Opposition Brief — Patchogue Nursing Center v. Bowen

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: | WV 28 1986

SS sosceH F. SPANIOL,

No. 86-482 ; cS . e

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N THE

Supreme Court of the United States

OcrToser TERM, 1986

PATCHOGUE NURSING CENTER,

Petitioner,

VS.

OTIS R. BOWEN, M.D.., as Secretary of the United States

Department of Health and Human Services, and DAVID

AXELROD, as Commissioner of the New York State De-

partment of Health,

Respondents.

MEMORANDUM IN OPPOSITION FOR

RESPONDENT AXELROD

ROBERT ABRAMS

Attorney General of the

State of New York

O. PETER SHERWOOD

Solicitor General

LAWRENCE S. KAHN

Deputy Solicitor General

[Counsel for Record]

EveLyN M. TENENBAUM

JupIrH KAUFMAN

Assistant Attorneys General

120 Broadway

New York, New York 10271

(212) 341-2569

TABLE OF CONTENTS

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THE PROCESS FOR IMPOSITION OF THE

INTERMEDIATE SANCTION ...............

STATEMeNs Or ieee CASE..................

THE DISTRICT COURT DECISION ...........

THE CIRCUIT COURT DECISION ............

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TABLE OF AUTHORITIES

Page

Cases

Brotherhood of Locomotive Firemen v. Bangor &

Aroostock R. Co., 389 U.S. 327 (1967) ......... 6

Case v. Weinberger, 523 F.2d 602 (2d Cir. 1975)... 7

Cleveland Board of Education v. Loudermill, 105

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Codd v. Velger, 429 U.S. 624 (1977) ............. 8

Estelle v. Gamble, 429 U.S. 97 (1976) ............ 6

Green v. Cashman, 605 F.2d 945 (6th Cir. 1979) ... 7

Mathews v. Eldridge, 424 U.S. 319 (1976) ........ 6,9

Morrissey v. Brewer, 408 U.S. 471 (1972) ......... 6

Town Court Nursing Center v. Beal, 586 F.2d 266

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Federal Statutes, Regulations and Rules

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42 C.F.R. § 405.1101 to 405.1137 ...............

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No. 86-482

IN THE

Supreme Court of the United States

OcTOBER TERM, 1986

PATCHOGUE NURSING CENTER,

Petitioner,

VS.

OTIS R. BOWEN, M.D., as Secretary of the United States

Department of Health and Human Services, and DAVID

AXELROD, as Commissioner of the New York State Department

of Health,

Respondents.

MEMORANDUM IN OPPOSITION FOR

RESPONDENT AXELROD

INTRODUCTION

Petitioner Patchogue Nursing Center (“Patchogue”) seeks review

of an Order of the United States Court of Appeals for the Second

Circuit entered July 22, 1986, which affirmed an order of the

United States District Court for the Eastern District of New York,

denying Patchogue’s motion for a preliminary injunction.

Patchogue, a skilled nursing facility, sought to bar respondent

Secretary of the United States Department of Health and Human

Services (“HHS”) from imposing the intermediate sanction of a ban

of limited duration on Medicaid and Medicare reimbursement for

new admissions pursuant to section 916 of the Omnibus Reconcilia-

tion Act of 1980, 42 U.S.C. § 1395cc(f) (“ban” or “intermediate

sanction”). This request should be denied because it does not pre-

sent a special or important reason within Supreme Court Rule 17(1)

for granting a writ of certiorari, and there is no conflict among the

United States Circuit Courts of Appeal regarding this issue.

The Process for Imposition of the

Intermediate Sanction

The federal statutory and regulatory scheme mandates that a

skilled nursing facility be evaluated periodically to ensure that it

complies with the eighteen Medicare conditions of participation.

42 U.S.C. § 1395x(j) and 42 C.F.R. Part 405, subpart K.' The New

York State Department of Health (“DOH”) surveys skilled nursing

facilities for compliance with the conditions of participation of the

Medicare program pursuant to an agreement with HHS. 42 U.S.C.

§ 1395aa.’

The intermediate sanction of a ban on Medicare and Medicaid

admissions is imposed by HHS pursuant to 42 U.S.C. § 1395cce(f),

“where the [survey reveals] deficiencies [which] are of such

character as to substantially limit the provider’s or supplier’s capaci-

ty to render adequate care or which adversely affect the health and

safety of residents.” 42 C.F.R. § 405.1905. The ban is limited to a

period not to exceed eleven months. 42 U.S.C. § 1395cc(f)(3). If the

deficiencies are not corrected at the end of the eleven months, the

provider agreement is terminated and the facility closed, 42 U.S.C.

§ 1395ce(f)(3), subject to the facility’s right to a full post-

termination administrative hearing and to judicial review. 42

U.S.C. § 1395ff(c).

HHS provides the nursing home with a reasonable opportunity

to correct its deficiencies and reasonable notice and an opportunity

to present its case at an informal hearing before any adverse

' Each of the eighteen Medicare conditions of participation consists of

numerous standards which are subdivided into various elements. 42 C.F.R.

§§ 405.1101-405.1137.

2 DOH isalso the state survey agency for institutions in which Medicaid reci-

pients received services 42 C.F.R. § 431.115(b) and may certify that facilities

meet standards for participation in the Medicaid program. 42 C.F.R. § 442.10.

action is taken against a facility, including the intermediate sanc-

tion. 42 U.S.C. § 1395cce(f). The sanction wili be lifted when the

deficiencies are corrected, or it is determined that the facility is

making a good faith effort to achieve substantial compliance with

the conditions of Medicare participation. 42 U.S.C. § 1395ce(f)(3).

Statement of the Case

Petitioner is authorized to provide skilled nursing services for up

to a total of 120 Medicare (42 U.S.C. § 1395 et seq.) and Medicaid

(42 U.S.C. § 1396) recipients pursuant to a Medicare provider

agreement with HHS.’

DOH conducted an annual on-site survey of Patchogue on

January 22, 1985 in accordance with 42 U.S.C. § 1395aa to deter-

mine whether Patchogue was in compliance with the conditions of

participation. The DOH surveyors found Patchogue out of com-

pliance with two Medicare conditions of participation, Governing

Body and Management, see 42 C.F.R. § 405.1121 and Dietetic

Services see 42 C.F.R. § 405.1125 (App. 32).*

After the survey, DOH held an exit conference to advise

Patchogue of the survey findings (App. 32). Thereafter, DOH sent

Patchogue a Statement of Deficiencies detailing the areas of non-

compliance and the applicable regulatory authority. DOH re-

quested a Plan of Correction from Patchogue, informing Patchogue

of the possible sanctions for continued non-compliance. (App. 32).

DOH conducted another survey of Patchogue on March 8, 1985.

Thereafter, at the exit conference, the surveyors apprised the

operator of their findings of continued non-compliance with the

Medicare conditions of participation as well as eleven additional

deficiencies relating to the condition of Dietetic Services, see 42

C.F.R. § 405.1125(g) (Sanitary Conditions) (App. 33).

, Patchogue was issued its most recent Medicare provider agreement effective

December 11, 1984, but has entered into prior agreements since 1977.

* References preceded by “App.” are to pages of the appendices annexed to the

petition.

Patchogue submitted a Plan of Correction on March 18, 1985.

DOH formally responded and rejected the plan as unacceptable on

May 13, 1985. DOH included a detailed statement explaining why

the plan was inadequate and also requested a revised Plan of Cor-

rection. (App. 33). DOH representatives contacted the nursing

home operator numerous times by phone and by mail to discuss the

cited deficiencies and the Plan of Correction and to inform him of

his rights and the possible penalties for non-compliance. (App. 43).

DOH advised HHS by letter dated June 6, 1985 that Patchogue

was not in compliance with two Medicare conditions of participa-

tion and recommended the imposition of the intermediate sanction

of a ban on admissions. 42 U.S.C. § 1395cce(f) (App. 33). HHS

subsequently notified Patchogue of the possible ban and advised

Patchogue that it could request an informal hearing to present

evidence contradicting the finding of non-compliance. (App. 33).

An informal hearing was held by HHS on July 22, 1985.

Representatives from Patchogue and DOH were present.

(App. 33). Patchogue did not present any factual evidence to

dispute the accuracy of the survey. Patchogue simply denied it was

ever out of compliance and accused DOH of incompetence and pre-

judice. (App. 33).

Pursuant to Patchogue’s request at the hearing, another survey

was conducted on July 31 and August 1 by DOH surveyors, DOH

officials from Albany and a federal nutrition consultant.

(App. 33-34). This survey revealed continued non-compliance

with the two conditions of participation. An exit conference was

held after the survey and Patchogue was advised of the findings.

(App. 34). The federal nutrition consultant concurred with DOH’s

findings and sent a written report of the results to Patchogue. DOH

sent a copy of the survey report and a Statement of Deficiencies to

Patchogue. (App. 34).

HHS renewed its notice of intent to impose a ban in September

1985 and offered Patchogue an informal hearing to address the

results of the July/August survey. (App. 34). This second hearing

was held on October 11, 1985. (App. 34). Again, Patchogue did not

present any factual evidence to dispute the accuracy of the survey.

HHS issued its notice to impose a ban on January 2, 1986.5

(App. 34).

The District Court Decision

Patchogue sought preliminary injunctive relief from the District

Court (Weinstein, Ch. J.) on the ground that Patchogue did not

receive adequate due process prior to the imposition of the ban. The

District Court denied the motion and held that there was no

substantial likelihood of success on the merits of petitioner’s due

process claim. The court found that, considering all of the evidence

produced regarding the conferences and negotiations between

Patchogue, DOH and HHS, “the plaintiff was fully advised of the

complaints of the government”. The court also held that the “series

of detriments to the quality of life of the residents” were “sufficient

to warrant a ban.” (App. 27-28).

The Circuit Court Decision

The Circuit Court affirmed the order of the District Court and

held that the process accorded petitioner was “fully adequate and

sufficiently protects the private interest -- the financial and reputa-

tional well-being of the appeliant.“ (App. 45). “Patchogue was fully

capable of communicating its views to the decision makers and was

accorded numerous opportunities over a period of months to

demonstrate either orally or in writing that the ban should not be

imposed. [It] was supplied with detailed statements and was en-

couraged to contact agency administrators for assistance if

necessary.” Jd. The court also found that “the procedures at issue

safeguard against mistaken decisions and the concomitant harm

they would cause.”* (App. 46).

* Patchogue submitted an acceptable Plan of Correction after the ban was

imposed.

* The U.S. Circuit Court of Appeals stayed the imposition of the intermediate

sanction pending application for certiorari on condition that petitioner post a

bond.

ARGUMENT

As will be shown, the petition in this case should be denied

because there are no “special” or “important” issues warranting

review by this Court and the petitioner has not demonstrated any

conflict between the Circuits. Sup. Ct. R. 17.’ Petitioner argues

that the informal hearings provided by HHS prior to imposing a

ban on admissions were insufficient to satisfy due process. An ex-

amination of the facts leading to the imposition of the ban,

however, illustrates the consistent failure of the nursing home to

comply with public health standards meant to protect the residents

of the nursing home. Petitioners were accorded ample procedural

safeguards prior to the imposition of the ban and these safeguards,

combined with the informal hearing held by HHS, more than meet

minimum due process standards.

This Court has repeatedly held that “[d]ue process is flexible and

calls for such procedural protections as the particular situation

demands.” Morrissey v. Brewer, 408 U.S. 471, 481 (1972).* The fac-

tors to be considered in determining the adequacy of administrative

procedures are set forth in Mathews v. Eldridge, 424 U.S. 319, 335

(1976):

[F Jirst, the private interest that will be affected by the of-

ficial action; second the risk of an erroneous deprivation

of such interest through the procedures used, and the

probable value, if any, of additional or substitute

Moreover, a petition for certiorari will not ordinarily be granted until a final

judgment has been rendered. Estelle v. Gamble, 429 U.S. 97, 115 (1976)

(Stevens, J. dissenting), Brotherhood of Locomotive Firemen v. Bangor &

Aroostock R. Co., 389 U.S. 327, 328 (1967). The policy agains: review of in-

terlocutory orders is important where, as here, a complete development of the

facts regarding the procedures afforded would be helpful in assessing the merits

of the arguments presented.

* Petitioner now claims that it was entitled to a full evidentiary hearing after

imposition of the ban. It did not make this argument below, but contended on-

ly that it was entitled to such a hearing before imposition of the ban.

procedural safeguards; and finally, the Government's

interest, including the function involved and the fiscal

and administrative burdens that the additional or

substitute procedural requirement would entail.

Applying these factors, it is apparent that the private interest of

the home in avoiding the imposition of a ban, is of limited weight.

The Medicaid and Medicare statutes and regulations were not in-

tended “to provide financial assistance to providers of care for their

own benefit.” Green v. Cashman, 605 F.2d 945, 946 (6th Cir.

1979). Rather, the Medicaid and Medicare acts are designed to aid

eligible patients. Id. at 946. As the Second Circuit wrote in Case v.

Weinberger:

A nursing facility’s ‘need’ for patients has nothing to do

with the statutory benefits structure...[T]hat a par-

ticular nursing facility cannot survive without Medicaid

participation was certainly not Congress’ foremost con-

sideration in its creation of the Medicaid program.

523 F.2d 602, 607 (2d Cir. 1975).

Moreover, Patchogue can, itself, limit the duration of the ban or

avoid it entirely by taking prompt corrective action. The Second

Circuit emphasized that Patchogue was given repeated notice of its

deficiencies and ample opportunity to correct them. The court

wrote:

The record is replete with evidence refuting appellant’s

contentions that it was without notice of its deficiencies

and was denied an opportunity to implement an ade-

quate plan of correction.

(App.43).

Furthermore, this case does not involve the permanent closure

of a nursing home, but only a ban of limited duration which will be

rescinded as soon as the nursing home corrects (or even makes a

good faith effort to correct) its deficiencies pursuant to the Plan of

Correction which has already been proposed by the home and

approved by DOH.

Applying the second factor, the procedures followed prior to im-

posing a ban make it extremely unlikely that a ban will be er-

roneously imposed. Both HHS and DOH surveyors conducted in-

spections of the nursing home. Their findings showed that

Patchogue failed to meet minimum standards regarding two con-

ditions of participation in the Medicaid and Medicare programs:

“Governing Body and Management,” 42 C.F.R. § 405.1121 and

“Dietetic Services,” 42 C.F.R. § 405.1125. These deficiencies were

documented in three separate surveys over a six month period and

consistently demonstrated that Patchogue lacked the capacity to

render adequate care to the patients residing there

DOH fully delineated each of the home’s deficiencies at exit con-

ferences and in detailed correspondence. The nursing home

responded only by making unsubstantiated allegations regarding

the surveyors’ judgments. Not once during its exit conferences, its

correspondence with DOH or at the informal hearings held by

HHS, did Patchogue provide any factual basis or any documentary

evidence to refute the surveyors’ findings.°

In Town Court Nursing Center, Inc. v. Beal, 586 F.2d 266, 277

(3d Cir. 1978), the Third Circuit described the survey process and

its accuracy in evaluating the care at nursing facilities." The Court

wrote:

It is based in most cases upon routine, standard, un-

biased reports by health care professionals. Those pro-

fessionals evaluated the provider in light of well-defined

criteria that were developed in the administrative rule

making process. Written submissions are adequate

to allow the provider to present his case. Given the

* Because petitioner failed to make any factual assertions disputing the substan-

tial accuracy of the surveys, it did not demonstrate the need for the full eviden-

tiary hearing it claims is envisioned by Cleveland Board of Education v. Louder-

mill, _ U.S. __ 1055S. Ct. 1985; see Codd v. Velger, 429 U.S. 624, 628 (1977).

'° Town Court Nursing Center is a case involving the termination of a provider

agreement. However, the same process is accorded to a nursing home by DOH

prior to any recommendation to impose the intermediate sanction of a ban.

extensive documentation that the provider is able to sub-

mit in response to the findings of the survey teams, the

provider is unlikely to need an evidentiary hearing to

present his position more effectively.

Thus, given the effectiveness of the survey process in general and

considering the facts in this case, it is extremely unlikely that the ban

was erroneously imposed.

Applying the third factor, the Government has an obvious and

substantial interest in protecting the residents at Patchogue. A full

evidentiary hearing, where DOH surveyors could be extensively

cross-examined regarding their judgments and the factual basis for

each of their determinations, would be extremely time consuming

and burdensome. As the Second Circuit wrote:

Most importantly, it should be recognized that the in-

terest of the government in protecting the health, safe-

ty, and welfare of the residents at Patchogue far

outweighs any financial harm which appellant might

suffer. While the residents may not be harmed im-

mediately, they will be placed in jeopardy by extant con-

ditions at Patchogue. At some point, the rights of the

caretaker must end and the rights of the cared-for begin.

(App. 46-47).

Considering all the factors set forth in Mathews v. Eldridge, it

is apparent that the Government’s interests far outweigh those of

the nursing home, that the procedural safeguards gave the home

adequate protection and that the ban was properly imposed. Under

these circumstances, there is no “special” or “important” reason for

this Court to grant the petition.

CONCLUSION

For the foregoing reasons, the petition for a writ of certiorari

should be denied.

Dated: New York, New York

November 28, 1986

Respectfully submitted,