The Medical Resort at Willowbrook, ALJ Ruling 2021-2 (HHS CRD Apr. 27, 2021)

ACKNOWLEDGMENT, DENIAL OF MOTION FOR AN EXTENSION OF TIME TO FILE HEARING REQUEST, ANDDISMISSAL OF HEARING REQUEST

The Civil Remedies Division (CRD) received Petitioner’s April 16, 2021 Request for Hearing challenging the Centers for Medicare & Medicaid Services’ (CMS) December 7, 2020 initial determination imposing civil money penalties (CMP) on Petitioner due to findings of substantial noncompliance with Medicare requirements for skilled nursing facilities (SNF).  CRD also received Petitioner’s motion for an extension of time to file this hearing request (P. Motion) because Petitioner’s filing is more than two months late.

For Petitioner to obtain a filing extension, Petitioner must show that it had good cause for missing the due date for its hearing request.  As explained below, the reasons that Petitioner provides for failing to file a hearing request within 60 days of receiving the initial determination are insufficient to show good cause.  Further, Petitioner did not support its assertions with affidavits or declarations from Petitioner’s personnel who received the initial determination and were allegedly confused by it.  As a result, I deny Petitioner’s motion for an extension of time and, consequently, dismiss the Request for Hearing as untimely.

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I.  Legal Framework

The Medicare program “provides basic protection against the costs of . . . related post‑hospital . . . care” for individuals over the age of 65 who are eligible for Social Security retirement benefits and for individuals under 65 who meet other criteria.  42 U.S.C. § 1395c.  Post-hospital care includes extended care services provided at an SNF.  42 U.S.C. §§ 1395f(a)(2)(B), 1395x(h)-(i).

For Medicare program purposes, an SNF is an institution that is primarily engaged in providing skilled nursing care and/or rehabilitation services for its residents but is not primarily engaged in the care and treatment of mental diseases.  42 U.S.C. §§ 1395x(j), 1395i-3(a)(1).  Because an SNF is a “provider of services” in the Medicare program, each SNF that participates in the program must file a provider agreement with the Secretary of Health and Human Services (Secretary).  42 U.S.C. §§ 1395cc(a), 1395x(u).  Further, a participating SNF must meet a variety of ongoing requirements related to how it provides services, maintains the rights of its residents, and administers its facility.  42 U.S.C. § 1395i-3(a)(3), (b)-(d); 42 C.F.R. pt. 483, subpt. B.

When an SNF fails to meet a statutory or regulatory participation requirement, then the SNF has a “deficiency.”  42 C.F.R. § 488.301; see 42 U.S.C. § 1395i-3(h)(1).  “Noncompliance” means “any deficiency that causes a facility to not be in substantial compliance.”  42 C.F.R. § 488.301; see also 42 U.S.C. § 1395i-3(h)(3).  To maintain “substantial compliance,” an SNF’s deficiencies may “pose no greater risk to resident health or safety than the potential for causing minimal harm.”  42 C.F.R. § 488.301.

Broadly, noncompliance that subjects an SNF to enforcement remedies is divided into two levels.  One level is comprised of deficiencies that immediately jeopardize the health or safety of residents and the other level is composed of deficiencies that do not.  42 U.S.C. § 1395i-3(h)(1).  “Immediate jeopardy” exists when “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. § 488.301.

The Secretary contracts with state agencies to conduct surveys to determine whether SNFs are in substantial compliance.  42 U.S.C. §§ 1395aa(a), 1395i-3(g); 42 C.F.R. § 488.10.  These surveys can be unannounced surveys that occur at least once every 15 months or can be in response to a complaint.  42 U.S.C. § 1395i-3(g).  When the results of a survey show that an SNF is not in substantial compliance with program participation requirements, the Secretary may impose enforcement remedies on the SNF.  42 U.S.C. § 1395i-3(h)(2); 42 C.F.R. § 488.406.  When CMS selects an enforcement remedy to impose on an SNF, it determines the scope (i.e., the number of residents affected or potentially affected) and severity (i.e., the degree of harm or potential harm) for each

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deficiency.1   See 42 C.F.R. § 488.404(a)-(b); see also 42 U.S.C. § 1395i‑3(h)(2)(B)(ii)(III)(bb). 

One such remedy is a CMP.  42 U.S.C. § 1395i-3(h)(2)(B)(ii).  CMS may impose a per‑instance CMP for each instance of an SNF’s noncompliance, or a per‑day CMP for the number of days an SNF is not in substantial compliance.  42 U.S.C. § 1395i‑3(h)(2)(A), (h)(2)(B)(ii)(I); 42 C.F.R. § 488.430(a). 

If CMS imposes a CMP based on a finding of substantial noncompliance, then the SNF may request a hearing to challenge CMS’s initial determination of noncompliance that led to the imposition of an enforcement remedy and/or the level of noncompliance (if a successful challenge to the level would affect the range of CMP amounts imposed on the SNF).  42 U.S.C. §§ 1320a-7a(c)(2), 1395i‑3(h)(2)(B)(ii); 42 C.F.R. §§ 488.330(e)(3)(ii), 488.408(g)(1), 488.434(a)(2)(viii), 498.3(b)(13)-(14), (d)(10); see also 5 U.S.C. §§ 554, 556.  However, CMS’s choice of remedies is not reviewable.  42 C.F.R. §§ 488.438(e)(2), 488.408(g)(2), 498.3(b)(13).  The SNF must request the hearing within 60 days of from receipt of CMS’s initial determination. 

II.  Procedural History

On April 16, 2021, Petitioner moved for an extension of time to request a hearing to dispute CMS’s December 7, 2020 initial determination to impose CMPs on Petitioner.  Petitioner attached 11 exhibits (P. Exs. 1-11) to its motion.  One of those exhibits (P.Ex. 2) is Petitioner’s April 16, 2021 Request for Hearing.

III.  Background

Petitioner is an SNF located in Texas that participates in the Medicare program.  On December 11, 2019, the Texas Health & Human Services Commission (THHSC) conducted a survey of Petitioner’s facility to determine whether it was in compliance with Medicare requirements for SNFs.  P. Ex. 1 at 1; P. Ex. 2 at 1.  THHSC found that Petitioner was not in substantial compliance, at the D and E scope and severity levels,

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with five requirements, including 42 C.F.R. § 483.15(c)(1)(i)-(ii), (c)(2)(i)-(iii), (c)(3)‑(6), (8).  P. Ex. 1 at 1; P. Ex. 2 at 1-3.  THHSC later determined that Petitioner achieved substantial compliance with Medicare requirements on February 15, 2020.  P. Ex. 1. at 1. 

Before CMS issued an initial determination based on THHSC’s findings, the COVID-19 pandemic caused CMS to significantly modify its priorities concerning SNF compliance.  On March 4, 2020, CMS notified state survey agencies that it was immediately “suspending non-emergency inspections across the country, allowing inspectors to turn their focus on the most serious health and safety threats like infectious diseases and abuse.  This shift in approach will also allow inspectors to focus on addressing the spread of [COVID-19].”  P. Ex. 3 at 1.  In its March 4 notice, CMS limited survey activity to immediate jeopardy complaints, infection control complaints, statutorily required recertifications, initial certifications, and revisits needed to resolve open surveys.  P. Ex. 3 at 1-2.  On March 13, 2020, the President of the United States declared that COVID-19 was a national emergency.  P. Ex. 6 at 1.  In March 2020, Texas officials also recognized the COVID-19 emergency.  P. Exs. 4-5. 

On March 20, 2020, CMS announced to state survey agencies that it was further narrowing the focus of surveys to help stem the spread of COVID-19.  P. Ex. 6.  

On August 17, 2020, CMS notified state survey agencies of CMS’s updated priorities related to SNF compliance, which also included “providing guidance on resolving enforcement cases that were previously directed to be held, and providing guidance on [CMP] collection.”  P. Ex. 7 at 1.  CMS’s August 17 notice indicated how surveys from various survey cycles would be handled.  CMS divided this information into three chronological groups: 

• Surveys initiated before March 23, 2020;
• Surveys initiated on March 23, 2020 through May 31, 2020; and
• Surveys initiated on or after June 1, 2020. 

P. Ex. 7 at 3.  If a survey was conducted before March 23, 2020, but CMS had not yet sent an initial determination imposing remedies, then CMS was going to impose remedies in accordance with the Immediate Imposition of Remedies Policy in Chapter 7, section 7304 of the State Operations Manual (SOM).  P. Ex. 7 at 4-5.  Section 7304 relates to the mandatory immediate imposition of remedies for deficiencies involving immediate jeopardy to the health and safety of residents or actual harm (G level) to a resident.  P. Ex. 8.

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If a survey cycle started on March 23, 2020 through May 31, 2020, then CMS stated that it would not impose CMPs for noncompliance cited at scope and severity levels D, E, and F.  P. Ex. 7 at 6.  Such a statement did not apply to surveys conducted before March 23, 2020. 

On October 1 and 16, 2020, THHSC completed surveys at Petitioner’s facility and found that Petitioner was not in substantial compliance with numerous Medicare program requirements at the D through G scope and severity levels.  P. Ex. 10 at 2.  On November 6, 2020, CMS faxed to Petitioner an initial determination dated November 6, 2020, which stated that CMS concurred with THHSC’s findings and imposed enforcement remedies including two per-instance CMPs.  P. Ex. 10 at 1-3.  CMS’s initial determination stated at the top of the first page:  “IMPORTANT NOTICE – PLEASE READ ENTIRE DOCUMENT CAREFULLY.  This serves as official notice pursuant to 42 CFR Part § 488.”  P. Ex. 10 at 2.  Directly under Petitioner’s address and directly above the salutation CMS indicated that this notice was regarding the “Imposition of Remedies” for “Enforcement Cycle Start Date (CSD):  October 1, 2020.”  P. Ex. 10 at 2. The initial determination also provided in bold the time limitations that Petitioner had to file a hearing request to dispute the enforcement remedies imposed on Petitioner:  “You must file your hearing request . . . no later than January 5, 2021 (60 days from the date of receipt of this letter via fax).”  P. Ex. 10 at 4. 

On December 7, 2020, CMS faxed to Petitioner an initial determination dated December 7, 2020, which stated that, on December 11, 2019, THHSC surveyed Petitioner’s facility and THHSC certified that Petitioner was not in substantial compliance with five Medicare program requirements.  P. Ex. 1.  The top of the first page of the initial determination stated:  “IMPORTANT NOTICE – PLEASE READ ENTIRE DOCUMENT CAREFULLY.  This serves as official notice pursuant to 42 CFR Part § 488.”  P. Ex. 1 at 2.  Directly under Petitioner’s address and directly above the salutation CMS indicated that this notice was regarding the “Imposition of Remedies and Substantial Compliance” for “Enforcement Cycle Start Date (CSD):  December 11, 2019.”  P. Ex. 1 at 2.  In the notice, CMS stated that THHSC informed CMS that Petitioner had achieved substantial compliance on February 15, 2020.  P. Ex. 1 at 2.  Based on two of the deficiencies, CMS stated that it was imposing two per-instance CMPs.  P. Ex. 1 at 3.  The initial determination provided, in bold, the time limitations for the filing of a hearing request to dispute the enforcement remedies imposed on Petitioner:  “You must file your hearing request . . . no later than February 5, 2021 (60 days from the date of receipt of this letter via fax).”  P. Ex. 1 at 4. 

IV.  Petitioner’s Statement of Good Cause

In its motion seeking an extension of time to file a hearing request, Petitioner makes several assertions to show good cause exists in this case.  Petitioner asserts that various

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factors led to confusion over the December 7, 2020 initial determination resulting in it being overlooked.  These are: 

• CMS issued the December 7, 2020 initial determination nearly a year after the completion of THHSC’s survey and nearly nine months after Petitioner returned to substantial compliance.
• CMS delivered the initial determination by fax only. 

• CMS guidance indicated that CMS would not assess a CMP on Petitioner for the December 2019 survey.

• A new survey cycle had been initiated before the CMPs for the December 2019 survey were imposed.

P. Motion at 1.

Petitioner asserts that it believed that it was not subject to CMPs based on the results of the December 2019 survey because the deficiencies found during the survey were scope and severity levels D and E.  Petitioner bases this view on CMS’s August 17, 2020 guidance document to state survey agencies indicating that CMS would follow the SOM’s rules on the Imposition of Remedies Policy, which only discussed imposing remedies on deficiencies with a scope and severity level of G and above.  P. Motion at 2‑3; see P. Ex. 7.  Petitioner said that its interpretation of this guidance “was further bolstered by the fact that CMS expressly stated that ‘CMS will not impose[] CMPs for noncompliance cited at lower S/S levels (D, E, or F)’ for surveys conducted between March 23, 2020 and May 31, 2020.”  P. Motion at 3. 

Petitioner also indicates that it underwent two additional surveys in October 2020, and even received a November 2020 initial determination imposing CMPs based on those surveys before the December 7, 2020 initial determination arrived.  P. Motion at 3.  Petitioner argues that:

This notice [the November 2020] indicated that the October 1, 2020 survey started a new survey cycle, which further supports the Facility’s reasonable belief that the December 11, 2019 survey was resolved.  Thus, when the Facility received the 12/7/2020 notice, the facility thought it was in connection with the other two surveys and it was inadvertently overlooked.  

P. Motion at 3.  It was not until Petitioner’s counsel conducted a legal review related to the October 2020 surveys that Petitioner realized for the first time that it had received an

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initial determination imposing CMPs related to the December 2019 survey.  P. Motion at 4. 

Petitioner finally asserts that, “[i]f CMS was going to send a notice in contravention to [CMS’s August 17, 2020 notice], the Facility should have received the notice much sooner and it should have made the enforcement action more conspicuous by providing more prominent language.  The CMS notice concerning the 12/11/2019 survey should not have taken one year to send to the Facility.”  P. Motion at 4 (emphasis omitted).

V.  Analysis

A hearing request must be filed within 60 days of receiving an initial determination.  42 C.F.R. § 498.40(a)(2).  If a hearing request was not filed within 60 days, an SNF may file a request for an extension of time to file the hearing request explaining why the request was not filed timely.  42 C.F.R. § 498.40(c)(1).  An administrative law judge may extend the date for filing the hearing request for “good cause shown.”  42 C.F.R. § 498.40(c)(2).

The regulations do not define what the term “good cause” means.  Further, the Departmental Appeals Board (DAB) has not definitively defined that term either.  Day Op of North Nassau, Inc., DAB No. 2818 at 6-7 (2017) (citing cases).  Therefore, I will consider all of the facts and circumstances based on the information before me. 

Petitioner does not dispute that it received the December 7, 2020 initial determination by fax on that date.  See P. Ex. 1.  Nor does Petitioner dispute that it has filed its hearing request more than two months late. 

In the present case, counsel for Petitioner lays out the reasons why a person or persons (none are named) at Petitioner’s facility received the December 7, 2020 initial determination and was confused by it, which resulted in it being overlooked.  However, Petitioner does not submit an affidavit or declaration from a person or persons at the facility who state this.  Perhaps counsel’s rendition of the situation is accurate or perhaps it is speculation.  However, I do not have an evidentiary basis to find good cause.  See Maximum Hospice and Palliative Care, DAB No. 2898 at 5 (2018) (“In denying Petitioner’s request to vacate the dismissal, the [administrative law judge] noted that Petitioner had failed to submit any evidence, such as a declaration or affidavit, to support its assertions.  Given the complete lack of evidence to support Petitioner’s assertions, we cannot conclude that the [administrative law judge] abused her discretion in failing to find good cause to vacate the dismissal order.”).  Even if I did have evidence, I do not believe that Petitioner’s assertions show good cause.    

Petitioner complains that CMS’s initial determination should have provided more prominent language that it was related to the December 2019 survey so that Petitioner’s

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administrator or staff could distinguish it from initial determinations related to the October 2020 surveys.  However, the December 7, 2020 initial determination prominently provides that information.  The top left portion of the initial determination indicates that the initial determination involved the imposition of remedies concerning the enforcement cycle that started on December 11, 2019.  Also, the first full sentence starts:  “On December 11, 2019, your State Survey Agency (SA) surveyed your facility for compliance with Federal requirements . . . .”  P. Ex. 1 at 1.  No reasonable employee of Petitioner’s facility, no less the facility administrator to whom the initial determination was addressed, could have easily mistaken this document as pertaining to the October 2020 surveys. 

In addition, even if facility personnel were somehow confused and believed that this initial determination related to the October 2020 surveys, the document clearly states that CMS is imposing CMPs on Petitioner and that Petitioner had until February 5, 2021, to request a hearing.  Therefore, Petitioner should still have reviewed the document and considered whether to request a hearing by February 5, 2021.

Petitioner is critical that the initial determination came by fax.  However, the November 2020 initial determination related to the October 2020 surveys did as well.  That initial determination was received and apparently intelligible to Petitioner’s staff.  Having received an initial determination in November 2020 similar to the December 2020 initial determination, Petitioner’s staff would have been alerted that CMS would send initial determinations by fax and that there would be only 60 days to request a hearing after receipt.

Finally, even if facility personnel did believe that CMS’s ambiguous instructions to state survey agencies concerning the imposition of CMPs for surveys conducted before March 23, 2020 meant that CMS would not impose CMPs for deficiencies with the scope and severity levels of D and E, the fact remains that CMS said it was taking such action in the December 7, 2020 initial determination.2   This should have resulted in staff concluding that it needed to appeal the CMPs rather than “overlook” the document.  Cf. West Side House LTC Facility, DAB No. 2791 at 7-9 (2017) (finding no good cause based on an SNF’s mistaken belief that Petitioner was favorably resolving the deficiencies in question

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through the independent informal dispute resolution and that CMS had extended Petitioner’s time to file a hearing request). 

Based on my review of Petitioner’s motion, Petitioner’s staff mistakenly failed to act on the December 7, 2020 initial determination when they received it.  This is insufficient to show good cause.

VI.  Dismissal

An administrative law judge may dismiss a hearing request when the SNF “did not file a hearing request timely and the time for filing has not been extended.”  42 C.F.R. § 498.70(c).  Because Petitioner’s hearing request is late by more than two months and I have not extended the date for filing, I dismiss Petitioner’s hearing request. 

1. CMS or the state agency designates the scope and severity level using a letter from A through L based on a scope and severity matrix published in the State Operations Manual, Ch. 7, § 7400.3.1 (Rev. 185, Eff. Nov. 16, 2018).  Levels A, B, or C indicate a deficiency that presents no actual harm but has the potential for minimal harm, which means the facility technically remains in substantial compliance.  42 C.F.R. § 488.301.  Levels D, E, or F indicate a deficiency that presents no actual harm but has the potential for more than minimal harm that does not amount to immediate jeopardy.  Levels G, H, or I indicate a deficiency that involves actual harm that does not amount to immediate jeopardy.  Finally, levels J, K, and L indicate a deficiency that constitutes immediate jeopardy to resident health or safety.
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2. Petitioner interprets CMS guidance (P. Ex. 7 at 4-6) to mean that surveys conducted before March 23, 2020, would not result in CMPs for deficiencies that did not involve actual harm or immediate jeopardy.  Petitioner claims that this perception was bolstered by the provision in the same guidance document directly stating such was the case for surveys conducted after March 23, 2020.  I view CMS’s clear statement regarding surveys conducted after March 23, 2020, as an indication that such a policy might not apply to surveys conducted before March 23, 2020.  Otherwise, CMS would have clearly stated that instruction related to surveys conducted before March 23, 2020, as well.
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