On April 26, 2005, the DHHS Departmental Appeals Board entered its final decision, in ACT for Health, Inc. v. C.M.S., Civil Remedies CR1177, Decision No. 1972, affirming the decision of the Administrative Law Judge, Steven T. Kessel, that CMS lacked jurisdiction to terminate ACT's participation in the Medicare Program as a home health care provider. ACT was the largest home health agency in Colorado at the time.
The ALJ ruled that ACT had removed any jeopardy situation prior to termination even though CMS surveyors refused to accept any of ACT's five successive plans of correction submitted to it. The surveyors ran out the clock without telling ACT specifically where the plans of correction were deficient.
On appeal, CMS argued that a previous DAB decision in Carmel Convalescent Hospital, DAB No. 1584 (1976) set forth the "fundamental principle" that substantial compliance with the Medicare Conditions of Participation is determined as of the survey and that the consideration of ACT's past survey activity was tantamount to reviewing CMS's discretionary decision not to accept Petitioner's proposed plans of correction; which is outside the ALJ's authority to consider and decide.
CMS asked the Board to decide the issue whether (and to what extent) an ALJ has authority under the Social Security Act and attendant regulations to review whether a home health agency has corrected previously cited deficiencies when the efficacy of its corrective measures has not been first assessed during an on site survey.
The Board decided the case on an even more "fundamental principle" that in order to preserve this issue for appeal CMS first must raise it before the Administrative Law Judge. It noted that CMS had numerous opportunities to raise the issue before the ALJ, but failed to do so. The Board held that CMS provided no justification for why the DAB should not follow its own appellate guidelines requiring formal presentation of the issue below. It also noted that CMS raised no contention that the ALJ's finding of provider compliance was not supported by substantial evidence or that the ALJ erred in his specification of the level of compliance required.
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