Heritage Convalescent Center, DAB No. 3073 (2022)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE ORDERS

Heritage Convalescent Center (Petitioner), a skilled nursing facility, appeals an Administrative Law Judge (ALJ) dismissal of Petitioner's request for hearing and subsequent denial of Petitioner's request to vacate the dismissal.  Heritage Convalescent Center, Order of Dismissal, Docket No. C-21-911 (July 28, 2021) (Dismissal); Heritage Convalescent Center, Order Denying Construed Motion to Vacate Dismissal, Docket No. C-21-911 (Aug. 20, 2021) (Order Denying Motion to Vacate).  The ALJ dismissed Petitioner's hearing request after Petitioner failed to respond to an order to show cause.  The ALJ concluded that (i) Petitioner had no right to a hearing having failed to challenge an initial determination that imposed an enforcement remedy, and (ii) Petitioner abandoned its hearing request.  The ALJ also denied Petitioner's request to vacate the dismissal, finding Petitioner failed to show good cause.

We affirm the ALJ's dismissal of Petitioner's hearing request under 42 C.F.R. § 498.70(b) because, despite repeated opportunities, Petitioner failed to establish a right to a hearing before the ALJ.  We further find the ALJ did not abuse her discretion by declining to vacate the dismissal.  We do not reach the alternative ground for dismissal found by the ALJ (i.e., abandonment) having affirmed the dismissal under section 498.70(b).

Legal Background

To participate in the Medicare program, a skilled nursing facility (facility) must be in "substantial compliance" with the participation requirements in 42 C.F.R. Part 483, Subpart B.  42 C.F.R. §§ 483.1(b), 488.400.1  Those requirements include, among other things, meeting applicable COVID-19 reporting requirements for infection control.  Id. § 483.80(g) (May 21, 2021).

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The Centers for Medicare & Medicaid Services (CMS) may impose enforcement "remedies," including civil money penalties (CMPs), on a facility that is found to be out of substantial compliance with one or more participation requirements.  42 C.F.R. §§ 488.400, 488.402(b)-(c), 488.406(a), 488.430(a).  When CMS imposes a remedy based on a facility's noncompliance, the facility will be provided a notice specifying the "(i) [n]ature of the noncompliance; (ii) [w]hich remedy is imposed; (iii) [e]ffective date of the remedy; and (iv) [r]ight to appeal the determination leading to the remedy."  Id. § 488.402(f)(1).  A facility may appeal this initial determination – a finding of noncompliance that results in the imposition of a remedy – by requesting an ALJ hearing.  Id. §§ 488.408(g)(1), 498.3(b)(13) (a finding of noncompliance "leading to the imposition of enforcement actions" is an appealable initial determination); see also id. § 488.330(e)(3) (Part 498 applies to hearings challenging facility noncompliance leading to enforcement remedy).

A request for an ALJ hearing is filed in the Civil Remedies Division (CRD).  The hearing request must "[i]dentify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees;" and "[s]pecify the basis for contending that the findings and conclusions are incorrect."  42 C.F.R. § 498.40(b).  Moreover, the Civil Remedies Division Procedures (CRDP), which apply to all CRD proceedings and have the same force and effect as if ordered by an ALJ, impose the following requirement:  "All hearing requests must be accompanied by a copy of the notification of adverse action a party believes triggers the right to a hearing.  Do not send the statement of deficiencies.  An ALJ may dismiss a hearing request if it is not signed or a copy of the notice of adverse action is not submitted."  CRDP §§ 1, 2.c. (emphasis in original).2

An ALJ may dismiss a hearing request when the party requesting the hearing does not have a right to a hearing.  42 C.F.R. § 498.70(b).  An ALJ may also dismiss a hearing request if the party that requested the hearing abandons its request.  Id. § 498.69(a).  An ALJ may consider a hearing request to be abandoned if the party (i) "[f]ails to appear at the prehearing conference or hearing without having previously shown good cause for not appearing," and (ii) "[f]ails to respond, within 10 days after the ALJ sends a ‘show cause' notice, with a showing of good cause."  Id. § 498.69(b).

Section 498.72 further provides:  "An ALJ may vacate any dismissal of a request for hearing if a party files a request to that effect within 60 days from receipt of the notice of dismissal and shows good cause for vacating the dismissal."  A party whose hearing request is dismissed by an ALJ may appeal that dismissal to the Board.  Id. §§ 498.80, 498.82(a).  "The dismissal of a request for hearing is binding unless it is vacated by the ALJ or the [Board]."  Id. § 498.71(b).

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Case Background

On July 9, 2021, Petitioner filed a request for an ALJ hearing with the CRD.  The matter was assigned Case No. C-21-911.  Petitioner's two-paragraph hearing request stated in full:

We respectfully request the dismissal for F-884 due to computer malfunction.  The reports were completed but failed to save.  Please see supporting documentation for the completed reporting.

In addition, facility was unaware of the compliance notification letter due to the unusual manner it was sent via Simple LTC.

Request for Hearing.  Petitioner attached to its request two computer screenshots and a Form CMS-2567, Statement of Deficiencies, dated July 5, 2021 (July 5 SOD).  The July 5 SOD indicated that Petitioner was not compliant with 42 C.F.R. § 483.80(g)(1)-(2) (Tag F884) because "between 06/28/2021 and 07/04/2021, [Petitioner] did not report complete information . . . about COVID-19 in the standardized format and frequency as specified by CMS and the CDC."  July 5 SOD at 1-2.3  Petitioner's hearing request neither challenged the imposition of an enforcement remedy related to the cited deficiency nor indicated that CMS issued an initial determination imposing an enforcement remedy.  Petitioner did not submit with its hearing request a copy of an initial determination imposing an enforcement remedy as required by the CRDP § 2.c.

On July 14, 2021, the ALJ issued an Order Directing Petitioner to Show Cause and Supplement its Request for Hearing (Order to Show Cause), noting that Petitioner did not challenge the imposition of an enforcement remedy or submit a copy of an initial determination imposing an enforcement remedy and, therefore, had not established a right to a hearing.  Order to Show Cause (citing 42 C.F.R. §§ 488.406, 498.3(b)).  The ALJ ordered Petitioner to "file a copy of the relevant initial determination" and "show cause why it has a right to a hearing, which it may do by simply submitting a statement that it is challenging the imposition of an enforcement remedy (i.e., a civil monetary penalty)."  Id.  The ALJ warned Petitioner that its hearing request will be dismissed under 42 C.F.R. § 498.70(b) if Petitioner fails to comply with the order by July 24, 2021.  Id.  Petitioner failed to respond to the Order to Show Cause.

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On July 28, 2021, the ALJ dismissed Petitioner's hearing request.  Dismissal at 1.  The ALJ found the dismissal was warranted under section 498.70(b) "[b]ecause Petitioner has not challenged an initial determination imposing an enforcement remedy [and, therefore,] it has no right to a hearing."  Id.  The ALJ further determined that, "to the extent Petitioner abandoned its hearing request based on its failure to timely respond to an order to show cause, dismissal is also warranted pursuant to 42 C.F.R. § 498.69(b)(2)."  Id.

Several weeks later, on August 20, 2021, Petitioner filed a one-page request (Motion to Vacate) asking the ALJ to "open docket number C-21-911."  In this request to reopen, which the ALJ construed as a motion to vacate the dismissal, Petitioner reiterated that it was challenging Tag F884 due to a computer malfunction, made a vague reference to a "misunderstanding" about the need for information "such as [the] imposition letter, imposer, and evidence," and repeated its assertion that it "was unaware of the compliance notification letter due to the unusual manner it was sent via Simple LTC."  Motion to Vacate.  With its request, Petitioner submitted two more copies of the July 5 SOD and copies of the two computer screenshots that it previously submitted.  Petitioner did not submit a copy of an initial determination imposing an enforcement remedy.

Later that day, the ALJ issued an order denying Petitioner's Motion to Vacate.  Order Denying Motion to Vacate.  The ALJ concluded that Petitioner had not shown good cause for vacating the dismissal as required by 42 C.F.R. § 498.72.  Id. at 2.  The ALJ explained:

Although Petitioner disputed the deficiency cited under 42 C.F.R. § 483.80(g)(1), (2) and vaguely reported an unspecified misunderstanding, it did not make any showing of good cause why the July 28, 2021 dismissal should be vacated.  Further, Petitioner did not explain why it failed to timely respond to the July 14, 2021 order to show cause.  And despite the fact I had previously informed Petitioner that I had dismissed its request for hearing, in part, because it had neither challenged the imposition of an enforcement remedy nor submitted a copy of the relevant initial determination, Petitioner nonetheless failed to dispute the imposition of any enforcement remedies nor submit a copy of the relevant initial determination.

Id.

On August 23, 2021, Petitioner filed a one-page request for review in the Appellate Division, asking the Board to "review docket number C-21-911."  Request for Review (RR).  The request for review does not specify the issues, the findings of fact or conclusions of law with which Petitioner disagrees, or the basis for contending that the

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ALJ's findings and conclusions are incorrect.4  Instead, Petitioner repeats the same arguments made in its Motion to Vacate and further states that a system error has been corrected, and reports are now current and saving properly.  RR.  Petitioner also submitted, for the first time and with no explanation, a compliance determination and imposition of remedy dated July 6, 2021 (July Notice).5  The July Notice states that a review completed by CMS on July 5, 2021, confirmed Petitioner was not in substantial compliance with reporting requirements under section 483.80(g)(1)-(2), and a CMP of $1,500.00 was being imposed for one day of noncompliance.  July Notice at 1-2.  Petitioner does not specify in its request for review whether it seeks review of both the Dismissal and the Order Denying Motion to Vacate; however, we review both orders here.

On August 27, 2021, Petitioner filed two screenshots of a computer calendar and, on September 3, 2021, filed a third screenshot of a computer calendar.  These additional screenshots were not submitted to the ALJ, and we do not admit this evidence into the record because they are not relevant or material to any issue before the Board.  See 42 C.F.R. § 498.86(a).6  Additionally, on September 7, 2021, Petitioner submitted a two-page brief (Petitioner's Br.).  In its brief, Petitioner asserts that it implemented a "plan of correction" and again requests the "dismissal" of Tag F884.  Petitioner's Br. at 1-2.  Petitioner also reiterates arguments made in its request for review about an alleged "misunderstanding" and being unaware of a "compliance notification."  Id. at 2.  Petitioner's brief, however, fails to identify any error in the Dismissal or the Order Denying Motion to Vacate.

CMS filed its response to Petitioner's request for review (CMS Br.), arguing that the ALJ did not abuse her discretion in dismissing Petitioner's request for hearing under sections 498.69(b) or 498.70(b).  CMS Br. at 6-8.  CMS further contends the ALJ did not abuse her discretion in denying Petitioner's Motion to Vacate.  Id. at 8-9.  CMS confirmed that it issued an initial determination letter to Petitioner dated July 6, 2021, and that Petitioner did not identify an initial determination that it was appealing before the ALJ.  Id. at 2-3.

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Standard of Review

The standard of review for disputed issues of law is whether the ALJ decision is erroneous.  The standard of review for disputed issues of fact is whether the ALJ decision is supported by substantial evidence in the record as a whole.  Departmental Appeals Board, Guidelines -- Appellate Review of Decisions of Administrative Law Judges Affecting a Provider's Participation in the Medicare and Medicaid Programs, HHS.gov, (last visited Sept. 28, 2022), https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/participation/index.html.

"The standard of review for an ALJ's exercise of discretion to dismiss a hearing request is whether the discretion has been abused."  Penobscot Nursing Home, DAB No. 2642, at 2 (2015) (citations omitted).  "Where an ALJ dismisses a hearing request addressing only issues that as a matter of law are not initial determinations, and, thus, are not matters within the ALJ's review authority, the standard of review is whether the ALJ erred in dismissing the hearing request."  Id. (citations omitted).  "The Board reviews an ALJ's finding about ‘good cause' to determine whether the ALJ abused his or her discretion."  Meridian Nursing & Rehab at Shrewsbury, DAB No. 2504, at 7 (2013) (citations omitted), aff'd, 555 F. App'x 177 (3d Cir. 2014) (denying petition for review of the Board's order).

Analysis

I.  The ALJ did not err in dismissing Petitioner's hearing request under 42 C.F.R. § 498.70(b) because Petitioner failed to establish a right to a hearing.

The ALJ dismissed Petitioner's hearing request under 42 C.F.R. § 498.70(b) because Petitioner had "not challenged an initial determination imposing an enforcement remedy" and, therefore, had "no right to a hearing."  Dismissal at 1.  Specifically, the ALJ found Petitioner "included a copy of a statement of deficiencies with its hearing request," but "did not file a copy of an initial determination imposing any enforcement remedies" or "indicate it was appealing an initial determination that imposed an enforcement remedy."  Id.  Before the Board, Petitioner does not dispute or even address the ALJ's determination that Petitioner did not challenge an initial determination imposing an enforcement remedy and failed to submit a copy of the relevant initial determination.  Based on our review of the record and pertinent legal authorities, we uphold the ALJ's dismissal of Petitioner's hearing request under section 498.70(b).

"[S]ection 498.3 of the regulations provides that a facility is entitled to an ALJ hearing where CMS has made an adverse ‘initial determination' of a kind specified in 42 C.F.R. § 498.3(b)."  Columbus Park Nursing & Rehab. Ctr., DAB No. 2316, at 6 (2010) (citing 42 C.F.R. § 498.3(a)(1)), appeal dismissed, 940 F.Supp.2d 805 (N.D. Ill. 2013); see also Great Lakes HealthCare, LLC, DAB No. 2777, at 8 (2017) ("Section 498.3(b) establishes

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the administrative actions – initial determinations – for which the right to an ALJ hearing (and Board review) exists.").  Section 498.3(b)(13) defines "initial determinations," with respect to skilled nursing facilities, to include "the finding of noncompliance leading to the imposition of enforcement actions specified in § 488.406 . . . ."  Section 488.406 authorizes CMS to impose enforcement remedies, such as CMPs, based on a facility's noncompliance.  Id. §§ 488.402(b).  Section 488.408(g)(1) provides that a facility may "appeal a certification of noncompliance leading to an enforcement remedy."  "Thus, consistent with section 498.3(b), section 488.408 provides that a facility has a right to an ALJ hearing where a certification of noncompliance has led to one or more of the enforcement remedies specified at section 488.406(a)."  Columbus Park at 6.

"Applying the plain language of the regulations, the Board has long held that a [facility] has no right to an ALJ hearing to contest survey deficiency findings where CMS has not imposed any of the remedies specified at section 488.406 based on those findings . . . ."  Columbus Park at 7 (collecting cases).  Indeed, in the preamble to its enforcement regulations, CMS "expressly rejected comments requesting hearings for facilities found not to be in substantial compliance where no remedy (or only a minor remedy such as state monitoring) was imposed."  Fountain Lake Health & Rehab., Inc., DAB No. 1985, at 5 (2005) (citing 59 Fed. Reg. 56,116, 56,158 (Nov. 10, 1994)).  "CMS concluded that, absent a remedy being imposed, the deficiency findings alone do not result in harm such as to create a right to hearing."  Id. (citing 59 Fed. Reg. 56,116, 56,158).  Accordingly, unless a facility challenges an initial determination, such as a finding of noncompliance leading to the imposition of an enforcement action, the facility has no right to a hearing.  See 42 C.F.R. § 498.3(a)(1), (b)(13), (d)(1) (establishing that the mere finding that a provider has deficiencies is not an appealable initial determination); see also Great Lakes at 8 (upholding dismissal of hearing request where petitioner "sought a hearing solely on an issue that was not an initial determination"); Penobscot Nursing at 5 (finding no error or abuse of discretion in dismissal of hearing request where petitioner had not challenged an initial determination to impose remedies based on deficiency findings); Columbus Park at 7-8 (upholding dismissal of hearing request where petitioner challenged only survey findings that did not result in the imposition of remedies).

Here, Petitioner submitted a hearing request, along with a copy of the July 5 SOD, requesting that the ALJ overturn the F884 deficiency finding due to a computer malfunction.  Although the July 5 SOD identified a deficiency, it did not impose any enforcement remedy and is not itself an initial determination.  See 42 C.F.R. § 498.3(b), (d)(1).  Moreover, as the ALJ found, Petitioner's hearing request failed to indicate that Petitioner was appealing an initial determination that imposed an enforcement remedy and failed to include a copy of an initial determination.  Order to Show Cause; Dismissal at 1.  In the Order to Show Cause, the ALJ provided a clear directive and sufficient opportunity for Petitioner to supplement its hearing request by (i) "fil[ing] a copy of the relevant initial determination," and (ii) "simply submitting a statement that it is challenging the imposition of an enforcement remedy (i.e., a civil monetary penalty)."

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Order to Show Cause.  Petitioner did neither of these things and, therefore, the ALJ dismissed Petitioner's hearing request under section 498.70(b).  Dismissal at 1.  We find no error or abuse of discretion in the ALJ's dismissal of Petitioner's hearing request, which plainly did not challenge an initial determination that imposed an enforcement remedy or even indicate that CMS had imposed an enforcement remedy in connection with the July 5 SOD.

II.  The ALJ did not abuse her discretion in finding that Petitioner did not show good cause to vacate the dismissal.

"An ALJ may vacate any dismissal of a request for hearing if a party files a request to that effect . . . and shows good cause for vacating the dismissal."  42 C.F.R. § 498.72.  The Board reviews an ALJ's finding regarding "good cause" to determine whether the ALJ abused their discretion.  Meridian at 7 (citations omitted).  "No definition of ‘good cause' appears in the Part 498 regulations, and the Board has not attempted to set out an authoritative or complete definition of that term."  Axion Healthcare Servs., LLC, DAB No. 2783, at 4 (2017).  Here, as in prior cases, we need not define the term because we conclude "no reasonable definition of ‘good cause' encompasses the lapses" for which Petitioner is responsible.  Id. (citation omitted); see also Meridian at 8.  We find the ALJ did not abuse her discretion in concluding that Petitioner failed to show good cause to vacate the dismissal because Petitioner failed to supplement its hearing request in response to the Order to Show Cause and offered no explanation for its inaction in response to the ALJ's orders and directives.  Order Denying Motion to Vacate at 2.

In its Motion to Vacate, Petitioner did not contend that it was challenging any enforcement remedy, or attach a copy of the relevant initial determination.  Instead, Petitioner continued to dispute the F884 deficiency finding and made a vague reference to an alleged "misunderstanding" about "needed information."  See Motion to Vacate.  To whatever extent Petitioner misunderstood the applicable regulatory requirements and procedures when it filed its hearing request, it cannot reasonably claim a misunderstanding after the ALJ's Order to Show Cause, which provided a clear directive and specific instructions about what was required to avoid dismissal.  Petitioner did not respond to the Order to Show Cause and offered no explanation for its failure to respond.  Order Denying Motion to Vacate at 2.  As the ALJ further found, "despite previous orders that unambiguously informed Petitioner that it had not submitted the information and documentation necessary to establish a right to a hearing, Petitioner's [Motion to Vacate], once again, failed to include this information and documentation."  Id.

Petitioner's Motion to Vacate also reiterated its assertion, first raised in its hearing request, that it "was unaware of the compliance notification letter due to the unusual manner it was sent via Simple LTC."  Motion to Vacate.  It is unclear what letter Petitioner is referring to or why this would show good cause to vacate the dismissal.  Petitioner also failed to explain how it could be unaware of the letter but aware of how it

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was sent.  In any event, by the time the ALJ issued the Order to Show Cause, Petitioner was certainly aware of what it needed to submit to avoid the dismissal of its hearing request.  Again, Petitioner did not respond to the Order to Show Cause and offered no explanation for its failure to respond.

Before the Board, Petitioner repeats the same flawed arguments made in its Motion to Vacate and again attempts to argue the merits of the F884 deficiency finding.  RR.  The merits of the F884 deficiency finding are not before the Board and we do not reach those issues.  With respect to the ALJ Dismissal and the Order Denying Motion to Vacate, Petitioner points to no legal or factual error by the ALJ and offers no basis for the Board to overturn either order.  For this reason alone, we affirm the ALJ Dismissal and Order Denying Motion to Vacate.  See Wisteria Care Ctr., DAB No. 1892, at 10 (2003) ("[T]he Board may summarily affirm a factual or legal finding if a party's presentation of an issue regarding that finding is such that the Board cannot discern the legal or factual basis for the party's disagreement with it.").

Moreover, Petitioner's submission of the July Notice with its request for review, without explanation, provides no basis to reverse the ALJ Dismissal and Order Denying Motion to Vacate.  Petitioner did not submit this document to the ALJ or indicate in any of its filings before the ALJ that it sought to appeal this initial determination.  The existence of this document only demonstrates that Petitioner could have taken steps to comply with the Order to Show Cause but failed to do so without explanation.  Still further, the July Notice instructed Petitioner that to initiate an appeal, "[a]t minimum, the Civil Remedies Division (CRD) requires a party to file a signed request for hearing and the underlying notice letter from CMS that sets forth the action taken . . . ."  July Notice at 4 (emphasis added).  Petitioner offers no explanation for why it did not submit the July Notice with any of its filings before the ALJ, despite receiving clear filing instructions in the July Notice and a clear directive in the Order to Show Cause.  We find Petitioner's submission of the July Notice for the first time before the Board provides no basis to overturn the ALJ's determination that Petitioner did not show good cause to vacate the dismissal.

The Board has previously stated that it has an "overarching responsibility to ensure the efficiency and integrity of proceedings before the Departmental Appeals Board as a whole, which encompasses a concern that the orders of ALJs not be disregarded . . . without consequence."  Axion at 5 (citation omitted).  Based on the record before us, including Petitioner's lack of explanation for its inaction in response to the Order to Show Cause, and its failure to supplement or amend its hearing request as directed by the ALJ, we conclude that the ALJ did not abuse her discretion by declining to vacate the dismissal.

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Conclusion

We affirm the ALJ Dismissal and Order Denying Motion to Vacate.

Endnotes

¹  We apply the participation requirements in effect when the compliance review relating to this matter was conducted.  Cf. Carmel Convalescent Hosp., DAB No. 1584, at 2 n.2 (1996).

²  The current version of the CRDP has an effective date of March 28, 2016, and is available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-alj/procedures/index.html.

³  Findings concerning a facility's noncompliance with participation requirements are reported in a statement of deficiencies.  Western Care Mgmt. Corp., d/b/a Rehab Specialties Inn, DAB No. 1921, at 3 (2004).  The statement of deficiencies identifies deficiency citations using "F-tags" that correspond to the relevant regulatory requirements.  The F-tag noted here (F884) pertains to COVID-19 reporting requirements under 42 C.F.R. § 483.80(g)(1)-(2).  See CMS, Interim Final Rule Updating Requirements for Notification of Confirmed and Suspected COVID-19 Cases Among Residents and Staff in Nursing Homes at 1-5 (May 6, 2020) (last visited Sept. 28, 2022), https://www.cms.gov/files/document/qso-20-29-nh.pdf.

⁴  "A request for review of an ALJ decision or dismissal must specify the issues, the findings of fact or conclusions of law with which the party disagrees, and the basis for contending that the findings and conclusions are incorrect."  42 C.F.R. § 498.82(b).

⁵  Petitioner also submitted a copy of the July 5 SOD that Petitioner had previously filed with the ALJ.

⁶  Petitioner appears to rely on the screenshots to support its contention that it implemented a plan of correction after initially failing to submit the required reports; however, the screenshots are not relevant or material to any issue in this appeal, which is limited to reviewing the Dismissal and Order Denying Motion to Vacate.  See Acknowledgment Letter (Sept. 1, 2021) at 2 (notifying the parties that the only issue before the Board is "whether the ALJ's dismissal of Petitioner's request for hearing should be upheld").