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CHESTER EXTENDED CARE CENTER v. COMMONWEALTH PENNSYLVANIA (12/19/88)

decided: December 19, 1988.

CHESTER EXTENDED CARE CENTER, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF PUBLIC WELFARE, RESPONDENT



Appeal from the Order of the Office of Hearings and Appeals of the Department of Public Welfare, in the case of Appeal of: Chester Extended Care Center, File No. 22-84-002 and 24-84-026.

COUNSEL

Jeffrey B. Albert, with him, Fox, Rothschild, O'Brien & Frankel, for petitioner.

Bruce G. Baron, Assistant Counsel, for respondent.

Judges Doyle and Smith, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Doyle.

Author: Doyle

[ 122 Pa. Commw. Page 208]

This is an appeal by Chester Extended Care Center (CECC) from an order of the Office of Hearings and Appeals (OHA) of the Department of Public Welfare (DPW) which rejected a hearing attorney's recommendation and denied CECC's appeal.

[ 122 Pa. Commw. Page 209]

The basic facts are not in dispute. In January 1984, CECC received a notice from the Pennsylvania Department of Health (DOH) advising it that its license to operate its skilled nursing care facility was being revoked effective January 6, 1984. CECC appealed this action which had the effect of staying the revocation. On January 18, 1984, the United States Department of Health and Human Services (HHS) advised CECC that it would be terminated from participation in the Medicare program effective March 16, 1984. This action was not appealed. Subsequently, DPW, on February 7, 1984, notified CECC that it was terminating it from participation in the Pennsylvania Medical Assistance Program.*fn1 CECC, wishing to retain its certification, requested another DOH survey. As a result of the survey, DOH concluded that CECC satisfied the conditions for licensure. Based upon the survey and a plan of correction submitted by CECC, the facility and DOH entered into a settlement agreement.

Under the agreement DOH promised, inter alia, to issue CECC a six-month provisional license, to remove the suspension placed upon new admissions at the facility, and to recommend to HHS that CECC remain fully certified under the Medicare and Medical Assistance Programs. In exchange CECC paid a fine and agreed to remain in substantial compliance with regard to the regulations pertaining to licensure. Both parties performed their obligations under the agreement and on March 8, 1984, DOH forwarded information to HHS including a recommendation that the facility's participation in the federal program be permitted to continue. Following March 16 (the effective date of termination in the federal program) DOH continued to inspect the facility

[ 122 Pa. Commw. Page 210]

    and DPW continued to make interim payments for Medical Assistance.

In mid-April of 1984, DOH received a response from HHS to its letter recommending continuation of CECC in the federal program. In its response, HHS indicated that CECC was no longer federally certified and had not sought readmission to the program and, hence, there was no action HHS could take in response to the DOH letter of recommendation. The HHS letter was not sent to CECC. CECC, upon learning of this response, sent a letter dated April 19, 1984 to DOH requesting permission to reapply for the Medicare Program. Accordingly, DOH then conducted another survey and again recommended that CECC be entitled to participate in the Medicare and Medicaid Programs. In November 1984, however, HHS denied CECC readmission into the program. On November 13, 1984, DPW by letter advised CECC that any funds which it received for skilled nursing services provided after March 16, 1984 would be subject to recoupment. CECC appealed this action and a DPW hearing attorney recommended that the appeal be sustained. OHA rejected the recommendation and held that the sum at issue could be recouped. This appeal followed.*fn2

Before considering the merits of the recoupment action, we also note certain other events which transpired. The sale of CECC, which had been scheduled for settlement as early as March 1984, was completed on August 15, 1984. In December 1984, DPW entered into a special provider agreement with the new owners of the facility which ...


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