Opposition Brief — Patchogue Nursing Center v. Bowen

Supreme Court, U.S,

FILED

NOV 28 1986

tO S Eilat, JR.

CLERK

Iu the Supreme Conut cf the United States

OCTOBER TERM, 1986

PATCHOGUE NURSING CENTER, PETITIONER

Vv.

OTIS R. BOWEN, SECRETARY OF HEALTH

AND HUMAN SERVICES, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

MEMORANDUM FOR THE FEDERAL RESPONDENT

IN OPPOSITION

CHARLES FRIED

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

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TABLE OF AUTHORITIES

Cases: Page

Case V. Weinberger, 523 F.2d 602 ......:..................... 5

Cleveland Board of Education v. Loudermill, 470

Be I eae ittaigla in cna adnan athe aaeticssteeinnah eens 4

Mathews v. Eldridge, 424 U.S. 319 .......................... 4,6

Northlake Community Hospital v. United States,

re 5

Town Court Nursing Center, Inc. v. Beal, 586 F.2d

BO ch ested Lak cees pelea cheecicinlcbic i citscoel Nor oi eacniptaicmobonakecan 5

Constitution, statutes and regulations:

U.S. Const. Amend. V (Due Process Clause)........ 1, 8,

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Miscellaneous:

H.R. Rep. 96-1167, 96th Cong., 2d Sess. (1980)... 4,5

Iu the Supreme Court of the United States

OCTOBER TERM, 1986

No. 86-482

PATCHOGUE NURSING CENTER, PETITIONER

Vv.

OTIS R. BOWEN, SECRETARY OF HEALTH

AND HUMAN SERVICES, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

MEMORANDUM FOR THE FEDERAL RESPONDENT

IN OPPOSITION

Petitioner contends that the Due Process Clause

requires that a Medicare/Medicaid provider be af-

forded a full adversarial evidentiary hearing before

being temporarily banned from participation in those

programs for noncompliance with regulatory stand-

ards.

1. a. Petitioner, a nursing home located in New

York, has provided services under the Medicare and

Medicaid programs since 1977. In January 1985,

the New York State Department of Health (DOH)

(1)

2

conducted a compliance survey at petitioner’s facili-

ties (see 42 U.S.C. 1395aa). Based on the data ob-

tained in that survey, DOH concluded that petition-

er’s dietetic services were not in compliance with

federal regulations (42 C.F.R. 405.1101-405.1137).

DOH notified petitioner of the deficiencies, warning

that failure to correct the deficiencies would jeop-

ardize its status as a provider under Medicare and

Medicaid (42 U.S.C. 1395ee(b) and (f)). Petitioner

was requested to submit a plan to bring itself into

compliance with regulatory standards (Pet. App.

32a). In a second survey in March 1985, DOH

found that petitioner was still not in compliance.

After petitioner was again informed of the deficien-

cies, it submitted a plan of correction that DOH

found unacceptable. Pet. App. 38a.

In June 1985 DOH apprised the Secretary of

Health and Human Services of petitioner’s noncom-

pliance and recommended that petitioner be sanc-

tioned. Pet. App. 33a. DOH did not recommend

that petitioner receive the maximum statutory sanc-

tion—termination as a Medicare and Medicaid pro-

vider (42 U.S.C. 1895ee(b)). Rather, DOH recom-

mended that the Secretary impose the lesser sanc-

tion of temporarily banning petitioner from receiv-

ing reimbursement for new Medicare and Medicaid

admissions, a ban that would stay in effect until

petitioner corrected the deficiencies. See 42 U.S.C.

1395cc(f).' The Secretary informed petitioner that

1 Where, as here, a skilled nursing facility’s noncompliance

with regulatory requirements does not immediately jeopardize

the health and safety of its patients, the Secretary may either

terminate the facility’s certification or temporarily preclude

reimbursement for new patients to the facility until com-

pliance is achieved. 42 U.S.C. 1395cc(f) (1) (B). Where the

3

it could request an informal hearing, before the im-

position of a temporary ban, at which petitioner

would have the opportunity to present evidence chal-

lenging the finding of noncompliance. Pet. App. 33a;

see 42 U.S.C. 1895cee(f) (2).

An informal hearing was held in July 1985. Peti-

tioner asserted that it was adhering to the regula-

tions, accused DOH of incompetence and prejudice,

and requested that another survey of its facilities be

conducted. Pet. App. 38a. Petitioner’s request was

granted, and DOH conducted a third survey and

found for the third time that petitioner fell short of

the regulatory standards. Pet. App. 33a-34a. HHS

once again notified petitioner that under the statute

it was entitled to an informal hearing before being

banned. Another hearing was held at which HHS

concluded that petitioner had not complied with fed-

eral regulations. As DOH had recommended, the

Secretary banned petitioner from receiving reim-

bursement for new Medicare and Medicaid admis-

sions until it satisfies program requirements. Ibid.

b. Petitioner brought this action in the United

States District Court for the Eastern District of

New York seeking to enjoin the Secretary from ban-

ning petitioner from program participation without

conducting a full evidentiary hearing. Petitioner

argued that a full adversary hearing was required

by the statute, or, alternatively, by the Due Process

Clause. In denying petitioner’s motion for a pre-

lesser sanction is imposed, termination will become mandatory

if the facility fails to achieve compliance within eleven months.

42 U.S.C. 1395cc (f) (3). The statute provides for a full evi-

dentiary hearing after termination. 42 U.S.C. 1395ff(c).

4

liminary injunction, the district court reasoned that

petitioner had not shown a sufficient likelihood of

success on the merits (Pet. App. 25a-28a). The court

of appeals unanimously affirmed (id. at 29a-47a),

holding that 42 U.S.C. 1895ece(f) (2) requires only

an informal pre-sanction hearing and that such a

hearing satisfies the Due Process Clause.

2. The court of appeals’ decision affirming the

denial of a preliminary injunction is correct. Peti-

tioner does not allege, nor is there, a conflict among

the circuits or with any decision of this Court. Fur-

ther review is unwarranted.

The petition presents only the constitutional issue

decided below: whether the Due Process Clause re-

quires a full evidentiary pre-sanction hearing. As

the court of appeals noted (Pet. App. 45a), petition-

er’s position on this issue is inconsistent with this

Court’s recent statement that, “[i]n general, ‘some-

thing less’ than a full evidentiary hearing is suffi-

cient prior to adverse administrative action.” Cleve-

land Board of Education vy. Loudermill, 470 U.S. 582,

545 (1985), quoting Mathews v. Eldridge, 424. U.S.

319, 343 (1976). Petitioner’s contention also disre-

gards the function of the particular sanction in the

statutory scheme. Congress empowered the Secretary

to implement a temporary ban on reimbursement to

noncompliant providers as an alternate remedy short

of complete termination. See H.R. Rep. 96-1167,

96th Cong., 2d Sess. 55-58 (1980). An administra-

tive ban is an intermediate sanction that lasts only

until the provider cures its deficiencies. 42 U.S.C.

1395cee(f) (3). If the provider fails to measure up

to program standards within eleven months after

the ban is imposed, the provider is then terminated

5

(ibid.). The statutory scheme thus evidences Con-

gress’s intent that the power to ban be used to en-

courage noncomplying providers to make corrections

promptly and thereby avoid termination. See H.R.

Rep. 96-1167, supra, at 56-57. This goal of encour-

aging prompt compliance would be thwarted if the

formal procedures petitioner urges were required be-

fore the Secretary could seek to remedy noncompli-

ance by banning a provider.

In any event, as the court of appeals stated (Pet.

App. 45a), petitioner has no basis for challenging

the process that it in fact received. Petitioner had

the benefit of two informal hearings at which it pre-

sented oral and written arguments challenging the

DOH surveys. Throughout the administrative stages

there was considerable informal communication be-

tween petitioner and DOH. And, of course, should

petitioner fail to cure its deficiencies and eventually

be terminated from the programs, it will then be en-

titled under 42 U.S.C. 1895ff(c) to a full evidentiary

hearing.” The court of appeals was correct in con-

cluding (Pet. App. 44a-45a) that the procedures pro-

vided under the statute and afforded petitioner in

* Other courts of appeals have stated that, in light of the

post-sanction evidentiary hearing mandated by 42 U.S.C.

1395ff (c), due process does not require a full evidentiary hear-

ing before a provider is terminated. Northlake Community

Hospital v. United States, 654 F.2d 1234, 1241-1244 (7th Cir.

1981) ; Town Court Nursing Center, Inc. v. Beal, 586 F.2d.

266, 273-278 (3d Cir. 1978) (en banc) ; Case v. Weinberger,

523 F.2d 602, 606-609 (2d Cir. 1975). Since the Constitution

does not require a full hearing before the Secretary imposes

the more severe sanction of termination, there is no basis for

petitioner’s contention that a formal evidentiary hearing must

precede the intermediate curative step of banning a noncom-

plying provider until its deficiencies are remedied.

6

this case satisfy the due process standards set forth

by this Court in Mathews v. Eldridge, 424 U.S. 319

(1976).

It is therefore respectfully submitted that the peti-

tion for a writ of certiorari should be denied.

CHARLES FRIED

Solicitor General

NOVEMBER 1986

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