Neurorestorative Nevada, ALJ Ruling 2023-5 (HHS CRD March 1, 2023)

DISMISSAL

Petitioner, Neurorestorative Nevada, is a long-term-care facility, located in Reno, Nevada, that participates in the Medicare program.  The Centers for Medicare and Medicaid Services (CMS) determined that, for ten weeks, starting with the week that ended on December 21, 2020, through the week that ended on February 22, 2021, the facility did not submit its COVID-19 data to the Centers for Disease Control and Prevention (CDC), as required by 42 C.F.R. § 483.80(g)(1)-(2).  CMS imposed a $1,000 civil money penalty (CMP) for the first week the facility failed to comply.  For each succeeding week, CMS increased the penalty by $500 over the previously-imposed penalty amount.  42 C.F.R. § 488.447(a)(1)-(2).  The penalties total $32,500. 

Each week, CMS sent the facility a notice of its determination that the facility was not in substantial compliance with section 483.80(g) because it had not reported its weekly COVID data.  The notices explain the facility’s appeal rights.  Petitioner did not timely appeal the determinations, and, pursuant to 42 C.F.R. § 498.70(c), CMS moves to dismiss the hearing requests as untimely.  

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For the reasons discussed below, I grant CMS’s motion.  I agree that the hearing requests are untimely and that Petitioner has not shown good cause for my extending the time for filing. 

Background

The Social Security Act (Act) sets forth requirements for nursing facilities to participate in the Medicare program and authorizes the Secretary of Health and Human Services to promulgate regulations implementing those statutory provisions.  Act § 1819.  The Secretary’s regulations are found at 42 C.F.R. Part 483.  To participate in the Medicare program, a nursing facility must maintain substantial compliance with program requirements.  To be in substantial compliance, a facility’s deficiencies may pose no greater risk to resident health and safety than “the potential for causing minimal harm.”  42 C.F.R. § 488.301. 

The Covid reporting requirements.  The COVID-19 pandemic disproportionately affected this country’s nursing home population.  Responding to the crisis, on May 8, 2020, CMS published an interim final rule, amending its infection control regulation to add Covid-specific requirements.  88 Fed. Reg. 27,550, 27,601-602 (May 8, 2020). 

Among other provisions, the new rule adds COVID-19 reporting requirements.  Weekly, facilities must electronically report to the CDC National Healthcare Safety Network (NHSN), “in a standardized format specified by the Secretary,” the following information: 

1. suspected and confirmed COVID-19 infections among residents and staff, including residents previously treated for COVID-19;
2. total deaths and COVID-19 deaths among residents and staff;
3. personal protective equipment and hand hygiene supplies in the facility;
4. ventilator capacity and supplies in the facility;
5. resident beds and census;
6. access to COVID-19 testing while the resident is in the facility;
7. staffing shortages;
8. the COVID-19 vaccine status of residents and staff, including total numbers of residents and staff vaccinated, numbers of each dose of

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COVID-19 vaccine received, and COVID-19 vaccination adverse events; and

ix. therapeutics administered to residents for treatment of COVID-19. 

42 C.F.R. § 483.80(g)(1) and (2); see CMS Ex. 6 at 3 et seq. (emphasizing that NHSN enrollment is required and instructing facilities on how to enroll online). 

Before it published the final rule, CMS issued a policy memorandum, QSO-20-29-NH (Interim Final Rule Updating Requirements for Notification of Confirmed and Suspected COVID-19 Cases Among Residents and Staff in Nursing Homes), dated May 6, 2020, addressing the new participation requirement.  CMS Ex. 1.  The memorandum explains that federal (not state) surveyors would review, offsite, facility compliance with the Covid-reporting rule.  After an initial grace period, CMS would “review for timely and complete reporting of all data elements.”  CMS would cite a deficiency under section 483.80(g)(1)-(2) (F884) on form CMS-2567 (statement of deficiencies) for facilities identified as not reporting.  The scope and severity level would be F (widespread substantial noncompliance that causes no actual harm with the potential for more than minimal harm).  CMS Ex. 1 at 4. 

CMS subsequently published another rule, authorizing CMS to impose CMPs for noncompliance with section 483.80(g)(1)-(2) and setting the amounts of those CMPs.  42 C.F.R. § 488.447; see 85 Fed. Reg. 54,820, 54,823-825 (Sept. 2, 2020).  The regulation sets a minimum penalty of $1,000, to which an additional $500 is added for each subsequent occurrence.  42 C.F.R. § 488.447(a)(1)-(2).  Compliance is assessed weekly.  42 C.F.R. § 488.447(c). 

CMS’s database includes the Certification and Survey Provider Enhanced Reports (CASPER) system.  Through CASPER, facilities connect to CMS’s national reporting database.  In a notice dated June 1, 2020, CMS advised nursing homes that it would “use the CASPER shared folders to communicate important information regarding findings of noncompliance with the requirements to report COVID-19 data to the CDC through the National Healthcare Safety Network (NHSN).  This includes the CMS 2567 and Enforcement Notices.”  CMS Ex. 7 (emphasis added); see https://qtso.cms.gov. 

Here, in notices issued on December 21, 2020, December 28, 2020, January 4, 2021, January 11, 2021, January 18, 2021, January 25, 2021, February 1, 2021, February 8, 2021, February 15, 2021, and February 22, 2021, CMS advised Petitioner that it had reviewed the CDC’s National Health Safety Network system data for the facility to determine whether it complied with section 483.80(g)(1)-(2).  CMS determined that the facility was not in substantial compliance with that regulation because it failed to report complete information “about COVID-19 in the

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standardized format and frequency” required.  P. Exs. 1, 33, 34, 35, 36, 37, 38, 39, 40, 41.¹  In fact, the parties agree that the facility submitted no reports during these weeks. 

For the first week, CMS imposed a $1,000 penalty for one day of substantial noncompliance (December 21, 2020).  P. Ex. 1 at 2.  Thereafter, for each succeeding week, CMS added $500 to the previously-imposed penalty, as called for in 42 C.F.R. § 488.447(a)(2).  P. Ex. 33 at 2 ($1,500 CMP); P. Ex. 34 at 2 ($2,000 CMP); P. Ex. 35 at 2 ($2,500 CMP); P. Ex. 36 at 2 ($3,000 CMP); P. Ex. 37 at 2 ($3,500 CMP); P. Ex. 38 at 2 ($4,000 CMP); P. Ex. 39 at 2 ($4,500 CMP); P. Ex. 40 at 2 ($5,000 CMP); P. Ex. 41 at 2 ($5,500 CMP). 

Each of the notice letters includes a section prominently captioned “APPEAL RIGHTS,” which advises the facility of its right to request a hearing before an administrative law judge (ALJ):  “If you disagree with the noncompliance that resulted in this imposition, you or your legal representative may request a hearing before an (ALJ) of the Department of Health and Human Services, Departmental Appeals Board (DAB).”  The letters then cite the regulations that govern such appeals – 42 CFR § 498.  The letters instruct the facility to file its hearing request electronically and explain the procedures for doing so.  P. Ex. 1 at 4-5; P. Ex. 33 at 4-5; P. Ex. 34 at 4-5; P. Ex. 35 at 4-5; P. Ex. 36 at 4-5; P. Ex. 37 at 4-5; P. Ex. 38 at 4-5; P. Ex. 39 at 4-5; P. Ex. 40 at 4-5; P. Ex. 41 at 4-5.  The letters emphasize that “A request for hearing must be filed no later than 60 days from the date of receipt of this notice.”  P. Ex. 1 at 5; P. Ex. 33 at 5; P. Ex. 34 at 5; P. Ex. 36 at 5; P. Ex. 37 at 5; P. Ex. 38 at 5; P. Ex. 39 at 5; P. Ex. 40 at 5; P. Ex. 41 at 5 (emphasis in originals). 

Pursuant to its announced practice for serving COVID-related enforcement notices (CMS Ex. 7), CMS served the notices by posting them on the CASPER-shared folders.  

On April 27, 2021, Petitioner requested hearings on the ten determinations and asked that the filing periods be extended (P. Appeal).  Not one of the appeals was filed within 60 days of its respective notice.  See CMS Motion to Dismiss at 6 (showing that the appeals were filed from five to 67 days after the deadlines). 

CMS moves to dismiss the requests as untimely (CMS Motion).  Petitioner opposes (P. Opp.).  

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Discussion

1. Petitioner is not entitled to hearings to challenge CMS’s determinations – issued from December 21, 2020, through February 22, 2021 – because it did not file timely hearing requests and no good cause justifies extending the time for filing.²

Section 1866(h) of the Social Security Act authorizes administrative review of determinations that a provider fails to comply substantially with Medicare program requirements “to the same extent as is provided in section 205(b) of the [Act].”  42 U.S.C. § 1395cc(h)(1).  Under section 205(b), the Secretary of Health and Human Services must provide reasonable notice and opportunity for a hearing “upon request by [the affected party] who makes a showing in writing that his or her rights may be prejudiced” by the Secretary’s decision.  42 U.S.C. § 405(b)(1).  The hearing request “must be filed within sixty days” after receipt of the notice of CMS’s determination.  Id. (emphasis added).  The 60-day time limit is thus a statutory requirement.  See Cary Health and Rehab. Ctr., DAB No. 1771 at 8-9 (2001). 

Similarly, the regulations mandate that the affected party “file the request in writing within 60 days from receipt of the notice . . . unless that period is extended.”  42 C.F.R. § 498.40(a)(2).  If the request is not filed within 60 days, the party may file a written request for extension, which the ALJ may grant “for good cause shown.”  42 C.F.R. § 498.40(c). 

The parties agree that CMS added each notice to CASPER on the date of the notice itself.  See P. Opp. at 2.  CMS maintains that this is the date of service.  Petitioner does not argue that this means of service is improper; it argues that it was unable to access the system at the time the notices were added because the facility’s administrator left abruptly, taking with him the facility’s access.  As a result of his misconduct, according to Petitioner, facility staff did not receive the notices until March 9, 2021, when a new administrator was able to access CASPER and read them.  Based on this, Petitioner argues that March 9, 2021 was the date of service. 

In the alternative, if the date of service is the date CMS added the notices to CASPER, Petitioner argues that its inability to access the system constitutes good cause for its late filings. 

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When Petitioner received the notices.  The regulations were drafted at a time when virtually all notices were served by U.S. mail.  Hence, they provide that the date of receipt is presumed to be five days after the date on the notice “unless there is a showing that it was, in fact, received earlier or later.”  42 C.F.R. § 498.22(b)(3).  Over time, as technology has made it possible, CMS has adopted more advanced (and, arguably, more reliable) methods of sending its notices, and the Departmental Appeals Board has found that these alternative methods are valid. 

In a modern era of electronic mailing and messaging, the term “mails” is not unambiguous.  The core question for due process is whether the transmission method is as capable of accomplishing the essential purpose of notice. 

Fairway Medical Clinic & Shadow Creek Medical Clinic, DAB No. 2811 at 9 (2017) (emphasis added).  Thus, the Board has upheld the practices of sending notices by email, fax, or upload into a shared electronic folder and agreed that such notices are received on the date sent or filed.  See Allan L. Silverstein, M.D., DAB No. 2908 at 7-8 (2018); LCD Complaint:  Bioengineered Skin Substitute, DAB No. 2814 at 6-7 (2017). 

The Civil Remedies Division’s own practice for serving notice involves uploading the document into an electronic file and sending the parties an email indicating that a document has been filed.  The parties are expected to check their email accounts regularly and to check the electronic file.  In the Board’s view, the agency’s uploading the document creates a rebuttable presumption that it has been served on the parties, who have agreed to participate in the electronic filing system.  Silverstein, DAB No. 2908 at 7; Parvin Shafa, M.D., DAB No. 2846 at 4-5 (2018); LCD Complaint, DAB No. 2814 at 6-7.  This is so even where the party fails to check the file and, thus, does not actually see the notice.  Silverstein at 7. 

Here, CMS maintains that, for purposes of requesting review, Petitioner received each notice on the date CMS added it to CASPER, which is the date on the notice itself.  Petitioner, on the other hand, argues that March 9, 2021, the date the facility’s newly-hired administrator gained access to CASPER and saw the notices, was the date of service.  Thus, in Petitioner’s view, the facility had until May 10, 2021 to request hearings, and its April 27, 2021 appeals were timely filed.  P. Appeal at 4; P. Opp. at 3. 

I agree that the date of service is the date CMS uploads a notice into the CASPER system.  Due process requires “notice reasonably calculated, under the circumstances, to apprise interested parties of the pendency of the action and afford them the opportunity to present their objections.”  It does not require “rigid conformity in terms of the kind of notice that must be given.”  Fairway Med.

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Clinic, DAB No. 2811 at 8 n.6 (2017), quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, and citing Lehner v. United States, 685 F. 3d 1187, 1190-1191 (9th Cir. 1982). 

Here, all Medicare-certified facilities were required to report COVID data weekly.  CMS had a monumental task in reviewing the NHSN submissions, identifying the facilities that did not comply, assessing penalties, and sending notices to the noncompliant.  Its solution for providing the weekly notices was “reasonably calculated, under the circumstances, to apprise” facilities of the actions taken and to afford them the opportunity to object.  CMS fully informed facilities of their obligations to check CASPER.  CMS Ex. 7.  In fact, CMS warned facilities to have backup staff who would be able to access the systems in order to avoid the situation Petitioner found itself in.  In an instruction module, dated September 29, 2020, CMS “strongly encouraged” facilities to add to the CDC’s COVID reporting module additional users, able to view, enter, and analyze data.  “This will help prevent loss of (National Healthcare Safety Network) access in the event of staff turnover.”  CMS Ex. 4 (emphasis added); see CMS Ex. 2 at 1 (advising that options such as adding additional users are available); CMS Ex. 3 at 8; CMS Ex. 5 at 1. 

CMS thus had in place a reasonable and practical process for service; it was well-publicized; and the facility does not claim that it was unaware of its obligation to review the CASPER-shared folders for all notices, including notices for failing to report.³  And, because it was obviously not reporting, the facility knew or should have known that penalties would be imposed and that the notices of penalties would be in the file.  See Michael B. Zafrani, M.D., DAB No. 3075 at 15 (2022) (holding that Medicare providers and suppliers “have a duty to familiarize themselves with Medicare requirements.”); Waterfront Terrace, DAB No. 2320 at 7 (2010) (confirming that a Medicare-certified provider should possess at least a rudimentary understanding of program rules and terminology). 

An additional, practical consideration compels me to accept CMS’s position and to reject the notion that a facility receives notice only when it checks CASPER.  If the

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date of service is the date a facility checks the file, the system becomes unworkable.  A facility, particularly one that failed to report, would be able to increase the amount of time it has to appeal by simply not checking CASPER as required.  This is comparable to allowing a facility that was served by U.S. mail to delay the date of service by declining to open the envelope containing the notice.  When service is by U.S. mail, the date of service is the date the envelope arrives, not the date the recipient decides to open it.  See Day Op. of North Nassau, Inc., DAB No. 2818 at 5 n.7 (2017) (indicating that the date the notices “arrived at [the facility’s] offices was the date of receipt.”). 

Further, Petitioner was able to access the system and review the notices on March 9, 2021.  At that time, it could have timely appealed seven of the ten determinations (those issued on January 11, 2021, and following).  Yet, knowing that it had missed the deadline for appealing three of the noncompliance determinations, it waited an additional seven weeks before filing any appeals.  By failing to act when it unquestionably had seen the notices, Petitioner forfeited those appeal rights.  See Fairway Med. Clinic, DAB No. 2811 at 4. 

No good cause.  Petitioner justifies its failing to check CASPER by blaming its former administrator.  According to Petitioner, on December 16, 2020, he absconded, and no one else at the facility was able to access either the NHSN database or CASPER until March 9, 2021.  P. Appeal at 3-4; P. Opp. at 2.⁴ 

The purported misconduct of its administrator does not excuse the facility.  The statute explicitly provides that “a principal is liable for penalties, assessments, and an exclusion under this section for the actions of the principal’s agent acting within the scope of the agency.”  Act § 1128A(l) (emphasis added).  Citing this and other provisions, the Board has repeatedly affirmed that facilities are responsible for any misconduct of their staff and agents that violate federal participation standards, “even that of which facility owners or management may not be aware.”  Kindred Transitional Care, DAB No. 2792 at 10, 12 (2017) (holding that a facility may not disavow the wrongdoing of its staff and may properly be held responsible for its staff’s actions).  Madison County Nursing Home, DAB No. 2895 at 8-9 (2018); Springhill Senior Residence, DAB No. 2513 at 15 (2013); Gateway Nursing Ctr., DAB No. 2283 at 8 (2009). 

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[A]n employee’s deliberate wrongdoing – and even criminal misconduct – may properly be imputed to the facility where the employee had “the means and opportunity” to commit the misfeasance, by virtue of his or her assigned duties and facility access. 

Madison County, DAB No. 2895 at 9, citing Kindred at 14; see also North Carolina State Veterans Nursing Home, Salisbury, DAB No. 2256 at 10-11 (2009); Beverly Healthcare Lumberton, DAB Ruling No. 2008-5 (Denial of Petition for Reopening Decision No. 2156) at 6-7 (2008); Emerald Oaks, DAB No. 1800 at 7 n.3 (2001) (noting that the facility “cannot disown the consequences of the inadequacy of the care provided by the simple expedient of pointing the finger at [the employee’s] fault, since she was the agent of her employer, empowered to make and carry out daily care decisions.”). 

The regulations do not define “good cause” but leave that determination to the discretion of the ALJ.  For its part, the Board has never attempted to provide “an authoritative or complete definition” of the term.  However, it has upheld the ALJ’s refusal to find good cause where the facility’s administrator (or other employee or agent) was responsible for the untimely filing.  Day Op. of North Nassau, Inc., DAB No. 2818 (2017) (affirming as “more than reasonable” an ALJ’s refusal to find good cause based on its acting administrator’s alleged negligence or malicious conduct in failing to file a hearing request).  

Conclusion

Because Petitioner’s hearing requests are untimely and because no good cause justifies my extending the times for filing, I dismiss them pursuant to 42 C.F.R. § 498.70(c).  

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Endnotes

¹  I refer to the exhibits Petitioner attached to its hearing request (e-file # 1).

²  I make this one finding of fact/conclusion of law.

³  The facility also well knew (or should have known) that it was obligated to report COVID data weekly through NHSN, but it did not do so.  For that reason, if I were to reach the merits of this case, Petitioner would not prevail.  As I discuss, the purported misconduct of its prior administrator (or any other staff member) does not excuse the facility from failing to report the data or failing to check CASPER.  It is well-settled that a facility is responsible for the actions of its employees.  Act § 1128A(l); Madison County Nursing Home, DAB No. 2895 at 8-9 (2018); Springhill Senior Residence, DAB No. 2513 at 15 (2013); Gateway Nursing Ctr., DAB No. 2283 at 8 (2009).

⁴  It is particularly disturbing that, in the midst of the COVID pandemic – which was so dangerous for residents of nursing homes – the facility, through its own fault, had no access to the CDC and CMS, the principal sources for vital information and instructions.  Nor was it providing those agencies with the information they needed in order to identify and address the multiple problems presented by the COVID crisis.