Date: February 16, 1999
In the Case of:
BAN Laboratories,
Petitioner,
- v. -
Health Care Financing Administration.
Docket No. C-97-418
Decision No. CR576
I decide that the Health Care Financing Administration (HCFA) is authorized to impose principal and alternative remedies against Petitioner, BAN Laboratories, based on Petitioner's failure to comply with conditions of certification under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). I sustain the remedies imposed by HCFA. As a matter of law, my decision means that Petitioner's authority to participate under CLIA is revoked.
I. BACKGROUND
A. Governing law
I decide this case pursuant to regulations that are contained in 42 C.F.R. Part 493 (CLIA regulations). The CLIA regulations implement sections or parts of sections 1846, 1861(e), 1861(j), 1861(s)(13), and 1902(a)(9) of the Social Security Act, along with section 353 of the Public Health Services Act. The CLIA regulations set forth the conditions that all laboratories must meet in order to perform clinical testing. The regulations also set forth enforcement procedures and hearings and appeals procedures for those laboratories that are found to be noncompliant with CLIA requirements.
The regulations authorize HCFA or its designee (such as a State survey agency) to conduct validation inspections of any accredited or CLIA-exempt laboratory, in order to determine whether the laboratory is in compliance with CLIA requirements. 42 C.F.R. � 493.1780(a). The regulations confer broad enforcement authority on HCFA, in order to assure that laboratories comply with CLIA. 42 C.F.R. � 493.1800. Where HCFA determines that a laboratory is not complying with one or more CLIA conditions, HCFA may impose principal sanctions against that laboratory, which include suspension and/or revocation of the laboratory's CLIA certificate. 42 C.F.R. � 493.1806(a), (b). HCFA may also impose alternative sanctions against a noncompliant laboratory in lieu of or in addition to principal sanctions. 42 C.F.R. � 493.1806(c). Additionally, HCFA may cancel a laboratory's approval to receive Medicare payments for its services, where the laboratory is found not to be complying with one or more CLIA conditions. 42 C.F.R. � 493.1807(a).
The regulations provide a noncompliant laboratory with the opportunity to correct its deficiencies so that HCFA may remove alternative sanctions that have been imposed against the laboratory. 42 C.F.R. � 493.1810(e). A laboratory may make an allegation of compliance once it believes it has corrected the deficiencies. HCFA will verify whether the deficiencies have been corrected if it finds the allegation of compliance to be credible and will lift alternative sanctions effective as of the correction date. Id. However, the regulations do not afford a laboratory the same opportunity to have principal, as opposed to alternative, sanctions lifted based on self-correction of deficiencies and an allegation of compliance by the laboratory.
A laboratory that is dissatisfied with a determination by HCFA to impose sanctions against it may request a hearing before an administrative law judge to contest HCFA's determination. 42 C.F.R. � 493.1844. In most circumstances, a determination to suspend, limit, or revoke a CLIA certificate will not become effective until after a decision by an administrative law judge that upholds HCFA's determination to impose such a remedy. 42 C.F.R. � 493.1844(d)(2)(i). However, if HCFA determines that a laboratory's failure to comply with CLIA requirements poses immediate jeopardy to patients, then HCFA's determination to suspend or limit a laboratory's CLIA certificate will become effective in advance of a hearing and decision by an administrative law judge, after HCFA gives notice to the laboratory of its determination. 42 C.F.R. � 493.1844(d)(2)(ii). A suspension automatically becomes a revocation of the laboratory's CLIA certificate in a case where an administrative law judge decides to uphold a determination by HCFA to suspend a laboratory's CLIA certificate based on a finding that the failure by the laboratory to comply with CLIA requirements poses immediate jeopardy to the health and safety of patients. 42 C.F.R. � 493.1844(d)(4).
An immediate jeopardy determination is not appealable. 42 C.F.R. � 493.1844(c)(6). Thus, a laboratory that has been found to be posing immediate jeopardy to patients may appeal the findings of condition-level deficiencies which are the basis for the imposition of remedies against it, but not HCFA's determination that these deficiencies pose immediate jeopardy to patients. Nor may a laboratory appeal a determination by HCFA not to reinstate a suspended laboratory where HCFA has concluded that the reason for the suspension has not been removed or that there is insufficient assurance that the reason will not recur. 42 C.F.R. � 493.1844(c)(3).
B. Background facts and procedural history
Petitioner is a clinical laboratory in Dallas, Texas. It is in the business of performing laboratory tests that are referred to it by physicians. On March 31, 1997, Petitioner was surveyed by the Texas Department of Health, a State survey agency acting as HCFA's designee, in order to determine whether Petitioner was in compliance with CLIA conditions of certification. The surveyors concluded that Petitioner was not complying with 15 specific conditions of certification. HCFA Exhibit (Ex.) 1.
On April 3, 1997, HCFA notified Petitioner that it concurred in these findings. HCFA Ex. 2. It advised Petitioner further that it had concluded that the deficiencies that were identified at the March 1997 survey were so severe as to pose immediate jeopardy to the health and safety of patients. Id. HCFA advised Petitioner that, effective April 15, 1997, it would impose principal sanctions, which included suspension of Petitioner's CLIA certificate. Id. HCFA advised Petitioner further that the suspension would become a revocation of Petitioner's CLIA certificate if an administrative law judge issued a decision which upheld HCFA's determination. Id.
HCFA's notice to Petitioner invited Petitioner to correct its deficiencies and to submit a credible allegation of compliance to HCFA. HCFA Ex. 2. It is unclear from the text of HCFA's notice whether HCFA meant that Petitioner could submit an allegation of compliance in order to have HCFA rescind the principal sanctions that it had imposed. See id. As I discuss above, at Part A of this section, the regulations do not afford a noncompliant laboratory the opportunity to submit an allegation of compliance in order to have principal sanctions rescinded. But, on April 11, 1997, Petitioner sent a letter to HCFA in which it stated that its owner would "insure that the necessary procedures to bring the laboratory into compliance in response to the deficiencies . . . will be achieved as of 4/11/97." HCFA Ex. 3. The letter listed six corrective actions that the laboratory would undertake in order to attain compliance. Id.
Petitioner requested an administrative hearing and the case was assigned to me for a hearing and a decision. I conducted an initial prehearing conference at which Petitioner's counsel advised me that Petitioner believed it had corrected its deficiencies and wished to have its laboratory resurveyed for compliance with CLIA conditions. I advised the parties then that I had no authority to direct HCFA to resurvey Petitioner. The parties agreed to stay the case while they discussed possible settlement.
HCFA's Dallas Regional Office reviewed Petitioner's April 11, 1997 letter and found the allegations of compliance that Petitioner made in the letter not to be credible. HCFA Ex. 5
at 4. Evidently, based on this review, and in response to the request that Petitioner made at the initial prehearing conference in this case, HCFA decided that it would not request the Texas Department of Health to resurvey Petitioner. On April 13, 1998, HCFA sent Petitioner a letter advising it of its determination. HCFA Ex. 4. HCFA did not furnish me directly with a copy of that letter.
Neither party contacted me to apprise me of the state of settlement negotiations or to request that I activate this case. In the summer of 1998, I became concerned that the case had remained stayed for an extended period without any advice from the parties. Therefore, I convened a prehearing conference. At the conference, the parties advised me that they intended to litigate the case based on written submissions. I established a schedule for the parties to file briefs and proposed exhibits.
HCFA timely submitted its brief and six proposed exhibits. Petitioner submitted documents which were not organized as a brief and exhibits in accordance with the directions that I had given to the parties. I returned these items to Petitioner and directed that it resubmit them in correct form. After a lapse of some weeks without an additional submission by Petitioner, I issued an order to show cause asking Petitioner to explain why the case should not be dismissed for abandonment. Subsequently, I received a written submission from Petitioner dated December 29, 1998. The submission includes statements which are in the nature of assertions of fact and arguments and 40 proposed exhibits.
I note that Petitioner's final submission to me was sent by B. Antiquene Nichols, who, in various communications, describes herself to be either the owner or the administrative director of Petitioner. Petitioner had been represented by an attorney, Alfonzo R. Greenidge. All of my communications with Petitioner had been directed to counsel. It is unclear why Ms. Nichols made Petitioner's final submission to me or why Mr. Greenidge is no longer in contact with me. He has not formally withdrawn as counsel.
In any event, I am accepting Petitioner's submission as its brief and proposed exhibits in this case. I conclude that the case is now ready for a decision on the merits. Petitioner has not objected to my receiving into evidence the six proposed exhibits which were submitted by HCFA. HCFA has not objected to my receiving into evidence the 40 proposed exhibits which were submitted by Petitioner. I receive into evidence HCFA's Exhibits 1 - 6 and Petitioner's Exhibits (P. Exs.) 1 - 40.
II. ISSUE, FINDINGS OF FACT AND CONCLUSIONS OF LAW
A. Issue
The issue in this case is whether HCFA is authorized to impose sanctions against Petitioner based on Petitioner's failure to comply with CLIA conditions of certification.
B. Findings of fact and conclusions of law
I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading. I discuss each of my Findings in detail.
1. As of March 31, 1997, Petitioner was not complying with CLIA conditions of certification.
HCFA established a prima facie case that, as of March 31, 1997, Petitioner was not complying with CLIA conditions of certification. The evidence which establishes HCFA's prima facie case consists of the report of the March 31, 1997 survey of Petitioner. HCFA Ex. 1. It consists additionally of the affidavit of Nancy Dominy, one of the surveyors who performed the March 31, 1997 survey of Petitioner. HCFA Ex. 6.
Petitioner has supplied commentary concerning the March 31, 1997 survey findings. This commentary is provided in two documents, one entitled "Statement of Deficiencies" and the other bearing a heading on the first page which reads "I. Exit Conference." This commentary contains unsworn allegations of fact. To be fair to Petitioner, I have treated this commentary as if it were an affidavit by Ms. Nichols, Petitioner's owner and administrator. I find that the commentary does not rebut the essential allegations of the surveyors. Indeed, in some critical respects, it admits to those allegations.
I have elected not to discuss each and every finding of deficiency that the surveyors made. In this Finding, I discuss the condition-level deficiencies that were identified by the surveyors. The report of the March 31, 1997 survey of Petitioner is 154 pages in length. HCFA Ex. 1. Many of the deficiencies that are identified in that report are not cited as being condition-level deficiencies.
I sustain each of the findings of condition-level deficiency made by the surveyors, although it is unnecessary for me to sustain each and every finding of a condition-level deficiency in order to conclude that HCFA is authorized to impose principal and alternative remedies against Petitioner. Under the applicable regulations, the presence of even one condition-level deficiency is sufficient to authorize HCFA to impose principal and alternative remedies. 42 C.F.R. � 493.1806(a).
HCFA's prima facie case of condition-level noncompliance was not rebutted by Petitioner with respect to the following conditions of certification:
a. Proficiency testing (42 C.F.R. �� 493.801, 493.803, 493.839, and 493.849)
The conditions governing proficiency testing (in particular 42 C.F.R. �� 493.801 and 493.803) require that a laboratory enroll in and successfully complete proficiency testing. The regulations do not allow laboratories to be exempted from the enrollment and successful completion requirements. The surveyors found that Petitioner was deficient in meeting these conditions in that it failed to enroll in or complete proficiency testing. The surveyors found that Petitioner had a history of non-compliance with proficiency testing requirements. HCFA Ex. 6 at 2-3. Furthermore, they found that Petitioner failed to enroll in proficiency testing for the year 1997.
Petitioner does contradict directly the surveyors' findings. It asserts that a surveyor had told it in March 1996, that it was not mandatory prior to 1996 that it enroll in proficiency testing. Petitioner's Commentary -- Statement of Deficiencies at 1. Petitioner admits that it had not enrolled in proficiency testing for 1997 but attributes this failure by it to a freeze that HCFA had allegedly placed on Petitioner's funds in December 1996. Id.
Petitioner's assertions do not rebut the surveyors' findings. To the contrary, Petitioner admits to the central element of their findings which is that, as of March 31, 1997, Petitioner was not enrolled in a regulation-mandated proficiency testing program. The regulations do not suggest that a laboratory may justify not enrolling in proficiency testing on the ground that exigent financial circumstances impeded its enrollment.
b. Patient test management (42 C.F.R. � 493.1101)
The condition of certification which governs patient test management requires that a laboratory which performs tests of moderate or high complexity employ and maintain a system that provides for proper patient preparation; proper specimen collection, identification, preservation, transportation, and processing; and accurate result reporting. The condition requires further that such a system must assure optimum patient specimen integrity and positive identification of specimens throughout the testing process and must meet applicable testing standards. 42 C.F.R. � 493.1101.
The surveyors concluded that Petitioner failed in numerous respects to comply with this condition. Among other things, they found that Petitioner: failed to perform tests timely; used compromised specimens for performing tests; altered test results, thereby altering the true values recorded on tests; and reported results for tests that were not performed. The surveyors concluded that Petitioner's failure to comply with the condition caused actual harm to patients. HCFA Ex. 6 at 3-4.
Petitioner has not rebutted persuasively these conclusions. In its commentary, Petitioner asserts that it did not fail to maintain all testing or patient records. Petitioner's Commentary - Statement of Deficiencies at 2. However, the surveyors did not conclude that Petitioner failed to maintain all testing or patient records. Their conclusion was that Petitioner failed to maintain a system to assure that tests were performed properly. Petitioner's other assertions similarly fail to address the central allegations of noncompliance made by the surveyors. See id.
c. General quality control (42 C.F.R.
� 493.1201(a),(b))
The regulation which governs general quality control requires a laboratory to establish and follow written quality control procedures for monitoring and evaluating the quality of the analytical testing process of the tests it provides. 42 C.F.R. � 493.1201(b). A laboratory is obligated to meet applicable quality control standards. Id.
The surveyors concluded that Petitioner manifested pervasive and ongoing quality control failures. HCFA Ex. 1 at 65; HCFA Ex. 6 at 4. They identified condition-level quality control failures in several areas. HCFA Ex. 1 at 65-66. These failures were documented in detail in the report of the March 31, 1997 survey of Petitioner. Id.
Petitioner did not rebut the surveyors' conclusions. Petitioner merely asserts, without explanation, that it "performed quality control procedures for all areas of testing during 1996 and 1997." Petitioner's Commentary - Statement of Deficiencies at 6.
d. Routine chemistry quality control (42 C.F.R. � 493.1245)
The regulation which governs routine chemistry quality control establishes specific quality control criteria with which a laboratory must comply. 42 C.F.R. � 493.1245. The surveyors concluded that Petitioner failed to perform and document control procedures correctly. HCFA Ex. 1 at 127-129; HCFA Ex. 6 at 4. The surveyors found that, as a result, aberrant testing results were not identified and communicated to patients' physicians. Id.
Petitioner has not responded directly or persuasively to these findings. It asserts that its instruments were validated when they were installed and that calibrations of instruments were performed along with other instrument checks. Petitioner's Commentary - Statement of Deficiencies at 9. This assertion does not refute or, in the main, even address the surveyors' findings of noncompliance with quality control requirements as of the date of the survey.
e. Additional conditions of certification with which Petitioner did not comply (42 C.F.R. �� 493.1239, 493.1247, 493.1249, 493.1253, 493.1409, 493.1441, 493.1447, 493.1701)
The surveyors made findings of additional condition-level deficiencies at Petitioner. These consisted of the following:
i. Syphilis serology (42 C.F.R. � 493.1239);
ii. Endocrinology and toxicology (42 C.F.R. �� 493.1247, 493.1249);
iii. Hematologyy (42 C.F.R. � 493.1253);
iv. Personnel (42 C.F.R. �� 493.1409, 493.1441, 493.1447);
v. Quality assurance (42 C.F.R. � 493.1701).
HCFA Ex. 6 at 4-6.
I find that Petitioner did not rebut these findings of deficiencies. Petitioner's explanations essentially amount to general assertions that equipment was calibrated or that requisite personnel were on duty. However, they fail to address the very explicit findings of failures to comply with laboratory certification requirements that the surveyors issued.
For example, the surveyors found that the following personnel conditions were not met - director, high complexity; technical supervisor; and technical consultant. Additionally, the surveyors found that the persons functioning in those capacities failed to perform the technical supervision and overall management necessary to prevent the pervasive and ongoing failures that were identified during the survey of Petitioner. HCFA Ex. 1 at 137-138; HCFA Ex. 6 at 5; 42 C.F.R. � 493.1409. Petitioner's response to these findings is essentially that it had the requisite personnel on duty in 1997. Petitioner's Commentary - Statement of Deficiencies at 9. This assertion begs the question of whether the supervisory personnel were discharging the technical supervision and overall management responsibilities that are established under the conditions of participation.
As another example, the surveyors found that Petitioner failed to meet the specific requirements for hematology testing. HCFA Ex. 1 at 133-134; HCFA Ex. 6 at 5; 42 C.F.R. � 493.1253. Petitioner's response to these findings by the surveyors is essentially to assert that instruments were validated when installed and calibrations were performed along with other instrument checks. Petitioner's Commentary - Statement of Deficiencies at 9. This explanation by Petitioner merely is a general assertion that instruments were calibrated. It does not address or respond to the specific findings of deficiencies that the surveyors identified.
2. HCFA is authorized to impose principal and alternative remedies against Petitioner.
The presence of one or more condition-level deficiencies as of March 31, 1997, authorizes HCFA to impose principal and alternative remedies against Petitioner. 42 C.F.R. � 493.1806. These remedies may include any of the remedies that HCFA determined to impose against Petitioner, including suspension of Petitioner's CLIA certificate. As I discuss above, that suspension becomes a revocation effective with my decision that Petitioner manifested condition-level deficiencies.
I do not address the question of whether the condition-level deficiencies manifested by Petitioner posed immediate jeopardy to patients. As I discuss above, at Part I.A. of this decision, I have no authority to consider whether a condition-level deficiency poses immediate jeopardy.
3. Petitioner was not denied due process.
Petitioner makes two arguments to assert that it was denied due process by HCFA. First, Petitioner argues that representatives of the Texas Department of Health did not hold a proper and complete exit conference with Petitioner at the close of the March 31, 1997 survey of Petitioner. Second, Petitioner asserts that it should have been resurveyed prior to April 15, 1997, inasmuch as it had submitted allegedly credible allegations of compliance to HCFA prior to that date. I find both of these arguments to be without merit.
There is no provision in the regulations governing laboratories which compels HCFA or its designee to conduct an exit conference with a laboratory at the completion of a survey of that laboratory. See 42 C.F.R. � 493.1773. Notwithstanding, I would be concerned if Petitioner had shown that it was deprived of notice by HCFA or by the Texas Department of Health of the findings of deficiencies or the basis for those findings. However, Petitioner has not pointed to anything which would establish that it was deprived of adequate notice of these findings.
Petitioner's assertion to the contrary, its submission to HCFA of allegations of compliance did not trigger a duty on HCFA's part to assure that Petitioner was resurveyed. As I discuss above, at Part I.A. of this decision, a laboratory is entitled to a resurvey only as to alternative, and not to principal, remedies. But, HCFA's determination to suspend Petitioner's CLIA certificate is an invocation of a principal remedy. Under no circumstance would Petitioner be entitled to a resurvey to determine whether the remedy should be rescinded. Furthermore, a laboratory may qualify for a resurvey to determine whether an alternative remedy should be rescinded where it has submitted a credible allegation of compliance to HCFA. Here, HCFA determined that Petitioner's allegation of compliance was not credible.
Steven T. Kessel
Administrative Law Judge