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From Health Law Daily, December 18, 2017

Provider fails to find ‘good cause’ for late appeal from Medicare termination

By Jeffrey H. Brochin, J.D.

A provider of ambulatory surgical center (ASC) services whose agent did not appeal from a CMS notice of termination of Medicare participation within the 60 days allowed, did not establish good cause for late filing of the appeal, the Departmental Appeals Board (DAB) has ruled. Although the ALJ accepted that the provider was the victim of negligent or perhaps malicious conduct by the agent, the ALJ found that this did not constitute "good cause" for late filing because the provider bore full responsibility for the actions of its agent. The DAB upheld the ALJ’s decision (Day Op of North Nassau, Inc. v. CMS, Docket No. A-17-54, Decision No. 281807, September 15, 2017).

Background. On September 10, 2014, and September 12, 2014, surveyors from the New York State Department of Health, Bureau of Hospitals and Diagnostic & Treatment Centers (NYSDOH), conducted a recertification survey of a New York ASC provider, and notified them on September 26, 2014, that the surveyors had found them not to be in substantial compliance with Medicare conditions for coverage. The notice stated that if the provider did not submit an acceptable plan of correction resulting in verified correction during a follow-up on-site visit, NYSDOH would be required to recommend to CMS that the facility be terminated from the Medicare Program.

On October 2, 2014, CMS sent the provider a letter advising that its Medicare participation would be terminated effective December 31, 2014. The letter further advised the provider that it had a right to request a hearing before an ALJ if its Medicare agreement was terminated and it did not believe the termination decision was correct. A second letter was sent on January 12, 2015, confirming that CMS it had terminated the participation with an adjusted termination date of January 4, 2015, which had a 60 day request for hearing period for an appeal before an ALJ. CMS never received a plan of correction, and the provider did not file a hearing request, but on April 29, 2016 (approximately 15 months after CMS’s January 4, 2015 letter), the provider filed a request for an extension of time to file a hearing request. The ALJ ruled that the request was not timely filed, and dismissed the request.

Provider’s assertion of good cause. The provider attempted to show good cause for the delay in filing a hearing request (and submission of a corrective action plan) by attributing the delay to the alleged negligence or malicious conduct of an independent contractor over whom it had no control. The ALJ accepted the assertions about the independent contractor’s conduct as true but found that this was not good cause because he was the provider’s agent and the provider bore full responsibility for whatever it was that the agent did or did not do. Consequently, the provider could not excuse its failure to file a timely hearing request on the ground that the agent failed to act appropriately. For purposes of interacting with Medicare, the agent was deemed to be the provider and whatever he did bore the provider’s imprimatur.

Defining "good cause." The provider further asserted that although "good cause" was not defined in the regulations governing appeals proceedings, the DAB has, in defining that term, considered whether the failure to timely file a hearing request was due to circumstances beyond the control of the party seeking the hearing. However, the DAB found that the provider misstated the DAB’s precedent on the issue. The negligence or malfeasance of an employee was truly no different from that of an independent contractor in terms of causing a hearing request to be untimely filed. The DAB found that whether an employee or an agent, the person charged with responsibility for dealing with the Medicare program acts on behalf of the entity that retains his or her services for that purpose and is under the entity’s control. A facility is equally responsible for the acts of its agents as it is for those of its employees.

Based on the foregoing, the DAB found no abuse of discretion in the ALJ’s decision, and it affirmed the dismissal due to lack of showing good cause for the untimely request.

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