SUBJECT: Wesley Long Nursing Center, Inc.,

Petitioner,

Centers for Medicare & Medicaid Services

REMAND OF
ADMINISTRATIVE LAW JUDGE DECISION

Wesley Long Nursing Center, Inc. (Wesley) appealed the March 18, 2004 decision by Administrative Law Judge (ALJ) Alfonso J. Montano dismissing this case on the ground that he did not have authority to hear and decide it. Wesley Long Nursing Center, Inc., DAB CR1155 (2004) (ALJ Decision). Wesley, a skilled nursing facility (SNF), requested an ALJ hearing to review a determination of the Centers for Medicare & Medicaid Services (CMS). CMS determined, among other things, that Wesley met the requirements for provider-based designation as part of Moses H. Cone Memorial Hospital, contrary to Wesley's position that it was a freestanding facility. ⁽¹⁾

The ALJ made two numbered findings of fact and conclusions of law: "1. I do not have authority to hear and decide this case;" and "2. The remaining issues raised by the parties are moot." ALJ Decision at 4-5. The ALJ stated that "[u]nder the regulations which governed this case, a determination by CMS concerning classification of a provider for purposes of reimbursement is not a determination which gives a dissatisfied party hearing and appeal rights." Id. at 5. The ALJ continued:

Petitioner has no right to hearing because they are challenging their reimbursement classification and not their certification status. CMS never determined that Petitioner failed to qualify as a provider of services nor had it determined to terminate Petitioner's status as a provider of services.

Id. The ALJ declined to address the issues of whether Wesley filed a timely hearing request; whether it established good cause for not having filed a timely hearing request; and whether it failed to meet nearly all of the criteria for provider-based status. ALJ Decision at 5-6.

As discussed below, we conclude that Wesley was entitled to a hearing and that its hearing request was not untimely. Accordingly, we vacate the ALJ's dismissal of the hearing request and remand the case to the ALJ for further proceedings.

1. Wesley was entitled to a hearing.

Section 1866(h)(1) of the Social Security Act (Act) confers a hearing right on any institution or agency "dissatisfied with a determination . . . that it is not a provider of services or with a determination described in subsection (b)(2) . . . ." Subsection (b)(2) of section 1866 authorizes the Secretary to refuse to enter into a provider agreement or to refuse to renew or to terminate a provider agreement for specified reasons. ⁽²⁾ Part 498 of 42 C.F.R. implements section 1866(h)(1) and other statutory hearing provisions, and also accords some hearing rights not granted by statute. Section 498.3 lists "initial determinations" by CMS that are subject to appeal as well as administrative actions by CMS that are not subject to appeal. Section 498.3(b)(8) identifies "[t]he termination of a provider agreement in accordance with � 489.53 of this chapter" as an initial determination subject to appeal. Section 489.53(d) in turn states that "[a] provider may appeal the termination of its provider agreement by CMS in accordance with part 498 of this chapter."

The ALJ correctly concluded that the regulations do not provide for a hearing on a determination by CMS regarding a facility's "reimbursement classification status." ALJ Decision at 5. Wesley did not dispute that its classification as a provider-based rather than a freestanding facility affected its Medicare reimbursement. Wesley argued, however, that it was entitled to a hearing under section 1866(h)(1) of the Act because CMS's determination "amounted to a determination that Petitioner was no longer a provider." ALJ Decision at 3. The ALJ rejected this argument, stating that "CMS never determined that Petitioner failed to qualify as a provider of services nor had it determined to terminate Petitioner's status as a provider of services." Id. at 5. On appeal, Wesley argued that the ALJ was incorrect that the CMS determination did not terminate Wesley's status as a provider. Request for Review at 5. ⁽³⁾

As we discuss below, contrary to what the ALJ found, the record shows that CMS terminated Wesley's provider agreement. Accordingly, we conclude that the ALJ erred in dismissing this case on the ground that Wesley was not entitled to a hearing under the statute or regulations. ⁽⁴⁾ We therefore remand the case to the ALJ for further proceedings.

The ALJ Decision describes the circumstances which gave rise to this case as follows:

Prior to September 30, 1998, Wesley Long Community Hospital, and Moses H. Cone Memorial Hospital, were two separate hospital providers, each with its own hospital based skilled nursing facility. Wesley Long Nursing Center was a hospital based skilled nursing facility at Wesley Long Community Hospital, and Moses H. Cone Extended Care Center was a hospital based skilled nursing facility at Moses H. Cone Memorial Hospital. Effective October 1, 1998, the two hospitals merged into a single institution. As a result of the merger of the two hospitals, the two skilled nursing facilities, Wesley Long Nursing Center and Moses H. Cone Extended Care Center were also merged. The surviving entity, Wesley Long Nursing Center, Inc., then became a provider-based skilled nursing facility with Moses H. Cone Memorial Hospital.

ALJ Decision at 1. However, the ALJ did not cite any basis for his statement that the two SNFs were merged or recognize that Wesley disputed that this is what occurred. The record shows only that CMS treated Wesley Long Nursing Center and Moses H. Cone Extended Care Center as if they were merged, with the surviving entity being Moses H. Cone Extended Care Center (not Wesley Long Nursing Center as the ALJ stated).

In a February 17, 2000 letter to Moses Cone Health System, CMS stated that it had "determined that Wesley Long Nursing Center, Inc. does meet the requirements for provider-based designation with Moses H. Cone Memorial Hospital . . . effective . . . October 1, 1998." However, the letter continues:

At the time Wesley Long Community Hospital merged with Moses H. Cone Memorial Hospital (change of ownership), with the surviving entity being Moses H. Cone Memorial Hospital, a change of ownership also occurred for Wesley Long Nursing Center, previously determined by HCFA to be provider-based with Wesley Long Community Hospital and continuing to meet the criteria for provider-based designation. Since Moses H. Cone Memorial Hospital already had in place a HCFA approved, provider-based skilled nursing facility (Moses H. Cone Extended Care Center) and since it is HCFA policy that no more than one skilled nursing facility may be certified as provider-based to any hospital HCFA determined the following:

1.The provider number for Wesley Long Nursing Center, #34-5427, will be retired as a result of the change of ownership, just as the provider number for Wesley Long Community Hospital is being retired as a result of the same action;

2. The entity previously certified as Wesley Long Nursing Center will be merged with Moses H. Cone Extended Care Center and all inclusive certification actions and claims submissions will occur under the provider number for the Moses H. Cone Extended Care Center, #34-5391, which continues to be designated as a provider-based skilled nursing facility with Moses H. Cone Memorial Hospital.

P. Ex. 2, at 1 (emphasis added).

In a subsequent letter to Moses Cone Health System dated February 29, 2000, CMS stated:

. . . Wesley Long Nursing Center (34-5427) has been merged with Moses H. Cone Extended Care Center (34-5391) effective October 1, 1998. This represents an increase in beds from 125 to 245. Please note that we have retired provider number 34-5427 effective October 1, 1998.

Blue Cross and Blue Shield of North Carolina (00310) has been notified of these actions by copy of this letter and a letter terminating provider 34-5427.

P. Ex. 1, at 1 (emphasis added) (same as CMS Ex. 1, at 1).

The underscored language clearly indicates that Wesley's provider agreement was terminated by CMS. Moreover, under 42 C.F.R. � 489.18, a provider agreement is not automatically terminated when there is a change of ownership. Instead, section 489.18(c) provides that an existing provider agreement will automatically be assigned to the new owner. ⁽⁵⁾ Pursuant to these regulations, CMS could not simply "retire" Wesley's provider number without terminating its provider agreement. Accordingly, this case falls squarely under the language of section 1866(h)(1) of the Act and 42 C.F.R. � 498.3(b)(8) and 489.53(d) providing an opportunity for a hearing on a determination to terminate a provider agreement. ⁽⁶⁾

CMS argued that Wesley could not have been terminated as a provider because Wesley acknowledged that it was receiving Medicare reimbursement for skilled nursing services provided after CMS made the determination in question. This argument is not persuasive. The record shows that, when CMS made this determination, the number of beds at Moses H. Cone Extended Care Center was increased by the same number of nursing facility beds that Wesley was licensed by the State of North Carolina to provide. Compare P. Ex. 1, at 1, and Wesley's 11/20/01 hearing request, Ex. 2, Att. 10. Thus, it appears that Wesley agreed to continue operations as part of Moses H. Cone Extended Care Center. CMS did not point to anything in section 1866(h)(1) limiting a facility's right to appeal the termination of its provider agreement merely because the facility is able to continue providing services under an arrangement with another entity. Where there is no express limitation on a hearing right afforded by statute, we are unwilling to infer one. See Big Bend Hospital Corp., d/b/a Big Bend Medical Center, DAB No. 1814, at 13 (2002) ("We do not lightly uphold any limitation on statutory hearing rights."), aff'd, Big Bend Hospital Corp. v. Thompson, No. P-02-CA-030 (W.D. Tex. Jan. 2, 2003).

CMS also argued that the ALJ's dismissal of Wesley's hearing request is consistent with two prior Board decisions, cited in the ALJ Decision, that sustained ALJ dismissals of hearing requests based on the lack of authority to review determinations regarding provider-based status, Comprehensive Mental Health of Baton Rouge et al. and Mira Vista Care Center, Inc., DAB No. 1789 (2001). CMS noted that in Comprehensive--

community mental health centers had argued that they were entitled to a hearing under 498.3(b)(1) as prospective providers because they made their requests for provider-based status at the same time they requested certification as CMHC's. The DAB rejected this argument, concluding that "[n]othing in the scope [] provisions in section 498.3 suggests that merely because a prospective provider has requested a determination on one of the matters listed in section 498.3(b), an entity is entitled to a hearing on any other matter addressed at the same time which was not listed [in 498.3(b)]."

CMS Br. at 7, quoting Comprehensive. CMS asserted that "it is equally clear that the question the ALJ would be considering, if Petitioner was found to have a right to a hearing, is whether CMS correctly determined that Wesley Long Nursing Center was provider-based with Moses H. Cone Hospital." Id. at 10.

Wesley's hearing request is related to provider-based status in the sense that CMS determined that Wesley continued to meet the criteria for provider-based designation and therefore could not operate as a separate provider-based facility with Moses H. Cone Memorial Hospital under CMS's policy. As discussed above, however, this case raises the general issue of whether CMS properly terminated Wesley's provider agreement. This general issue raises other questions such as whether Moses H. Cone Memorial Hospital was the new owner of Wesley after the merger (as the CMS determination seems to assume), and whether the CMS policy applied to Wesley and authorized CMS to terminate Wesley's provider agreement.

In any event, the holding in the cited cases that there was no appealable initial determination under the regulations then in effect was based on facts which are clearly distinguishable from the facts in this case. Wesley here seeks to participate in Medicare as a separate entity, alleging not that it is provider-based, as the facilities in those cases alleged, but instead that it qualifies as a provider in its own right, and that, contrary to what CMS found, it was not part of Wesley Long Community Hospital at the time of the merger of the two hospitals. Furthermore, CMS did not make any determination as to which there was a statutory or regulatory hearing right in either Comprehensive or Mira Vista. In Comprehensive, CMS's determination on the facilities' requests for certification was favorable and therefore not appealable. Here, in contrast, CMS made a determination to terminate Wesley, a determination as to which there is clearly a statutory and regulatory hearing right, with which Wesley is dissatisfied.

Moreover, Wesley is entitled to a hearing regarding the basis on which CMS terminated Wesley's provider agreement even though that basis is not a basis for termination specifically listed in the statute or regulations. Section 1866(h)(1) of the Act does not state that a provider may appeal a termination only if the termination is based on the grounds on which CMS may terminate a provider which are specified in section 1866(b)(2). In addition, the broad wording of section 489.53(d) indicates that the right to a hearing on a termination would apply regardless of whether CMS cited to one of the specific grounds on which section 489.53(a) authorizes it to terminate a facility. Furthermore, section 498.3(b) lists administrative actions that are not initial determinations subject to appeal, but does not contain a category for terminations based on grounds other than those specified in section 489.53(a).

2. Wesley's hearing request was not untimely.

In moving for dismissal, CMS relied on the alternative ground, which the ALJ did not reach, that the request for hearing was untimely. If we agreed with CMS, we could modify the rationale for the ALJ dismissal and end administrative review. On the other hand, if we remanded to the ALJ and he dismissed based on untimeliness, we likely would need to address the timeliness question at that time. To fully and expeditiously resolve the issue of whether Wesley has a right to a hearing, therefore, we determined to address CMS's alternative ground in this decision.

Section 498.40 of 42 C.F.R. requires that a hearing request be filed "within 60 days from receipt of the notice of initial, reconsidered, or revised determination" unless the ALJ extends the time for filing the request "[f]or good cause shown." There is no dispute that Wesley's hearing request was not filed within 60 days of Wesley's receipt of the Associate Regional Administrator's February 29, 2000 determination. (The parties appeared to agree that this determination rather than CMS's February 17, 2000 letter triggered any hearing rights.) However, within this 60-day period, by letter dated April 14, 2000, Wesley requested reconsideration under 42 C.F.R. � 498.22, which provides a right to reconsideration of "any initial determination that affects a prospective provider." Seventeen months later, on September 28, 2001, CMS denied the request on the ground that Wesley was not entitled to reconsideration under Part 498. Then, within 60 days of its receipt of that correspondence, on November 20, 2001, Wesley filed its hearing request.

Wesley took the position before the ALJ that its hearing request was timely filed within 60 days of its receipt of notice of a reconsidered determination. Wesley argued that in any event, there was good cause for late filing in that: (1) CMS did not give Wesley notice of its appeal rights; (2) Wesley read a Board decision and an ALJ decision as indicating that providers should go through the reconsideration process before seeking an ALJ hearing to challenge provider-based determinations; and (3) there has been no prejudice to CMS from the delay since CMS itself took more than 17 months to determine that Wesley was provider-based and another 17 months to rule on the request for reconsideration.

CMS argued that Wesley was not a "prospective provider" within the meaning of section 498.22, so that CMS's September 28, 2001 letter denying reconsideration was not a "reconsidered . . . determination" within the meaning of section 498.40. Thus, according to CMS, the time for filing the hearing request was not properly measured from that date. CMS also argued that Wesley had not shown good cause for an extension of the filing deadline since it had not shown that the late filing was due to "circumstances beyond the ability of the provider to control." CMS' Reply Brief in Support of Its Motion to Dismiss, dated 11/8/02, at 7, citing Hospicio San Martin, DAB No. 1554, at 3 (1996).

We conclude that Wesley's hearing request was not untimely. Section 498.20 of 42 C.F.R. provides that CMS's notice of an initial determination must set forth "the basis or reasons for the determination, the effect of the determination, and the party's right to reconsideration, if applicable, or to a hearing." There is no dispute that CMS never gave Wesley notice of its right to a hearing. Absent such notice, the 60-day period for filing a hearing request was tolled, regardless of whether Wesley was misled by the absence of such notice. We therefore need not reach the question of whether Wesley showed that there was good cause for late filing. ⁽⁷⁾ We note in any event that had CMS promptly advised Wesley that it did not have a right to reconsideration under section 498.22, Wesley might have still filed its hearing request within 60 days of CMS's initial determination.

Conclusion

For the foregoing reasons, we conclude that the ALJ erred in dismissing Wesley's request for hearing on the ground that he had no authority to review CMS's determination. We further conclude that Wesley's request for hearing was not untimely. Accordingly, we remand the case to the ALJ pursuant to 42 C.F.R. � 498.88(a) for further proceedings on whether CMS properly terminated Wesley's provider agreement.

Cecilia Sparks Ford

Donald F. Garrett

Judith A. Ballard
Presiding Board Member

1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001). We use "CMS" in this decision unless we are quoting documents that refer to HCFA.

2. "Provider agreement" is defined in 42 C.F.R. � 489.3 as "an agreement between CMS and one of the providers specified in � 489.2(b) to provide services to Medicare beneficiaries and to comply with the requirements of section 1866 of the Act." Section 489.2(b) lists providers, including SNFs.

3. It is unnecessary to address Wesley's other arguments on appeal since we conclude that Wesley's first argument provides grounds for reversing the ALJ Decision.

4. Our standard of review on a disputed conclusion of law is whether the ALJ decision is erroneous. Our standard of review on a disputed finding of fact is whether the ALJ's finding is supported by substantial evidence on the record as a whole. See Guidelines for Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs, http://www.hhs.gov/dab/guidelines/ prov.html.

5. In Forest Glen Skilled Nursing & Rehabilitation Center, DAB No. 1887 (2003), CMS did not dispute the ALJ's finding that the new owner had the option of continuing under the existing provider agreement or applying for a new provider agreement.

6. As the ALJ indicated, section 498.3(b) was amended effective January 10, 2001 to provide for a hearing on whether a facility or entity qualifies or no longer qualifies for provider-based status, but does not apply retroactively. See ALJ Decision at 5, n.2; see also, Comprehensive Mental Health Center of Baton Rouge et al., DAB No. 1774 (2001), aff'd, Community Mental Health Ctr. of Alexandria et al. v. Social Security Administration [sic], No. 03-30294 (5th Cir. Feb. 17, 2004). However, there is nothing in either the language of this regulation or in the preamble (at 68 Fed. Reg. 18434, at 18505 and 18524 (Apr. 7, 2000)) that suggests that there was no pre-existing right to appeal a termination of a provider agreement where the reason for the termination was the facility's provider-based status.

7. CMS's suggestion that the Board has determined that an entity must show that the late filing was due to circumstances beyond its control in order to establish good cause is mistaken. The Board has never attempted to provide an authoritative or complete definition of the term "good cause" in section 498.40(c)(2). As the Board has explained, in Hospicio San Martin, the Board applied the definition of "good cause" cited by the ALJ in that case only after stating that neither party disputed the application of this definition below. See Glen Rose Medical Center Nursing Home, DAB No. 1852 (2002); see also Hillcrest Healthcare, L.L.C., DAB No. 1879 (2003).