Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

In the Case of:
Desert Hospital, DATE: December 13, 1996
Petitioner,

Docket No. C-96-295
Decision No. CR448

-v oe

Health Care Financing
Administration.

DECISION

I grant the motion of Desert Hospital (Petitioner) for
summary disposition on the issue of whether the Health
Care Financing Administration (HCFA) had the authority to
impose against Petitioner denial of payment for new
admissions, effective March 20, 1996. I dismiss
Petitioner’s request for a hearing as to a civil money
penalty imposed by HCFA, in view of Petitioner’s
assertion that it would withdraw its hearing request
concerning the civil money penalty if it prevailed in its
motion for summary disposition. I deny as moot HCFA’s
motion that I amend my prehearing order in this case.

I. Background

On April 16, 1996, HCFA advised Petitioner that it was
imposing remedies against Petitioner which included the
following:

e Denial of payment for new admissions, effective
March 20, 1996.

e A civil money penalty.

HCFA advised Petitioner additionally that it would
terminate Petitioner’s agreement to participate in the
Medicare program, effective August 5, 1996, if Petitioner
did not attain substantial compliance with Medicare
participation requirements by that date.
2

On May 23, 1996, HCFA advised Petitioner that it had
determined that Petitioner had attained substantial
compliance with Medicare participation requirements,
effective April 9, 1996. Consequently, HCFA determined
not to terminate Petitioner’s participation in Medicare.
HCFA ended the accrual of the civil money penalty and the
denial of payment for new admissions effective April 9,
1996.

Petitioner requested a hearing from HCFA’s April 16 1996
determination to impose remedies against it, and the case
was assigned to me for a hearing and a decision.
Petitioner moved for summary disposition on the issue of
whether HCFA could impose against Petitioner denial of
payment for new admissions, effective March 20, 1996. In
its motion, Petitioner averred that, if it prevailed, it
would withdraw its request for a hearing concerning the
civil money penalty that HCFA had imposed. Petitioner
submitted 10 exhibits (P. Exs. 1 - 10) with its motion
for summary disposition.

HCFA opposed Petitioner’s motion for summary disposition.
HCFA submitted two exhibits with its opposition to
Petitioner’s motion (HCFA Exs. 1 - 2). Neither
Petitioner nor HCFA objected to my receiving into
evidence any of the exhibits that were submitted by
Petitioner or by HCFA. Therefore, I am receiving into
evidence P. Exs. 1 - 10 and HCFA Exs. 1 - 2.

Additionally, HCFA moved that I amend the prehearing
order that I issued in this case. Petitioner opposed
HCFA’s motion.

II. Issue, findings of fact and conclusions of law

The issue is whether HCFA was authorized to impose
against Petitioner a denial of payment for new
admissions, effective March 20, 1996, and continuing
until April 9, 1996, the date on which HCFA found that
Petitioner was complying substantially with Medicare
participation requirements. I make the following
findings of fact and conclusions of law (Findings), which
I discuss in detail at Part III. of this decision.

1. HCFA is required to give a long term care
facility at least 15 days’ notice in writing of its
intent to impose a remedy against the facility,
except in a case where HCFA determines that the
facility’s noncompliance with Medicare participation
requirements poses immediate jeopardy to the health
and safety of residents.
3

2. As part of the notice requirement, HCFA must
inform a long term care facility of the
participation requirements that HCFA determines that
the facility has not complied with, and which are
the basis for HCFA’s determination to impose a
remedy.

3. On February 15, 1996, the California Department
of Health Services (California survey agency)
advised Petitioner that, based on a survey which the
California survey agency conducted of Petitioner on
February 6, 1996, Petitioner had been found not to
be complying with federal participation requirements
for the Medicare and Medicaid programs. The
California survey agency told Petitioner that, based
on these findings of noncompliance, it would
recommend to HCFA that HCFA impose remedies against
Petitioner, including denial of payment for new
admissions.

4. In its February 15, 1996 notice to Petitioner,
the California survey agency did not specify which
participation requirements it had found that
Petitioner had not complied with. However, a report
of the February 6, 1996 survey alleged failures by
Petitioner to comply with requirements contained in
the following regulations: 42 C.F.R. § 483.10(b) (4);
42 C.F.R. § 483.10(b) (5) - (6); 42 C.F.R. §
483.10(b) (11); 42 C.F.R. § 483.10(n); 42 C.F.R. §
483.10(0); 42 C.F.R. § 483.13(a); 42 C.F.R. §
483.15(f) (1); 42 C.F.R. § 483.15(g); 42 C.F.R. §
483.15(h) (1); 42 C.F.R. § 483.20(a); 42 C.F.R. §
483.20(b); 42 C.F.R. § 483.20(b) (4) (iv); 42 C.F.R. §
483.20(d); § 42 C.F.R. § 483.20(d) (3) (i); 42 C.F.R.
§ 483.25(c); 42 C.F.R. § 483.25(d)(2); 42 C.F.R. §
483.25(i)(1); 42 C.F.R. § 483.25(k); 42 C.F.R. §
483.25(1)(1), (2); 42 C.F.R. § 483.35(h) (2); 42
C.F.R. § 483.45(b); 42 C.F.R. § 483.60(c) (2); 42
C.F.R. § 483.65(a)(1) - (3); 42 C.F.R. § 483.75; 42
C.F.R. § 483.75(d)(1) - (2); 42 C.F.R. § 483.75(i);
42 C.F.R. § 483.75(1) (1); 42 C.F.R. § 483.75(0) (1);
and 42 C.F.R. § 483.75(0) (2) - (3).

5. On February 29, 1996, HCFA advised Petitioner
that it concurred with findings by the California
survey agency that Petitioner did not comply with
two federal participation requirements. These
requirements are contained in 42 C.F.R. §§
483.15(f) (1), and 483.25(c). HCFA did not advise
Petitioner that it concurred with other findings of
noncompliance made by the California survey agency.
4

6. The reasonable construction of HCFA’s February
29, 1996 notice to Petitioner is that HCFA concurred
with the California survey agency’s findings that
Petitioner failed to comply with participation
requirements contained in 42 C.F.R. §§ 483.15(f) (1)
and 483.25(c), but did not concur with findings by
the California survey agency that Petitioner failed
to comply with other participation requirements.

7. $n its February 29, 1996 notice, HCFA advised
Petitioner that HCFA would impose denial of payment
for new admissions and other remedies against
Petitioner if Petitioner did not attain compliance
with Medicare participation requirements. The
notice implied that, in order to avoid imposition of
denial of payment for new admissions, Petitioner
must attain compliance with participation
requirements by March 20, 1996.

8. The California survey agency resurveyed
Petitioner on March 20, 1996. The California survey
agency found that Petitioner had attained compliance
with the two participation requirements cited by
HCFA in the February 29, 1996 notice from HCFA to
Petitioner. However, the California survey agency
found that Petitioner had not attained compliance
with other participation requirements that it had
found that Petitioner was not complying with at the
February 6, 1996 survey of Petitioner.

9. On April 16, 1996, HCFA advised Petitioner that
it had determined that, based on the findings made
by the California survey agency at its March 20,
1996 survey of Petitioner, Petitioner had not
corrected all of the deficiencies that had been
alleged previously by the California survey agency.
HCFA advised Petitioner that it had determined to
impose remedies against Petitioner, which included
denial of payment for new admissions, effective
March 20, 1996.

10. HCFA’s determination to impose denial of
payment for new admissions against Petitioner,
effective March 20, 1996, was premised on findings
by the California survey agency that some of the
deficiencies that the California survey agency had
identified at its February 6, 1996 survey of
Petitioner had not been corrected by Petitioner as
of March 20, 1996. However, HCFA did not concur
with the California survey agency’s initial findings
of these deficiencies in HCFA’s February 29, 1996
notice to Petitioner.
5

11. The first notice from HCFA to Petitioner in
which HCFA implied that it concurred with findings
made at the February 6, 1996 survey by the
California survey agency, other than the findings
that Petitioner was not complying with participation
requirements contained in 42 C.F.R. §§ 483.15(f) (1)
and 483.25(c), is HCFA’s April 16, 1996 notice to
Petitioner.

12. HCFA did not give Petitioner 15 days’ notice of
its intent to impose denial of payment for new
admissions as a remedy for Petitioner’s failure to
correct deficiencies that the California survey
agency identified on February 6, 1996 and which the
California survey agency found that Petitioner had
not corrected as of March 20, 1996.

13. HCFA is without authority to impose denial of
payment for new admissions, effective March 20,
1996, as a remedy for Petitioner's failures to
comply with participation requirements, which
failures were identified by the California survey
agency at the February 6, 1996 and March 20, 1996
surveys, but which were not cited by HCFA in its
February 29, 1996 notice to Petitioner.

14. HCFA’s motion that I clarify my prehearing
order in this case is moot.

III. Discussion
A. Governing law (Findings 1 - 2)

Petitioner is a provider of long-term care whose
participation in Medicare is subject to the requirements
contained in 42 C.F.R. Part 488 which govern providers of
long-term care.' The regulations in this Part contain
notice requirements that HCFA must adhere to before
imposing a remedy against a long-term care provider that
HCFA determines is not complying with participation
requirements.

Where HCFA determines to impose a remedy, HCFA must give
the provider advance notice of its determination. 42
C.F.R. § 488.402(f)(1). The notice must tell the
provider: the nature of the provider’s noncompliance with

1 The parties agree that Petitioner is subject to
the requirements which govern providers of long-term care
contained in 42 C.F.R. Part 488.
6

participation requirements; which remedy HCFA has
determined to impose; the effective date of the remedy;
and the provider’s right to appeal HCFA’s determination
to impose a remedy. 42 C.F.R. § 488.402(f)(1)(i) - (iv).
The regulation’s requirement that HCFA tell the provider
the nature of the provider’s failure to comply with
participation requirements, as a prerequisite to imposing
a remedy against the provider, means that HCFA may not,
as a predicate to imposing a remedy, rely on a general
statement that the provider is not complying with
participation requirements. Nor may HCFA give the
provider an incomplete statement of the provider’s
deficiencies, and then, at a later date, impose a remedy
based on the presence of deficiencies that were not cited
by HCFA in its notice to the provider. The regulation
requires nothing less than a complete disclosure by HCFA
to the provider of the deficiencies for which HCFA may be
imposing a remedy at a later date. Id.

HCFA must give the provider 15 days’ written notice of
its intent to impose a remedy in any case where the
provider’s noncompliance with participation requirements
does not pose immediate jeopardy to the health and safety
of residents, except in the instance where HCFA
determines to impose a civil money penalty or to impose
monitoring of the provider’s performance by a State. 42
C.F.R. § 488.402(f)(4). The 15-day notice period begins
to run on the date that the notice is received by the
provider. 42 C.F.R. § 488.402(f)(5). However, the
remedy will become effective no later than 20 days from
the date that HCFA mails to the provider its notice of
intent to impose a remedy.

The regulations in Part 488 which apply to providers of
long-term care were published in order to implement those
sections of the Social Security Act (Act) which govern
the participation of such providers in the Medicare
program and State health care programs. In particular,
the Part 488 regulations are intended to implement the
parts of sections 1819, 1919, and 1866 of the Act, which
authorize the Secretary of the United States Department
of Health and Human Services (the Secretary) and the
States to impose remedies on providers of long-term care
who do not comply with federal requirements which govern
participation in the Medicare and State health care
programs. In the Part 488 regulations, the Secretary has
delegated authority to HCFA and to the States to impose
remedies that are consistent with the requirements of the
Act.
7

The purpose of remedies imposed pursuant to the
regulations in Part 488 is to encourage providers of
long-term care that are not complying with participation
requirements to correct their deficiencies. The
authority to impose remedies is not intended to be a
mechanism by which to punish such providers for failing
to comply with participation requirements. It would be
inconsistent with the requirements of both the Act and
the Part 488 regulations, and punitive, to impose a
remedy under circumstances where the remedy did not serve
a remedial purpose.

Where HCFA imposes a remedy without first satisfying the
notice requirements, that remedy becomes a punishment
that is inconsistent with the Act’s remedial purpose.
The notice requirements of 42 C.F.R. § 488.402(f) (4) and
(5) must be read consistent with the remedial purpose of
the Act and regulations. The purpose of the notice
requirements is to give a long-term care provider an
opportunity to correct its deficiencies in order to
forestall the imposition of a remedy. If a long-term
care provider is not given adequate notice of its
deficiencies and of HCFA’s intent to impose a remedy
based on HCFA’s determination that the provider manifests
those deficiencies, then the provider will not be
encouraged to correct the deficiencies in order to
forestall the imposition of a remedy.

The requirement of adequate notice is made more
compelling by the fact that the Part 488 regulations give
the States and HCFA independent authority, in some
circumstances, to make determinations of deficiencies and
to impose remedies based on those determinations. See 42
C.F.R. § 488.400. In some circumstances, a State may
make a determination of a deficiency and impose a remedy
against a provider of long-term care without seeking
HCFA’s concurrence or approval. In other circumstances,
as in this case, the State will make a recommendation to
HCFA, and HCFA will make the ultimate determination of a
deficiency and whether to impose a remedy. The parallel
authority to impose remedies makes it imperative that the
provider know which authority (State or HCFA) it must
satisfy in order to avoid the imposition of a remedy.

B. The relevant facts (Findings 3 - 12)

The parties do not dispute the relevant facts. The
undisputed facts are as follows.

On February 6, 1996, the California survey agency
conducted a survey of Petitioner to determine whether
Petitioner was complying with federal participation
8

requirements governing nursing homes participating in
Medicare and Medicaid. P. Ex. 1 at 1. The surveyors who
conducted the survey concluded that Petitioner was not
complying substantially with several participation
requirements. The requirements which the surveyors
concluded that Petitioner was not complying substantially
with are stated in: 42 C.F.R. § 483.10(b) (4); 42 C.F.R. §
483.10(b) (5) - (6); 42 C.F.R. § 483.10(b) (11); 42 C.F.R.
§ 483.10(n); 42 C.F.R. § 483.10(0); 42 C.F.R. §
483.13(a); 42 C.F.R. § 483.15(f) (1); 42 C.F.R. §
483.15(g); 42 C.F.R. § 483.15(h) (1); 42 C.F.R. §
483.20(a); 42 C.F.R. § 483.20(b); 42 C.F.R. §
483.20(b) (4) (iv); 42 C.F.R. § 483.20(d); § 42 C.F.R. §
483.20(a) (3) (i); 42 C.F.R. § 483.25(c); 42 C.F.R. §
483.25(a) (2); 42 C.F.R. § 483.25(i)(1); 42 C.F.R. §
483.25(k); 42 C.F.R. § 483.25(1)(1), (2); 42 C.F.R. §
483.35(h) (2); 42 C.F.R. § 483.45(b); 42 C.F.R. §
483.60(c) (2); 42 C.F.R. § 483.65(a)(1) - (3); 42 C.F.R. §
483.75; 42 C.F.R. § 483.75(d)(1) - (2); 42 C.F.R. §
483.75(i); 42 C.F.R. § 483.75(1) (1); 42 C.F.R. §
483.75 (0) (1); and 42 C.F.R. § 483.75(0)(2) - (3). HCFA
Ex. 1 at 1 - 66.

On February 15, 1996, the California survey agency sent a
notice to Petitioner. P. Ex. 1. The notice recited that
a survey had been conducted of Petitioner on February 6,
1996. Id. at 1. It stated that Petitioner had been
found not to be complying with participation
requirements. Id. The notice did not state specifically
which participation requirements Petitioner had been
found not to be complying with, except that it referred
Petitioner to the finding of the surveyors that
Petitioner had not complied with the requirements of 42
C.F.R. § 483.25, and, therefore, had provided care of a
substandard quality. Id. at 3. Nor did the notice
specifically incorporate by reference the findings which
the surveyors reported separately. However, it appears
that the California survey agency furnished Petitioner a
copy of the surveyors’ report. See HCFA Ex. 1.

The notice instructed Petitioner to submit a plan of
correction to the California survey agency. P. Ex. 1 at
1. In addition, the notice advised Petitioner that the
California survey agency was recommending to HCFA that
HCFA impose remedies consisting of the following: a
civil money penalty, to be imposed effective January 30,
1996; denial of payment for new admissions, to be imposed
effective March 5, 1996; and directed in-service training
to be imposed effective March 5, 1996. Id. at 2.
9

On March 4, 1996, the California survey agency sent an
amended notice to Petitioner. P. Ex. 2. The amended
notice differs from the February 15, 1996 notice only in
the following respect: it stated that Petitioner had
also not complied with the requirements of 42 C.F.R. §
483.15, and therefore, had provided care of a substandard
quality.

On February 29, 1996, HCFA sent a notice to Petitioner.
P. Ex. 3. The notice recited that the California survey
agency had surveyed Petitioner on February 6, 1996, and
that it had found that Petitioner was not complying
substantially with federal participation requirements.
Id. at 1. HCFA told Petitioner that:

As a result of the survey findings listed on
the Statement of Deficiencies and Plan of
Correction (Form HCFA-2567) which was forwarded
to you after the survey, the [California survey
agency] notified you that it would recommend to
. . . (HCFA) that remedies be imposed. We
concur with the survey findings which indicate
that the following Medicare requirements were
out of compliance:

42 C.F.R. 483.15(f)(1) Quality of Life
42 C.F.R. 483.25(c) Quality of Care

id.

HCFA informed Petitioner that, as a result of its
“current and past noncompliance with Medicare
requirements,” HCFA would impose remedies against
Petitioner. Id. These remedies included denial of
payment for new admissions, effective March 20, 1996.
Id. at1- 2.

Petitioner prepared a corrective action plan. HCFA Ex. 1
at 1 - 66. The corrective action plan addressed all of
the findings of noncompliance that were made by the
California survey agency surveyors, and not just those
that were recited in the February 15 and March 4, 1996
notices from the California survey agency to Petitioner,
or in HCFA’s February 29, 1996 notice to Petitioner.
HCFA Ex. 1 at 1 - 66; See P. Ex. 1- 3. The corrective
action plan is dated March 11, 1996, and is signed by
Petitioner’s Administrative Director. HCFA Ex. 1 at 1;
see P. Ex. 4 at 2.

It is not clear from the exhibits in this case whether
Petitioner sent the completed corrective action plan to
the California survey agency or to HCFA. In any event,
10

on March 13, 1996, Petitioner informed HCFA that it had
attained compliance with Medicare participation
requirements. P. Ex. 4. In this letter, Petitioner
asserted that it had completed required corrective
actions as of March 2, 1996. Jd. at 1. Petitioner
asserted that it was ready to be resurveyed in order to
demonstrate that it was complying substantially with
participation requirements. Id. at 1 - 2.

On March 20, 1996, the California survey agency
resurveyed Petitioner. P. Exs. 5, 6. On April 3, 1996,
the California survey agency notified Petitioner that,
based on the resurvey, the California survey agency
concluded that Petitioner remained noncompliant with
participation requirements contained in 42 C.F.R. §§
483.20, 483.45, and 483.75. P. Ex. 6 at 1. The
California survey agency advised Petitioner that it would
recommend to HCFA that HCFA impose against Petitioner the
remedy of directed in-service training. Id. The
California survey agency advised Petitioner,
additionally, that HCFA might determine to impose a civil
money penalty against Petitioner. Id. at 1 - 2.

On April 9, 1996, Petitioner submitted a plan of
correction to the California survey agency. P. Ex. 7.
The plan of correction addressed the deficiencies that
the California survey agency identified at its March 20,
1996 survey of Petitioner. P. Ex. 7 at 2 - 8.

On April 16, 1996, HCFA notified Petitioner that HCFA was
imposing remedies against Petitioner. P. Ex. 8. HCFA
announced that its determination to impose remedies was
based on findings by the California survey agency at the
March 20, 1996 resurvey of Petitioner, that Petitioner
continued to manifest failures to comply with
participation requirements, and that Petitioner had not
corrected all deficiencies that were identified
previously by the California survey agency. The remedies
imposed by HCFA included denial of payment for new
admissions “effective March 20, 1996 as stated in our
February 29, 1996 letter.” Id. at 1; see P. Ex. 3.

Other remedies that were imposed included a civil money
penalty and continuation of directed in-service training.
Id. at 1.

Petitioner’s April 9, 1996 plan of correction, which
addressed the deficiencies identified by the California
survey agency at the March 20, 1996 resurvey of
Petitioner, was accepted by the California survey agency
as being credible evidence that Petitioner had corrected
those deficiencies. HCFA Ex. 2 at 2. Based on that
acceptance, HCFA determined that Petitioner complied with
11

all federal participation requirements, effective April
9, 1996. Id. HCFA determined to rescind the remedies of
denial of payment for new admissions, civil money
penalty, and directed in-service training, effective
April 9, 1996. Jd. However, the consequence of HCFA’s
determination to impose denial of payment for new
admissions, effective March 20, 1996, and its subsequent
rescission of that determination, effective April 9,
1996, is that HCFA denied Petitioner payment for new
admissions occurring between March 20, 1996 and April 9,
1996.

From the foregoing recitation, certain key facts emerge,
which are central to my decision in this case. They are
the following:

e HCFA’s February 29, 1996 notice to Petitioner
states that HCFA concurs with only two of the findings of
deficiencies that the California survey agency made at
the February 6, 1996 survey of Petitioner. P. Ex. 3 at
1. HCFA did not concur with or ratify the additional
findings of deficiencies that the California survey
agency made at its February 6, 1996 survey of Petitioner.
Id. The reasonable implication of this notice is that
HCFA concurred with the California survey agency’s
findings that Petitioner did not comply with the
requirements of 42 C.F.R. §§ 483.15(f)(1) and 483.25(c),
but that HCFA did not concur with other findings of
deficiencies made by the California survey agency.

e The three continuing deficiencies that the
California survey agency identified at its March 20, 1996
resurvey of Petitioner did not include either of the two
deficiencies that HCFA identified in its February 29,
1996 notice to Petitioner. P. Ex. 6 at 1; see P. Ex. 3
at 1.

e The California survey agency did not recommend
that HCFA impose against Petitioner denial of payment for
new admissions as a remedy for the three remaining
deficiencies that the California survey agency identified
at its March 20, 1996 resurvey of Petitioner. P. Ex. 6
at 1.

e Petitioner corrected all of the three remaining
deficiencies, effective April 9, 1996. P. Ex. 7; HCFA
Ex. 2 at 2.

e The two findings of deficiencies that HCFA
concurred with in its February 29, 1996 notice to
Petitioner were not a basis for HCFA’s determination to
impose against Petitioner denial of payment for new
12

admissions, effective March 20, 1996, inasmuch as
Petitioner corrected these deficiencies on or before
March 20, 1996. P. Ex. 7.

e Notwithstanding, HCFA determined to impose
against Petitioner denial of payment for new admissions,
effective March 20, 1996. P. Ex. 8 at 1. HCFA’s basis
for determining to impose denial of payment for new
admissions was the California survey agency’s
determination that, as of March 20, 1996, Petitioner
remained out of compliance with three participation
requirements that the California survey agency had found
Petitioner to be out of compliance with at its February
6, 1996 survey. P. Ex. 8 at 1; see P. Ex. 6; see HCFA
Ex. 1. None of these three participation requirements
comprise either of the two requirements that HCFA cited
in its February 29, 1996 notice to Petitioner. Id.

e HCFA did not give Petitioner 15 days notice of
the basis for its determination to impose against
Petitioner denial of payment for new admissions.

e Prior to April 16, 1996, the only participation
requirements which HCFA had advised Petitioner that it
found Petitioner not to be complying with are those
contained in 42 C.F.R. §§ 483.15(f)(1) and 483.25(c). P.
Ex. 3.

C. Application of the law to the facts (Finding 13)

As I find at Part III.A., 42 C.F.R. § 488.402(f) (1)
requires HCFA to state with particularity the basis for
its determination to impose a remedy against a provider
of long-term care. HCFA failed to comply with this
requirement in imposing denial of payment for new
admissions against Petitioner, effective March 20, 1996.

The plain meaning of HCFA’s February 29, 1996 notice to
Petitioner is that HCFA agreed with the California survey
agency’s findings that Petitioner was not complying
substantially with participation requirements only to the
extent that HCFA concurred with the California survey
agency’s findings that Petitioner was not complying
substantially with the participation requirements
contained in 42 C.F.R. §§ 483.15(f)(1) and 483.25(c).?

2? I make no finding in this decision whether HCFA
concurred with all, or only some, of the California
survey agency’s findings, because it is not necessary
that I do so. My decision in this case is based on the

(continued...)
13

HCFA linked its warning to Petitioner that it would
impose denial of payment for new admissions, effective
March 20, 1996, unless Petitioner attained compliance
with participation requirements by that date, to the
determination that, as of February 6, 1996, Petitioner
was not complying with 42 C.F.R. §§ 483.15(f)(1) and
483.25(c). There is nothing in HCFA’s February 29, 1996
notice that suggests that HCFA might impose denial of
payment for new admissions, effective March 20, 1996,
based on continued failures by Petitioner to comply with
other participation requirements that the California
survey agency had found Petitioner not to be complying
with at the February 6, 1996 survey.

In this case, HCFA failed, on February 29, 1996, to give
Petitioner the requisite notice of the specific basis,
later relied on by HCFA, for imposing against Petitioner
the remedy of denial of payment for new admissions. HCFA
did not give Petitioner 15 days notice, as is required by
42 C.F.R. § 488.402(f) (4), of its intent to impose denial
of payment for new admissions effective March 20, 1996,
based on Petitioner’s continued failure to comply with
participation requirements other than those stated in 42
C.F.R. §§ 483.15(f)(1) and 483.25(c). Such notice was
not provided by HCFA until April 16, 1996, and thus
cannot be a basis for imposing denial of payment for new
admissions effective March 20, 1996.

It is true that HCFA’s notice of February 29, 1996 told
Petitioner that HCFA would impose a denial of payment for
new admissions if Petitioner did not attain compliance
with participation requirements by March 20, 1996.
However, that notice explicitly refers only to
Petitioner’s failure to comply with the participation
requirements contained in 42 C.F.R. §§ 483.15(f)(1) and
483.25(c). By stating only that HCFA concurred with the
California survey agency’s findings concerning these two
requirements, the notice creates the impression that HCFA
did not concur with the California survey agency’s
findings that Petitioner was deficient in other respects.
Given that, the February 29, 1996 notice was inadequate
notice of HCFA’s intent to impose denial of payment for
new admissions, effective March 20, 1996, for continued
failure by Petitioner to comply with the participation

2(,...continued)
adequacy of the notice that HCFA gave Petitioner of its
determination to impose denial of payment for new
admissions, effective March 20, 1996. It is not based on
the actual findings that HCFA may have made concerning
Petitioner’s compliance with participation requirements.
14

requirements that the California survey agency found that
Petitioner had not complied with as of February 6, 1996
but which were not mentioned in HCFA’s February 29, 1996
notice.

I do not dispute the fact that the California survey
agency gave Petitioner notice of the deficiencies that
were identified at the February 6, 1996 survey.’
Petitioner’s understanding of what the California survey
agency had found is demonstrated by the fact that
Petitioner submitted a plan of correction which addressed
all of the deficiencies that were identified on February
6, 1996, and not just the two findings of deficiencies
that HCFA concurred with in its February 29, 1996 notice
to Petitioner. But, the notice of deficiencies which the
California survey agency gave to Petitioner is not notice
of HCFA’s determination, or of the remedies that HCFA
might impose. Under 42 C.F.R. § 488.402(f), where HCFA
determines to impose a remedy against a provider of long-
term care, then HCFA must give that provider notice of
the determination, including the specific basis for the
determination.

D. HCFA’s motion that I amend my prehearing order
(Finding 14)

HCFA’s motion that I amend my prehearing order is moot.
HCFA premised its motion on an assertion that I had not
stated with sufficient clarity the issues to be heard and
decided at an evidentiary hearing of the merits of this
case. However, I do not reach the merits of this case,
inasmuch as I find that HCFA provided Petitioner with
inadequate notice of its intent to impose the remedy of
denial of payment for new admissions.

Iv. Conclusion

I conclude that HCFA provided Petitioner with inadequate
notice of its intent to impose against Petitioner the

remedy of denial of payment for new admissions effective
March 20, 1996. Consequently, HCFA is without authority

3 That is not to say that the California survey
agency stated its findings to Petitioner with absolute
clarity. Neither the February 15, 1996 notice nor the
amended notice of March 4, 1996 recites the specific
findings of noncompliance. P. Ex. 1; P. Ex. 2.
Petitioner was left to assume that the California agency
had accepted all of the findings made by the surveyors
who conducted the February 6, 1996 survey.
15

to impose against Petitioner the remedy of denial of
payment for new admissions, effective March 20, 1996. I
conclude further that Petitioner has withdrawn its
request for a hearing as to HCFA’s imposition of a civil
money penalty against Petitioner. However, that
withdrawal is conditioned on my ruling in favor of
Petitioner on Petitioner’s motion for summary disposition
on the issue of HCFA’s authority to impose against
Petitioner the remedy of denial of payment for new
admissions, effective March 20, 1996. In the event that
HCFA should appeal my disposition of that issue, and
should it succeed in its appeal, then Petitioner could
choose to renew its hearing request at that time. To do
so, Petitioner would have to notify this office within 45
days of receipt of the decision on appeal. Finally, I
conclude that HCFA’s motion that I amend my prehearing
order in this case is moot.

/s/

Steven T. Kessel
Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Sharad Patel, M.D., DATE: November 26, 1996
Petitioner,

Docket No. C-96-085
Decision No. CR447

-vo-

The Inspector General.

DECISION

In this case, I uphold the determination made by the Inspector
General (I.G.) to exclude Petitioner from participating in the
Medicare and Medicaid programs! for a period of 10 years.

After Petitioner pled guilty in U.S. District Court to charges of
Medicare billing fraud and related crimes, the I.G. notified
Petitioner by letter dated November 27, 1995 (Notice Letter) that
Petitioner was being excluded for a period of 10 years pursuant
to sections 1128(a)(1) and (c)(3)(B) of the Social Security Act
(Act) and the implementing regulations codified at 42 C.F.R. §
1001.102. Petitioner agrees that he is subject to an exclusion
of five years mandated by sections 1128(a)(1) and (c) (3) (B) of
the Act. Petitioner agrees also that three of the aggravating
factors enumerated in 42 C.F.R. 1001.102(b) are applicable to his
circumstances. However, he asserts that a mitigating factor
listed in 42 C.F.R. § 1001.102(c) is applicable as well, and,
therefore, the 10 year exclusion imposed and directed by the I.G.
is unreasonably long.

An in-person hearing was scheduled and then cancelled by me after
I reviewed the parties' proposed exhibits and the summary of
testimony Petitioner intended to present.’ My reasons for
vacating the hearing schedule are contained in my Summary of
Prehearing Conference and Order Scheduling Case for Briefing,
dated May 30, 1996 (May 30, 1996 Order). Based on the parties'

1 Unless the context indicates otherwise, I use the term
"Medicaid" as an abbreviation for all the State health care
programs listed in section 1128(h) of the Social Security Act.

2? The I.G. intended to present no witnesses at the
hearing and had requested that I excuse her counsel from
appearing at the hearing.
2

stipulations of facts and agreement to submit the case for
disposition on a written record, I established a briefing
schedule for the parties to follow. Jd. However, I informed the
parties also that if Petitioner's written submissions establish
the applicability of the mitigating factor he alleges, then I
would conduct a hearing to take testimony from the two witnesses
identified in Petitioner's witness list as having information
relevant to that factor. Id.

Pursuant to my May 30, 1996 Order, each party has submitted a
brief in chief (I.G. Br.? and P. Br., respectively). The I.G.
submitted also a reply brief (I.G. Reply). Petitioner then moved
to file a sur-reply brief (P. Sur-reply) attached to his motion,

3 Even though the I.G.'s initial brief is titled "The
Inspector General's Memorandum in Support of Summary
Disposition," I construe the I.G.'s request to be for affirmance
of the 10-year exclusion based on the written record alone. I do
not construe the I.G.'s motion as one for summary judgment, which
is not appropriate for resolving disputed issues of material
facts and which, if denied, would necessitate further on-merits
proceedings such as the receipt of witness testimony at an in-
person hearing.

My construction of the I.G.'s request is based on several
factors. First, in her reply brief, the I.G. asked that the case
be decided based on the documentary evidence and briefs alone.
I.G. Reply at 5. Even when an in-person hearing was scheduled to
take place, the I.G. had exercised her option of waiving the
presentation of witnesses and requested that her counsel be
excused from personally appearing at the hearing. In addition,
the parties' agreement during the last prehearing conference was
that they each submit the case for decision based only on their
briefs and exhibits. May 30, 1996 Order. My briefing order was
to the same effect. Id. The only proviso I made for any
possible future in-person hearing was for the taking of live
testimony from certain of the witnesses appearing on Petitioner's
witness list if Petitioner were able to establish by his written
submissions that the mitigating factor he claims exists. Id. In
her briefs, the I.G. has denied the existence of this alleged
mitigating factor and has asked for affirmance of the 10-year
exclusion based solely on the documentary evidence of record even
though there exist disputed material facts and the regulations do
not specify the weight to be accorded any aggravating or
mitigating factor.

Therefore, notwithstanding the title of the I.G.'s initial brief,
I consider the I.G. to have made a request for me to resolve all
issues of fact before me based solely on the briefs and
documentary evidence of record.
3

which I am granting at this time. In addition, I have received
and admitted the following exhibits submitted by the parties:

the I.G.'s exhibits 1 through 5 (I.G.
Exs. 1 - 5); and

Petitioner's exhibits 1 through 5 (P.
Exs. 1 - 5).

I have excluded the eight additional exhibits offered by
Petitioner (P. Exs. 6 - 13) due to their irrelevancy.

Having considered the briefs and documentary evidence submitted
by the parties, I conclude that there is no need to reschedule an
in-person hearing because, for the reasons detailed below,
Petitioner has not established the applicability of the
mitigating factor he alleges. The evidence of record establishes
the reasonableness of the 10-year exclusion imposed and directed
by the I.G. against Petitioner.

STIPULATIONS

As noted in my May 30, 1996 Order, the parties have stipulated as
follows:

A. that Petitioner is subject to a
mandatory exclusion of five years under
sections 1128(a)(1) and (c)(3)(B) of the
Act;

B. that there is no dispute under the facts of this
case concerning the existence of the following three
aggravating factors relied upon by the I.G. in
setting the exclusion period in controversy:

1. the acts that resulted
in Petitioner's conviction,
or similar acts, resulted
in financial loss to the
Medicare and Medicaid
programs of $1,500 or more
(see 42 C.F.R. §
1001.102(b) (1); Notice
Letter) ;

2. the criminal acts that
resulted in Petitioner's
conviction, or similar
acts, were committed over a
period of one year or more
(see 42 C.F.R. §
1001.102(b) (2); Notice
Letter); and
4

3. the sentence imposed by
the court included
incarceration (see 42
C.F.R. § 1001.102(b) (4);
Notice Letter).

c. that notwithstanding the information
to the contrary contained in the Notice
Letter, the I.G. does not allege that the
acts that resulted in Petitioner's
conviction, or similar acts, hada
significant adverse physical, mental, or
financial impact on one or more program
beneficiaries or other individuals (see
42 C.F.R. § 1001.102(b) (3); Notice
Letter).

ISSUE

Given the stipulations of the parties, the only issue before me
is whether the additional five years of exclusion imposed and
directed by the I.G. is reasonable. 42 C.F.R. §
1001.2007(a) (1) (ii). The resolution of this issue requires me to
decide the following in sequence:

A. to what extent, if any, the evidence
relevant to the above-mentioned three
aggravating factors justifies an
exclusion longer than five years (see 57
Fed. Reg. 3314; 42 C.F.R. § 1001.102(c));

B. if an exclusion longer than five
years is justified by the evidence
relevant to the aggravating factors, then
whether, as alleged by Petitioner, there
exists a mitigating factor, in that the
record from Petitioner's criminal
proceedings demonstrates that the court
determined Petitioner to have had a
mental, emotional, or physical condition
before or during his commission of ‘the
offenses and thereby reduced his
culpability (see 42 C.F.R. §
1001.102(c)(2)); and

c. if Petitioner establishes the
existence of the mitigating factor, then
to what extent, if any, the evidence
relevant to the mitigating factor
justifies reducing the lengthened
exclusion period to a period of not less
than five years (42 C.F.R. §
1001.102(c)).
5
FINDINGS AND CONCLUSIONS ON DISPUTED ISSUE

1. The evidence relevant to the three aggravating factors relied
upon by the I.G. justified the I.G.'s increasing Petitioner's
exclusion to 10 years. See discussion and citations in sections
A and B of Analysis.

2. Petitioner has not proven the existence of the mitigating
factor he relies upon. See discussion and citations in section C
of Analysis.

3. The 10-year exclusion imposed and directed by the I.G.
against Petitioner is reasonable. Findings 1 and 2.

ANALYSIS
A. Evidence relevant to the three aggravating factors

Prior to the imposition of the exclusion in controversy,
Petitioner was a psychiatrist entitled to bill for health care
services rendered to patients insured or covered by the Medicare
program, the State of Kentucky's Medicaid program, and the Civil
Health and Medical Program of the Uniformed Services (CHAMPUS).
I.G. Ex. 2 at 3; I.G. Ex. 3 at 2. As a participating provider in
these programs, Petitioner was obligated to submit bills only for
services that were medically necessary and that were actually
performed. I.G. Ex. 3 at 2. During August of 1992, an
Indictment issued by the Grand Jury was filed in U.S. District
Court for the Western District of Kentucky, charging Petitioner
with 55 counts of criminal wrong-doings relating to the
submission of false, fictitious, and fraudulent claims by
Petitioner and others to the Medicare, Medicaid, and CHAMPUS
programs from about October 1, 1989 to December 31, 1990. I.G.
Ex. 2.

The Indictment issued by the Grand Jury charged Petitioner with
conspiring with others to commit various fraud-related offenses
against the United States. I.G. Ex. 2 at 1 - 2. Many of the
counts charged Petitioner also with submitting, attempting to
submit, or causing to be submitted to the Medicare, Medicaid and
CHAMPUS programs, multiple claims for physician services, even
though the services were not rendered by any person licensed as a
physician ("noncredentialed" services). I.G. Ex. 2 at 5, 9 - 10.
Other counts charged him with having submitted, or caused to be
submitted, claims for services which were different in amounts or
types than those actually rendered ("upcoding"). See I.G. Ex. 2
at 5. Still other charges involved the submission of claims for
"unrendered" physician services. Id. The Indictment charged
Petitioner with having violated numerous federal statutes: i.e.,
18 U.S.C. § 371 ("Conspiracy to File False Medical Claims and to
Commit Maid Fraud"); 18 U.S.C. § 287 and § 2 ("Making False
Medical Claims to Medicare and CHAMPUS. Aiding and Abetting"),
18 U.S.C. § 1341 and § 2 ("Mail Fraud. Aiding and Abetting"); 42
U.S.C. § 1320(a)-7b(a) (1)&(5) and 18 U.S.C. § 2 ("Making False
Medical Claims to State Programs for Payment. Aiding and
6

Abetting"); and 42 U.S.C. § 1320a-7b(a) (5) and 18 U.S.C. § 2
("Making False Medical Claims to Federal programs for Payment.
Aiding and Abetting."). I.G. Ex. 2; I.G. Ex. 4 at 2.

In December of 1993, Petitioner voluntarily entered a plea of
guilty to all 55 counts in the Indictment, specifically
acknowledging that "he is in fact guilty of the charges." I.G.
Ex. 3 at 1. He acknowledged specifically also that he had
knowingly conspired and engaged in a pattern and practice of
submitting and causing others to submit false and fraudulent
claims to the Medicare, Medicaid, and CHAMPUS programs. Id. at
2. The Plea Agreement contains also Petitioner's admission that
he committed the criminal offenses between at least October 1,
1989 and December 31, 1991. Id. at 2 - 3.

Thereafter, U.S. District Judge Charles Simpson accepted
Petitioner's guilty plea to the 55 counts and entered judgment
against him. I.G. Ex. 4. The sentence imposed by Judge Simpson
included four months of incarceration in a federal prison for
each count, to be served concurrently; four months of home
incarceration for each count, to be served concurrently; and an
additional three-year period of supervised release for each
count, also to be served concurrently. I.G. Ex. 4 at 3 and 4; P.
Br. at 2.4 Even though Petitioner was subject to fines in an
amount between $2,000 to $20,000, Judge Simpson waived the
payment of such fines due to Petitioner's inability to pay it.
I.G. Ex. 4 at 5. In addition, Judge Simpson ordered no payment
of restitution by Petitioner because restitution was being
satisfied pursuant to a settlement agreement reached in a related
civil action. Id.; I.G. Ex. 5; P. Ex. 5 at 12.

In a civil action, the United States, on behalf of the various
agencies which administered the health care programs defrauded by
Petitioner, had sued Petitioner under the False Claims Act, 42
U.S.C. § 3729, for the submission of false claims to the
Medicare, Medicaid, and CHAMPUS programs from January 1, 1988
until.December 31, 1991. I.G. Ex. 5; P. Ex. 4. The matter was
described as a "parallel civil proceeding" by the Asst. U.S.
Attorney during Petitioner's sentencing proceedings in the
criminal case. P. Ex. 5 at 5. In settlement of the civil fraud
charges against him, Petitioner agreed to pay the United States
$200,000, in addition to any amount he is required to pay in the
criminal action. I.G. Ex. 5. The United States did not seek any

4 As Petitioner noted in his brief, the federal
sentencing guidelines applicable to the plea agreement reached by
the parties required eight to 14 months of imprisonment. What
the court imposed, after accepting Petitioner's guilty plea, is
known as a "split sentence" of imprisonment, with four months
served in a federal prison and four months served as home
incarceration.

The split sentence was agreed to by the parties and ordered by
Judge Simpson, in accordance with the plea agreement. P. Ex. 1
at 18; P. Ex. 5 at 5; P Ex. 2 at 6.
7

additional amount in restitution because the U.S. Attorney's
Office was persuaded, after reviewing Petitioner's financial
statements, that he could not be reasonably expected to pay more.
P. Ex. 4 at 3.

B. The relationship between the evidence relevant to the three
aggravating factors and the I.G.'s authority to increase the
period of exclusion

The regulation at 42 C.F.R. § 1001.102 permits the I.G. to
lengthen the five-year exclusion required by sections 1128 (a) (1)
and (c)(3)(B) of the Act only if certain aggravating factors
exist. Where both aggravating and mitigating factors enumerated
by the regulations exist, increasing the minimum mandatory
exclusion period is appropriate only when the weight of the
evidence relevant to the aggravating factors is not offset
completely by the evidence relevant to any mitigating factor also
in existence. As explained in the agency's commentaries to these
regulations, there is no rigid formula establishing the weight to
be accorded to each aggravating factor. 57 Fed. Reg. 3314 - 15.
Instead, the weight to be assigned these factors depends on the
context of the particular case at issue. Id. As also explained
in these commentaries, "(t]he primary purpose of an exclusionary
sanction is remedial, not punitive." 57 Fed. Reg. 3300. Any
exclusion imposed by the I.G. under section 1128 of the Act
should carry out Congress' intent to protect the integrity of the
Medicare and Medicaid programs and those covered by the programs.
See, 57 Fed. Reg. 3300 - 01. Therefore, the weight to be
assigned the aggravating factors present in a case depends on the
relevant facts as they relate to the remedial purpose of an
exclusion.

As relevant to the aggravating factor listed at 42 C.F.R. §
1001.102(b)(1), the facts relating to Petitioner's settlement of
the civil fraud charges for $200,000 establish that the acts
which resulted in Petitioner's criminal conviction, or similar
acts, have caused great financial losses to the Medicare and
Medicaid programs. Whereas the threshold amount of loss
specified by the regulation is $1,500, Petitioner has caused much
more extensive financial damage to the Medicare and Medicaid
programs. Neither party before me has alleged any precise
amounts or argued the exact extent of financial damage caused by
Petitioner to the two programs. However, according to the
calculations used by the U. S. Attorney's Office, Petitioner's
criminal acts during the period specified in the Indictment
(October 1, 1989 to December 31, 1990) defrauded the Medicaid
program of $20,880, and the Medicare program of $20,007.72. P.
Ex. 4 at 3.5 In the Plea Agreement, Petitioner and the

5 However, as discussed below, Petitioner admitted in his
Plea Agreement to having committed the criminal offenses against
these programs for one year longer than the period alleged in the
Indictment. Therefore, the amount of damages caused by
Petitioner to these programs could have been greater than the
amounts calculated by the U.S. Attorney's Office.
8

Government stipulated that the aggregate loss to all programs for
federal sentencing guidelines purposes was an amount greater than
$40,000 but less than $70,000. I.G. Ex. 3 at 3.

In addition, for the longer period of violations alleged in the
civil suit brought under the False Claims Act, the same U.S.
Attorney's Office calculated the loss to the Medicare program to
be $20,007.20, and $66,844.85 to the Medicaid program.’ No
restitution amount was decided or ordered in the criminal case
only because the court found it unnecessary to address a matter
already disposed of in the civil action. As noted above also,
the U.S. Attorney's office agreed to Petitioner's offer to pay
$200,000 in the civil action because Petitioner was not able to
pay more.

Therefore, even though the evidence of record does not permit me
to determine what precise amount, below the $200,000 settlement
amount, constituted the full extent of financial damages caused
by Petitioner to the Medicare and Medicaid programs for the
periods involved in both the criminal and civil actions, it is
clear that such damages are substantially in excess of the $1,500
minimum specified by 42 C.F.R. § 1001.102(b) (1). Based on the
acts which resulted in Petitioner's conviction and similar acts,
the amount of damages Petitioner caused to the Medicare and
Medicaid programs amounted to at least the approximately $87,000
the U.S. Attorney's Office calculated for the period from October
1988 to December 31, 1990.

With respect to the aggravating factor codified at 42 C.F.R. §
1001.102(b)(2), the relevant evidence shows that Petitioner's
criminal acts that resulted in his conviction, and similar acts,
took place numerous times during a period in excess of the
minimum one-year period specified by said regulation. He was
charged with 55 counts of criminal violations, which took place
during the one year and three month period from October 1, 1989
to December 31, 1990. I.G. Ex. 2. In his Plea Agreement,
Petitioner admitted to having committed all his criminal offenses
for a period which lasted two years and three months (from at
least October 1, 1989 to December 31, 1991), which is one year
longer than the period alleged in the Indictment. I.G. Ex. 3 at
2-3.

The relevant evidence establishes also that, for a period longer
than one year, Petitioner violated multiple federal statutes in
perpetration of criminal conspiracy and numerous overt criminal

6 According to Petitioner's evidence, the civil suit
alleged that Petitioner violated the False Claims Act between
January 1, 1988 and December 31, 1991. P. Ex. 4 at 1. However,
the same evidence from Petitioner shows also that, in deciding
whether to accept Petitioner's settlement offer of $200,000, the
U.S. Attorney's Office used the amount of damages to the Medicare
and Medicaid programs calculated for a partial period alleged in
the complaint (i.e., only from October 1988 until December 31,
1990). P. Ex. 4 at 2.
9

activities. He specifically admitted in the Plea Agreement that,
for at least two years and three months between October 1, 1989
and December 31, 1991, he had engaged in a pattern of crimes
involving the submission of false or inflated billings for
services allegedly rendered to patients. As noted above also,
the United States sued him under the False Claims Act for the
submission of false and fraudulent claims to the Medicare,
Medicaid, and CHAMPUS programs for a period of nearly four years,
from January 1, 1988 to December 31, 1991. The evidence of
record concerning the civil case shows that the U.S. Attorney's
Office had evidence that, even for the lesser period of October
1, 1988 to December 31, 1990, Petitioner had submitted
approximately 870 false claims to the Medicaid program and
approximately 400 false claims to the Medicare program. P. Ex. 4
at 2.

In sum, the evidence relevant to the aggravating factor codified
at 42 C.F.R. § 1001.102(b) (2) shows that, over a period of time
longer than what is specified by said regulation, Petitioner had
engaged repeatedly in various carefully planned schemes to
defraud the Medicare, Medicaid, and CHAMPUS programs. In the
criminal proceedings, he admitted to having committed his
offenses for a period of at least two years and three months. In
settlement of the civil claims against him, Petitioner did not
contest the Government's allegation that he defrauded the
programs for a period of four years.

With respect to the evidence relevant to the aggravating factor
codified at 42 C.F.R. § 1001.102(b) (4), I have noted above that
the sentence imposed by the court included four months of
imprisonment and four months of home incarceration for each of
the 55 criminal counts, to be served concurrently. This split
sentence of incarceration was imposed in addition to the three
years of supervised release imposed for each of the 55 counts
(also to be served concurrently), as well as the $2,700 in
special assessment Petitioner was required to pay (I.G. Ex. 4 at
1), and the $200,000 Petitioner had agreed to pay in settlement
of the Government's parallel civil suit. Therefore, the sentence
of incarceration imposed by the court is an indication that the
crimes committed by Petitioner were very serious indeed.

The evidence relevant to all three aggravating factors discussed
above establishes a prima facie case for the I.G.'s increasing
Petitioner's exclusion under section 1128(a)(1) of the Act by
adding five years to the minimum period required by section
1128(c)(3)(b) of the Act. The relevant evidence shows that the
fiscal integrity of the Medicare and Medicaid programs need very
considerable protection from Petitioner. Petitioner had
intentionally bilked the Medicare and Medicaid programs of very
substantial sums of money by committing very serious criminal
offenses and civil violations on hundreds of occasions during a
protracted period of time. While a 10-year exclusion may not be
the only period of exclusion that is reasonable under the facts
of this case, a 10-year exclusion is within the continuum of all
that may constitute a reasonable period of exclusion.
10

Moreover, the I.G. has cited three Departmental Appeals Board
decisions wherein an administrative law judge upheld the I.G.'s
impositions of 10-year exclusions pursuant to section 1128(a) (1)
of the Act. I.G. Br. at 6 (citing Hil] v. I.G., DAB CR347

(1994); Middleton v. I.G., DAB CR297 (1993); Weiss v. I.G., DAB
CR421 (1996)). Those cases were decided on facts very similar to

those before me. Therefore, based on the evidence relevant to
the aggravating factors before me and the regulations permitting
the I.G. to increase the minimum five-year period of exclusion on
the basis of those factors (42 C.F.R. § 1001.102(b)), I conclude
that the I.G. has proven that five additional years constitute a
reasonable increase for Petitioner's exclusion period.

c. The potential effect of a mitigating factor and Petitioner's
evidence concerning the alleged existence of a mitigating factor

Because the I.G. has properly increased the statutorily mandated
exclusion period in accordance with 42 C.F.R. § 1001.102(b),
Petitioner is entitled to prove as an affirmative defense that
the increased exclusion period is unreasonable due to the
presence of a’ mitigating factor also specified by regulation. 42
C.F.R. § 1001.102(c). In this case, Petitioner has endeavored to
prove that "(t]jhe record in the criminal proceedings, including
sentencing documents, demonstrates that the court determined that
the individual had a mental, emotional or physical condition
before or during the commission of the offence that reduced the
individual's culpability." 42 C.F.R. § 1001.102(c) (2).
Petitioner's arguments concerning the applicability of this
mitigating factor are built upon the following two statements
appearing in the sentencing documents he submitted as evidence:

{by U.S. District Judge Simpson:] I have
reviewed the presentence report in this
case and have determined to accept the
plea agreement and sentence in accordance
with it.

P. Ex. 5 at 5.

{by the U.S. Probation Officer in his
presentencing report:] The defendant has
indicated some inpatient and outpatient
treatment as well as ongoing counseling;
however, this information appears to best
be addressed in the substance abuse
section of the report as it appears that
the majority of the problems have arisen
due to the defendant's use of alcohol.

P. Ex. 1 at 13. Based on these two statements, Petitioner argues
that Judge Simpson adopted the presentencing report in its
entirety (P. Br. at 2); that Judge Simpson therefore concluded,
as did the Probation Officer, that "the majority of the problems
have arisen due to the defendant's use of alcohol" (id. at 5);
that Judge Simpson also discussed during the sentencing hearing
Petitioner's need for treatment of his alcoholism while he is
11

incarcerated (id. at 6); and therefore, Judge Simpson had made a
determination meeting the requirements of 42 C.F.R. §
1001.102(c)(2) (id.).

I agree with the I.G. that Petitioner failed to prove with the
evidence from his criminal proceedings that the court had made a
determination that Petitioner suffered from any mental,
emotional, or physical condition before or during the commission
of his offenses which reduced his culpability. Unless all these
elements are satisfied, Petitioner cannot avail himself of the
effect of the mitigating factor codified at 42 C.F.R. §
1001.102(c)(2). Here, the evidence before me establishes only
that Judge Simpson reviewed the presentencing report, as he
stated (P. Ex. 5 at 5), and, based on Petitioner's request to
continue his past treatment for substance abuse at the time of
sentencing and the absence of objection from the United States,
Judge Simpson expressed a willingness to order Petitioner's
incarceration at an institution which offered alcohol-abuse
counseling and was located as close as possible to Petitioner's
place of residence. P. Ex. 5 at 4 - 9.

I find that Petitioner has attributed undue significance to Judge
Simpson's statement that he had "reviewed the presentencing
report in this case and have determined to accept the plea
agreement and sentence in accordance with it" (P. Ex. 5 at 5).
First of all, there is no finding by Judge Simpson or by the
Probation Officer who authored the presentencing report
concerning the severity or onset date of Petitioner's alleged
alcoholism or substance abuse problems. Neither determined that
Petitioner had any alcohol or substance abuse problems during the
time he committed those crimes which resulted in his conviction.
Nor does the evidence show that either the judge or the Probation
Officer was in possession of those facts necessary for making a
determination meeting the requirements of 42 C.F.R. §
1001.102(c)(2), even assuming that the judge adopted the
presentencing report in its entirety as argued by Petitioner.

Aside from the fact that the Probation Officer never explained
what he meant by "the problems" which he said were mostly due to
Petitioner's use of alcohol (P. Ex. 1 at 13),’ the Probation
Officer's narrative of Petitioner's alleged history of substance
abuse prior to his Indictment was based solely .on Petitioner's
own statements. P. Ex. 1 at 14. Virtually every sentence in the
Probation Officer's narrative on the matter makes explicit that
the information is what "the defendant advised" or what "the
defendant indicates." Id. Moreover, nothing in the

7 Since the observation was placed under the heading of
"Mental and Emotional Health" under "PART C. OFFENDER
CHARACTERISTICS," the Probation Officer's reference to "the
problems" which mostly arose from Petitioner's use of alcohol
could well mean that Petitioner's mental and emotional health
problems mostly arose from his use of alcohol, and not that his
commission of the crimes mostly arose from his use of alcohol as
implied by Petitioner's arguments.
12

presentencing report suggests that Petitioner had ever alleged to
have committed his offenses as a result of his alleged abuse of
alcohol or other substances. Nor does the report suggest that
Petitioner asked for a finding of lesser culpability on the basis
of his alleged substance abuse problems. Nor do Petitioner's
descriptions of his own history of alcohol and substance abuses
indicate the degree of his alleged problems during the time he
committed his criminal offenses. Id,

At the time the presentencing report was prepared in March of
1994, the Probation Officer could not even obtain confirmation of
the history provided by Petitioner from a treatment facility
named by Petitioner. Jd. The only treatment notes discussed in
the presentencing report pertained to Petitioner's progress as of
December 2, 1993, after the Indictment against him had been filed
and his trial date had been set. Id. Nothing in these treatment
notes appear to indicate when the alleged disorders began or the
degree, if any, to which Petitioner's alleged disorders have
affected his ability to think and act in accordance with the
dictates of law during any particular period of time. Id. It
simply does not follow that any alleged alcohol or substance
abuse of unproven severity and unproven onset would diminish an
individual's culpability for his criminal conduct.

In addition, Judge Simpson did not say that he was accepting
everything stated in the presentencing report. He said only that
he decided to "accept the plea agreement and sentence in
accordance with" the presentencing report. P. Ex. 5 at 5. The
section of the presentencing report dealing with the plea
agreement and recommended sentence sets out the parties!
stipulations and the requirements of the federal sentencing
guidelines applicable to those stipulations. P. Ex. 5 at 14 -
16. Nothing in said section of the report, or in the Plea
Agreement itself, indicates that a finding had been made by the
Probation Officer or the U.S. Attorney's Office prosecuting the
case that Petitioner suffered from any physical, emotional, or
mental disorder before or during his commission of the crimes
which reduced his culpability.

During the sentencing hearing, Judge Simpson asked Petitioner
whether there were changes, errors, or problems with the
presentencing report. P. Ex. 5 at 4. Even at ‘that time
Petitioner did not allege reduced criminal culpability based on
any disorder. Nor did he allege that he suffered any disorder
before or during the period he committed the offenses.* Instead,
Petitioner merely asked the court to order that his sentence of
incarceration be served at a prison where he could continue to
receive alcohol-abuse counseling. P. Ex. 5 at 6 - 11. There was
never any allegation or determination made during the sentencing

8’ petitioner's counsel told Judge Simpson that he had
reviewed the presentencing report with Petitioner "in great
detail." He stated further that "[t]here are no changes or
amendments that we could suggest at this time." P. Ex. 5 at 3 -
4.
13

proceedings concerning an onset date for the alcoholism to be
treated during Petitioner's incarceration.

In sum, the record does not even contain the underlying facts
necessary for Judge Simpson to have reached a determination as to
whether Petitioner suffered from alcoholism or substance abuse
prior to or during his commission of the criminal offenses, much
less whether Petitioner's culpability was reduced by such alleged
abuses. For all of the reasons stated above, I find that Judge
Simpson has not made a determination meeting the requirements of
42 C.F.R. § 1001.102(c)(2) in this case. Because Petitioner has
not proven the mitigating factor he alleges, Petitioner has
failed to rebut the I.G.'s evidence that a 10-year exclusion is
reasonable based on the evidence relevant to three aggravating
factors.

CONCLUSION

Based on the foregoing facts and the reasons explained in my May
30, 1996 Order, I will not schedule any additional proceedings in
this case. I conclude that the 10-year exclusion is reasonable.
Therefore, I uphold the I.G.'s imposition of this exclusion
against Petitioner.

/s/

Mimi Hwang Leahy

Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD
Civil Remedies Division

In the Case of:

The Rivers HealthCare DATE: November 26, 1996

Resources, Inc.,
Petitioner,

Docket No. C-96-326
Decision No. CR446

-vwe

Health Care Financing
Administration.

DECISION

I decide that the Health Care Financing Administration (HCFA)
determined correctly to certify Petitioner, The Rivers
HealthCare Resources, Inc., to participate in the Medicare
program, effective January 23, 1996.

I. Background

The following background facts are undisputed. On June 1,
1995, Petitioner applied to participate in the Medicare
program as a home health agency. Petitioner’s Brief. On
February 22, 1996, HCFA notified Petitioner that Petitioner
was certified to participate in Medicare as a home health
agency, effective January 25, 1996. HCFA Ex. 12.! On April

' HCFA offered as evidence 16 exhibits (HCFA Exs.
1 - 16). Petitioner offered as evidence with its initial
brief six exhibits (P. Exs. 1 - 6) and two documents
which Petitioner designated as “supporting documents.”
The first “supporting document” is a letter to
Petitioner’s President, dated March 11, 1996, from the
Joint Commission on Accreditation of Healthcare
Organizations, with attachments. I have designated this
document as P. Ex. 7. The second “supporting document”
is a nine-page policy and procedure manual prepared by
Petitioner. I have designated this document as P. Ex. 8.
Additionally, Petitioner has offered P. Exs. 9 and 10.
Neither party has objected to my receiving into evidence
2

25, 1996, Petitioner requested HCFA to change the effective
date of Petitioner’s certification to participate in Medicare
to December 15, 1995. HCFA Ex. 13. On May 3, 1996, HCFA
notified Petitioner that it would not change the effective
date of Petitioner’s participation to December 15, 1995.

HCFA Ex. 14.7

Petitioner requested a hearing, and the case was assigned to

me for a hearing and a decision. The parties agreed that the
case could be heard and decided without an in-person hearing.
The parties each submitted exhibits and written arguments. I
base my decision in this case on the law and on the parties’

submissions.

II. Issue, findings of fact, and conclusions of law

The issue in this case is whether HCFA determined correctly
to certify Petitioner to participate in Medicare, effective
January 23, 1996. I make the following findings of fact and
conclusions of law (Findings) to support my decision that
HCFA correctly determined to certify Petitioner to
participate in Medicare effective January 23, 1996. I
discuss each of these Findings in detail, below.

1. A home health agency that applies for participation
in the Medicare program may not participate until HCFA
determines that the home health agency meets Medicare
participation requirements.

2. A home health agency that applies for participation
in the Medicare program will be surveyed on behalf of
HCFA to determine whether the home health agency meets
Medicare participation requirements. The home health
agency will be certified to participate in Medicare
effective the date that the survey is completed, if the
home health agency meets all conditions of participation
in Medicare, and any other requirements imposed by HCFA.

3. Where a home health agency complies with all
conditions of participation in Medicare on the date that
the survey is completed, but fails to comply with one or
more standards of participation or any other
participation requirements, HCFA will certify the home

the other party’s exhibits. I admit into evidence HCFA
Exs. 1 - 16 and P. Exs. 1 - 10.

2? However, HCFA has now agreed to change the
effective date of Petitioner’s participation in Medicare
to January 23, 1996. HCFA’s Brief at 1.
3

health agency to participate in Medicare on the earlier
of the following dates: the date on which the home
health agency complies with all participation
requirements; or, the date on which the home health
agency submits to HCFA a plan of correction which HCFA
accepts.

4. A pre-certification survey was completed of
Petitioner on December 15, 1995. On that date,
Petitioner complied with all conditions of participation
for home health agencies, but did not comply with
several standards of participation.

5. Petitioner did not prove that it complied with all

participation requirements before January 23, 1996, the
date on which it submitted to HCFA a plan of correction
which HCFA accepted.

6. HCFA properly determined to certify Petitioner’s
participation in Medicare as a home health agency,
effective January 23, 1996.

III. Discussion
A. Governing law (Findings 1 - 3)

An entity must apply to HCFA to be certified to participate
in Medicare. 42 C.F.R. § 489.10(a). In order to be
certified, an applicant for participation first must be
surveyed in order to determine whether that applicant meets
all Medicare participation requirements. 42 C.F.R. §§
488.10, 489.10(d). HCFA has delegated to State survey
agencies the authority to conduct surveys on HCFA’s behalf.
Id. HCFA will accept an applicant’s participation agreement
on the date that a survey of that applicant is completed,
assuming that the applicant meets all participation
requirements on that date. 42 C.F.R. § 489.13(a).

If an applicant for participation in Medicare fails to
satisfy all participation requirements as of the date of
completion of the survey, then HCFA will not certify that
applicant to participate in Medicare until HCFA is satisfied
that the applicant meets participation requirements. See 42
C.F.R. § 489.13(b). If HCFA finds, on the basis of a survey,
that an applicant (other than a skilled nursing facility)
complies with all conditions of participation, but fails to
comply with a lesser requirement or requirements, such as a
standard of participation, then HCFA will certify the
applicant to participate on the earlier of the following
dates: the date that the applicant actually complies with all
participation requirements; or, the date on which the
4

applicant submits a plan of correction which addresses the
outstanding deficiencies and which HCFA accepts. 42 C.F.R. §
489.13(b)(1), (2).?

Petitioner notes in its brief that approximately 28 weeks
transpired between the date that Petitioner applied to
participate in Medicare and the date that it became certified
to participate in Medicare. I infer that Petitioner is
arguing that it might have met Medicare participation
requirements sooner than the date of its certification, had
HCFA been more expeditious in processing Petitioner’s
application.

That may be so, but the delay in processing Petitioner’s
application does not entitle Petitioner to be certified at an
earlier date than the date that it actually satisfies the
criteria for participation. The earliest date that an
applicant for participation will be certified is the date on
which a survey of that applicant is completed, assuming that
the applicant meets all participation requirements as of that
date. 42 C.F.R. § 489.13(a). An applicant may not be
certified to participate at a date earlier than the date the
initial survey is completed, even assuming that the applicant
might have been able to satisfy HCFA that it met
participation requirements at an earlier date, had the survey
been conducted on that earlier date. See id. Where an
applicant is deficient in complying with participation
requirements, that applicant may not be certified at a date
earlier than the date that it satisfies HCFA that the
deficiencies have been corrected. 42 C.F.R. § 489.13(b). An
earlier certification date may not be established, based on
the applicant’s argument that the applicant would have
corrected its deficiencies earlier, had HCFA apprised the
applicant of those deficiencies at an earlier date. See Id.

B. The facts of this case and the application of the
law to the facts (Findings 4 - 6)

It is evident from application of the law to the facts of
this case that the earliest date that Petitioner established
that it met Medicare participation requirements is January
23, 1996. Consequently, HCFA correctly certified Petitioner
to participate in Medicare, effective January 23, 1996.

3. The criteria for establishing compliance are
not the same for skilled nursing facilities as they are
for other applicants for participation. 42 C.F.R.

§ 489.13(b) (2). Petitioner is not a skilled nursing
facility, so those different criteria are not at issue
here.
5
1. The facts (Findings 4 - 5)

A pre-certification survey of Petitioner was completed by the
Commonwealth of Virginia Department of Health (Virginia State
survey agency), acting on behalf of HCFA, on December 15,
1995. HCFA Ex. 4 at 1. On December 27, 1995, the Virginia
State survey agency notified Petitioner that Petitioner had
been found to be deficient in complying with standards under
the following regulations: 42 C.F.R. § 484.14(g), 42 C.F.R. §
484.18, and 42 C.F.R. § 484.18(c). HCFA Ex. 4 at 1, 3 - 9.
Petitioner was not found to be deficient in complying with
any conditions of participation. See Id. The Virginia State
survey agency advised Petitioner that Petitioner must submit
a plan of correction which addressed the specific
deficiencies that had been identified. HCFA Ex. 4 at 1.

Petitioner submitted its first plan of correction on December
31, 1995. HCFA Ex. 5. The Virginia State survey agency
found the first plan of correction to be unacceptable. HCFA
Ex. 6.

The Virginia State survey agency found Petitioner’s first
plan of correction to be deficient in several respects. With
respect to the standard of participation contained in 42
C.F.R. § 484.14(g), which requires a home health agency to
coordinate its delivery of patient services and to maintain
liaison among the individuals who provide services, the
Virginia State survey agency found that Petitioner had failed
to explain how it would provide prompt notification to a
physician of any delay in providing care to a patient
pursuant to a plan of care. HCFA Ex. 6 at 5; see HCFA Ex. 5
at 3-4.

With respect to the standard of participation contained in 42
C.F.R. § 484.18, which requires that care provided by a home
agency follow a written plan of care that is established and
is periodically reviewed by a physician, the Virginia State
survey agency found that Petitioner did not explain how it
would document a verbal order for treatment issued by a
physician. HCFA Ex. 6 at 5 - 6; see HCFA Ex. 5 at 4 - 5.
Additionally, with respect to this standard of participation,
the Virginia State survey agency found that Petitioner did
not explain how it would document a corrective action
undertaken to redress an error in following a physician’s
plan of care. HCFA Ex. 6 at 6; see HCFA Ex. 5 at 5.

With respect to the standard of participation contained in 42
C.F.R. § 484.18(c), which requires that oral orders by a
physician be signed by a nurse or therapist, and that the
physician’s signature be obtained, the Virginia State survey
agency found that Petitioner had not explained adequately how
it would redress any failure to do what the standard
6

required. Specifically, the Virginia State survey agency
found that Petitioner did not explain how it would assure
that a verbal physician’s order would be signed and dated
immediately. HCFA Ex. 6 at 6 - 7; see HCFA Ex. 5 at 6 - 8.
Also with respect to the standard of participation contained
in 42 C.F.R. § 484.18(c), the Virginia State survey agency
found that Petitioner did not explain how it would document
the date that it received a verbal order from a physician.
HCFA Ex. 6 at 7; see HCFA Ex. 5 at 8. Finally, the Virginia
State survey agency found that Petitioner’s first plan of
correction did not address a failure by Petitioner’s staff to
follow Petitioner’s policy concerning assuring that a
physician sign a verbal order for care. HCFA Ex. 6 at 7; see
HCFA Ex. 5 at 9.

On January 19, 1996, the Virginia State survey agency
communicated by telephone to Petitioner some, but not all, of
its conclusions that Petitioner’s first plan of correction
was unacceptable. HCFA Ex. 2 at 5. On January 22, 1996, the
Virginia State survey agency attempted to fax its written
findings to Petitioner. Id.; see HCFA Ex. 6. However, the
fax machine at Petitioner’s office would not receive the
transmission. HCFA Ex. 2 at 5.

On January 22, 1996, Petitioner submitted to the Virginia
State agency a second plan of correction. HCFA Ex. 7.
Petitioner submitted this second plan of correction to the
Virginia State survey agency prior to receiving the Virginia
State survey agency’s written findings that Petitioner’s
first plan of correction was unacceptable. HCFA Ex. 2 at 5;
HCFA Ex. 7 at 1.

On January 23, 1996, the Virginia State survey agency
notified Petitioner, by telephone, that the second plan of
correction had not addressed all of the problems that had
been found with the first plan of correction. HCFA Ex. 2 at
6.

On January 23, 1996, Petitioner submitted a third plan of
correction to the Virginia State survey agency. HCFA Ex. 8.
In this plan, Petitioner made revisions to address the
outstanding problems with the first plan of correction that
Petitioner had not addressed in its second plan of
correction. Id.; see HCFA Ex. 6. The Virginia State survey
agency found the third plan of correction to be deficient
only in that it had not been signed and dated and in that it
did not contain completion dates for proposed corrections.
HCFA Ex. 9. On January 25, 1996, Petitioner submitted a
fourth plan of correction which addressed these remaining
deficiencies. HCFA Ex. 10. HCFA has now agreed to certify
Petitioner to participate in Medicare effective January 23,
1996, based on Petitioner’s fourth plan of correction.
7

Petitioner does not dispute that it was obligated to comply
with Medicare participation requirements, as described by the
virginia State survey agency. However, Petitioner asserts
that it was in compliance with all Medicare conditions of
participation on December 18, 1995, and ought to have been
certified to participate effective that date. Petitioner’s
Brief. It is possible that the reference to “December 18" in
Petitioner’s Brief is a typographical error, and that
Petitioner intends to say that it was in compliance with all
Medicare conditions of participation on December 15, 1995,
the date that the pre-certification survey was completed.

It also may be that Petitioner is asserting that, as of
December 15, 1995, it was in compliance with all Medicare
participation requirements, and not just conditions of
participation in Medicare. As I discuss above, at Part
III.A. of this decision, an applicant for participation may
not be certified to participate as of the completion date of
the pre-certification survey on the basis that it complied
with all conditions of participation if, in fact, it was not
complying with standards of participation on that date.
HCFA’s determination in this case in part is that Petitioner
was complying with all conditions of participation as of
December 15, 1995, but that Petitioner was not complying with
standards of participation on that date. To be fair to
Petitioner, I have examined the evidence offered by
Petitioner to decide if, in fact, Petitioner was complying
with all standards of participation, as well as conditions of
participation, at any time prior to January 23, 1996.

Petitioner has offered an exhibit which arguably is relevant
to deciding this question. The exhibit consists of
Petitioner’s policy and procedure manual, which describes the
policies and procedures in effect in Petitioner’s operations
as of December 15, 1995. P. Ex. 8. I have looked closely at
the policies and procedures described in the manual, in order
to decide whether they establish that Petitioner was
complying with all standards of participation on December 15,
1995, or thereafter. I conclude that the policy and
procedures manual does not answer all of the concerns raised
by the Virginia State survey agency.

The deficiencies that the surveyors identified in the report
of the pre-certification survey, completed on December 15, in
many respects were based on review of Petitioner’s care of
individual patients. HCFA Ex. 5 at 4 - 9. Petitioner has
not denied that it failed, in these individual cases, to
provide care that met standards of participation. Thus, even
if Petitioner did have policies in effect on December 15,
1995 that may have comported with the requirements of the
standards of participation governing home health agencies, it
was not complying with those policies, and the standards, in
8

individual cases. Petitioner has not offered any evidence
that it corrected its failures to comply prior to January 23,
1996.

Furthermore, the policies stated in the policy and procedure
manual do not completely address the concerns raised by HCFA
as of December 15, 1995, or thereafter. Thus, Petitioner
would not have been in full compliance with applicable
participation requirements, even if it had carried out to the
letter the policies contained in its policy and procedure
manual. As I describe above, one deficiency noted by the
Virginia State survey agency under 42 C.F.R. § 484.14(g) was
that Petitioner did not explain how it would assure that a
physician would be notified of any delay experienced in
following the physician’s plan of care for a patient. The
policy and procedure manual states that a patient’s case
manager will determine the frequency of communication with a
patient’s physician. P. Ex. 8 at 3. Among the
communications which are to be made are communications
concerning delays in implementing a patient’s plan of care.
Id. I do not find that these statements in the policy and
procedure manual address fully the concern raised by the
virginia State survey agency. Although these statements in
the policy and procedure manual identify the individual who
has the duty to notify a physician of a delay in implementing
a patient’s plan of care, they do not define a mechanism for
assuring that such notification will take place.

Another deficiency identified by the Virginia State survey
agency, pursuant to 42 C.F.R. § 484.18(c), which I have
discussed above, was a failure by Petitioner to explain how
it would address a failure by Petitioner’s staff to assure
that Petitioner followed its internal policies concerning
documentation of a physician’s verbal order. The policy and
procedure manual does establish a policy for documenting a
verbal order by a physician. P. Ex. 8 at 3. However, it
does not explain what Petitioner would do in the event that
its staff was remiss in executing the policy. See id.

2. Application of the law to the facts (Finding 6)

As I discuss at Part III.A. of this decision, HCFA will not
certify an applicant to participate in Medicare effective the
completion date of a pre-certification survey if the
applicant is not complying with all Medicare participation
requirements as of that date. In the event that an applicant
is not complying with a participation requirement other than
a condition of participation, the applicant may not
participate until it satisfies HCFA that it is complying with
all participation requirements. HCFA will certify an
applicant to participate on the earlier of the following
9

events: when the applicant attains compliance, or when the
applicant submits an acceptable plan of correction.

The evidence in this case establishes that Petitioner was not
complying with all Medicare participation requirements on
December 15, 1995. HCFA determined correctly that Petitioner
could not be certified to participate effective that date.
Petitioner has not proved that it complied with all Medicare
participation requirements prior to January 23, 1996, the
date when it submitted an acceptable plan of correction.
Therefore, HCFA correctly determined that the earliest date
that it could certify Petitioner to participate in Medicare
was January 23, 1996,

Iv. Conclusion
I conclude that HCFA determined correctly to certify

Petitioner as a Medicare participant, effective January 23,
1996.

/s/

Steven T. Kessel
Administrative Law Judge