SUBJECT:

American Women's Center,

Petitioner,

Health Care Financing Administration

DECISION

I hereby dismiss the request for hearing filed by American Women's Center (AWC) regarding the Phillipsburg and Elizabeth facilities. I deny HCFA's motion to dismiss as to the Voorhees facility and remand the portion of this case concerning the Vorrhees facility to HCFA for further proceedings consistent with this ruling.

I. Background

Petitioner, AWC, performs laboratory testing in conjunction with the provision of abortion services at three New Jersey facilities located in Elizabeth, Voorhees, and Phillipsburg.

The New Jersey Department of Health and Senior Services (NJDOHSS) conducted surveys at the Elizabeth, Voorhees, and Phillipsburg facilities of AWC, on June 24, 1996, July 25, 1996, and August 30, 1996, respectively. NJDOHSS found the same condition level deficiency at all three laboratories, in that they had failed to enroll in a statutorily mandated proficiency testing program. 42 C.F.R. � 493.801. HCFA claims that on May 8, 1997, it notified each of the AWC New Jersey facilities by certified mail, of that agency's determination to suspend their Clinical Laboratory Improvement Amendments (CLIA) certificates, effective May 23, 1997.

The notices also advised the three facilities of an additional opportunity to file an acceptable plan of correction by July 21, 1997, and of the right to seek an administrative hearing. According to HCFA, none of the AWC facilities filed acceptable plans of corrections or hearing requests. Consequently, HCFA claims that on August 27, 1997 it served notice on each of the three laboratories subject of these proceedings, by regular mail, that their CLIA certificates would be revoked effective September 10, 1997. According to HCFA, sometime in 1999, it learned that these three AWC facilities had nevertheless continued laboratory testing of human specimens after their CLIA certificates were revoked in 1997. Thus, HCFA sent them a notice on August 9, 1999, that they must cease and desist laboratory testing because the laboratories were operating without CLIA certificates.

AWC filed a request for hearing on September 20, 1999, in response to the August 9, 1999 notices to cease and desist, seeking a hearing for each of the three facilities with regard to the suspension and revocation actions undertaken by HCFA in 1997.

On July 31, 2000, HCFA filed a motion to dismiss Petitioner's hearing request supported by a memorandum of law and four proposed exhibits. HCFA had labeled these as attachments "A" through "D", but I have re-designated them exhibits 1 - 4 (HCFA Exs. 1 - 4). Petitioner filed a response memorandum on September 18, 2000, accompanied by sixteen exhibits. I have admitted these into evidence as Petitioner's exhibits 1 - 16 (P. Exs. 1 - 16). I entertained argument by the parties over the telephone on February 21, 2001. The transcript (Tr.) of the February 21, 2001 oral argument forms part of the record. Subsequent to the oral argument, HCFA submitted a four page exhibit consisting of the CLIA application for the Elizabeth, New Jersey facility of ACW. I have admitted this additional exhibit as HCFA exhibit 5 (HCFA Ex. 5). Petitioner supplemented the record with three additional exhibits that have been admitted as Petitioner's exhibits 17 - 19 (P. Exs. 17 - 19).

After consideration of the written and oral arguments and documentary evidence submitted by the parties, I grant HCFA's motion to dismiss as to the facilities of AWC at Elizabeth and Phillipsburg. I deny HCFA's motion as to the Voorhees facility. In arriving at my decision I find that the hearing request was untimely filed as to the Elizabeth and Phillipsburg facilities, and that the time for filing a request for hearing should not be extended, inasmuch as Petitioner has not shown good cause for the failure of these laboratories to file a timely hearing request. On the other hand, I conclude that Petitioner had good cause for late filing of the Voorhees request for hearing, and an extension of the time for requesting a hearing is in order.

II. Issue

The issues in this case are:

a. Whether Petitioner filed a timely request for hearing; and

b. Whether Petitioner has shown good cause for extending the time period within which it should be allowed to file a request for hearing.

III. Applicable Law and Regulations

CLIA was designed to promote accurate medical tests by clinical laboratories. Congress' goal was to establish a single set of standards applicable to all laboratory services, including those provided to Medicare beneficiaries. See H.R. Rep. 899, 100^th. Cong., 2^nd. Sess. 8 (1988), reprinted in1998 U.S.C.C.A.N. 3828.

Under CLIA, the Secretary of the United States Department of Health and Human Services (Secretary) is authorized to inspect clinical laboratories and, in effect, license them to perform tests. The Act prohibits a clinical laboratory from soliciting or accepting specimens for testing unless it has first received from the Secretary a certificate authorizing it to perform the specific category of tests which the laboratory intends to perform. 42 U.S.C. � 263a(b). The Act directs the Secretary to establish standards to assure that clinical laboratories certified by the Secretary perform tests that are valid and reliable. 42 U.S.C. � 263a(f).

The standards for operation of clinical laboratories promulgated by the Secretary pursuant to the enabling legislation are found at 42 C.F.R. Part 493. Regulations governing the performance of proficiency tests by clinical laboratories are found at 42 C.F.R. � 493.801. A clinical laboratory must enroll in an approved proficiency testing program. It must notify the Department of Health and Human Services of each program or programs in which it chooses to participate to meet proficiency testing standards. Failure by a laboratory to comply with even a single condition in an area of testing offered by that laboratory may be grounds for imposition of remedies including suspension or revocation of its CLIA certificate.

A laboratory that is not satisfied with the imposition of remedies by HCFA may request a hearing before an Administrative Law Judge (ALJ). 42 C.F.R. � 493.1844. A party is entitled to a hearing if that party files its request for hearing within the time limits established by 42 C.F.R. � 498.40(a)(2), unless the time period for filing is extended. In order to be entitled to a hearing, a party must file its request within 60 days from the receipt of a determination by HCFA imposing a remedy. An ALJ may extend the time within which a hearing request may be filed based on a showing of good cause justifying an extension of time. 42 C.F.R. � 498.40(c)(2). An ALJ may dismiss a request for hearing which is not timely filed. 42 C.F.R. � 498.70(c).

IV. HCFA's Contentions

HCFA contends that the orders to cease and desist do not constitute an appealable action pursuant to 42 C.F.R. � 493.1844(b). Furthermore, it contends that the request for hearing filed on September 20, 1999 was untimely, coming two years after HCFA's sanctions were imposed. HCFA adds that regardless of whether the facilities, individually, received notice, it cannot be disputed that AWC knowingly continued to violate federal law by performing patient testing despite the fact that its laboratories were not enrolled in statutorily required proficiency testing programs.

V. Petitioner's Contentions⁽¹⁾

Petitioner asserts that HCFA has failed to produce evidence to show that the Elizabeth and Phillipsburg facilities received the notices of suspension and revocation issued in May and August 1997. Thus, it argues that the facilities timely requested a hearing within 60 days after they first learned of HCFA's suspension and revocation actions by virtue of the cease and desist notice dated August 9, 1999. In effect, it argues that the absence of adequate notice tolled the time for requesting a hearing. Petitioner admits that the Voorhees facility received the notice of suspension of its CLIA certificate, but alleges that HCFA ignored the fact that the facility responded, providing documents evidencing enrollment in a proficiency testing program.

VI. Findings and Discussion

I make the findings of fact and conclusions of law (Findings) to support my decision. Each Finding is noted below, in bold face and italics, followed by a discussion of the finding.

1. Petitioner did not file a timely request for hearing.

HCFA may suspend and revoke a laboratory's CLIA certificate when a laboratory is found to be out of compliance with a condition level requirement. 42 C.F.R. � 493.1842. Each laboratory must meet the condition level requirement of enrollment in an approved proficiency testing program. 42 C.F.R. � 493.801. In the case at hand, HCFA took action to suspend and revoke Petitioner's CLIA certificate for failure to comply with

42 C.F.R. � 493.801. In furtherance of those enforcement actions, HCFA generated the letters dated May 8, 1997, found at Petitioner's Exs. 17 - 19. Afterwards, HCFA sent Petitioner the notice of revocation dated August 27, 1997, found at P. Ex. 16. It was the notice of May 8, 1997, that granted Petitioner 60 days within which to request a hearing before an ALJ. Thus, the time for seeking a hearing expired in July 1997.

42 C.F.R. � 498.40(a)(2) expressly provides that:

[An] affected party or its legal representative or other authorized official must file the request for hearing in writing within 60 days from the receipt of the notice of initial, reconsidered, or revised determination unless that period is extended . . .

Petitioner filed its request for hearing on September 20, 1999, clearly beyond the 60 days stipulated in the regulations.

2. Petitioner is not entitled to an extension of time to file a request for hearing with respect to its Elizabeth and Phillipsburg facilities.

As stated earlier, Petitioner contends that HCFA's failure to provide adequate notice and opportunity to respond to the letters of suspension and revocation of its CLIA certificates tolled the time for the filing of its request for hearing. In effect, Petitioner suggests that HCFA's alleged failure prevented it from seeking a hearing timely.

Petitioner argues that HCFA has been unable to produce documentary evidence showing that the Elizabeth facility received notice of either suspension or revocation. P. Br., at 10. As to the suspension notice, Petitioner asserts that whereas HCFA possesses a returned envelope indicating the address did not exist, it mysteriously produced a certified mail delivery receipt (green card) for the same envelope. Additionally, Petitioner claims that the signature on the delivery receipt does not belong to anyone on the staff of the Elizabeth facility. Concerning the revocation notice, Petitioner claims that no receipt of delivery exists, and the letter lacks an official date stamp.

As to the Phillipsburg facility, it is Petitioner's position that HCFA has been unable to produce any document showing that it received notice of either the suspension or the revocation. Petitioner places reliance for this assertion on the absence of a signed receipt of delivery (green card). Moreover, it alleges that the envelope that HCFA claims contained the notice was returned as undelivered. As to the revocation notice, Petitioner states that there is no official date stamped, signed copy of the letter sent to the Phillipsburg facility.

HCFA's May 8, 1997 notice of suspension, addressed to the Elizabeth facility was sent to:

1134 East Jersey Street, Elizabeth, NJ 07201.

Petitioner argues in its brief that such an address does not exist. P. Br., at 10. Allegedly, the correct address street address is 1139 East Jersey Street. See Petitioner's Report of Readiness dated April 3, 2000, at 1. What Petitioner fails to mention, however, is that the notice was sent to the address for the Elizabeth facility reported by AWC in its CLIA application dated January 24, 1996. HCFA Ex. 5 at 1. It requires no strain of the imagination to reason that the Elizabeth laboratory's CLIA application generated a response and written communications from the appropriate governmental agency, yet the record is devoid of any need to make an address correction during the approximately 15-month period that followed. Notwithstanding, a second attempt yielded positive results, as can be gleaned from HCFA Ex. 2. That exhibit refers to the certified mail delivery receipt signed by an agent of the Elizabeth facility and dated May 21, 1997. Petitioner characterizes as mysterious HCFA's production of the delivery receipt signed by an agent of the laboratory. This mere characterization, however, falls short of constituting convincing evidence that the notice of imposition of sanctions was not delivered to AWC's Elizabeth facility. In analogous cases it has been established that "[a] simple denial by an excluded individual that he or she received a notice, in the face of proof that the notice was delivered to the individual's address, will not suffice to overcome the presumption of receipt that flows from proof of delivery of a notice." Julio M. Soto, M.D., DAB CR418, at 4 (1996).

In Soto, as HCFA did in the case before me, the Inspector General sent the notice by certified mail, return receipt requested, and someone at Petitioner's address signed for the documents. Nonetheless, Petitioner asserted that neither he nor anyone in his household signed for the notice. In dismissing the argument, the ALJ in that case held that "the fact that someone other than Petitioner, his wife, or children may have signed the return receipt does not vitiate the proof . . . " Id. at 5. Similarly, in this case, the bare assertion that the signature on the delivery receipt does not belong to any "staff member" at the Elizabeth facility, does not overcome the presumption of receipt. See also Ronald J. Crisp, M.D., DAB CR724 (2000).

Petitioner also claims that there is no evidence (i.e., no green card) that a notice of revocation was received by the Elizabeth facility and that the letter lacked a date stamp. This assertion overlooks the fact that the regulations merely require that written notice be given.

Petitioner's contention that HCFA has been unable to produce any document showing that the Phillipsburg facility received notice of either the suspension or revocation is unpersuasive. There is no legal requirement that HCFA show that the laboratory actually received the sanction letter. The only specific requirement of the regulation as to the notice is that it be in writing. 42 C.F.R. � 493.1810. To require HCFA to prove that the laboratory actually received the notice of sanction undercuts not only the effectiveness of the enforcement mechanisms but also the purpose of the Congressional intent to protect the general public. 42 C.F.R. � 493.1804.

The letter of imposition of sanctions was sent to the AWC Phillipsburg facility at 157 South Main Street, Phillipsburg, NJ 08865. Petitioner does not deny that this is the facility's correct address. The delivery envelope shows that Post Office notices went to the addressee on May 29 and June 10, 1997. HCFA Ex. 4. The mail was returned to sender after the U.S. Postal Service attempted delivery twice and failed to produce a response from the facility. Interestingly enough, the Phillipsburg letter was marked "unclaimed' by the U.S. Postal Service after the other two AWC facilities involved in these proceedings received their notices on May 21, 1997. I infer from this that Petitioner chose not to claim the certified mail at the Post Office as a strategy to avoid being held responsible for its contents. If Petitioner were allowed to prevail by way of such stratagem, it would make a mockery of the purpose behind CLIA. I should also note that Petitioner's argument that the notice of revocation copies lacked an official date stamp also fails to overcome the regulatory presumption of receipt.

In view of the foregoing, I conclude that Petitioner has not shown good cause for extension of time to file the request for hearing regarding the imposition of sanctions against its laboratories in Elizabeth and Phillipsburg.

3. Good cause exists for extending the Voorhees facility's time to file a request for hearing.

The Voorhees facility was sent the May 8, 1997 notice of suspension of its CLIA certificate via certified mail. P. Ex. 18, HCFA Ex. 2. On July 5, 1997, the laboratory responded stating that on June 6, 1997, the necessary proficiency testing kits had been ordered from the American Association of Bioanalysts.⁽²⁾ P. Ex. 9. The laboratory expected the Basic Immunology kit to be received by September 23, 1997. Voorhees also forwarded a copy of the certificate attesting to their enrollment in a proficiency testing program, and requested to be contacted as to the status of their possible reinstatement. P. Ex. 9. HCFA did not respond to the Voorhees letter although the facility purportedly attached a copy of the certificate evidencing their enrollment in a proficiency testing program. The facility was responsive to HCFA's May 8, 1997 notice of suspension, but HCFA did not acknowledge the response.⁽³⁾ I note further that Voorhees indicated in its letter of July 5, 1997, that it was unaware that there was a problem with the requirement regarding enrollment and testing samples. This claim rings true inasmuch as NJDOHSS had previously notified the facility that no significant deficiencies were noted as a result of the survey of July 25, 1996. P. Ex. 10. In spite of this report, the suspension notice says that in light of that same survey conducted by NJDOHSS on July 25, 1996, a condition level deficiency was found.⁽⁴⁾

In accordance with regulatory requirements, HCFA afforded the facility a ten day period within which to respond to the notice of imposition of proposed sanctions. 42 C.F.R. � 493.1810(b), and (c). HCFA argued that the response has to be either a request for hearing or a plan of correction. Tr. at 65, HCFA Br., at 7. The language of the regulation does not support that view. The regulation allows the laboratory to submit "evidence or other information against the imposition of the proposed sanction or sanctions." 42 C.F.R. �1810(b). Once the laboratory avails itself of that opportunity, HCFA has to provide written notice that acknowledges "any evidence or information received." 42 C.F.R. �1810(c). HCFA failed to do that in this case. I realize that the facility responded well beyond the ten days granted by HCFA, but nonetheless, an acknowledgment should have been forthcoming.

HCFA posits that enforcement actions against all AWC laboratories is also appropriate because they have continued to operate without the required CLIA certificates. However true that may be, it is only a reflection of their character. That does nothing to relieve HCFA of its duty to accord Petitioner the due process of law to which it is entitled. In this regard, HCFA should be mindful that the law is not self executing.

In view of the foregoing, I find no merit in HCFA's motion to dismiss the request for hearing as to the Voorhees facility. The AWC Voorhees facility is entitled to an extension of time to file its request for hearing. However, inasmuch as HCFA did not consider the merits of the Voorhees facility's response to its notice of suspension prior to revocation of its CLIA certificate, it is appropriate to remand this portion of the case to HCFA for further proceedings consistent with this ruling.

VII. Conclusion

Based on the applicable law and undisputed facts, I conclude that Petitioner's hearing request as to its Elizabeth and Phillipsburg facilities was untimely filed and good cause does not exist to extend the time for filing. As to these facilities, HCFA's motion to dismiss is granted. However, I deny HCFA's motion to dismiss the hearing request as to the Voorhees facility. This portion of the case concerning the Voorhees facility is remanded to HCFA for further proceedings.

José A. Anglada

Administrative Law Judge

1. HCFA asserts, and Petitioner concedes, that the cease and desist order of August 9. 1999, is not an initial determination subject to a hearing request. 42 C.F.R. � 493.1844(b). Petitioner is requesting a hearing on HCFA's imposition of remedies in 1997.

2. The American Association of Bioanalysts is a proficiency testing agency approved by the Department of Health and Human Services.

3. I am not persuaded by HCFA's suggestion that the Voorhees response was a mere act of playing dumb. Tr. at 65.

4. HCFA implies that the facility had to know that it was not enrolled in a proficiency testing program. At first blush that seems to be a reasonable assumption, however, not all CLIA certificates require such enrollment.