Sundance Inn Health Center, DAB CR5913 (2021)

AMENDED DECISION1

I.      FOUND

I affirm the decision of the Centers for Medicare and Medicaid Services (CMS) establishing December 14, 2019, as the effective date for the provider agreement.

II.     JURISDICTION

I have jurisdiction to hear this case pursuant to my appointment by the Secretary of Health and Human Services and my authority under the Administrative Procedure Act (5 U.S.C. §§ 554-556; 5 U.S.C.A. § 3106; 5 C.F.R. §§ 930.201 et seq.) and Social Security Act (Act) § 1866(h)(1) (codified at 42 U.S.C. § 1395cc(h)(1)); 42 C.F.R. §§ 488.24(c); 489.53(e); 498.3(b)(8); 498.5(b); 498.40(a)(1).2

III.    PROCEDURAL BACKGROUND

Page 2

Petitioner, Sundance Inn Health Center (Sundance or Petitioner), a skilled nursing facility (SNF) in New Braunfels, Texas, seeks review of the effective date of Petitioner’s provider agreement.  On August 9, 2019, Petitioner submitted an initial application for a Medicare provider number in anticipation of acquiring the right to operate the facility from PM-Management, but opted not to assume the prior operator’s Medicare provider agreement.  CMS Exhibit (Ex.) 7 at 3.  On September 1, 2019, Petitioner purchased PM-Management’s assets and rights for $1.00 and the assumption of certain liabilities and the transaction was approved by a bankruptcy court on September 4, 2019.  CMS Exs. 10, 11.  On October 1, 2019, Novitas Solutions (Novitas), a Medicare contractor, recommended that Petitioner’s enrollment application be approved.  CMS Ex. 6. 

On November 7, 2019, the Texas Health and Human Services Commission (HHSC or state agency) conducted an initial Life Safety Code (LSC) certification survey and cited Petitioner with 18 deficiencies.  CMS Ex. 5 at 1-22.  In a letter dated November 22, 2019, the HHSC notified Petitioner that it did not meet state licensure requirements and was not in substantial compliance with federal participation requirements and asked Petitioner to submit a plan of correction (POC).  CMS Ex. 5 at 23-24.  Petitioner submitted a POC on December 3, 2019, but the state agency deemed the POC not acceptable.  CMS Ex. 5 at 25.  On December 19, 2019, the state agency accepted a second POC but requested additional evidence.  CMS Ex. 5 at 25.  On February 3, 2020, the state agency conducted a desk audit and determined Petitioner was in substantial compliance with federal LSC requirements.  CMS Ex. 5 at 29.

On November 21, 2019, the state agency conducted a federal health and safety survey at Petitioner’s facility.  CMS Ex. 4 at 1-7.  In a letter dated December 6, 2019, the state agency notified Petitioner that it was not in substantial compliance with federal participation requirements and required Petitioner to submit a POC.  CMS Ex. 4 at 8-9.  On December 18, 2019, the state agency accepted Petitioner’s POC and determined that all deficiencies had been corrected.  CMS Ex. 4 at 10-11.

In a letter dated February 13, 2020, CMS notified Petitioner that it had satisfied all the Medicare participation requirements and established an effective date of December 16, 2019.  CMS Ex. 3.  Petitioner requested reconsideration and argued that the effective date should be September 1, 2019, because it had met all enrollment requirements by that date.  CMS Ex. 2. 

On May 4, 2020, CMS revised its effective date determination and found that December 14, 2019, was the correct date Petitioner met all Medicare requirements.  CMS Ex. 1 at 1.  On June 29, 2020, Petitioner requested an Administrative Law Judge (ALJ) hearing to appeal the revised effective date determination.

Page 3

The parties have filed their prehearing exchanges.  CMS filed a pre-hearing brief and moved for summary judgment (CMS Br.) to which Petitioner responded (P. Br.). 

The Standing Prehearing Order issued on June 30, 2020, states, “An in-person hearing to cross-examine witnesses will be necessary only if a party files admissible, written direct testimony, and the opposing party asks to cross-examine.  In that event, I will convene a pre-hearing conference to discuss hearing procedures and scheduling.”  Standing Prehearing Order ¶ 10.  CMS did not propose any witnesses.  Petitioner proposed one witness but CMS did not request to cross-examine Petitioner’s witness. 

As discussed below, the record shows that there is no genuine dispute as to any material fact.  Accordingly, summary judgment is appropriate in this case.

IV.     LAW

42 U.S.C. § 1395aa
42 U.S.C. § 1395cc
42 C.F.R. Part 483
42 C.F.R. Part 489

V.      ISSUE

Whether CMS properly determined December 14, 2019, as the effective date of Petitioner’s participation in the Medicare program.

VI.    ADMISSION OF EVIDENCE AND TESTIMONY

CMS filed 11 proposed exhibits (CMS Exs. 1-11) and Petitioner filed one proposed exhibit (P. Ex. 1).  Neither party objected to the exhibits offered by the opposing party.  Therefore, all exhibits are admitted.

VII.   SUMMARY OF TESTIMONY AND EVIDENCE

A. CMS’s Case

CMS alleged in August 2019, Petitioner, a SNF located in New Braunfels, Texas, submitted its initial application for a Medicare provider number in anticipation of acquiring the right to operate the facility from PM-Management, but opted not to assume PM-Management’s Medicare provider number.  CMS Br. at 1.  Subsequently, the Medicare contractor approved the application and the HHSC conducted the requisite Medicare LSC certification survey on November 7, 2019,

Page 4

and a health and safety survey on November 21, 2019.  CMS Ex. 4 at 1-7; CMS Ex. 5 at 1-22; CMS Ex. 6.  On both surveys, Petitioner was found not in substantial compliance with Medicare participation requirements.  CMS Exs. 4, 5. 

Petitioner eventually submitted acceptable plans of correction and, by desk audits, HHSC determined that Sundance corrected its deficiencies on December 13, 2019.  CMS Ex. 1 at 1.

Upon reconsideration, CMS found that, “[a]fter a review of all documents, a compliance date of December 14, 2019, has been determined to be the correct date the facility met all Medicare requirements.”  CMS Ex. 1 at 1. 

As a result, CMS established December 14, 2019, as the effective date for the provider agreement.  CMS Exs. 1, 9.

B. Petitioner’s Case

Petitioner alleged that on August 9, 2019, it submitted an initial application (CMS Ex. 7) for a Medicare provider number after purchasing the facility without taking assignment of the seller’s Medicare provider number.  P. Br. at 3.  On September 1, 2019, Petitioner took over operations of the PM-Management facility.  CMS Exs. 10, 11.  CMS’s fiscal intermediary (Novitas) did not issue its recommendation to approve Sundance’s Medicare enrollment application until October 1, 2019.  CMS Ex. 6. 

The HHSC conducted the requisite Medicare LSC certification survey on November 7, 2019.  CMS Ex. 5 at 1-22.  On November 21, 2019, the HHSC conducted the federal health and safety survey.  CMS Ex. 4 at 1-7.

CMS conducted a desk review of the POC confirming Petitioner’s compliance and establishing its effective date as December 16, 2020.  CMS Ex. 3 at 1; CMS Ex. 4 at 10-11; CMS Ex. 5 at 27.  Petitioner subsequently submitted a request for reconsideration of the December 16, 2019 effective date.  CMS Ex. 2.  Upon reconsideration, CMS revised the effective date of the Medicare certification to be December 14, 2019.  CMS Ex. 1 at 1. 

Sundance appeals CMS’s reconsideration decision, asserting the effective date of its Medicare certification should be September 1, 2019 or at the latest, September 13, 2019, by which time Sundance’s Medicare application was fully corrected and completed and the facility was survey ready.  P. Br. at 5.  Sundance also disagrees that December 14, 2019, is the earliest possible effective date of the Medicare certification.  P. Br. at 2.

Page 5

Petitioner argues it is unjust, unreasonable, arbitrary and capricious for CMS to subject Sundance and its Medicare residents to disparate treatment with respect to the effective date of the Medicare eligibility and certification simply because Sundance declined to accept automatic assignment of the prior operator’s Medicare Provider Agreement.  P. Br. at 2.  Petitioner argues the applicable automatic assignment regulations do not instruct nor require CMS to apply such rules in such a disparate and economically damaging manner, nor do they suggest that two skilled nursing facility providers should be treated differently from a financial standpoint based on a choice whether to take such assignment of the existing Medicare Provider Agreement.  P. Br. at 2.  Petitioner continues to argue that to apply the Medicare Enrollment Requirements differently in this fashion is to effectively say the government’s objective of optimizing resident care depends significantly on whether a provider accepts automatic assignment of the existing Medicare Provider Agreement.  P. Br. at 2.

Petitioner argues that simply shifting financial responsibility onto the incoming operator taking such an automatic assignment does not drive the objective of optimizing resident care – it simply shifts such responsibility from one party to another.  P. Br. at 2-3.  If Sundance is expected and obligated to provide Medicare services to its Medicare residents (as it is and does), Sundance should have the right to have its Medicare certification be effective upon taking over facility operations (i.e., September 1, 2019), or at the very latest, on September 13, 2019, on the date it is undisputed that the enrollment application was fully corrected and complete.  P. Br. at 3.  Otherwise, the government is effectively taking Sundance’s property for public use without just compensation, in contravention of the Fifth Amendment to the United States Constitution, and due process of law.  P. Br. at 3.

VIII. SUMMARY JUDGMENT

Summary judgment is appropriate and no hearing is required where either:  there are no genuine disputes of material fact and the only questions that must be decided involve application of law to the undisputed facts; or the moving party prevails as a matter of law even if all factual disputes are resolved in favor of the party against whom the motion is made.  Mission Hosp. Reg’l Med. Ctr., DAB No. 2459 at 5 (2012) (and cases cited therein), aff’d, Mission Hosp. Reg’l Med. Ctr. v. Burwell, 819 F.3d 1112 (9th Cir. 2016).  In determining whether there are genuine issues of material fact for trial, the reviewer must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.  Id.  The party requesting summary judgment bears the burden of showing that there are no genuine issues of material fact for trial and/or that it is entitled to judgment as a matter of law.  Id.  Generally, the non-movant may not defeat an adequately supported summary judgment motion by relying upon the denials in its pleadings or briefs but must furnish evidence of a dispute concerning a material fact,

Page 6

i.e., a fact that would affect the outcome of the case if proven.  Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 at 3 (2010) (and cases cited therein), aff’d, Senior Rehab. & Skilled Nursing Ctr. v. Health & Human Servs., 405 F. App’x 820 (5th Cir. 2010); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

CMS argues it is entitled to summary judgment in this provider enrollment date dispute because the effective date established by CMS was the date it determined Petitioner complied with all applicable Medicare regulations in accordance with 42 C.F.R. § 489.13.  CMS Br. at 11-12.

Petitioner argues summary judgment is not proper if such party provides evidence of specific facts in the form of affidavits, declarations and/or admissible evidence, in support of its contention that a dispute exists.  P. Br. at 4 (citing Crestview Parke Care Ctr., DAB No. 1836 (2002)).  Sundance requests that CMS’s Motion for Summary Judgment be denied because the effective date of Sundance’s Medicare certification cannot be December 14, 2019, under any circumstances.  P. Br. at 14.

I find that Petitioner’s arguments do not raise a genuine dispute as to any material fact.  There is no dispute that Petitioner had not substantially complied with all federal participation requirements, including the certification surveys, until December 14, 2019.  Therefore, summary judgment in favor of CMS is appropriate.

IX.    ANALYSIS OF EVIDENCE AND TESTIMONY

On September 1, 2019, Petitioner purchased PM-Management’s assets and rights for $1.00 and the assumption of certain liabilities and the transaction was approved by a bankruptcy court on September 4, 2019.  CMS Exs. 10, 11.  On October 1, 2019, Novitas recommended approval of Petitioner’s enrollment application.  CMS Ex. 6. 

On November 7, 2019, the HHSC conducted an initial LSC certification survey and cited Petitioner with 18 deficiencies.  CMS Ex. 5 at 1-22.  On November 21, 2019, the state agency conducted a federal health and safety survey at Petitioner’s facility and found that Petitioner was not in substantial compliance with all federal participation requirements.  CMS Ex. 4 at 1-7.  After Petitioner submitted POCs and the state agency completed desk audits, the state agency determined Petitioner corrected all deficiencies by December 13, 2019.  CMS Ex. 4 at 10-11; CMS Ex. 5 at 29.

In a letter dated February 13, 2020, CMS notified Petitioner that it had satisfied all of the Medicare participation requirements and initially established an effective date of December 16, 2019.  CMS Ex. 3.  Petitioner requested reconsideration and

Page 7

argued that the effective date should be September 1, 2019, because it had met all enrollment requirements by that date.  CMS Ex. 2. 

On May 4, 2020, CMS issued a reconsidered determination and revised its effective date determination, finding that December 14, 2019, was the correct date Petitioner met all Medicare requirements.  CMS Ex. 1 at 1.

Petitioner argues that the effective date should be September 1, 2019, the date it submitted a completed and signed application, or at the latest, September 13, 2019, because that was the date Petitioner fully addressed the Medicare application related corrections requested by CMS.  P. Br. at 5-6.  Further, Petitioner contends that the state agency waited over two months to conduct the LSC survey and almost three months to conduct the health and safety survey.  P. Br. at 6.  Petitioner also makes equitable and policy arguments that it should not be penalized because it did not accept the prior owner’s provider agreement and because of the state agency’s delay in conducting the surveys.  P. Br. at 6-14.

In order to participate in Medicare, Petitioner must comply with LSC requirements and with the Medicare participation requirements governing SNFs.  The effective date of participation of a Medicare provider consists of the date when CMS or its contractor finds the provider to be in compliance with all applicable participation requirements.  42 C.F.R. § 489.13(b); Community Hosp. of Long Beach, DAB No. 1938 (2004).  The regulation states:

The agreement or approval is effective on the date the State agency, CMS, or the CMS contractor survey (including the Life Safety Code survey, if applicable) is completed, . . . if on that date the [provider] meets all applicable Federal requirements as set forth in this chapter . . . .  However, the effective date of the agreement or approval may not be earlier than the latest of the dates on which CMS determines that each applicable Federal requirement is met.  Federal requirements include, but are not limited to-

(1) Enrollment requirements established in part 424, subpart P, of this chapter. CMS determines, based upon its review and verification of the prospective provider's or supplier's enrollment application, the date on which enrollment requirements have been met;

(2) The requirements identified in §§ 489.10 and 489.12; and

Page 8

(3) The applicable Medicare health and safety standards, such as the applicable conditions of participation, the requirements for participation, the conditions of coverage, or the conditions for certification.

42 C.F.R. § 489.13(b).

The State Operations Manual (SOM) provides that if a new owner refuses to accept assignment and also wishes to participate in the Medicare program, the process is to treat the new owner as a new applicant to the program by obtaining and processing application documents, having the state agency perform an initial survey and, if all requirements for participation are met, assigning an effective date of participation based upon the applicable regulation, 42 C.F.R. § 489.13.  SOM, CMS Pub. 100-7, Ch. 3, § 3210.5A. 

Petitioner’s primary argument concerns the inequities of establishing the effective date of the provider agreement as December 14, 2019 rather than earlier.  P. Br. 6-14.  However, ALJs are not authorized to provide equitable relief by reimbursing or enrolling a provider who does not meet statutory or regulatory requirements.  US Ultrasound, DAB No. 2302 at 8 (2010). 

Petitioner sought initial certification as a Medicare provider, however it did not assume PM-Management’s Medicare provider agreement.  Petitioner elected to obtain a new Medicare enrollment for its facility instead of continuing to operate the facility under assignment of the previous owner’s Medicare provider number and agreement.  In accordance with the SOM, CMS treated Petitioner as a new applicant by requiring Petitioner to submit enrollment applications and comply with survey and certification requirements pursuant to the applicable regulation, 42 C.F.R. § 489.13.

Petitioner did not satisfy all federal participation requirements until it had corrected all of the deficiencies the state agency cited in the LSC and health and safety surveys, December 13, 2019.  The agreement or approval is effective on the date the state agency, CMS, or the CMS contractor survey (including the LSC survey) is completed.  42 C.F.R. § 489.13(b).  Further, the effective date of a provider agreement may not be earlier than the latest of the dates on which each applicable Federal requirement is determined to be met.  Id.  If all of the applicable federal requirements are not met on the date of the survey, the effective date for an SNF is the date on which the SNF is in substantial compliance with the requirements for participation.  42 C.F.R. § 489.13(b), (c)(1).  CMS determined that Petitioner met all applicable requirements for participation, including compliance with LSC and federal health and safety requirements, effective December 14, 2019.  Therefore,

Page 9

CMS properly established the effective date of Petitioner’s provider agreement as December 14, 2019. 

X.     CONCLUSION

The undisputed facts show that Sundance was not found in substantial compliance with all Medicare federal health and LSC requirements by CMS until December 14, 2019.  CMS Ex. 1.

CMS correctly determined that Sundance’s effective date of participation in the Medicare program was December 14, 2019.

WHEREFORE, evidence having read and considered it be and is hereby ORDERED as follows: 

1. CMS’s Motion for Summary Judgment be and is hereby GRANTED; and
2. CMS’s determination that Sundance’s effective date of participation in the Medicare program as of December 14, 2019, be and is hereby AFFIRMED.

1. This decision has been amended to correct a scrivener’s error in the case caption.
• back to note 1
2.   See also Butz v. Economou, 438 U.S. 478, 513 (1978); Marshall v. Jerrico, Inc., 446 U.S. 238 (1980); Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S. 743, 744 (2002).
• back to note 2