consult with the resident's physician; and
if known, notify the resident's legal representative (sic) or an
interested family member when there is --

(A) An accident involving the resident which results in
injury and has the potential for requiring physician
intervention;

(B) A significant change in the resident's physical,
mental, or psychosocial status (i.e., a deterioration in
health, mental, or psychosocial status in either life-
threatening conditions or clinical complications);

(C) A need to alter treatment significantly (i.e., a need
to discontinue an existing form of treatment due to
adverse consequences, or to commence a new form of
treatment); or

(D) A decision to transfer or discharge the resident
from the facility as specified in Sec. 483.12(a).

° The surveyors also cited Petitioner for a violation of 42 C.F.R. § 483.13(c)(1)(i)
(Tag F224) based upon the same facts as those alleged under Tag F157. CMS Ex. 1, at
12. It is apparent from the face of the SOD, the evidence, and the briefs of CMS that the
citation in the SOD to 42 C.F.R. § 483.13(c)(1)(i) was in error or at least superfluous.
That subsection provides that “(1) The facility must-- (i) Not use verbal, mental, sexual,
or physical abuse, corporal punishment, or involuntary seclusion; ....” None of the facts
alleged in the SOD or developed by the parties suggest that there was any “physical
abuse, corporal punishment, or involuntary seclusion.” Rather, CMS indicates that it
intended to cite Petitioner for a violation of 42 C.F.R. § 483.13(c) (Tag F224) for neglect
of the patient. I need not review this Tag, however, because the deficiency under section
42 C.F.R. § 483.10(b)(11) is more than sufficient a basis for the remedy proposed by
CMS.
13

Petitioner fails to directly address in its briefs what the regulation actually requires.
Petitioner attempts to narrow the focus to whether or not it was necessary for the treating
physician to be “notified” of a change in the resident’s condition. Petitioner takes the
additional step of arguing that any changes in Resident 900's condition were not
significant within the meaning of the regulation, a position not supported by the testimony
of its own witnesses.

The regulatory requirements are abundantly clear yet they are often misquoted and
misconstrued. Patients in long term care facilities have certain rights. Among these are
that the facility “must immediately ... consult with the resident’s physician ... when
there is a significant change in the resident’s physical, mental, or psychosocial status”
(meaning a deterioration in the resident’s condition). 42 C.F.R. § 483.10(b)(11)(emphasis
added). The requirement is not discretionary and it requires more than merely informing
or notifying the physician, which is evident from the plain language of the regulation.
The drafters chose the language carefully. The regulation is specific that the facility is
required to immediately “inform the resident; consult the physician; and . . . notify the
legal representative or an interested family member.” /d. (emphasis added). The
preamble to the final rule indicates the drafters specific intention that the facility should
“inform” the resident of the changes that have occurred but should “consult with the
physician about actions that are needed.” 56 Fed. Reg. 48,826, at 48,833 (Sept. 26,
1991). Thus, it is clear from the language of the regulation and its history, that the
requirement of the regulation to consult means more than to simply notify. Consultation
requires a dialogue with and a responsive directive from the resident’s physician as to
what actions are needed; it is not enough to merely notify the physician of the resident’s
change in condition. Nor is it enough to leave just a message for the physician.

The regulation also requires consultation “immediately” upon discernment of a change in
condition of the resident. The use of the term immediately in the regulatory requirement
indicates that consultation is expected to be done as soon as the change is detected,
without any intervening interval of time. It does not mean that the facility can wait hours
or days before consulting with the physician. The preamble to the final rule indicates that
originally the proposed rule granted the facility up to 24 hours in which to notify the
resident’s physician and the legal representative or family. However, after the receipt of
comments that time is of the essence in such circumstances, the final rule amended that
provision to require that the physician and legal representative or family be
consulted/notified immediately. 56 Fed. Reg. 48,826, 48,833 (Sept. 26, 1991). The point
of using the word “immediately” was the recognition that in such situations a delay could
result in a situation where a resident is beyond recovery or dies, similar to the resident in
this case. Furthermore, when we balance the relative inconvenience to a physician and
the facility staff to consult about a resident’s change in condition with the possibility for
dire consequences to the resident if the physician is not consulted, it seems that any
inconvenience certainly is inconsequential and outweighed by the potential for significant

14

harm if the facility fails to consult the physician.° This regulation is entitled “Resident
rights” and the requirements of this specific regulation provide that every resident has the
right to a dignified existence and access to and communication with persons and services
inside and outside the facility. Therefore, the regulatory requirements make
inconsequential any inconvenience under the regulation to the resident’s physician or to
the facility staff when compared to the protection and facilitation of the rights of the
resident. See 56 Fed. Reg. 48,826, at 48,834 (Sept, 26, 1991).

Finally, the regulation does not allow the facility to pick and choose whom to notify and
whom to consult. Rather, it requires the facility to immediately inform the resident,
consult the physician and notify the resident’s legal representative or interested family
member. Merely, notifying the legal representative/family without also consulting with
the physician is not enough.

The facts important to this case are set forth in the Findings of Fact above and are not
restated here. I have reviewed the nursing notes and resident records submitted by the
facility and CMS. Nowhere in the record is there any indication that Resident 900's
physician, Dr. Sundbye, was consulted or even notified of the resident’s change in
condition.

There is no dispute by Petitioner that Dr. Sundbye was not consulted.’ Petitioner has the
affirmative duty under the regulation to immediately consult with the physician, a key

® Better to err on the side of consulting a physician regarding a change ina
resident’s condition rather than not or debating about whether the change is significant,
particularly since nursing home staff may not be qualified or competent to identify the
significance of signs and symptoms.

7 The evidence shows that Dr. Sundbye’s nurse practitioner was notified on
January 6, 2005. Her note, dated January 6, 2005, states

Notified by nursing staff that pts [patient’s] DPOAH [Durable
Power of Attorney/brother] wants comfort measures only for
pt and for him to not be sent to hospital.

CMS Ex. 4, at 24. This note does not indicate that Dr. Sundbye was notified or that his
nurse practitioner made any effort to contact him to examine the patient. It is also clear
from the clinical record that the facility contacted the resident’s brother first with respect
to comfort measures and then staff reported that election to the nurse practitioner. Tr.
246-48. There is no indication that the unfortunate brother had the benefit of qualified
medical advice prior to changing his earlier direction to take the resident to the hospital in
the event of complications.
15

member of the care planning team, to ensure the physician is aware of significant changes
and to obtain his or her orders, guidance, and direction to ensure the resident receives
necessary care and services. Petitioner completely failed in its duty despite the fact that
staff who were caring for Resident 900 believed he was declining and dying. Tr. 287-90,
304, 307-09.

Dr. Sundbye testified that the fact that Resident 900 was wheezing and had a red face on
January 4, 2005, were signs and symptoms of which he should have been notified and
consulted they reflected a need for medical intervention and potential change in treatment
modality. Tr. 225. He offered, however, that he was scheduled to be in the facility that
morning, within hours, and he did not feel additional notification was necessary. Tr. 226.
Due to an intervening winter storm, Dr. Sundbye did not visit the facility and he never
saw the Resident before the resident expired on January 10, 2005. However, the fact that
Dr. Sundbye never showed his face in the facility the six days from January 4 through
January 10, 2005, is no defense for Petitioner. It was Petitioner’s duty to ensure that the
doctor was immediately consulted, and this Petitioner failed to do.

Petitioner’s failure in this case is made more egregious by the fact that the emergency
room doctor specifically ordered that Resident 900’s physician be consulted.
Furthermore, Dr. Sundbye testified that pleural effusions and signs of a probable heart
attack apparent to him from emergency room test results, may have significantly
contributed to Resident 900’s death. Thus, there is more sufficient evidence from which
to infer that Petitioner’s failure to consult with Dr. Sundbye about the resident and his
signs and symptoms following return from the hospital, prevented Dr. Sundbye from
ordering treatment necessary to prevent the untimely demise of the resident.

Dr. Sundbye’s opinions that Petitioner did what it was supposed to or all it could, is
entitled to no weight here. The fact that Dr. Sundbye may have found Petitioner’s care
and treatment of the resident satisfactory is not determinative. It is my duty to review the
evidence and apply the regulatory requirements. The preponderance of the evidence
shows that there was a significant change in Resident 900's condition upon his return
from the hospital and that Petitioner failed to fulfill its regulatory duty to consult with
Resident 900's physician immediately in order to determine what actions should be taken.
Accordingly, I conclude that Petitioner violated 42 C.F.R. § 483.10(b)(11).

2. The PICMP of $7000 is reasonable.

If a facility is not in substantial compliance with program requirements, CMS has the
authority to impose one or more of the enforcement remedies listed in 42 C.F.R.

§ 488.406, including a CMP. CMS may impose a CMP for the number of days that the
facility is not in compliance or for each instance that a facility is not in substantial
16

compliance. 42 C.F.R. § 488.430(a). The minimum amount for a PICMP is $1000 and
the maximum is $10,000. CMS imposed a per instance penalty here of $7000. I must
consider whether the proposed PICMP is reasonable.

In determining whether the amount of the per instance CMP is reasonable, the following
factors specified at 42 C.F.R. § 488.438(f) must be considered: (1) the facility’s history
of non-compliance, including repeated deficiencies; (2) the facility’s financial condition;
(3) the seriousness of the deficiencies as set forth at 42 C.F.R. § 488.404; and (4) the
facility’s degree of culpability.

I evaluate the $7000 PICMP against the regulatory factors I have mentioned. I conclude,
after considering the circumstances and the regulatory factors, that $7000 is reasonable.

Strictly speaking, a determination of immediate jeopardy is irrelevant to the issue of what
is reasonable as a PICMP; it is only relevant as a necessary prerequisite to imposition of a
per diem CMP in excess of $3000. Therefore, while I need not consider immediate
jeopardy in the context of a prerequisite to the imposition of a PICMP, the finding of
immediate jeopardy is an indication of the seriousness of a deficiency, at least from the
surveyors’ and CMS’ perspective. 42 C.F.R. § 488.404 (b). In this case, the evidence
certainly supports a finding that Petitioner’s failure to consult with Resident 900's
physician immediately upon noticing a change in the resident’s condition constituted
immediate jeopardy because it “caused, or is likely to cause, serious injury, harm,
impairment, or death to a resident.” 42 C.F.R § 488.301. I find that the evidence in the
record supports the conclusion that Petitioner’s failure to consult Dr. Sundbye
immediately on January 4, 2005, when the LPNs recognized a change in Resident 900's
condition, was likely to cause this resident serious injury, harm, impairment or death and
constituted immediate jeopardy. Moreover, | find that the overwhelming evidence
supports a finding that Petitioner was culpable. All that was required was for Petitioner to
consult Resident 900's physician or return the resident to the hospital at the first
indication that his condition was worsening. Yet, Petitioner did nothing. One might
conclude from the facts, that the staff were more concerned with disturbing Dr. Sundbye
than with caring for the resident’s needs or that they had the attitude that Resident 900
was dying anyway. There is also some indication from the record that the facility
employees, including its Medical Director, Dr. Sundbye, were completely unaware of
what was required under the regulation. But what is particularly troublesome here is how
little effort it would have taken by the staff to consult with Dr. Sundbye with respect to
this resident before the deterioration in his condition became too grave. I note that the
record before me indicates that the facility did indeed have a means of notifying a doctor
and request an urgent response, but did not do so in this case. See P. Ex. 14, at 1-3.
17

Although CMS Ex. 8 appears to show that Petitioner was cited for violation of Tag F157
in 2001, the parties stipulated that “(t)here is no relevant history of prior surveys citing
the Facility for same [sic] deficiencies as those at issue in this matter... .” Jt. Stip. at 3.
Petitioner presented no evidence and has not argued that its financial condition precludes
payment of the $7000 PICMP. I find, after evaluation of all the regulatory factors, that
the $7000 PICMP is reasonable.

Ill. Conclusion

For the foregoing reasons, I conclude that Petitioner violated 42 C.F.R. § 483.10(b)(11)
and a PICMP of $7000 is reasonable.*

/s/
Keith W. Sickendick
Administrative Law Judge

* Pursuant to 42 C.F.R. § 483.151(b)(2) and (e)(1) a state may not approve and
must withdraw any prior approval of a NATCEP offered by a SNF or NF that: (1) has
been subject to an extended or partial extended survey under sections 1819(g)(2)(B)(i) or
1919(g)(2)(B)(i) of the Act; (2) has been assessed a CMP of not less than $5000; or (3)
that has been subject to termination of its participation agreement, a DPNA, or the
appointment of temporary management. The evidence shows Petitioner was previously
notified and no further action appears necessary.


Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

Decision No. CR1706
Centers for Medicare & Medicaid
Services.

In the Case of: )
)

Apple Home Health Services, Inc., )

(CCN: 10-8197), ) Date: December 3, 2007

)

Petitioner, )

)

-V.- ) Docket No. C-07-627

)

)

)

)

DECISION DISMISSING REQUEST FOR HEARING

I dismiss the hearing request of Petitioner, Apple Home Health Services, Inc. Petitioner
is not entitled to a hearing in this case because it failed to file its request timely.
Furthermore, Petitioner failed to establish good cause for its late filing.

I. Background

Petitioner is a home health agency doing business in the State of Florida. It participated
in the Medicare program and its participation in that program was governed by provisions
of the Social Security Act and by implementing regulations. Its hearing rights in this case
are governed by regulations at 42 C.F.R. Part 498.

On March 15, 2007 the Centers for Medicare & Medicaid Services (CMS) sent a notice to
Petitioner advising it that, based on findings made at a compliance survey of Petitioner’s
agency completed on March 5, 2007, Petitioner had been found out of compliance with
two Medicare participation conditions. CMS Ex. 4, at 1; P. Ex. 1, at 1.' CMS told

' CMS filed 11 exhibits as support for its motion to dismiss, which it identified as
CMS Ex. 1 - CMS Ex. 11. Petitioner filed 13 exhibits in opposition to CMS’s motion,
which it identified as P. Ex. | - P. Ex. 13. I admit all of CMS’s and Petitioner’s exhibits
into the record of this case.
2

Petitioner that it would terminate Petitioner’s Medicare participation effective April 2,
2007 unless Petitioner was in full compliance with Medicare participation requirements
as of that date. CMS also advised Petitioner that it could submit a plan of correction
(POC) to address the deficiencies identified by CMS. It told Petitioner that the POC
would be reviewed upon receipt and, if CMS found it to be acceptable, CMS would ask
the Florida State survey agency to conduct a revisit survey of Petitioner in order to verify
compliance. /d. Finally, CMS told Petitioner that it had a right to request a hearing
before an administrative law judge of the Departmental Appeals Board if it wished to
contest CMS’s determination. In advising Petitioner of that right CMS stated:

A written request for a hearing must be filed no later than sixty days after
the date of this letter... .

Id., at 2.

Petitioner filed a POC on March 19. A follow-up survey was conducted of Petitioner’s
facility on March 29, 2007 in order to ascertain whether Petitioner had attained
compliance with participation requirements. CMS determined, based on the outcome of
the March 29 survey, that Petitioner remained noncompliant and, so, it effectuated

termination of Petitioner’s Medicare participation on April 2, 2007.

Petitioner did not request a hearing until July 20, 2007. Its hearing request was dated 127
days after CMS’s March 15, 2007 notice letter.

The case was assigned to me for a hearing and a decision. CMS moved to dismiss
Petitioner’s hearing request on the ground that it was not filed timely. Petitioner opposed
the motion.
II. Issues, findings of fact and conclusions of law

A. Issues

The issues in this case are whether:

1. Petitioner is entitled to a hearing.
3

2. Assuming Petitioner is not entitled to a hearing as a consequence of its
not having filed a timely hearing request, it nevertheless should be granted a
hearing because it established good cause for filing its request untimely.

B. Findings of fact and conclusions of law

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

1. Petitioner is not entitled to a hearing because it failed to file a timely
hearing request.

Regulations governing hearings in cases involving CMS state that, in order to be entitled
to a hearing, a party must file its request no later than 60 days from the date that it
receives a notice of an adverse determination from CMS. 42 C.F.R. § 498.40(a)(2).? In
this case the notice of adverse determination was CMS’s March 15, 2007 letter to
Petitioner. CMS Ex. 4; P. Ex. 1. That letter clearly stated CMS’s intent to impose a
remedy against Petitioner (termination of Medicare participation) for its failure to comply
with conditions of participation, and, it explicitly advised Petitioner of its right to request
a hearing from that determination.

As Petitioner acknowledges, it did not file a document in which it requested a hearing
until July 20, 2007, 127 days after March 15, 2007 and 122 days after the presumed date
of receipt. Petitioner’s hearing request was in fact untimely by more than two months.
Consequently, Petitioner is not entitled to a hearing based on its having filed the July 20,
2007 hearing request.

Petitioner now argues that, if the July 20 request does not entitle it to a hearing, it should
be entitled to one based on another document, a letter plus attachments which Petitioner’s
counsel sent to CMS on April 20, 2007. P. Ex. 5, at 1-166. Petitioner contends that I
should construe this document to be a hearing request and find it to be timely inasmuch as
Petitioner filed it within 60 days of its receipt of CMS’s March 15, 2007 notice.

I find no basis to construe this document as being a hearing request. It neither evidences
an intent by Petitioner to request a hearing nor does it comply in any respect with the
requirements for content of a hearing request set forth at 42 C.F.R. § 498.40(b)(1) and (2).

> The presumed date of receipt of any notice sent by CMS is five days from the
mailing date. 42 C.F.R. § 498.22(b)(3).
4

The April 20, 2007 letter plus attachments that Petitioner’s counsel sent to CMS is a
request that CMS exercise discretion to rescind its termination of Petitioner’s Medicare
participation. P. Ex. 5, at 1-166. At no point in either the letter or in the lengthy
attachments does Petitioner express any interest in having a hearing to challenge CMS’s
noncompliance findings. The submission is, rather, an attempt by Petitioner to convince
CMS that, as of April 20, 2007, about three weeks after the termination date, Petitioner
was in the process of correcting or had corrected the noncompliance findings that were
made at the March 29, 2007 survey. Thus:

* The document fails to discuss the findings of noncompliance made at the March
5, 2007 survey.

+ It expresses disagreement with some of the findings made at the March 29 survey
but it also acknowledges that some of those findings were accurate. E.g., P. Ex. 5,
at 66.

+ It does not contend that Petitioner corrected all of its noncompliance prior to the
April 2, 2007 termination date. To the contrary, it avers that many of the
corrective actions that Petitioner allegedly undertook were “ongoing” as of April
20, 2007, or had been completed after April 2, 2007. E.g., P. Ex. 5, at 66-67.

Petitioner’s April 20, 2007 submission not only fails to express an intent to request a
hearing but it does not comport with the regulatory requirements governing the content of
a hearing request. There are statements here and there in Petitioner’s April 20, 2007
submission that constitute disagreements with findings that were made at the March 29
survey. But, nowhere in the document is there a coherent statement by Petitioner of its
intent to show that it was, in fact, complying with participation requirements, either on
March 15, March 29, or April 2, 2007.

A party requesting a hearing must specify the issues and CMS’s findings of fact and
conclusions of law with which it disagrees and it must specify the basis for contending
that these findings and conclusions are incorrect. 42 C.F.R. § 498.40(b)(1) and (2). But,
in its April 20, 2007 submission, Petitioner failed to even mention the findings of
noncompliance that were made at the March 5 survey. And, although it challenged some
of the findings of noncompliance that were made at the March 29 survey, Petitioner failed
to explain how challenging some, but not all, of these findings constituted an assertion
that it was, in fact, complying with all Medicare participation requirements as of March
5

29 or April 2, 2007.° Indeed, at no place in its April 20 submission does Petitioner state
affirmatively that it was complying with all Medicare requirements as of March 29 or
between that date and April 2, 2007.

On July 10, 2007 CMS responded to Petitioner’s April 20, 2007 submission. CMS Ex.
10. In this letter CMS stated that it was responding to Petitioner’s “request to reconsider”
the April 2, 2007 termination of Petitioner’s Medicare participation. CMS advised
Petitioner that it had concluded that the deficiencies that it had identified were accurate
and that the decision to terminate Petitioner’s Medicare provider agreement stood.* CMS

then advised Petitioner that:

At this point, . . . [Petitioner] may request a hearing before the Departmental
Appeals Board (DAB) or reapply for Medicare participation.

CMS Ex. 10. Petitioner has not argued that this letter conferred hearing rights on it that
were in addition to those that were conferred by the March 15, 2007 notice from CMS to
Petitioner. However, I have considered that issue and I conclude that the July 10 letter
conferred no additional hearing rights. Consequently, Petitioner’s July 20, 2007 hearing
request can relate only to the March 15, 2007 notice. CMS’s July 10 letter did not extend
Petitioner’s deadline for requesting a hearing.

It appears from the July 10 letter’s reference to a “request to reconsider” Petitioner’s
Medicare termination that the author of the letter may have assumed that Petitioner’s
April 20, 2007 submission was a formal reconsideration request filed pursuant to 42
C.F.R. § 498.22. That regulation narrowly defines circumstances in which a party that is
dissatisfied with a determination by CMS may request that CMS reconsider that
determination. The regulation allows for reconsideration of:

> In fact, Petitioner’s July 20, 2007 hearing request manifestly fails to comply with
the content requirements of 42 C.F.R. § 498.40(b)(1) and (2). The request consists of a
one-page letter to which Petitioner attached a July 10, 2007 letter sent to it by CMS in
which CMS denied Petitioner’s April 20, 2007 request for reconsideration of the
determination to terminate its Medicare participation, plus a copy of Petitioner’s April 20,
2007 letter and attachments. All that Petitioner states concerning its desire for a hearing
is that: “We are formally requesting a DAB hearing with regard to .. . [the April 2, 2007
termination of its Medicare participation].” The letter does not evince any challenge to
the March 5, 2007 survey findings nor does it express any explanation of Petitioner’s
disagreement with the determination to terminate its participation.

* The letter is somewhat unclear in that it does not specify which deficiencies
CMS was referring to. Conceivably, those could include: the deficiencies identified as of
March 5; those identified as of March 29; or those that were identified as of both dates.
6

any initial determination that affects a prospective provider or supplier, or a
hospital seeking to qualify to claim payment for all emergency hospital
services furnished in a calendar year....

42 C.F.R. § 498.22(a). Where a right to reconsideration exists a party that is dissatisfied
with a reconsideration determination has a right to a hearing to challenge that
determination.

Petitioner, a home health agency actively participating in Medicare until CMS’s
termination of its participation, was neither a prospective provider, a prospective supplier,
or a hospital and, consequently, was not entitled to seek reconsideration from CMS’s
determination to terminate its Medicare participation. Its only right to a hearing was
directly from CMS’s March 15, 2007 determination and, in order to effectuate that right,
Petitioner had to request a hearing consistent with the provisions of 42 C.F.R. § 498.40.
CMS could not create a right to reconsideration where none existed and, consequently,
Petitioner received no additional hearing rights as a consequence of CMS’s July 10, 2007
letter.*

2. Petitioner did not establish good cause for failing to file its hearing
request timely.

Applicable regulations provide that an administrative law judge may extend a party’s
deadline for filing its hearing request — in effect, giving a party a hearing even though it
filed its request beyond the presumed deadline — based on that party’s showing of good
cause. 42 C.F.R. § 498.40(c)(2). The term “good cause” is not defined in the regulation.
However, it has been the subject of much litigation and it has an accepted interpretation.

Good cause is interpreted universally to mean a circumstance beyond a party’s ability to
control which prevents that party from filing its request timely. Hospicio San Martin,
DAB No. 1554 (1996).°

* At Finding 2 I explain why the July 10 letter did not mislead Petitioner into
believing that it could file its hearing request beyond the time frame specified in CMS’s
March 15, 2007 letter and by 42 C.F.R. § 498.40(a)(2).

® Petitioner purports to rely on Federal Rules of Civil Procedure (FRCP) Rule
60(b) as establishing the definition of good cause. It argues that the rule allows a judge to
relieve a party from the effect of a judgment, order, or proceeding, based on proof of
mistake, inadvertence, surprise, or excusable neglect. Petitioner’s opposition to CMS’s
motion at 8. It asserts, in effect, that the Rule 60(b) standard operates to establish good
cause for purposes of 42 C.F.R. § 498.40(c)(2). I disagree with this analysis because this
proceeding is not governed by the Federal Rules of Civil Procedure. The rule cited by
7

The very narrow definition of what constitutes good cause closely limits an administrative
law judge’s discretion to grant a hearing in the situation where the request has not been
timely filed. Good cause might exist in the situation where some outside force causes a
facility not to file a request timely. For example, good cause might exist if CMS
affirmatively and explicitly misleads a facility into not filing a hearing request within the
allotted time or if some intervening natural event makes it physically impossible for a
facility to file its request timely. But, good cause never exists where a facility fails to file
a request as a consequence of some event or sequence which was in its ability to control
but which it failed to control. For example, negligence by a facility’s staff is never good
cause for failing to file a request timely.

Petitioner’s principal argument for asserting good cause is that it operated on the:

good-faith and well-founded belief that, through its former . . . [chief
operating officer Petitioner] had properly and timely responded to CMS’s
March 15, 2007 revocation notice and simultaneous submission of its
Corrective Action Plan.

Petitioner’s opposition to CMS’s motion at 8. Petitioner’s argument is not entirely clear.
Petitioner does not aver explicitly that its administrator had assumed, incorrectly, that the
chief operating officer filed a hearing request within the requisite limitations period.
Rather, Petitioner asserts only that the administrator assumed that the chief operating
officer “properly and timely” responded to CMS’s March 15, 2007 notice. Jd.; P. Ex. 7,
at 2; see CMS Ex. 6. I understand that argument to mean either that Petitioner’s
administrator assumed, incorrectly, that a hearing request had been filed or, alternatively,
that the administrator assumed, also incorrectly, that filing a POC tolled the limitation
period for filing a hearing request.

But, neither possible argument is a basis for me to find good cause for Petitioner’s
untimely filing. First, the possibility that the administrator may have relied to Petitioner’s
detriment on the performance of a subordinate officer is not an event that was beyond
Petitioner’s ability to control. The actions of Petitioner’s staff are all within the control of
Petitioner and, as I discuss above, the negligence of any of these individuals cannot be a
asis for finding good cause.

Second, there is nothing to suggest that CMS said or failed to say anything to Petitioner
that misled it into believing that it need not file a hearing request timely. The March 15,
2007 notice letter from CMS to Petitioner was unambiguous and explicit. CMS Ex. 4; P.
Ex. 1. It plainly told Petitioner that it must request a hearing within 60 days if it wanted

Petitioner is simply inapplicable.
8

to contest CMS’s determination to terminate its participation in Medicare. Nothing in the
letter suggested that filing a POC would serve as a substitute for a hearing request or
would toll the period for filing a hearing request.

Nor was CMS’s July 10, 2007 letter to Petitioner materially misleading. It is true that the
letter inaccurately seems to suggest that Petitioner might have a right to a hearing from
CMS’s determination not to rescind its March 15, 2007 determination. But, the letter
could not possibly have misled Petitioner into missing its deadline for filing a hearing
request. That deadline — 60 days after Petitioner’s receipt of CMS’s March 15, 2007
letter — had elapsed approximately seven weeks prior to CMS’s July 10, 2007 letter to
Petitioner.

Finally, Petitioner argues that the doctrine of “equitable tolling” should serve as a basis to
extend the deadline for filing its hearing request. Petitioner relies on a decision issued in
Florida State court, which it argues stand for the principle that a party should be allowed
to defend a case when equitable circumstances have prevented it from timely filing a
jurisdictional document.

State law has no application in this case. It cannot be used to expand the definition of
good cause that I must apply in deciding whether or not to give Petitioner a hearing.

/s/
Steven T. Kessel
Administrative Law Judge