SUBJECT: ACT for Health, Inc.,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

The Centers for Medicare & Medicaid Services (CMS) appealed a decision by Administrative Law Judge (ALJ) Steven T. Kessel in which he found that CMS was not authorized to terminate the participation of ACT for Health, Inc. (ACT) in the Medicare program. ACT for Health, Inc., DAB CR1177 (2004) (ALJ Decision). This case arose from a February 5, 2004 survey of ACT, a home health agency. Based on the findings of that survey, CMS decided to terminate ACT's participation in the Medicare program effective February 28, 2004 because of "deficiencies" that immediately jeopardized the health and safety of patients. ACT appealed to the ALJ and presented evidence of corrective action taken after the survey. Based on this evidence, the ALJ found that ACT had removed the immediate jeopardy situation as of February 28, 2004, and therefore CMS had no basis to terminate ACT's Medicare participation on that date.

CMS contends in its appeal that the ALJ should have disregarded ACT's evidence of post-survey corrective action and upheld the termination based on the findings of the February 5 survey. We find that this contention raises issues that were not presented to the ALJ. The Board's procedural guidelines provide that the Board will not consider issues that are raised for the first time on appeal. Because the issues raised by CMS could have been raised before the ALJ but were not, and because CMS has not persuaded us that it would be inappropriate or unnecessary to apply our procedural guidelines under these circumstances, we decline to address the merits of CMS's appeal and summarily affirm the ALJ Decision.

Legal Background

To participate in the Medicare program, a home health agency must comply with various "conditions of participation" set forth in section 1891 of the Social Security Act (Act) and the regulations implementing the Act. 42 U.S.C. § 1395bbb(a); 42 C.F.R. Part 484, subparts A-C. State health agencies perform periodic surveys to verify a home health agency's compliance with these participation requirements. 42 C.F.R. § 488.20.

Section 1866(b)(2) of the Social Security Act (Act) states that the Secretary of Health and Human Services may, upon reasonable notice to the provider, terminate a home health agency's participation in the Medicare program if he finds that the agency has "fail[ed] to comply substantially" with Medicare statutory and regulatory requirements, such as the conditions of participation. 42 U.S.C. § 1395cc(b)(2). Additional termination authority is found in section 1891 of the Act. Relevant here, section 1891(e)(1) authorizes CMS to terminate an agency's participation if there are "deficiencies" that "immediately jeopardize the health and safety of the individuals to whom the agency furnishes items and services[.]" 42 U.S.C. § 1395bbb(e)(1). CMS's termination decision is an "initial determination" that a home health agency may appeal by requesting a hearing before an ALJ. 42 C.F.R. §§ 498.3(b)(8), 498.5(b), 489.53(d).

Case Background

On February 5, 2004, the Colorado Department of Public Health and Environment (CDPHE) completed a survey of ACT. CMS Ex. 2, ¶ 2. CDPHE determined during the survey that ACT had 26 deficiencies and that the deficiencies reported under, or associated with, tag G168 ⁽¹⁾ had created a situation of "immediate jeopardy." ⁽²⁾ Id., ¶¶ 3-4; CMS Ex. 1 at 1. In a February 6, 2004 letter, CDPHE notified ACT of the immediate jeopardy finding and stated that a "[f]ailure to remove the Immediate Jeopardy situation will result in involuntary termination of [ACT's] provider number effective February 28, 2004." CMS Ex. 5 (bold in original). The letter urged ACT to provide as soon as possible a "complete and credible plan of correction which effectively removes the Immediate Jeopardy Situation." Id.

On or about February 10, 2004, ACT submitted a plan of correction relating to the immediate jeopardy situation. See CMS Ex. 7, at 1. On February 12, 2004, CDPHE rejected the plan as "incomplete," advised ACT to submit a revised plan that addressed several additional specified issues, and warned ACT that failure to remove the immediate jeopardy would "result in a recommendation to CMS for involuntary termination of the agency's provider number effective February 28, 2004." Id.

On February 12, 2004, CMS sent ACT a letter entitled "Notice of Intent to Terminate Provider Agreement." CMS Ex. 8. The notice informed ACT that its participation in the Medicare program was being terminated pursuant to section 1891(e)(1), and that the termination would become effective on February 28, 2004. Id. The notice of intent also indicated that the termination would not go into effect if a revisit survey verified that the immediate jeopardy situation had been removed. Id. In addition, the notice of intent stated that if ACT provided assurance (through a plan of correction) that adequate corrective action had been taken, CDPHE would "make every effort" to perform a revisit survey before February 28, 2004. Id.

Between February 19 and 27, 2004, ACT submitted at least four additional plans of correction, none of which CDPHE found acceptable. CMS Exs. 10-13, 18; CMS Ex. 2, ¶¶ 58-59. Because ACT failed to submit a plan of correction acceptable to CDPHE, CDPHE did not conduct an on-site revisit prior to February 28 (or at any time), and CMS did not withdraw its termination decision. CMS Ex. 2, ¶ 62.

ACT thereafter requested an expedited hearing before the ALJ. Based on an account of its efforts to submit an acceptable plan of correction, ACT asserted in its hearing request that CDPHE had "unreasonably refused to accept [the] Plans of Correction and refused to revisit the site." Request for Hearing at 4. ACT also asserted that it had, in fact, abated the immediate jeopardy situation by February 28, 2004. Id. at 3-4.

The ALJ issued a pre-hearing order before CMS filed a substantive response to ACT's hearing request. Noting that he was "making no final decisions as to the issues" in the case, the ALJ indicated in the order that the only issue he had the authority to resolve was whether ACT had in fact achieved compliance by February 28, 2004. March 16, 2004 Pre-Hearing Order at 2. Accordingly, ACT presented evidence of the actions it took to eliminate the immediate jeopardy by that date. See ACT Exs. 11-15.

Following the evidentiary hearing and the submission of post-hearing briefs, the ALJ issued a decision favorable to ACT. He found that, as of February 5, 2004, ACT had one or more deficiencies that immediately jeopardized the health and safety of patients served by ACT. ALJ Decision at 2-8. The ALJ also found that he had no authority to decide whether CDPHE had unfairly rejected ACT's plans of correction. Id. at 10, n.5. However, based on the evidence of corrective measures taken after the survey, the ALJ determined that by February 28, 2004, ACT had "corrected the practices that supported the immediate jeopardy deficiency determination," and that CMS therefore lacked a basis to terminate ACT's participation in the Medicare program on that date. Id. at 11, 14-15.

Discussion

CMS contends in its appeal that the ALJ erred in setting aside the termination based on ACT's evidence of post-survey corrective measures because the existence or implementation of those measures had not been verified by a revisit (or follow-up) survey of ACT. Request for Review (RR) at 22-29. ACT asserts that our decision in Carmel Convalescent Hospital, DAB No. 1584 (1996) supports its position. ⁽³⁾ CMS also asserts that the ALJ's consideration of ACT's post-survey activity was "tantamount to [his] reviewing CMS's discretionary decision not to accept Petitioner's proposed plans of correction which is outside of the ALJ's authority to consider and decide." Reply Brief at 19.

ACT responds that CMS did not raise this argument before the ALJ and that the Board should decline to consider it for that reason. Response Brief at 8-10. ACT also makes additional arguments concerning the relevance of Carmel. Id. at 10-15. We need not address those additional arguments because we find ACT's first argument dispositive.

Our "appellate guidelines" ⁽⁴⁾ state that we "will not consider . . . issues which could have been presented to the ALJ but were not." This statement mirrors the rule applied in federal appellate courts, which generally refuse to consider issues or arguments raised for the first time on appeal. Tele-Communications, Inc. v. Commissioner of Internal Revenue, 104 F.3d 1229, 1232-1233 (10^th Cir. 1997); see also Singleton v. Wulff, 428 U.S. 106, 120 (1976). Requiring parties to raise issues before the ALJ helps to ensure that the record before the Board is adequate to permit meaningful appellate review of the ALJ's factual and legal conclusions. Ross Healthcare Center, DAB No. 1896 (2003). The requirement also promotes fairness by ensuring that parties have an opportunity to present evidence on the issues whose resolution might have a bearing on the outcome of the case. Id.; Singleton, 428 U.S. at 120. Finally, requiring timely presentation of issues promotes efficient adjudication and administration by encouraging the parties to seek, in a single proceeding, a comprehensive and conclusive resolution of all material issues before the finder of fact. See Tele-Communications, Inc., 104 F.3d at 1232.

The core issue that CMS asks us to resolve in this appeal is whether (or to what extent) the ALJ, in reviewing CMS's termination action, has the authority under the Social Security Act and regulations to make findings about whether a home health agency has corrected previously cited deficiencies when the efficacy of its corrective measures has not first been assessed during an on-site survey. We find no indication that CMS raised this issue before the ALJ, despite several opportunities to do so.

The proper scope of the hearing was a matter about which the ALJ himself expressed tentative views in his initial pre-hearing order. March 16, 2004 Pre-Hearing Order at 2. His statements in that order clearly reflect a belief that, notwithstanding the lack of a revisit survey, ACT was entitled to have CMS's termination decision set aside if ACT established at the hearing that its post-survey activities had brought it back into compliance by February 28, 2004, the effective date of CMS's termination decision. In subsequent written submissions, CMS raised no objection to the ALJ's views and stated that an issue to be resolved was whether ACT had in fact attained compliance by February 28. Respondent's Pre-Hearing Brief at 8. That issue, of course, is irrelevant if one accepts the validity of CMS's current argument (based on Carmel). ⁽⁵⁾

CMS had another opportunity to object at the hearing. At the start of the hearing, the ALJ identified what he thought the issues were, indicating that the parties should concern themselves with whether ACT had, in fact, come back into compliance by February 28. Tr. at 9-22. In response, CMS expressed no reservations about the ALJ's views, stating that the case turned on "whether or not the Petitioner was out of compliance as of the termination date" and acknowledging later "that the end of this matter certainly does not end with the survey itself." ⁽⁶⁾ Tr. at 22-24. In essence, CMS accepted the ALJ's framework for determining whether there were sufficient grounds to sustain the termination, a framework that called for evaluation of ACT's post-survey corrective action. In contrast, CMS contends in this appeal that any actions or events taken after the survey are legally irrelevant -- that the lack of a revisit survey left the ALJ with nothing to do but to make findings about whether ACT was in substantial compliance as of the date of the initial survey (February 5).

In its reply brief CMS insists that it is raising no new issues. Reply Brief at 5-7, 24-25. CMS suggests that the only issue requiring consideration by the Board is whether ACT was out of compliance as of February 5, 2004 -- an issue that was adjudicated by the ALJ -- and that we can conclude this matter (in CMS's favor) simply by "not reaching" the issue of whether ACT had come back into compliance by February 28. Id. Of course, any decision we make not to reach the latter issue presupposes an acceptance of CMS's main argument, which is that, absent a revisit survey, an ALJ has no authority under the statute and regulations to determine a provider's state of compliance as of the termination date. Whether the ALJ's authority is limited in this way is an issue that CMS did not raise below, as we have already explained.

CMS also contends that the ALJ's focus on the February 28 termination date rested on a flawed interpretation of section 1891(e). RR at 28-29. In particular, CMS contends that the ALJ misinterpreted section 1891(e) as authorizing CMS to terminate ACT's participation "immediately" upon completion of the February 5 survey. Id. CMS also asserts that the ALJ erred in finding that CMS had "moved forward" the effective date of termination from February 5 to February 28, when in fact February 28 was determined to be the effective date in order to give ACT advance notice of termination, as required by the regulations. Id.; see also 42 C.F.R. § 489.53(c).

Even if these alleged errors stem from findings or analysis set out for the first time in the ALJ's decision, we decline to address them because CMS has not asserted that they provide a sufficient basis to reverse the ALJ Decision. ⁽⁷⁾ CMS, in fact, has not made it clear how the errors relate to the larger issue that it failed to raise below but which it now claims is dispositive -- namely, whether, in a termination appeal, the statute and regulations preclude an ALJ from determining whether a provider has corrected a deficiency in the absence of a survey to verify the provider's corrective action. Of course, our decision not to address these and other issues should not be construed as approval of the ALJ's legal and factual findings or conclusions.

CMS suggests that presenting its Carmel-based arguments to the ALJ would have been a futile gesture because, in his initial pre-hearing order and opening remarks at the hearing, the ALJ effectively rendered a decision that defined the scope of his authority and identified the issues requiring adjudication. Reply Brief at 9, 11-14. However, the ALJ indicated in his pre-hearing order that he was stating only tentative views about these matters. Moreover, at no point did the ALJ bar CMS from raising objections to his views.

Finally, CMS asserts that if we decline to consider its new arguments, our decision --

would have the practical effect of requiring parties to take exception by appealing every interlocutory order reflected in ALJs' pre-hearing orders and rulings with which they disagreed to the DAB's Appellate Division in order to preserve issues for appeal. This would hamstring the hearing and appeal process by elongating the process and further increasing parties' transaction costs as well as defeat judicial economy, and would effectively eliminate the possibility of providing expedited hearings in appropriate cases.

Reply Brief at 24. We disagree that these would be the consequences. Our guidelines do not require a party to file an interlocutory appeal in order to preserve an issue for appellate review. They require a party to do nothing more than to present the ALJ with the issues or arguments it believes ought to be considered in reaching the correct result, and to do so in a manner that puts the participants on notice that consideration of, or a ruling on, an issue or argument is being sought. See Tele-Communications, Inc., 104 F.3d at 1233 (citing decisions indicating that arguments must be actually articulated and not merely be insinuated or presented in a vague, ambiguous, or undeveloped manner); Portis v. First Nat. Bank of New Albany, Miss., 34 F.3d 325, 331 (5th Cir. 1994).

In short, we conclude that the issues raised by CMS in this appeal were not presented to the ALJ. CMS has not established that it was prevented or discouraged from raising the issues below. In addition, CMS has not persuaded us that applying our guidelines would be inappropriate or unwarranted in these circumstances. Indeed, applying the guidelines here is appropriate because it is unlikely that the issues now presented could be resolved without significant additional factual findings or development. Finally, CMS does not contend that the ALJ's findings regarding the adequacy of ACT's corrective measures are not supported by substantial evidence, or that the ALJ erred in specifying the level of compliance (that is, removal of the immediate jeopardy situation, as opposed to fully correcting the deficiencies) that ACT was required to meet as of February 28, 2004 in order to avoid termination.

Conclusion

For the reasons stated above, we decline to address the merits of CMS's appeal and summarily affirm the ALJ Decision.

Daniel Aibel

Judith A. Ballard

Donald F. Garrett
Presiding Board Member

1. ¹ Tag G168 refers to noncompliance with the condition of participation set forth in 42 C.F.R. § 484.30, which requires the home health agency to furnish skilled nursing services "by or under the supervision of a registered nurse and in accordance with the plan of care." The Statement of Deficiencies indicates that ACT's noncompliance with section 484.30 stemmed from deficiencies reported under tags G170, G172, G173, G175, G176, and G178. CMS Ex. 1, at 50-51.

2. ² "Immediate jeopardy means a situation in which the provider's noncompliance with one or more requirements of participation has caused, or is likely to cause, serious injury, harm, impairment, or death to a resident." 42 C.F.R. § 489.3 (italics in original).

3. 3 According to CMS, Carmel adopted the "fundamental principle that substantial compliance is determined as of the survey[.]" RR at 23. This principle, CMS asserts, is "premised on a provider [having] submitted a complete plan of correction acceptable to the state survey agency where a provider has been determined to be out of compliance with Medicare program requirements . . . [and] on the state survey agency conducting a revisit to verify the provider's compliance allegations contained in an approved plan of correction." Reply Brief at 16.

4. ⁴ Their full title is "Guidelines -- Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Porgrams." They can be found on the Board's website at http://www.hhs.gov/dab/guidelines/prov.html.

5. ⁵ In its "supplemental" pre-hearing brief, CMS asserted that ACT had "failed to rebut CMS's position that the Agency had not attained substantial compliance with all participation requirements by the termination date" because there was insufficient "independent evidence" of post-February 5 corrective action. CMS Supplemental Pre-Hearing Brief at 49. It is clear from these assertions, and surrounding argument, that CMS was challenging the sufficiency of ACT's evidence, not its legal relevance. CMS's argument on appeal is not concerned with the quality or sufficiency of ACT's evidence, but with the ALJ's authority to set aside the termination without the findings of a revisit survey.

6. The relevant portions of CMS's response contain no assertion, like the one now being made, that ACT's evidence was irrelevant as a matter of law:

I certainly recognize your point that the termination itself turns on whether or not the Petitioner was out of compliance as of the termination date, February 28 of this year. In that regard, it's CMS's position that we put the Petitioner on notice that the State Survey Agency would not conduct a revisit survey to verify compliance with all Medicare and Medicaid participation requirements, until and unless an acceptable plan of correction was tendered by Petitioner. And that was not the case here. And hence, the State Survey Agency did not conduct a revisit. So from our perspective, there was no revisit to verify compliance with the Medicare and Medicaid participation requirements. We then looked at the issue of whether or not Petitioner has brought forward independent evidence that they had achieved compliance by the termination date. And CMS would submit that's not the case here. We have what we described as numerous vague and unsupported assertions in the Petitioner's key witnesses affidavit, Ms. Graves. Those are not corroborated in the record. We certainly note your point that the end of this matter certainly does not end with the survey itself. But it's essentially our point that in terms of the Petitioner rectifying the compliance issues that the State Survey Agency identified as a result of the full extended survey, there were no dates in many, many instances in Ms. Graves's affidavit that would show that between the date of the survey ending February 5 and February 28, on the other hand, that Petitioner had rectified the problems that the State Survey Agency identified. And that really does sum up CMS's position here.

Tr. at 23-24. Later on in the hearing, the ALJ remarked that "it would have been a lot easier for me if a resurvey had been done, because then we would be looking at the findings that were made by the survey . . . [but] I don't know if that's relevant to the case[.]" Tr. at 63. These remarks prompted no comment by CMS.

7. CMS's apparent assumption is that, but for these alleged errors, the ALJ would have correctly concluded that CMS had the authority to terminate on February 28 regardless of any corrective actions subsequent to the February 5 survey. However, the fact that CMS may have had such authority does not establish that CMS in fact exercised it in this particular case, or that the ALJ's review was limited to the February 5 survey.