Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
In the Case of:
Carmel Convalescent Hospital,
Petitioner,
- v. -
Health Care Financing Administration.
Date: June 27, 1996
Docket No. C-95-008
Decision No. 1584
FINAL DECISION ON REVIEW
OF
ADMINISTRATIVE LAW JUDGE DECISION
Carmel Convalescent Hospital (Petitioner) appealed an
August 25, 1995
decision by Administrative Law Judge
(ALJ) Mimi Hwang Leahy. See Carmel
Convalescent
Hospital, DAB CR389 (1995) (ALJ Decision). Petitioner,
a
skilled nursing facility (SNF), had requested a hearing
before the ALJ
on the determination of the Health Care
Financing Administration (HCFA) to
terminate Petitioner's
Medicare provider agreement effective June 25,
1994. The
ALJ concluded that HCFA was entitled to
summary
disposition of Petitioner's hearing request because the
ALJ found
that the uncontested facts established that
Petitioner was out of compliance
with the Medicare
condition of participation for physical environment
at
the time of the relevant survey of the facility.
The standard for review of an ALJ decision on a disputed
factual issue is
whether the decision is supported by
substantial evidence in the
record. The standard of
review on a disputed issue of law is whether
the ALJ
decision is erroneous. We conclude, as discussed
fully
below, that the ALJ was correct in deciding that HCFA was
entitled
to summary disposition of Petitioner's appeal in
HCFA's favor.
Petitioner failed to contest during
proceedings before the ALJ that it was
out of compliance
at the time of the original survey (November 16, 1993)
or
the resurvey (June 16, 1994) with four serious Life
Safety Code
requirements included under the condition of
participation for physical
environment. Petitioner did
not timely offer evidence to the
contrary. If anything,
the evidence submitted by Petitioner
further
substantiates that Petitioner was not in compliance with
the four
requirements on those dates and, indeed, was not
in compliance with three, if
not four, of the
requirements on the effective date of the termination.
Therefore, we sustain the ALJ Decision finding that HCFA
was entitled to
summary disposition in its favor. We
uphold all the findings of fact
and conclusions of law
(FFCLs) except FFCL 10, which we delete as
harmless
error.
The record on appeal includes the record before the ALJ,
the parties'
briefs on appeal, and the transcript of the
oral argument before the
Presiding Board Member. 1/
I. Applicable Authority
To participate in the Medicare program, long-term care
facilities such as
skilled nursing facilities (SNFs) must
meet certain requirements which are
imposed by statute,
as well as requirements which the Secretary of Health
and
Human Services has determined to be necessary for the
health and
safety of individuals to whom services are
furnished in the facilities.
The survey process is the
means by which HCFA and its agents (including
state
survey agencies) assess providers' compliance with
federal health,
safety, and quality standards. 42 C.F.R.
. 488.26(b)(1). 2/
Section 488.24(a) of 42 C.F.R.
provided, in relevant part:
The State agency will certify that a provider . . .
is not or is no longer in compliance with
the
conditions of participation or level A
requirements
(for SNFs and NFs) or conditions for
coverage where
the deficiencies are of such a
character as to
substantially limit the provider's .
. . capacity to
render adequate care or which
adversely affect the
health and safety of patients .
. . .
Moreover, HCFA may terminate an agreement with any
provider if HCFA finds
that the provider no longer meets
the appropriate conditions of participation
or
requirements for SNFs. 42 C.F.R. . 489.53(a)(3).
The condition of participation or level A requirement at
issue in this
appeal was the requirement concerning
physical environment at 42 C.F.R. .
483.70, which
provides that the facility must be designed,
constructed,
equipped and maintained to protect the health and safety
of
residents, personnel and the public. 3/ In
particular, section
483.70(a) provided that unless
certain prescribed exceptions applied, a
facility must
meet the applicable provisions of the 1985 edition of
the
Life Safety Code of the National Fire Protection
Association
(henceforth referred to as "LSC"
requirements). 4/
A provider that is found to be deficient with respect to
one or more of
the standards in the conditions of
participation or level B requirements may
participate in
the Medicare program only if an acceptable plan
of
correction is submitted for achieving compliance within a
reasonable
period of time. Moreover, the existing
deficiencies noted either
individually or in combination
may not jeopardize the health and safety of
the patients.
42 C.F.R. . 488.28(a).
HCFA's termination of a provider agreement is defined as
an "initial
determination." 42 C.F.R. . 498.3(b)(7). A
provider is not
entitled to have HCFA reconsider its
initial determination to end the
provider agreement. 42
C.F.R. .. 498.2, 498.22. Under the
regulations, HCFA's
initial determination to terminate a provider
agreement
remains binding unless (a) the provider obtains a
hearing
decision from an ALJ that reverses or modifies the
initial
determination, or (b) the initial determination
is revised by HCFA in
accordance with 42 C.F.R. .. 498.32
or 498.100. 42 C.F.R. .
498.20(b).
Further, HCFA has the discretion to reopen and revise any
initial
determination within 12 months after the date of
the initial
determination. 42 C.F.R. .. 498.30, 498.32.
Like an initial
determination, HCFA's revised
determination is binding unless the affected
party
requests a hearing before an ALJ and obtains a hearing
decision that
reverses or modifies the revised
determination, or HCFA further revises the
revised
determination on its own initiative. 42 C.F.R.
.
498.32(b).
Additionally, if a provider contests HCFA's
determination, the affected
party or its representative
must file a written request for a hearing within
60 days
from receipt of the notice of initial, reconsidered, or
revised
determination, unless the 60-day period has been
extended in accordance with
applicable requirements. An
ALJ may dismiss a hearing request if:
(1) the request
has not been timely filed, or (2) the party requesting
a
hearing is not a proper party or "does not otherwise have
a right to a
hearing." 42 C.F.R. . 498.70(b).
II. Background
HCFA first began termination proceedings against
Petitioner following a
November 16, 1993 survey of
Petitioner by the State Fire Marshal's
Office. By letter
dated January 24, 1994, HCFA informed Petitioner that
its
provider agreement would be terminated on February 5,
1994, because
Petitioner had failed to submit a plan of
correction for deficiencies found
during the November 16,
1993 survey. HCFA relied on four LSC
violations,
described below, that are the subject of this appeal, as
well
as other deficiencies identified during the November
16, 1993 survey.
Shortly after receiving HCFA's January
24, 1994 notice, Petitioner submitted
to HCFA a plan of
correction for the deficiencies noted in the survey.
(Petitioner's Administrator declared before the ALJ that
Petitioner had
filed a plan of correction with the State
Fire Marshal's Office in late
December 1993. See
Petitioner's Exhibit (P. Ex.) 1, at . 3.
By letter dated May 25, 1994, HCFA informed Petitioner
that it had
reviewed the findings of deficiencies,
reviewed Petitioner's plan of
correction, denied
Petitioner's request for waiver of some of
the
deficiencies, and concluded that the combined remaining
deficiencies
"seriously jeopardize the safety and health
of the patients in your
facility." HCFA Ex. 1, at 1.
HCFA then specifically found that the
Level A requirement
found at 42 C.F.R. 483.70 concerning the
physical
environment of the facility was not met. As a result of
the
foregoing, HCFA changed the date for termination of
Petitioner's provider
agreement from February 5 to June
25, 1994.
Notwithstanding HCFA's letter dated May 25, 1994, HCFA
subsequently
authorized a resurvey of the facility, based
on the representation made by
Petitioner's Administrator
on or about June 2, 1994, that all deficiencies
would be
corrected before June 25, 1994. See HCFA Exs. 1 and 10.
The resurvey took place on June 16, 1994. By letter
dated July 7,
1994, HCFA informed Petitioner that it had
upheld its May 25, 1994
determination to terminate
Petitioner's provider agreement on June 25,
1994. HCFA
stated that its rationale for upholding its May 25,
1994
determination was based on the same evidence as its
earlier
termination decision, as well as additional new
information from the resurvey
conducted on June 16, 1994.
HCFA Ex. 5.
The four violations that were identified in both the
November 16, 1993
survey and the June 16, 1994 survey
are:
(1) Failure to meet minimum construction
standards
for a two-story structure, in that the
facility was
not constructed of two-hour fire
resistive
materials. (Survey ID Prefix Tag
(ID) K-12, LSC .
1322). 5/
(2) Failure to have one-hour fire resistive
walls
in a basement storage room. (ID K-17,
LSC . 10-
1331).
(3) Failure to have a smoke barrier on each
floor.
(ID K-23, 24, 25, and 26, LSC .. 10-2311,
10-2312,
and 10-2313.)
(4) Failure to have flame retardant curtains
in all
patient rooms. (ID K-74, LSC .
17-4151).
See P. Ex. 2 and HCFA Ex. 8.
Petitioner filed a hearing request on August 22, 1994
"based on the fact
that all work [to correct
deficiencies] had been completed by 6-25-94."
6/
III. Analysis
The ALJ Decision contained twelve supporting FFCLs.
Petitioner did not
contest FFCLs 1 through 4: 7/
1. HCFA's letter of January 24, 1994 was
HCFA's
initial determination.
2. HCFA's May 25, 1994 letter was HCFA's
revised
determination.
3. HCFA's July 7, 1994 letter was also a
revised
determination.
4. Petitioner's hearing request dated August
22,
1994 was timely filed.
Therefore, we adopt and affirm these FFCLs without
further comment.
Petitioner contested FFCLs 5 through 12:
5. In accordance with governing regulations,
HCFA
made its decision to terminate Petitioner's
provider
agreement on June 25, 1994 based on the
results of
surveys conducted on November 16, 1993
and June 16,
1994.
6. In challenging HCFA's determination
that
Petitioner's provider agreement should
terminate on
June 25, 1994, the only matter raised
by Petitioner
in its hearing request is the
contention that all
work to correct the deficiencies
found during the
November 16, 1993 and June 16, 1994
surveys had been
completed by June 25, 1994.
7. After filing its hearing request,
Petitioner
admitted that it had not completed all
the remedial
work by June 25, 1994, as alleged in
its hearing
request.
8. Even if true, Petitioner's asserted
completion
of all remedial work after HCFA's last
survey and by
the date of termination does not raise
any material
issue for hearing.
9. Even if true, Petitioner's asserted
completion
of remedial work after HCFA's last survey
and by the
date of termination fails to raise any
matter on
which relief may be granted.
10. Based only upon the contents of
Petitioner's
hearing request, HCFA's notices
attached to the
hearing request, and the relevant
regulations, HCFA
is entitled to prevail on its
motion to dismiss
Petitioner's hearing request under
42 C.F.R. .
498.70(b).
11. As of the June 16, 1994 survey, and
through at
least June 25, 1994, Petitioner was out
of
compliance with the condition of participation
for
physical environment.
12. Based on the pleadings and the evidence
of
record before me, HCFA is entitled to
summary
judgment in its favor on the issue of
whether the
termination of Petitioner's provider
agreement was
proper.
Petitioner made general arguments that encompassed one or
more of the
contested FFCLs and specific arguments that
were applicable only to an
individual FFCL. We discuss
Petitioner's general arguments first.
We then briefly
address Petitioner's arguments that are specific
to
individual FFCLs.
A. Petitioner's general arguments
Petitioner here made four general arguments that
encompassed one or more
of the ALJ's FFCLs.
o Petitioner argued that the ALJ erred because,
according to
Petitioner, the ALJ required strict or full
compliance with each of the LSC
requirements at issue
rather than "substantial" compliance.
o Petitioner argued that the ALJ erred in requiring
compliance as of
the date of the June 16, 1994 survey
rather than as of the termination date
of June 25, 1994.
o Petitioner argued that it was in substantial
compliance with the
LSC requirements on June 16, 1994 and
on June 25, 1994.
o Petitioner argued that the ALJ's summary disposition
of
Petitioner's hearing request was erroneous.
We address each of these arguments under separate
headings below.
1. The ALJ applied the correct compliance standard.
Petitioner argued that FFCLs 5 through 12 should be
reversed because they
were based on an erroneous
interpretation that the law requires strict
compliance
with the requirements of Medicare participation.
Petitioner
asserted that providers are required only to
"substantially" comply with the
requirements of Medicare
participation, and that Petitioner was in
substantial
compliance on the date of the relevant survey, June 16,
1994,
and on the effective date of the termination, June
25, 1994. Further,
Petitioner maintained that prior ALJ
decisions have recognized that failure
to strictly comply
with participation requirements is not grounds
for
terminating a provider agreement. Petitioner alleged
that
Nazareno Medical Hospice Fajardo, Daguas, Cayey, DAB
CR385 (1995), held that
when a provider appeals the
termination of the provider agreement, a critical
element
of the case is whether the provider was in substantial
compliance
with the requirements of participation.
Petitioner's brief (Br.) at 15.
Petitioner's arguments do not persuade us that the ALJ
applied an
incorrect compliance standard in this case.
Section 1866(b)(1) of the Social Security Act authorizes
the Secretary to
terminate an agreement with a provider
of services after the Secretary:
(A) has determined that the provider fails to
comply
substantially with the provisions of the
agreement,
with the provisions of [title XVIII] and
regulations
thereunder . . . [or]
(B) has determined that the provider
fails
substantially to meet the applicable
provisions of
section 1861.
During the time period relevant in this case, the
applicable regulations
authorized HCFA to terminate a
provider agreement where a skilled nursing
facility no
longer complied with a condition of participation (or
level A
requirement) which adversely affected the health
or safety of patients.
See 42 C.F.R. . 488.24(a) and .
489.53(a)(3). Thus, although the
regulation did not use
the term "substantial compliance" as such, it
implemented
that standard by authorizing terminations where there
were
violations of the most significant requirements
applicable to SNFs, the
conditions of participation or
level A requirements, and where those
violations
adversely affect the health and safety of patients. 8/
This is
precisely the standard that the ALJ applied in
her Decision. Moreover,
as we discuss at length below,
the record in this appeal establishes that
Petitioner was
in violation of a condition of participation involving
the
life safety of its patients both at the time of the
original survey and the
June 16, 1994 resurvey and on the
June 25, 1994 effective date of the
termination.
The term "substantial compliance" as such was first
incorporated in the
regulations by amendments effective
July 1, 1995. See 59 Fed. Reg.
56,116 (Nov. 10, 1994).
The definition section at 42 C.F.R. . 488.301
defines
"substantial compliance" as follows:
a level of compliance with the requirements
of
participation such that any identified
deficiencies
pose no greater risk to resident health
or safety
than the potential for causing minimal
harm.
The same section defines "noncompliance" as:
any deficiency that causes a facility to not be
in
substantial compliance.
The preamble to the July 1, 1995 amendments stated, in
relevant part:
We reconfigured the criteria used to
determine
enforcement remedies when facilities are
out of
compliance with Federal requirements, so that
there
is a clearer correlation between levels
of
noncompliance and types of remedies imposed. . .
.
We provide that remedies may cease when
substantial
compliance is achieved, and define
substantial
compliance as "a measure of compliance
with the
participation requirements such that no
deficiencies
exist which pose actual harm or have
the potential
for more than minimal harm."
59 Fed. Reg. 56,116, at 56,126 (Nov. 10, 1994). This
explanation
indicates that under the regulations that
expressly refer to "substantial
compliance," a provider
may not have achieved "substantial compliance" even
where
a deficiency is not causing actual harm to patients if
that
deficiency has the potential for harm, and if the
potential for harm is for
more than minimal harm.
It is by no means clear that the addition of the
definition of
"substantial compliance" to the regulations
after the time period at issue
here was intended to make
a substantive change in the standards for
terminating
providers from the Medicare program. Nevertheless, as
we
discuss below, even if we were to apply this definition
to the
violations at issue here, rather than the
regulatory interpretation actually
in effect during the
time in question, there is absolutely no basis
for
concluding that the violations did not have the potential
for harming
Petitioner's patients or that the potential
for harm was only minimal, and
that Petitioner therefore
was in fact in "substantial compliance."
Throughout its briefs, Petitioner consistently
misconstrued the meaning
and effect of the "substantial
compliance" standard as contemplated by
statute and
implemented by regulations in 1995. This standard
does
not allow the Secretary liberally to disregard violations
that
potentially affect the safety of a facility's
patients and to view a provider
as in "substantial"
compliance even though the survey findings
established
that the violation of safety requirements existed and had
not
been remedied. Moreover, the regulations and
preamble make clear that
substantial compliance means a
level of compliance of the requirements that
protects the
patient population from the possibility of anything more
than
minimal harm. The cited violations found during the
June 16, 1994
resurvey unquestionably risked the safety
of Petitioner's patients, and
unquestionably had the
potential for far more than minimal harm to the
patients.
Thus, even if we were to apply the substantial
compliance
standard subsequently implemented in the
regulations,
Petitioner unquestionably was not in substantial
compliance
at the time of the original survey or the June
16, 1994 resurvey and was not
in substantial compliance
on the effective date of the termination.
Accordingly, we conclude that the ALJ applied the correct
interpretation
of substantial compliance then in effect
in the regulations. However,
even if we were to apply
the definition of substantial compliance that
was
implemented after the period at issue, given the nature
of the
deficiencies at Petitioner's facility, Petitioner
would clearly not have been
in "substantial compliance."
2. The ALJ correctly rejected Petitioner's
argument
that the dispositive date for determining
whether
the facility was in compliance for purposes
of
termination proceedings is the effective date of
the
termination.
Petitioner argued that the dispositive date for
determining whether a
provider agreement is properly
terminated is the effective date of the
termination.
Petitioner reasoned that if the applicable
requirements
are met while the provider agreement is in effect, then
HCFA
does not have grounds for terminating the provider
agreement. Moreover,
Petitioner argued that HCFA is
estopped from arguing that Petitioner's status
on June
25, 1994 is irrelevant, since HCFA notified Petitioner on
May 25,
1994 that it could submit materials and/or
discuss the pending termination
prior to the effective
date of the termination. Petitioner's Br. at 32.
Further, Petitioner maintained that HCFA's July 7, 1994
letter, which
stated, among other things, that the
termination decision was based on the
"additional
evidence submitted since [the] initial
determination,"
indicated that HCFA could and would consider all
evidence
submitted to it between its initial determination and
the
effective date of the termination. Id. at 33-34.
We find that the ALJ correctly rejected Petitioner's
argument that the
dispositive date for determining
whether the facility was in compliance for
purposes of
the termination proceedings is the effective date of
the
termination.
The statute and regulations establish that a facility's
participation in
the Medicare program is determined by
means of the survey by the State survey
agency. See
section 1819(g) of the Social Security Act and 42
C.F.R.
. 488.26. When the facility enters the program, it may
do so
no sooner than the date on which an onsite survey
by the survey agency
establishes its compliance. 42
C.F.R. . 489.13(a). Likewise, when
the facility's
participation is terminated because of alleged
non-
compliance, the critical date for establishing compliance
is the
survey date, not the subsequent effective date of
the termination. The
regulations require HCFA to rely on
the findings of the State survey agency
in making its
decision to terminate, and the survey agency's
findings
necessarily relate to the status of the facility as of
the date
of the survey.
Indeed, to rely possibly on a later date after the survey
as the
dispositive date for determining compliance, as
Petitioner argued, could
cause a never-ending cycle of
resurveys based on unsubstantiated claims of
compliance
by the facility as of the later date. Clearly, as
HCFA
argued, no law required HCFA to conduct still another
survey of
Petitioner after June 16 and before June 25,
1994, after the resurvey of June
16 found that Petitioner
had four serious continuing violations.
Indeed, nothing
in the regulations even required that the June 16
resurvey
be conducted prior to termination.
Petitioner's argument, moreover, misconstrues the purpose
and effect of
the hearing process. The purpose of the
hearing process, under the
circumstances here, is to
provide a review of HCFA's determination, based on
the
survey findings. (HCFA's basis for termination was the
finding
of four LSC violations in the original November
16, 1993 survey; the June 16,
1994 resurvey simply
confirmed that these violations still existed.) If
the
facility was in fact out of compliance, HCFA clearly had
the authority
under the statute and regulations to
terminate the provider agreement.
Any effort Petitioner
made to bring itself into compliance after the date
of
the resurvey, therefore, is completely irrelevant to the
facility's
appeal of HCFA's determination to terminate.
9/
We also reject Petitioner's argument that HCFA should be
estopped.
We conclude that, even if estoppel could be
asserted against HCFA in the
administration of the
Medicare program, Petitioner did not establish
the
existence of the basic elements of estoppel under the
circumstances of
this case. 10/ Four elements must be
present to establish the defense
of estoppel: (1) the
party to be estopped must know the facts; (2) he
must
intend that his conduct shall be acted on or must so act
that the
party asserting the estoppel has a right to
believe it is so intended; (3)
the latter must be
ignorant of the true facts; and (4) he must rely on
the
former's conduct to his injury.
Petitioner did not satisfy this burden because Petitioner
did not show
that it was ignorant of the true facts or
that HCFA in any way misled
Petitioner that it had to
establish compliance as of any date other than the
survey
date. HCFA's letter of May 25, 1994 merely
notified
Petitioner that it could discuss the pending termination
or
submit materials relevant to the pending termination
prior to the effective
date. That letter in no way
indicated that the termination would be
based on
Petitioner's compliance for a date other than the date of
the
survey that found Petitioner to be out of compliance.
Moreover, HCFA's
correspondence occurring after the
effective date of the termination could
not in any event
be a basis for estoppel under the circumstances here.
Thus, we conclude there is absolutely no basis for a
claim of estoppel in
this case.
3. The ALJ correctly concluded that no
genuine
issue of material fact existed as to
whether
Petitioner met the applicable compliance
standards
on June 16, 1994.
Petitioner argued that genuine issues of material fact
existed as to
whether Petitioner violated all four LSC
requirements at issue in this appeal
and as to whether it
was in substantial compliance with the LSC
requirements.
Petitioner maintained first that a genuine issue of fact
existed as to
whether it was ever out of compliance with
ID K-12, minimum construction
requirements.
Specifically, Petitioner asserted that the facility
was
originally built as an acute care hospital in 1929 and
always
consisted of two stories. Further, Petitioner
argued that both stories
go to grade and allowed egress.
Petitioner Br. at 44. Finally,
Petitioner asserted that,
when pictures of the facility were submitted
directly to
HCFA and reviewed by the Division Chief of the
Coastal
Division of the State Fire Marshal's Office in 1995, the
State
Fire Marshal agreed to support a waiver of the LSC
provision. Id.
Next, Petitioner argued that a genuine issue of fact
existed as to whether
the basement storage room walls
were in substantial compliance with ID
K-17. Petitioner
alleged that those walls were fully repaired as of
the
effective date of the termination.
Additionally, Petitioner argued that a genuine issue of
fact existed as to
whether it was ever out of compliance
with ID K-23 through ID K-26, which
require a smoke
barrier wall on the facility's second floor.
Petitioner
asserted that the smoke barrier wall always existed, and
that
the Division Chief of the Coastal Division of the
State Fire Marshal's Office
visited the facility in March
1995 and personally verified the existence of
the smoke
barrier wall. Petitioner's Br. at 45.
Finally, Petitioner argued that a genuine issue of fact
existed as to
whether the patient room curtains were in
substantial compliance with ID
K-74.
We review below whether Petitioner failed to raise an
issue of fact
concerning any of the LSC violations relied
upon by HCFA.
a. Failure to meet minimum construction
standards
for a two-story structure, in that the
facility was
not constructed of two-hour fire
resistive materials
(Id. no. K-12)
The ALJ Decision stated:
I note that with respect to the first of
these
deficiencies from the June 16, 1994 survey,
evidence
introduced into the record suggests that,
in 1995,
the Fire Marshall may have granted a waiver
request,
which exempted Petitioner from having to
meet the
Code's requirement on the use of two-hour
fire
resistive construction materials in
two-story
structures. . . . However, there is
no evidence or
allegation that Petitioner had been
granted such a
waiver when Petitioner was surveyed,
when its
provider agreement was terminated, or when
it filed
its hearing request. According to
other evidence
generated or submitted by Petitioner,
Petitioner did
not seek a waiver for this
requirement (HCFA Prefix
Tag #K12) until December
26, 1994.
ALJ Decision (Dec.) at 17. Petitioner provided no
persuasive
argument why this analysis was incorrect and,
indeed, Petitioner still could
not verify on appeal
before us that a waiver from HCFA has been
granted. See
Transcript of April 3, 1996 teleconference at 19-20.
Until Petitioner is actually granted a waiver, it remains
out of
compliance with this requirement. In the record
before the ALJ,
Petitioner never raised a material issue
of fact concerning whether it was in
compliance with the
requirement, which, of course, is a different issue
from
the issue of whether a waiver had been granted or even
requested and
substantiated. The record suggests that
Petitioner first requested a
waiver for this requirement
after the effective date of the termination on
December
26, 1994.
b. Failure to have one-hour fire resistive walls
in
a basement storage room (ID K-17)
The ALJ Decision stated:
At best, Petitioner had completed the work to
remedy
only one of the four cited deficiencies by
June 25,
1994: the failure to have one-hour
fire resistive
walls in a basement storage
room. E.g., P. Exs. 1,
5.
ALJ Dec. at 21. Petitioner argued before the ALJ that it
was in full
compliance with this requirement as of June
25. Petitioner's Brs. dated
April 19, 1995 and June 26,
1995. Petitioner, however, did not allege
before the ALJ
that it was in compliance with this requirement as of
June
16, 1994, and the invoice Petitioner submitted to
establish compliance by
June 25th states that the repair
work was performed from June 17 through June
20, 1994.
P. Ex. 5. Thus, while Petitioner arguably raised
a
genuine issue of material fact concerning its compliance
with this
requirement as of June 25, it clearly did not
raise any issue of fact
concerning its compliance as of
the determinative date of June 16,
1994. Indeed,
Petitioner's own evidence establishes that Petitioner
had
not achieved any form of compliance as of June 16, 1994.
c. Failure to have a smoke barrier on each floor
(ID K-23 through ID K-26)
The ALJ Decision stated:
Petitioner has also argued in its brief that
the
Fire Marshall confirmed after a survey that
the
facility has always had a smoke barrier
in
place. . . . This argument is misleading
because
the Fire Marshall stated that, as of March
31, 1995,
he verified that a smoke barrier existed,
but that
it showed evidence of recent repair.
HCFA Ex. 18.
ALJ Dec. at 17. Contrary to what Petitioner argued, the
Fire
Marshal's statement shows only that a wall existed
as of March 31, 1995, not
that it existed in a fully
repaired condition as of the date of the survey on
June
16, 1994. The Deputy Fire Marshal that conducted the
June 16,
1994 survey stated that she asked the employee
of Petitioner who accompanied
her during the survey where
the smoke barrier wall was so she could inspect
it and
the employee never told her where it was. HCFA Ex. 12,
at .
5(c). As HCFA argued, Petitioner had the
responsibility to be able to
identify where the wall was
located, particularly because the absence of this
smoke
barrier wall had already been cited in the survey of
November 16,
1993. Moreover, Petitioner's Administrator
asserted to an employee of
HCFA on June 2, 1994 that all
cited violations from the November 16, 1993
survey would
be corrected before the termination date of June 25,
1994,
and the Administrator was notified of the
possibility of a resurvey before
the termination date.
Any correction efforts for this particular
violation
would have required Petitioner at least to have located
where
the smoke barrier wall was, and then to verify what
condition it was in and
to make any necessary repairs.
Yet, in spite of the foregoing, Petitioner's
employee
assigned to accompany the Fire Marshal was unable to
even
identify the wall during the June 16, 1994 resurvey.
While subsequent survey evidence suggests the possibility
that the smoke
barrier wall did exist at the time of the
June 16, 1994 resurvey, both survey
evidence and evidence
from Petitioner also strongly suggest that the
barrier
was not in proper repair at that time. See HCFA Exs.
18,
13. Petitioner, moreover, failed to allege or offer any
evidence
that the wall was properly repaired as of June
16, 1994. Cf. P. Ex. 1,
at . 12. Thus, we conclude that
Petitioner cannot reasonably argue that
it raised a
material dispute about its compliance with this
requirement as
of June 16, 1994.
Finally, as HCFA argued both before us and the ALJ, a
smoke barrier wall,
which prevents smoke going from one
building compartment to another so
residents can be
safely moved during a fire, critically cannot
have
penetrations in it, because the penetrations would allow
the smoke to
get to the other building compartments.
HCFA Br. at 20. This point is
obvious, and Petitioner
did not offer any evidence to dispute it.
d. Failure to have flame retardant curtains in
all
patient rooms (ID K-74)
The ALJ Decision stated:
Petitioner's owner and operator . . .
recently
admitted that, on June 25, 1994, 50 percent
of the
patient room curtains were not made of a
flame
retardant material and not all of the
remaining
curtains had been treated with a flame
retardant
substance. . . . Even setting aside
Petitioner's
additional admissions that all of its
patient rooms
have had the same non-flame retardant
curtains for
at least 10 years prior to 1992 and
that
Petitioner's owner and operator failed to
discover
until after August 22, 1994 that not all
patient
room curtains had been made flame retardant
as of
June 25, 1994, the fact remains that
Petitioner had
not succeeded in making all of its
patient room
curtains flame retardant during the
seven month
period between being cited for the
deficiency in
November of 1993 and having its
provider agreement
terminated on June 25, 1994.
ALJ Dec. at 18-19. The survey evidence substantiates
that none of
Petitioner's curtains had been made flame
retardant (or replaced with new
flame retardant curtains)
as of the determinative date of June 16, 1994,
and
Petitioner did not allege or offer evidence otherwise.
HCFA Exs. 8 at
5; 12 at . 5(d). Moreover, Petitioner's
Administrator declared before
the ALJ that only 50
percent of the curtains had been made flame retardant
by
June 25, 1994. P. Ex. 13, at . 6. Even if the latter
date
were the relevant date for our purposes (which it is
not), correction of 50
percent is not compliance with
this requirement under any reasonable
interpretation of
the term. A full half of the patient population of
the
facility was still at increased risk in case of fire
because the
curtains in their rooms were still not flame
retardant by that date.
Indeed, to the extent that a
fire started in or passed through any of those
rooms, the
entire facility was placed in jeopardy. Of course,
the
record would also support a conclusion that none of the
patients'
curtains had been made flame retardant by the
date of the June 16, 1994
resurvey, since Petitioner did
not raise a genuine dispute of material fact
with respect
to the survey finding to that effect.
Finally, Petitioner argued that the curtain violation was
somehow less
hazardous because the same curtains had been
in use in its patients' rooms
for over ten years. We
find that argument to be completely without
merit.
Petitioner was obligated to meet the LSC requirements at
issue
regardless of whether it was specifically cited for
a violation or
reprimanded in any given year. (In any
event, we simply do not know
whether Petitioner was
previously cited for this or any of the
other
requirements at issue in surveys that preceded the
surveys at issue
here.) The hazard from the non-flame
retardant curtains did not
diminish in any way simply
because it existed well before the surveys at
issue here.
Thus, based on the foregoing analysis of each of the four
requirements
found out of compliance, we conclude that
the ALJ did not err when she
concluded that Petitioner
failed to raise a genuine issue of material
fact
concerning its compliance with any of these violations as
of the date
of the June 16, 1994 resurvey, and at most
raised an issue concerning its
compliance with one item,
ID K-17, as of the effective date of the
termination.
4. The ALJ did not err in summarily disposing
of
Petitioner's hearing request.
Petitioner argued, without taking exception to a
particular FFCL, that in
an action for administrative
review of a termination of a provider agreement,
the
burden is not on the provider to prove entitlement to a
benefit.
Petitioner's Br. at 45. Rather, Petitioner
asserted, HCFA had the
burden of persuasion to show: (1)
the existence of the participation
requirements with
which a provider has allegedly not complied; (2)
the
facts which establish that the provider failed to comply
with a
participation requirement; and (3) that a
provider's failure to comply with a
participation
requirement is so substantial as to justify termination.
Id. at 46. Petitioner maintained that, in granting
summary
judgment, the ALJ imposed the burden of
persuasion on it instead of HCFA.
Additionally, Petitioner argued that FFCLs 5 through 12
are inconsistent
with a decision of the Second Circuit
holding that, despite a SNF's admission
that it violated
a LSC requirement and its failure to contest
other
outstanding alleged LSC violations, the facility had a
right to a
full evidentiary hearing because of the
possibility of a discretionary grant
of waiver of non-
compliance. Petitioner maintained that the facts
and
issues raised here are "very similar" to those in
discussed in that
decision, Case v. Weinberger, 523 F. 2d
602 (2nd Cir. 1975). There, the
court stated:
A full hearing, however, will hopefully provide
a
record upon which the Secretary can make
a
knowledgeable decision with respect to
his
discretionary grant or denial of waivers.
Furthermore, that record should also provide
the
basis for judicial review of that
discretionary
decision should an abuse of discretion
be claimed.
Petitioner's Br. at 21, quoting Case at 611.
Petitioner's arguments are without merit. HCFA was
required by law
to use the survey process to determine
Petitioner's compliance with the
Medicare requirements of
participation. See 42 C.F.R. .
488.26(b)(1). HCFA's
decision to terminate Petitioner's provider
agreement was
based on a survey that identified the four violations
at
issue, among others, and a resurvey that identified the
same four
violations. The survey reports themselves
provide the core evidence to
substantiate the existence
and seriousness of the violations, and the
record
contains supplemental evidence (discussed above) that
further
substantiates HCFA's determination to terminate.
Moreover, contrary to Petitioner's argument, HCFA has
fully substantiated
the seriousness and substantiality of
the violations. HCFA provided two
affidavits from the
Deputy Fire Marshal that performed the resurvey of
June
16, 1994. In the first affidavit, which was executed on
March
30, 1995, she declared that during the resurvey,
she found a number of
outstanding deficiencies still not
corrected from the November 1993 survey
which "seriously
jeopardized patients' health and safety." HCFA Ex. 7.
In the second affidavit, which was executed on May 5,
1995, she explained
the significance and possible
ramifications of each of the cited
violations. Thus,
with respect to the deficiency of ID K-17, she
stated
that:
if a fire started in the storage room and it did
not
have walls with at least a one-hour fire
resistance,
i.e., that could withstand a fire for at
least one-
hour, it would be a potential fire hazard
that could
involve the entire building and seriously
jeopardize
the health and safety of the residents
and
personnel.
HCFA Ex. 12, at . 5(b). With respect to the deficiency
of ID K-74
involving patient room curtains, she stated:
the reason that it is important to visually
verify
through an on-site inspection that this
deficiency
(K-74) was corrected is because if there
were a fire
in the facility, patient room curtains
that are not
flame retardant would ignite quickly
and would
endanger the lives of the facility's
residents and
personnel.
Id. at . 5(d).
Moreover, as HCFA argued, citing the Nazareno decision,
some of the
requirements for participation are so
necessary for the health and safety of
patients that a
failure to comply is on its face a substantial
deficiency
justifying termination. We conclude that several of
the
violations here are absolutely essential on their face
for the safety
of the facility's patients and personnel.
Petitioner argued before the ALJ that the violations were
not the
equivalent of examples that had been cited in the
Medicare and Medicaid Guide
as "immediate and serious
threats." Petitioner's Br. of June 26, 1995
at 8-9. Yet
the list quoted in Petitioner's brief contains
a
situation that precisely matches one of the violations
here, the failure
to maintain the integrity of a smoke
barrier. Indeed, when the
violations cited here are
compared to the items on the list cited by
Petitioner,
all of the violations would appear to qualify as
"immediate
and serious."
HCFA having provided sufficient evidence concerning the
existence and
nature of the violations in question, the
burden then properly shifted to
Petitioner to submit
pleading and, as appropriate, documentary evidence
and/or
offers of testimony to raise genuine issues of material
fact
concerning the existence of the violations of the
four LSC requirements at
issue here. As we discussed
above with respect to each of the four
violations,
Petitioner simply failed to do so. Nor did
Petitioner
allege or proffer evidence that the violations at issue
here
either independently or cumulatively did not have
the potential for a serious
adverse effect to the safety
of its patients or personnel. 11/
We conclude that the ALJ's summary disposition of this
appeal under these
circumstances was clearly authorized
by the regulations and does not conflict
with the Case
decision cited by Petitioner. The applicable
regulation
at 42 C.F.R. . 488.24(a) authorized termination for SNFs
based
on non-compliance with a level A requirement
affecting the health and safety
of patients. We conclude
that an evidentiary hearing is not required
under the
regulations where, as here, the Petitioner does not raise
in its
hearing request or during proceedings before the
ALJ a genuine issue of
material fact concerning its
failure to comply with the four LSC requirements
in
question incorporated in the level A requirement at the
time of the
relevant survey and, indeed, where the
evidence of record establishes
Petitioner was out of
compliance at that time and remained out of
compliance
with three if not all four of the requirements on
the
termination date. Nor did the Petitioner raise a genuine
issue
of material fact concerning the seriousness of the
violations either
independently or cumulatively.
Moreover, Petitioner was given, and took advantage of,
the opportunity to
present its case, including briefs and
supporting documentation during the
ALJ proceeding.
Indeed, the ALJ received supplemental
briefing
specifically to address the issue of summary disposition.
See
ALJ Dec. at 2. Petitioner has thus had the
opportunity to raise
disputes regarding all relevant
material issues that the court in Case sought
to afford.
Further, this appeal is clearly distinguishable from the
circumstances
confronted by the court in Case. HCFA here
gave Petitioner a second
survey opportunity to
demonstrate its compliance after having given
Petitioner
approximately seven months to bring itself into
compliance with
the requirements at issue following an
earlier survey. Petitioner did
not argue that it could
not have brought itself into compliance with three of
the
four requirements during that time. 12/ These same
options of
compliance were not realistically available to
the facility discussed in the
Case decision, and the
facility's only hope was to obtain a discretionary
waiver
of the applicable requirements from HCFA.
Consequently, we conclude that the ALJ did not err in
granting HCFA's
request for summary disposition.
B. Petitioner's exceptions to specific FFCLs
1. Petitioner's exceptions to FFCL 6
FFCL 6 stated:
In challenging HCFA's determination
that
Petitioner's provider agreement should
terminate on
June 25, 1994, the only matter raised
by Petitioner
in its hearing request is the
contention that all
work to correct the deficiencies
found during the
November 16, 1993 and June 16, 1994
surveys had been
completed by June 25, 1994.
Petitioner argued that this FFCL is incorrect in that
Petitioner alleged
that it was in substantial compliance
with the LSC violations on June 16,
1994. Further,
Petitioner maintained that its hearing request
referenced
its LSC status on both June 16 and June 25, 1994.
The
hearing request stated, in relevant part:
We had a resurvey June 16, 1994, at which
time,
Alise [sic] Anderson, D.S.F.M. told Steve
Bremner,
Maintenance, that we were back in
compliance. . . .
We are asking for an appeals
hearing based on the
fact that all work had been
completed by 6-25-94.
We conclude that FFCL 6 is not erroneous. Although the
hearing
request alleged that Petitioner was advised that
it was "back in compliance,"
the request was expressly
based "on the fact that all work had been completed
by
June 25, 1994." Thus, the request does not allege any
form of
compliance as of the date of the June 16, 1994
survey. Moreover, as we
discuss repeatedly in this
decision, Petitioner failed to raise a genuine
issue of
material fact concerning its compliance with any of the
four LSC
requirements as of June 16, 1994, and HCFA made
a prima facie case that
Petitioner had not achieved
compliance or substantial compliance with the
four
requirements as of that date. At best, the record
suggests that
Petitioner may have come into compliance
with only one of the requirements
(ID K-17) as of the
effective date of the termination. Thus, we adopt
and
affirm FFCL 6.
2. Petitioner's exceptions to FFCL 7
FFCL 7 stated:
After filing its hearing request,
Petitioner
admitted that it had not completed all
the remedial
work by June 25, 1994, as alleged in
its hearing
request.
Petitioner asserted that, contrary to the ALJ Decision,
it did not admit
to a violation of the K-23 through K-26
requirement (second floor smoke
barrier wall). Further,
Petitioner contested the ALJ's determination
that, by
failure to object specifically in the hearing request to
the
alleged deficiencies, Petitioner admitted that the
alleged deficiencies
existed. See ALJ Dec. at 17.
Finally, Petitioner argued that it has
consistently
contended that two of the alleged deficiencies, failure
to
meet minimum construction standards (K-12) and failure
to have a smoke
barrier on each floor (K-23 through K-
26), never existed, and that the third
deficiency,
failure to have one-hour fire resistive walls in a
basement
storage room (K-17), was fully corrected before
June 25, 1994.
Regardless of whether Petitioner did or did not admit the
continued
existence of other deficiencies as of June 25,
1994 after expressly stating
in the hearing request that
"all work had been completed by 6-25-94,"
Petitioner
unquestionably admitted that "less than all of the
curtains
were rendered flame retardant on or before June
25, 1994," as required by ID
K-74 (LSC . 17-4151). See
Petitioner's Br. at 26. Further,
Petitioner's
administrator directly contradicted the position he took
in
the hearing request by filing a declaration which
stated that "as of June 25,
1994, the facility had
completed the process of installing flame
retardant
curtains in approximately fifty percent (50%) of the
patient
rooms." P. Ex. 13, at . 6.
Accordingly, simply by focusing on Petitioner's change in
position
concerning the patient room curtains, we must
affirm and adopt FFCL 7.
Moreover, with respect to the
finding that Petitioner's facility did not
meet
construction standards for a two-story building,
Petitioner did not
allege that it had completed all
repair work on this deficiency or in the
alternative that
it had requested and received a waiver as of June
16,
1994, much less by June 25, 1994. Finally, with respect
to the
survey findings concerning the need for a second
floor smoke barrier wall,
Petitioner did not allege, or
offer evidence to show, that this wall was in
proper
repair at the time of the June 16, 1994 survey or the
termination
date. Cf. P. Ex. 1, at .. 1, 12. The
affidavit of the Fire
Marshal and indeed evidence
supplied by Petitioner strongly suggest that it
was not.
HCFA Ex. 18, at . 4; HCFA Ex. 13.
Even if all the deficiencies but the one relating to the
flame retardant
curtains were corrected by June 25, that
single deficiency in and of itself
would have been
sufficient in our view to justify
Petitioner's
termination. More importantly, however, since
Petitioner
has never alleged much less offered evidence that all
four
violations were corrected by June 16, 1994, the ALJ
did not err in granting
summary disposition on behalf of
HCFA.
3. Petitioner's exceptions to FFCL 10
FFCL 10 stated:
Based only upon the contents of Petitioner's
hearing
request, HCFA's notices attached to the
hearing
request, and the relevant regulations, HCFA
is
entitled to prevail on its motion to
dismiss
Petitioner's hearing request under 42
C.F.R.
. 498.70.
Petitioner argued that despite any inadequacy in
Petitioner's hearing
request, HCFA was given adequate
notice of Petitioner's claim. Hence,
Petitioner reasoned
that it did "otherwise have a right to a hearing"
under
42 C.F.R. . 498.70(b). Petitioner argued that it is
settled
law that administrative pleadings are liberally
and easily amended.
Petitioner's Br. at 35. Further,
Petitioner argued that dismissal of
the present action
for a failure to follow very technical
requirements
violates fundamental notions of justice, as well
as
established law. Petitioner argued that the law
recognizes that
pleadings of a pro se party are held to
less rigid standards than those
drafted by attorneys. 13/
Id. at 36.
The ALJ Decision relied on two alternative grounds for
resolving
Petitioner's appeal in HCFA's favor. The ALJ
granted HCFA's motion to
dismiss Petitioner's hearing
request under 42 C.F.R. . 498.70(b), because
"the request
failed to challenge the deficiencies found during the
June
16, 1994 survey. . . ." The ALJ also concluded that
HCFA was entitled
to summary disposition because
Petitioner raised no genuine issue of material
fact
requiring an evidentiary hearing and because, even
assuming all of
the facts asserted by Petitioner to be
true and construing them in a light
most favorable to
Petitioner, HCFA was entitled to summary disposition as
a
matter of law.
We agree with Petitioner that the reasons it gave for
contesting HCFA's
determination in its request for
hearing cannot be the basis for concluding
that
Petitioner "is not a proper party or does not otherwise
have a right
to a hearing" under section 498.70(b).
Petitioner has a right to a hearing
under 42 C.F.R. Part
498 because it is a provider dissatisfied with an
initial
determination to terminate its provider agreement. See
42
C.F.R. .. 498.2, 498.3 and 498.5(b). Petitioner
cannot lose its hearing
right based on these factors
merely because of the wording of the reasons it
gives for
its appeal in its hearing request. 14/
While we conclude it was error for the ALJ to have
dismissed Petitioner's
hearing request under 42 C.F.R. .
498.70(b), we further conclude that the
error was
harmless in this instance because the ALJ properly
concluded
that even assuming all of the facts asserted by
Petitioner in its pleadings
and briefs to be true and
construing them in a light most favorable to
Petitioner,
HCFA was entitled to summary disposition of
Petitioner's
appeal as a matter of law. This Board has
previously
determined, albeit in the context of a different type
of
appeal, that a requirement affording an opportunity for
an evidentiary
hearing is not contravened by a summary
disposition if there are no genuine
issues of material
fact. See, e.g., Campesinos Unidos, Inc., DAB No.
1518
at 10 (1995), citing Travers v. Shalala, 20 F.3d 993, 998
(9th Cir.
1994). 15/
Moreover, the regulations setting out the procedures for
provider appeals
place an affirmative responsibility on
the affected provider to identify all
disputed issues of
fact (as well as the basis for the disputes in
each
instance) at the initiation of the appeal in the request
for
hearing. 42 C.F.R. . 498.40(b). Where, as here, a
provider does
not raise a genuine issue of material fact
either in its request for hearing,
in its documentary
exhibits or in its briefs, including a brief
which
specifically addressed issues pertaining to summary
disposition, we
conclude the ALJ properly considered
whether summary disposition would be
appropriate. See
also Transitional Hospitals Corporation -- Las Vegas,
DAB
CR350 (1995).
As we have painstakingly discussed above, Petitioner did
not raise a
genuine issue of material fact before the ALJ
concerning its compliance as of
the June 16, 1994 survey
with four serious LSC requirements that are
incorporated
in a condition of participation (or level A requirement)
for
SNFs. (Petitioner, moreover, did not substantiate
before the Board that
it could have raised an issue but
simply failed to do so.) The ALJ
concluded that the
survey findings adopted by HCFA along with
additional
documentary evidence in the record provided a prima facie
case
in favor of Petitioner's termination. Where
Petitioner, as here, failed
by raising any genuine issue
of material fact to rebut that prima facie case,
we
conclude that the ALJ has the authority under the
regulations to
summarily dispose of the appeal.
Moreover, Petitioner's arguments concerning its failure
to obtain legal
counsel sooner are completely without
merit. Although Petitioner was
not represented by
counsel when it filed its hearing request, it
was
represented by counsel when it submitted its briefs and
documentary
exhibits. As we stated above, the ALJ based
her decision on the entire
record, not merely the hearing
request. Furthermore, Petitioner did not
provide any
evidence to show how having legal counsel at an earlier
point
would have changed the ALJ Decision.
Accordingly, we conclude the ALJ erred in dismissing this
appeal under 42
C.F.R. .498.70(b), and we therefore
delete FFCL 10. We further
conclude, however, that this
error was harmless since the ALJ correctly
concluded that
summary disposition in favor of HCFA was appropriate.
4. Petitioner's exceptions to FFCL 11
FFCL 11 stated:
As of the June 16, 1994 survey, and through at
least
June 25, 1994, Petitioner was out of
compliance with
the condition of participation for
physical
environment.
Petitioner argued that FFCL 11, although factually
correct, implies an
erroneous legal standard. Petitioner
contended that while it has
admitted that work on the
basement storage room walls was in process on June
16,
1994, and that all the patient room curtains were not
flame retardant
by June 25, 1994, HCFA still may not
terminate the provider agreement unless
the provider was
in substantial non-compliance with these requirements
of
participation. 16/ Petitioner's Br. at 42.
Since it is undisputed that FFCL 11 is correct,
Petitioner's disagreement
regarding the applicable legal
standard is not a basis for reversing the
FFCL. In any
event, as previously discussed, Petitioner's
arguments
concerning substantial compliance simply miss the point.
Petitioner's violations show that Petitioner was not in
substantial
compliance either under the then applicable
regulatory standards or under the
subsequently adopted
regulations which include a definition of
substantial
compliance. Thus, we adopt and affirm FFCL
11.
.Conclusion
Accordingly, based on the foregoing analysis, we sustain
the ALJ Decision
concluding that HCFA was entitled to
summary disposition in its favor on
Petitioner's hearing
request. We uphold each and every FFCL except FFCL
10,
which we delete as harmless error.
Judith A. Ballard
M. Terry Johnson
Donald F.
Garrett
Presiding Board Member
1. Although Petitioner's request for review
was
addressed to the Social Security Administration Appeals
Council, the
Board was substituted for the Appeals
Council as the reviewing authority for
this type of
appeal in 1993. 58 Fed. Reg. 58,170 (Oct. 29, 1993).
2. Unless otherwise noted, all references
to
regulations are to the version in effect during the time
period of the
original survey and the resurvey.
3. The preamble to final regulations amending
program
requirements for long term care facilities clarified
that:
those requirements that previously were
identified
as conditions of participation (appearing
as
individual sections within a subpart) are
now
designated as level A requirements.
Those
requirements that previously were identified
as
standards (appearing as individual paragraphs
within
a section) are now designated as level
B
requirements.
54 Fed. Reg. 5317-5318 (Feb. 2, 1989).
4. In addition to the exceptions specified
in
sections 483.70(a)(1) and (a)(3), section 483.70(a)(2)
provides for
waiver of specific code requirements by
HCFA. Under that section, HCFA
may waive specific
provisions of the LSC "which, if rigidly applied
would
result in unreasonable hardship upon the facility, but
only if the
waiver does not adversely affect the health
and safety of residents or
personnel."
5. The Petitioner identified the deficiencies
at
issue by the identification prefix code used in the
survey
document. Thus, to avoid confusion, we will use
those identifiers in
our discussion. We also note the
Life Safety Code sections.
6. During proceedings before the ALJ, HCFA
initially
moved to dismiss Petitioner's hearing request as
untimely
because it had not been filed within 60 days of receipt
of HCFA's
May 25, 1994 notice. The ALJ concluded in her
decision that
Petitioner's hearing request dated August
22, 1994 was timely filed.
FFCL 4. When HCFA responded
to Petitioner's appeal on January 12, 1996,
HCFA also
cross-appealed that FFCL, stating that it
"re-urges"
consideration of whether the hearing request should also
have
been dismissed on the basis of untimeliness.
We conclude, however, that HCFA itself has failed to make
a timely request
for Board review of the issue it here
argues. The regulation at 42
C.F.R. . 498.82 provides
that any party dissatisfied with an ALJ decision
may
request review of the decision and that the requesting
party must file
its request within 60 days from receipt
of the notice of decision or
dismissal, unless good cause
is shown by the requesting party to extend the
time.
Therefore, based on the requirements of section 498.82,
HCFA should
have requested review of the ALJ Decision
concerning the issue of timeliness
of Petitioner's
hearing request within the 60-day period allowed for
such
requests. Even if HCFA intended to request review of
this issue
only in the event that Petitioner requested
review on other issues, HCFA
could have so notified the
Board. Since no request for review of this
issue was
submitted within the prescribed period and since no good
cause
for an extension of time was shown by HCFA, we find
that HCFA's cross-appeal
was untimely and dismiss it
under 42 C.F.R. . 498.83(a). Additionally,
we note that
a comparable request made by the Inspector General for
a
review of an ALJ decision was also dismissed as untimely.
See I.G. v.
Edward J. Petrus, M.D., Docket No. C-147
(December 12, 1990).
7. Citations to the pages in the ALJ Decision
that
discussed the FFCLs have been omitted.
8. Petitioner's reference in this respect to the
ALJ
Decision in Nazareno Medical Hospice Fajardo, Daguas,
Cayey, DAB CR385
(1995), is unavailing, since the
decision confirms that substantiality is
established by
reference to whether the violations adversely affect
the
health and safety of patients. As we discuss in the text
below,
the record clearly establishes that the violations
of the LSC requirements at
issue here seriously risked
the safety of Petitioner's patients.
9. When a facility is faced with a notice
of
termination, it essentially has two options: it may
appeal the
termination by contesting that it was in fact
out of compliance as of the
date of the survey; or it may
attempt to bring itself into compliance after
the survey
in the hope that it will be able to persuade the state
survey
agency and HCFA at some future time that the
termination should not be
effectuated or that termination
should be of limited duration. Any
compliance efforts by
the facility after the date of the survey, however,
have
no bearing on whether HCFA's termination determination
was
correct.
10. We do not intend by this decision to imply
that
estoppel necessarily would lie against the federal
government if the
four elements of estoppel had been
established. See, e.g., Office of
Personnel Management
v. Richmond, 496 U.S. 414 (1990). But, having
concluded
that Petitioner has not satisfied all of the four
basic
elements, we do not discuss further considerations
involved in
determining whether a federal agency may be
estopped.
11. Nor did Petitioner allege or proffer
evidence
that it requested a waiver of any of these requirements
from HCFA
before the effective date of the termination.
(While Petitioner did request
a waiver of the smoke
barrier requirement, that request apparently pertained
to
the first floor of the facility, which is not at issue
here.
Petitioner did not argue that it had requested a
waiver of the requirement
for the second floor, where a
barrier already existed even though it
apparently
required repairs.) Thus, the ALJ was not faced with
the
issue of whether a denial of waiver by HCFA for any of
these
requirements was an abuse of discretion.
12. Even if a waiver was the only realistic means
of
achieving compliance with the remaining requirement that
the building
did not meet minimum construction standards
for a two-story building
(Deficiency K-12), Petitioner
did not establish that it acted with all due
haste to
make its case for a waiver to the Fire Marshal and to
HCFA
following the November 16, 1993 survey. The
standard for waiver is
identified in footnote 4 above.
It presumably requires an initial review by
the State
Fire Marshal and then careful consideration by HCFA to
see
whether the prescribed standard in the regulation has
been met.
Petitioner had no right to assume it was in
compliance with the requirement
merely because the
potential for waiver might have existed or because
waiver
may in fact be granted in the future. The record
here
suggests that Petitioner first requested a waiver from
HCFA of this
requirement on December 26, 1994, which was
well after the effective date of
the termination.
13. Petitioner did not hire legal counsel
until
October 25, 1994. Prior to that time, the
facility's
administrator represented Petitioner.
14. In fact, however, the ALJ did not base
her
decision on the hearing request alone, but rather on the
entire record
before her, including the briefs and
documentary exhibits submitted by both
parties.
Moreover, there is no indication in the record of this
appeal
that the ALJ ever precluded Petitioner from
amending the position it took on
any issue in the hearing
request.
15. The Travers decision involved a statutory
right
to a formal hearing by an administrative law judge under
the
Administrative Procedure Act.
16. Petitioner's arguments address only two of
the
four violations. Petitioner did not allege, much less
offer
evidence to establish, that it either repaired
Deficiency ID K-12 or that it
requested and received a
waiver for that deficiency by June 25, 1994, or that
even
if a second floor smoke barrier wall cited in Deficiency
ID K-23
through ID K-26 existed on June 25, 1994, it was
in full
repair.