The Rehabilitation Center of Oakland, ALJ Ruling 2020-5 (HHS CRD Feb. 11, 2020)

DISMISSAL

I dismiss Petitioner’s request for a hearing before an administrative law judge (ALJ).  The Centers for Medicare & Medicaid Services (CMS) reopened and revised its initial determination to withdraw the enforcement remedies CMS imposed on Petitioner.  As a result, Petitioner no longer has a right to ALJ review in this matter.

Petitioner, a skilled nursing facility (SNF), is a provider in the Medicare program.  42 U.S.C. § 1395x(u).  SNFs enrolled in the Medicare program must comply with various statutory and regulatory requirements and, as a result, Petitioner is subject to periodic surveys and surveys based on complaints conducted by a state agency.  42 U.S.C. § 1395i-3(a)(3), (b)-(d), (g); 42 C.F.R. §§ 483.10-483.95.

On July 1, 2019, the California Department of Public Health (state agency) completed a complaint survey of Petitioner’s facility.  The state agency found that Petitioner was not in substantial compliance with federal SNF requirements.  In a July 24, 2019 initial determination, CMS concurred with the deficiencies found by the state agency and imposed the following enforcement remedies on Petitioner:  a $13,780.00 civil money penalty (CMP); denial of payment for new admissions effective October 1, 2019; and termination of its Medicare provider agreement effective January 1, 2020.  CMS advised

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Petitioner that it had the right to request a hearing before an ALJ “since this certification/finding of noncompliance has led to the actual imposition of an enforcement remedy specified at 42 C.F.R. § 488.406.”  CMS Ex. 1.

On August 14, 2019, the state agency conducted a revisit survey and found Petitioner to be in substantial compliance with federal SNF requirements as of that date.  On August 19, 2019, CMS notified Petitioner that it would not effectuate the denial of payment for new admissions and termination of its Medicare provider agreement.  CMS Ex. 2.

On September 20, 2019, Petitioner requested an ALJ hearing.  On September 26, 2019, the Civil Remedies Division acknowledged receipt of the hearing request and issued my Standing Prehearing Order.

On December 11, 2019, CMS filed an unopposed extension request to the prehearing submission deadlines because the parties were in settlement discussions.  On December 12, 2019, I granted the motion. 

On December 26, 2019, CMS issued a revised determination in which it rescinded the CMP that it imposed on Petitioner, but continued to maintain that Petitioner had not been in substantial compliance with Medicare participation requirements.  The revised determination advised Petitioner that it no longer had hearing rights and that it should seek dismissal of the hearing request.1   CMS Ex. 3.

On January 23, 2020, CMS moved for dismissal (CMS Mot.) of Petitioner’s hearing request and filed three exhibits (CMS Exs. 1-3).  CMS argued:

A skilled nursing facility does not have a right to a hearing to challenge every action by CMS with which it disagrees.  It is the imposition of an enforcement remedy and not the citation of a deficiency that triggers the right to a hearing under 42 C.F.R. Part 498.  Thus, there is no right to a hearing under 42 C.F.R. Part 498 unless CMS determines to impose—and actually imposes—one of the remedies specified in the regulations.  42 C.F.R. §§ 498.3(b)(13); 488.408(g)(1) (“facility may appeal a certification of noncompliance leading to an enforcement remedy”); Columbus Park, DAB No. 2316

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(2010); Fountain Lake Health & Rehab., Inc., DAB No. 1985 (2005).  Where CMS withdraws the remedies or otherwise declines to impose one, Petitioner has no right to a hearing. Bruceville Terrace, ALJ Ruling No. 2016-8 (Feb. 1, 2016) (citing Fountain Lake, DAB No. 1985 (2005)).  As stated above, the proposed DPNA and termination of Medicare provider agreement did not go into effect, and CMS has rescinded the other remedies.  As a result, there is no longer any appealable initial determination, and Petitioner has no right to a hearing.  Its appeal should be dismissed.

CMS Mot. at 3 (footnote omitted).  Petitioner opposed the motion (P. Opp.) because Petitioner believes that CMS’s actions are meant to preclude Petitioner from appealing the underlying finding of substantial noncompliance.  P. Opp. at 2.  In order to argue that Petitioner still had a right to ALJ review, Petitioner was placed in the odd position of asserting that CMS should impose an enforcement remedy on Petitioner.  P. Opp. at 3-5.  Petitioner concluded its argument as follows:

CMS cannot be permitted to use the imposition and rescission of remedies as both a shield and a sword, picking and choosing when to impose remedies based upon the merits of a case, i.e. CMS cannot be allowed to rescind remedies when its case is weak to prevent a facility from contesting the deficiency on its merits.  This is not the purpose of the regulatory scheme.  There must be a mechanism by which providers, such as Oakland, can hold CMS accountable, especially when it appears that the remedy was rescinded for the sole purpose of precluding Oakland from proceeding with this appeal.

P. Opp. at 5.  CMS filed a reply to Petitioner’s opposition.

CMS is correct.  Once it rescinds all enforcement remedies, an SNF loses its right to a hearing before an ALJ.  Other than in cases involving the immediate jeopardy of SNF residents, CMS is not required to impose enforcement remedies when it concludes that an SNF is in substantial noncompliance with Medicare requirements.  Rather, CMS has discretion whether to impose those enforcement remedies.  See 42 U.S.C. § 1395i-3(h)(2)(A); 42 C.F.R. § 488.402(b).

Petitioner did not specify why it is concerned with a finding of noncompliance that does not result in enforcement remedies.  It could be because Petitioner’s history of deficiencies can result in increased CMP amounts should there be future deficiencies and CMS imposes a CMP.  See Plott Nursing Home v. Burwell, 779 F.3d 975, 987-989 (9th

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Cir. 2015).  However, while Petitioner’s history of noncompliance would be a factor to consider when determining the reasonableness of a CMP amount (42 U.S.C. §§ 1320a-7a(d)(2), 1395i-3(h)(2)(B)(ii)(I); 42 C.F.R. § 488.438(f)(1)), Petitioner could argue that the findings of noncompliance were not subject to appeal and, consequently, the ALJ should give little or no weight to those findings.  To the extent that CMS’s determination may result in other negative collateral consequences (see Plott, 779 F.3d at 986-987), such consequences are insufficient to confer a right to dispute the deficiencies before an ALJ.

Because Petitioner does not have the right to a hearing before an ALJ, I grant CMS’s motion and dismiss Petitioner’s hearing request.  42 C.F.R. § 498.70(b).

1. It is unclear why CMS did not move for remand of this case so that CMS could reopen and revise the initial determination.  See 42 C.F.R. § 498.78.  CMS represented in its December 11, 2019 Unopposed Motion for Extension of Deadlines that CMS needed an adjustment in the prehearing submission schedule until January 27, 2020, for the purpose of completing settlement negotiations.  I granted the motion for that purpose.  CMS did not disclose that it would issue a revised determination.
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