SUBJECT: Mark Gary Hertzberg, M.D., P.C.,

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Mark Gary Hertzberg, M.D., P.C. (Petitioner), a clinical laboratory, appealed an August 3, 2001 decision by Administrative Law Judge (ALJ) Alfonso J. Montaño granting summary disposition in favor of the Centers for Medicare & Medicaid Services (CMS).⁽¹⁾ Mark Gary Hertzberg, M.D., P.C., DAB CR805 (2001) (ALJ Decision). There, the ALJ sustained the following remedies imposed by CMS against Petitioner: the suspension and revocation of Petitioner's certificate under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and the cancellation of Petitioner's approval to receive Medicare payments for its services.

The ALJ Decision was based on six findings of fact and conclusions of law (FFCLs). On appeal, Petitioner excepted to each FFCL and asked that we reverse the ALJ Decision. We have reviewed Petitioner's exceptions and conclude that the ALJ Decision should be affirmed and the remedies imposed by CMS should be upheld.⁽²⁾

Applicable law and regulations

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories. Pub. L. No. 100-578, amending � 353 of the Public Health Service Act, codified at 42 U.S.C. � 263a et seq. CLIA further grants the Secretary of this Department broad enforcement authority, including the ability to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more requirements for a certificate. The purpose of the CLIA requirements is to ensure the accuracy and reliability of laboratory tests, and hence the health and safety of those tested. See H.R. Rep. No. 899, 100^th Cong. 2d Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829.

A laboratory's CLIA certification is dependent upon whether the laboratory meets the conditions of certification set out in the statute and regulations. 42 U.S.C. � 263a(f)(1)(E); 42 C.F.R. � 493.1 et seq.⁽³⁾ Each condition represents a major division of laboratory services to be offered by the laboratory or required environmental protections at the laboratory. The regulations also set forth standards, the specific components of the conditions of laboratory certification that a laboratory must meet as part of achieving compliance with applicable conditions.

A key component of the statutory and regulatory program to assure that laboratories holding CLIA certificates are competent to perform tests of moderate and high complexity is the requirement for participation in a proficiency testing (PT) program that is approved by CMS, as outlined in 42 C.F.R. Part 493, Subpart H. Among the requirements of that subpart are the following: a participating laboratory must test PT samples it receives in the same manner as it tests patient samples; must not communicate the results of its tests to other laboratories prior to the deadline for reporting results; must not refer PT samples to another laboratory for analysis; and must document and maintain documentation for the handling, preparation, processing, examination, and each step in the testing and reporting of results for all PT samples. 42 C.F.R. � 493.801.

A laboratory's failure to comply with even a single condition in an area of testing offered by that laboratory may be grounds for suspension or revocation of a laboratory's CLIA certificate. Ward General Practice Clinic, DAB No. 1624, at 2 (1997). CMS may suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and may also impose alternative sanctions such as a directed plan of correction or monitoring by the state. 42 C.F.R. � 493.1806.⁽⁴⁾

A laboratory is entitled to a hearing before an ALJ to contest the imposition of CLIA remedies, including the suspension, limitation, or revocation of the laboratory's CLIA certificate, and may request review of the ALJ's decision by the Departmental Appeals Board. The CLIA regulations at 42 C.F.R. � 493.1844(a)(2) and (3) incorporate by reference the hearing procedures and the request for review provisions in 42 C.F.R. Part 498, Subparts D and E.

Background

This is the fifth in a series of related CLIA appeals.⁽⁵⁾ The undisputed factual background is drawn from the ALJ Decision and the record below.

Petitioner is a physician-owned clinical laboratory engaged in high complexity testing for routine chemistry and endocrinology in Southfield, Michigan. Petitioner is owned and operated by Mark Gary Hertzberg, M.D., who served as Petitioner's laboratory director. CMS Ex. 5. Petitioner employed Deborah Sabo. Ms. Sabo performed high complexity routine chemistry and endocrinology testing, PT and tests billable to Medicare. CMS Ex. 7.

Some of the metropolitan Detroit laboratories participating in the American Association of Bioanalysts (AAB) PT program were Mark Hertzberg, M.D.; Stanley Boykansky, M.D.; Oakland Medical Group (also known as Moretsky/Trager/Flor); John Dunn, M.D.; Rochester Road Clinic; Nazar Sarafa, M.D. (also known as Garden City Medical Clinic); Liptawat Family, P.C.; Lakeland Medical; and Ecorse Med Center. CMS Exs. 1 and 27; Oakland, at 3. The AAB would mail to each participating laboratory an identical group of five specimens three times a year. The laboratories were required to test these specimens for analytes for which they did patient testing and mail their results to the AAB by a date certain. Petitioner was required to test the specimens for cholesterol, glucose, HDL cholesterol, triglycerides, iron, thyroid stimulating hormone, total thyroxine, triiodothyronine, and thyroid uptake.

While working for Petitioner, Ms. Sabo also performed PT for the Dunn, Ecorse, Boykansky and Garden City laboratories and worked for the Rochester Road laboratory as substitute testing personnel. CMS Ex. 26 (Tr.)⁽⁶⁾ at 42-43.

During this period, Rene Wheatley performed PT for the Rochester Road, Liptawat, Lakeland and Oakland laboratories. Boykansky at 3, citing HCFA Exs. 1 and 2 in that record.

In early January 1999, Dennis W. Jay, Ph.D., Technical Director of the Proficiency Testing Service of the AAB, sent a letter to the Michigan Department of Consumer and Industry Services (MDCIS), the state survey agency, concerning PT results for a group of Detroit area laboratories that he deemed suspect. Specifically, he suggested that the same PT results were being submitted by nine laboratories including Petitioner. CMS Exs. 24 at 2-4 and 25 at 2-3.

On February 25, 1999, MDCIS surveyors conducted a complaint investigation of Petitioner to determine whether Petitioner was complying with CLIA requirements. The surveyors determined that Petitioner's 1998 PT results were not obtained in compliance with CLIA requirements.⁽⁷⁾ CMS Ex. 25 at 3-12. Generally, the surveyors found that Petitioner's PT results for numerous tests were identical to PT results at some or all of eight other Detroit area laboratories, identified above, at which Ms. Sabo and Ms. Wheatley worked. The surveyors also found that the underlying calculations ostensibly used to produce those results did not always support them.

The surveyors referred their findings to CMS. On June 23, 1999, CMS notified Petitioner that it had found Petitioner deficient in complying with CLIA requirements. CMS Ex. 4. CMS advised Petitioner that it would impose remedies against Petitioner which included cancellation of Petitioner's approval to receive Medicare payment for its services and revocation of Petitioner's CLIA certificate.

CMS followed its June 23, 1999 notice with a second notice dated August 17, 1999. There, CMS advised Petitioner that its determination to impose remedies was based on its finding that Petitioner had referred PT samples to another laboratory for testing or had improperly collaborated with another laboratory in the administration of PT samples. CMS identified two specific CLIA conditions with which it asserted Petitioner had not complied. These conditions are stated at 42 C.F.R. �� 493.801 (proficiency testing) and 493.1441 (laboratory director). CMS Ex. 22.

On August 19, 1999, Petitioner requested a hearing before an ALJ.

On September 3, 1999, CMS sent a third notice to Petitioner, supplementing its June 23^rd notice "by clarifying, and setting forth in more detail, our basis for imposing the sanctions . . . ." CMS indicated that it had inadvertently failed to include evidence, in addition to survey findings, upon which its determinations were based. The evidence was abstracted in a chart for Petitioner which compared Petitioner's proficiency testing to eight other laboratories in Michigan. CMS asserted that the "identity of the results reported by these nine laboratories, especially for the third quarter of 1998, is strong evidence of improper referral or collaboration, or both." CMS Ex. 23.

On February 22, 2000, CMS filed a Motion for Summary Affirmance. Petitioner opposed CMS's Motion and requested a hearing. The ALJ denied CMS's motion and scheduled an in-person hearing for November 8, 2000. On November 2, 2000, this hearing was canceled at the request of the parties. The parties stipulated that if Ms. Sabo were to testify in this matter, her testimony would be the same as her April 12, 2000 testimony given in the hearing before the ALJ in Boykansky and contained in the transcript from that proceeding (submitted in this proceeding as CMS Ex. 26). Petitioner subsequently submitted a supplemental affidavit by Ms. Sabo (P. Ex. 5).⁽⁸⁾ The ALJ granted summary disposition for CMS on August 3, 2001.

Applicable Legal Standards

The standard of proof employed at a hearing concerning CMS's determination that a laboratory is not in compliance with CLIA conditions is preponderance of the evidence. CMS has the burden of coming forward with sufficient evidence to prove a prima facie case that the laboratory is not complying with one or more CLIA conditions. The laboratory has the ultimate burden of rebutting, by a preponderance of the evidence, any prima facie case of noncompliance established by CMS. Edison Medical Laboratories, Inc., DAB No. 1713 (1999), aff'd Edison Medical Laboratories, Inc., v. Thompson, 250 F.3d 735 (3^rd Cir. 2001); see also Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd Hillman Rehabilitation Center v. United States, No. 98-3789 (GEB) (D.N.J. May 13, 1999).

Our standard of review of an ALJ decision on a disputed issue of law is whether the ALJ decision is erroneous. Our standard of review on a disputed issue of fact is whether the ALJ decision as to that fact is supported by substantial evidence on the record as a whole. US Bio-Chem Medical Laboratories, Inc., DAB No. 1731 (2000).

Petitioner took exception to the six FFCLs underlying the ALJ Decision. Petitioner filed, concurrently, both a Request for Review, listing exceptions to the FFCLs, and a Brief in which its discussion of some FFCLs was subsumed within broader arguments. In presenting Petitioner's position, we cite both its Request for Review and its Brief.

We have considered each argument raised by Petitioner as well as the entirety of evidence before the ALJ. Below we address each relevant argument relative to a disputed FFCL. We have concluded that the challenged FFCLs are not erroneous and are supported by substantial evidence on the record as a whole. Thus, any nuance of Petitioner's contentions that we have not addressed specifically is subsumed in our analysis of its position and rejected.

FFCL 1. CMS properly notified Petitioner of condition-level deficiencies.

Petitioner contended that this FFCL was clearly erroneous and not supported by substantial evidence in the record. Petitioner asserted that it did not receive proper notice of the condition-level deficiencies in accordance with 42 U.S.C. � 263a(i) and 42 C.F.R. � 493.1844(g). Petitioner alleged that it had suffered prejudice because its Medicare payments were canceled prior to its receipt of notice of any alleged condition-level deficiencies. Petitioner noted further that, based on the ALJ Decision, it could have its CLIA certificate revoked. Petitioner Request for Review at 1-2; Petitioner Br. at 7.

Petitioner conceded that CMS's June 23, 1999 notice properly alleged standard-level deficiencies. However, Petitioner asserted that it was not until CMS's August 17, 1999 notice that allegations of condition-level deficiencies relative to 42 C.F.R. � 493.801 (testing of samples) arose. Petitioner contended that it received the August 17^th notice after the sanctions were either imposed or appealed. Further, Petitioner contended, this notice provided no opportunity for Petitioner to respond to or to appeal previously undisclosed deficiencies. Petitioner alleged that CMS's actions constituted a blatant violation of 42 U.S.C.� 263a(i), 42 C.F.R. �� 493.1842, 493.1844, and the Due Process and Equal Protection Clauses of the United States Constitution. Petitioner Br. 7-11.

Petitioner argued that the ALJ misinterpreted both the statute, 42 U.S.C. � 263a(i), and parallel regulations at 42 C.F.R. � 493.1842. Petitioner contended that this legislation provided that neither cancellation nor revocation may occur without proper notice and opportunity to respond. Petitioner recognized that 42 C.F.R. � 493.1842(b) authorized CMS to amend notices. However, Petitioner asserted that CMS was not authorized to impose a principal sanction unless it had properly alleged a condition-level deficiency. Petitioner argued that the ALJ erred in finding that CMS's August 17^th notice was an adequate basis for principal sanctions. Petitioner acknowledged this Board's prior consideration of this issue in Boykansky, in which the Board stated that pervasive noncompliance with standards could constitute a failure to comply with the overall condition. However, Petitioner asserted that the general analysis in Boykansky was wrong and that the ALJ here erred in relying on that decision to reach this FFCL. Here, Petitioner asserted, CMS imposed a condition-level remedy, cancellation of payment, then alleged condition-level deficiencies. Additionally, Petitioner asserted, CMS erroneously determined that it could cancel payments and revoke Petitioner's CLIA certificate based on an accumulation of standard-level deficiencies justifying condition-level sanctions. Petitioner Br. at 7-15.

We reject Petitioner's contention that it lacked timely and adequate notice of the basis for CMS's determination. As the ALJ found, the June 23^rd notice expressly cited 42 C.F.R. � 493.801(b)(4), the CLIA standard concerning the intentional referral of PT samples. See ALJ Decision at 7, citing CMS Ex. 4. That standard specifically mandates the principal sanction of certificate revocation. Thus, the ALJ reasoned, the fact that the other regulatory provisions cited in the Statement of Deficiencies accompanying the June 23^rd notice concerned only standard-level deficiencies does not make the notice inadequate as a basis for imposition of principal sanctions. Moreover, contrary to Petitioner's contention that it was not provided an opportunity to address the alleged deficiencies prior to cancellation of approval to receive Medicare payments (as required by 42 C.F.R. �� 493.1842(b) and 493.1810), the ALJ was correct in holding that the June 23^rd letter provided Petitioner its opportunity to respond before the cancellation went into effect. ALJ Decision at 8; see CMS Ex. 4. In addition, as we discuss extensively below, this case has parallels to Boykansky. Here, too, the egregious undermining of the PT system alleged by the June 23^rd notice was sufficient to constitute an allegation of a condition-level deficiency within the meaning of the regulations, even if the notice did not specifically state this.

Petitioner also claimed that CMS's action against it violated the Equal Protection Clause of the Constitution because one of CMS's affiants stated that other laboratories in other states also reported identical PT results, yet CMS failed to prosecute those laboratories. Since Petitioner did not raise this issue before the ALJ, and offered no evidence or legal authority to support its claim, we summarily reject this contention.

We therefore affirm and adopt FFCL 1.

FFCL 2. During 1998, Petitioner colluded with other clinical laboratories in the performance of proficiency testing.

Petitioner asserted that the ALJ's finding of collusion was not supported by "substantial facts presented and is clearly erroneous." Petitioner Request for Review at 2. Petitioner argued that in reaching this FFCL, the ALJ ignored the only credible evidence of record, Ms. Sabo's testimony, and relied instead on the similarity of Petitioner's PT results to the results of other laboratories in the Detroit area. Petitioner contended that the ALJ's findings, that Ms. Sabo and Ms. Wheatley were well-acquainted and that Ms. Sabo had offered no explanation for similar or identical PT results, were not supported by substantial evidence. Id. at 2-5.

In addition, Petitioner alleged that CMS had not met its burden regarding allegations of intentional referral. Petitioner also contended that CMS improperly relied on simple rounding errors and inconsequential human errors by Ms. Sabo as evidence of a greater scheme of collusion or collaboration. Petitioner Br.at 16-17.

Petitioner also challenged the qualifications of the two CMS affiants (the Technical Director, Proficiency Testing, AAB; and the Chief, Laboratory Improvement Section, MDCIS). Petitioner asserted that these affiants' credentials did not include expertise or special knowledge in the area of statistical analysis. Thus, Petitioner said, the ALJ's reliance on them was misplaced. Petitioner asserted that the affiants' declarations were suspect because they did not consider the totality of the testing process. Further, Petitioner contended, at least one of the affiants, as well as the ALJ, failed to understand that the reduction of the number of variables in a testing equation reduces the chances for dissimilarity of results. According to Petitioner, since the laboratories participating in the AAB testing had the same samples and many used the same reagents and/or equipment, the chance for similar results was increased. Petitioner Br. at 16-20; CMS Exs. 24 and 25.

Finally, Petitioner asserted that neither CMS nor the ALJ alleged, "expressly or impliedly," that Petitioner did not perform all clinical laboratory testing for its patients. Petitioner asserted that there was no evidence before the ALJ which would constitute a motive for the actions attributed to Ms. Sabo. Moreover, since there had been no showing that Ms. Sabo had acted in conjunction with anyone else, collusion was a "legal impossibility." Petitioner Br. at 24-25.

We have previously considered similar arguments in Boykansky. Here, we have reviewed this FFCL in light of Petitioner's contentions and our previous consideration of the issue. We conclude that this FFCL is supported by substantial evidence in the record. As we noted in Boykansky, our review of Ms. Sabo's testimony confirmed that Ms. Sabo had testified to the effect that she and Ms. Wheatley were well-acquainted and that Ms. Sabo offered no credible explanation for the similarity of testing results. Boykansky at 8; CMS Ex. 26. While Ms. Sabo denied that she colluded, the ALJ reasonably concluded that this denial was not credible in light of the evidence in the record as a whole.

Moreover, while the ALJ did not specifically address Petitioner's argument that Ms. Sabo had no motive to falsify the PT results, because it would not save her any work, that argument does not avail Petitioner here. While motive, if proven, would have buttressed the ALJ's findings concerning Ms. Sabo's credibility, lack of motive does not undercut the evidence supporting the ALJ's finding that the PT results reported by Ms. Sabo simply did not match the records she made of the PT testing at the time that she allegedly performed the tests.

In addition to the lack of explanation from Ms. Sabo as to how all nine laboratories could innocently reach identical PT results in all three PT events for 1998, the ALJ based the FFCL on his analysis of the testimony of two CMS affiants and his examination of the records Petitioner had produced to support the PT results reported. The ALJ relied on the affiants' opinions concerning the likelihood that identical results could be reached without collusion. Additionally, the ALJ made an independent determination that Petitioner's records contained data that was inconsistent with the results reported. Consequently, the ALJ reasonably concluded that Petitioner did not arrive at these results through human error or coincidence, but by intentional referral, collaboration, and manipulation of the results.

We also reject Petitioner's arguments about CMS's affiants' alleged lack of credentials and the similarity of test methods used by the laboratories which obtained identical testing results. Petitioner mischaracterizes the nature of the ALJ's reliance on the testimony of CMS's experts. He addressed Petitioner's challenge to these individuals' statistical expertise as follows:

I do not find Petitioner's arguments to be persuasive. These experts did not perform statistical analyses to obtain their conclusions. Rather, their conclusions were based on their training in their respective fields, their experience in those fields, and on the evidence which pertained to the specific proficiency tests that are at issue in this case.

ALJ Decision at 11.

Further, adopting the ALJ's reasoning in Boykansky, the ALJ here specifically addressed Petitioner's allegation that the identical PT results for the nine laboratories could be due to the similar testing conditions for the laboratories. He stated:

Although some of the laboratories had the same model spectrometer--a device that was used to perform proficiency testing--others had different models. Tr. at 77. All of the spectrometers were calibrated separately. Id. at 77-78. Each of the nine laboratories had its own supply of controls and reagents. Id. at 76-77. Room temperature varied from laboratory to laboratory. Id. at 78.

ALJ Decision at 12. Indeed, in making his finding that variability would be expected, the ALJ relied in part on Ms. Sabo's own testimony. Id. at 12-13.

We conclude that the ALJ properly weighed the evidence before him in reaching his finding that the results Petitioner reported for PT in 1998 were not its own. As we discuss below, we also conclude that he did not err in determining that this factual finding meant that Petitioner had participated in unlawful communication of PT results in contravention of 42 C.F.R. � 493.801(b).

We reject Petitioner's contentions that the ALJ erred in affirming CMS's finding of intentional referral here because CMS relied on decisions where the laboratory in question had admitted referral and on documents showing what Petitioner characterized as rounding errors or inadvertent human error. The ALJ thoroughly discussed the evidence supporting his application of the referral and inter-laboratory communication regulations to the circumstances here. See ALJ Decision at 8-15. As we have already stated, his analysis of these issues is supported by substantial evidence in the record.

We therefore affirm and adopt FFCL 2.

FFCL 3. Petitioner's conduct in colluding with other laboratories as to the testing of proficiency testing samples during 1998 constitutes a violation of the following standards concerning proficiency testing set forth at 42 C.F.R. � 493.801(b): section 493.801(b)(1) (failing to test proficiency testing samples in the same manner as it tests patients' specimens); section 493.801(b)(3) (engaging in inter-laboratory communications pertaining to the results of proficiency testing samples); and section 493.801(b)(4) (intentionally referring proficiency testing samples to another laboratory for analysis).

In challenging the evidentiary basis for this FFCL, Petitioner relied heavily on what it characterized as Ms. Sabo's "unequivocal testimony." The essence of her testimony was that PT and patient testing were properly performed in 1998. Additionally, Petitioner contended that there was no reliable evidence that PT was not performed on site. Petitioner Br. at 25-26. Petitioner argued that not only was there no evidence before the ALJ that Petitioner had engaged in inter-laboratory communication, but also the relevant CLIA regulation, 42 C.F.R. �� 493.801(b)(3) and (4), dictated that inter-laboratory communications be treated as a standard-level deficiency, not sanctionable by revocation. Consequently, Petitioner concluded, since this Department and Congress intended that inter-laboratory communications be treated as a standard-level deficiency, neither CMS nor the ALJ had the authority to impose principal sanctions in this case. Petitioner Br. 26-27.

In connection with our review of Petitioner's exceptions to FFCL 2, we have already discussed the substantial evidence in the record supporting the ALJ's finding that Petitioner's 1998 PT results were reached through collusion rather than through testing in accordance with the regulations. Based on that same analysis, we reject Petitioner's reliance on Ms. Sabo's testimony that PT testing was done properly on site.

We also reject Petitioner's regulatory analysis leading to its conclusion that CMS is not authorized to impose a principal sanction for inter-laboratory communication. One of the subsections cited by Petitioner, 42 C.F.R. � 493.801(b)(4), specifically requires imposition of a principal sanction, revocation of a laboratory's CLIA certificate for one year, for any laboratory that CMS determines intentionally referred its PT samples to another laboratory for analysis. This clearly contradicts Petitioner's assertion that the captioning of 42 C.F.R. � 493.801(b) as a standard evidences an intent to limit CMS's authority to impose a principal sanction for violations of this provision. CMS is not limited to alternative sanctions where a laboratory's actions constitute an egregious violation of its PT responsibilities. Boykansky, at 18-19; see also Oakland, at 23.

We therefore affirm and adopt FFCL 3.

FFCL 4. Petitioner failed to comply with the standard set forth at 42 C.F.R. � 493.801(b)(5) which requires the clinical laboratory's director to sign proficiency testing attestations.

The ALJ found that, contrary to the standard established at 42 C.F.R. � 493.801(b)(5), Petitioner's owner and laboratory director, Dr. Hertzberg, did not sign the attestation sheets accompanying the three PT events in 1998. This FFCL was based on unrefuted evidence in the record, which shows that only Ms. Sabo signed those sheets. ALJ Decision at 17, citing CMS Exs. 8, 10 and 12. Petitioner did not contend that Dr. Hertzberg had actually delegated to Ms. Sabo the laboratory director's responsibility to sign the attestation form.

Petitioner asserted that this FFCL was not supported by substantial evidence in the record and was clearly erroneous based upon the unambiguous regulatory language. Specifically, Petitioner contended that the ALJ's finding that the laboratory director was required to sign the PT attestation form was unsupported by the regulation because, pursuant to 42 C.F.R.� 493.1445, a laboratory director's duties may be delegated. Petitioner Request for Review at 6. Other than raising it in its Request for Review, Petitioner did not expand further upon this issue.

Section 493.801(b)(5) requires that the "individual testing or examining the samples and the laboratory director must attest to the routine integration of the samples into the patient workload using the laboratory's routine methods." Section 493.1445 does not specifically state that this attestation function may be delegated. Section 493.1445(a) refers to delegation of "these responsibilities," referring back specifically to "the duties of the technical supervisor, clinical consultant, general supervisor and testing personnel." Section 493.1445(b) provides that "[i]f the laboratory director reapportions performance of his or her responsibilities, he or she remains responsible for ensuring that all duties are properly performed." Among other things, the laboratory director must ensure that "proficiency testing samples are tested as required under Subpart H . . ." 42 C.F.R.� 493.1445(e).

Based on these provisions read as a whole, the ALJ properly concluded that Dr. Hertzberg was required to sign the attestation. Delegating to the individual actually doing the testing the authority to sign the attestation on behalf of the laboratory director could not reasonably be viewed as authorized since it could provide no assurance that the testing was done properly. Indeed, in affirming the ALJ's finding in Boykansky that the petitioner failed to comply with the requirement at 42 C.F.R. � 493.1441 that the laboratory director provide overall management and direction, we noted that, by permitting Ms. Sabo to sign the attestation alone, Dr. Boykansky abdicated his responsibilities under that regulation. Boykansky at 15, 17.

We therefore affirm and adopt FFCL 4.

FFCL 5. Petitioner's failure to comply with the standards set forth in 42 C.F.R. � 493.801(b) constitutes a failure to comply with the CLIA condition of participation that is stated at 42 C.F.R. � 493.801.

Citing Boykansky, the ALJ noted that if standard-level deficiencies are sufficiently egregious they will constitute a failure by a laboratory to comply with the overall condition of which the standards are subparts. Essentially, the ALJ determined that Petitioner's collusion was so egregious as to make its participation in a PT program meaningless. ALJ Decision at 17-18.

Petitioner asserted that this FFCL was not supported by substantial evidence in the record and was clearly erroneous. Petitioner noted that there was no evidence of a deliberate attempt by Petitioner to "frustrate the purpose of proficiency testing." Petitioner Request for Review at 6 (quoting ALJ Decision at 18).

Petitioner asserted that the alleged deficiencies here were no more than standard-level. Thus, Petitioner said, CMS's enforcement options were limited to those found at 42 C.F.R.� 493.1816, for situations where deficiencies are not at the condition level. Principally, Petitioner contended that CMS should have permitted it an opportunity to submit a plan of correction. Further, Petitioner cited the ALJ's analysis in Edison Medical Laboratories, DAB CR599 at 4 and 18 (1999), where the ALJ examined the difference between CLIA "conditions" and "standards." In addition, Petitioner insisted that CMS and the ALJ neglected to give weight to the findings of CMS's agent, the Commission on Office Laboratory Accreditation (COLA), which had not reported any PT-related deficiencies for Petitioner in 1998. Petitioner Br. at 32-34.

Petitioner's arguments are a restatement of those previously considered in both Oakland and Boykansky. Here, as in those cases, Petitioner's contentions rest on its assertion that it was given timely notice of standard-level deficiencies only. Petitioner's position is without merit and dependent on an overly technical reading of the regulations as restricting CMS's authority to take action to protect patients from relying on laboratory results produced by laboratories which are found to be noncompliant with CLIA requirements. As we previously stated, "[i]t is indisputable that a laboratory can be so pervasively noncompliant with standards as to have failed to have complied with the overall condition." Boykansky at 18-19 (quoting Oakland at 23). CMS is not restricted by regulation to the use of a plan of correction, as urged by Petitioner, when "Petitioner's collusion was so egregious as to make its participation in a proficiency testing program meaningless." ALJ Decision at 18. Moreover, Petitioner's reliance on its COLA accreditation in 1998 is misplaced. Petitioner presented no evidence that COLA was aware of the discrepancy between Petitioner's records and what it reported to AAB or of the similarity of the reported results with those of other laboratories.

We therefore affirm and adopt FFCL 5.

FFCL 6. CMS is authorized to impose principal sanctions against Petitioner as remedies for Petitioner's noncompliance with CLIA conditions of participation.

The ALJ concluded that CMS was authorized to impose principal sanctions, including revocation of a laboratory's CLIA certificate, as remedies for the laboratory's failure to comply with one or more CLIA conditions. ALJ Decision at 19, citing 42 C.F.R. � 493.1806(a),(b). Further, CMS may impose the additional remedy of cancellation of a laboratory's approval to receive Medicare payment for its services where the laboratory has not complied with one or more CLIA conditions. Id., citing 42 C.F.R. � 493.1807. Based on the regulations and the evidence before him, the ALJ concluded that CMS was authorized to act against Petitioner.

Petitioner asserted that this FFCL was not supported by substantial evidence and was, therefore, clearly erroneous. Petitioner argued that the ALJ failed to address its argument that CMS was not authorized under the CLIA statute and regulation to "independently deem" standard-level or condition-level deficiencies. Further, Petitioner again contended that the ALJ had ignored the 1998 COLA survey, performed by CMS's agent, which found no deficiencies. Petitioner Request for Review at 6-7.

This Panel addressed essentially this same issue in Boykansky. The ALJ in that case found that CMS was authorized to make independent determinations about the nature and severity of the petitioner's alleged noncompliance with CLIA requirements. Like the petitioner in that case, Petitioner here argued before the ALJ that CMS could not impose principal sanctions unless it had properly alleged a condition-level deficiency and Petitioner argued that CMS's determinations are invalid inasmuch as they differ from the standard-level deficiencies found by the surveyors. ALJ Decision at 6.

Petitioner contended that this FFCL does not adequately address its arguments about CMS's authority to impose principal sanctions where the state surveyors had cited only standard-level deficiencies. However, the ALJ addressed all aspects of Petitioner's contentions on this topic in FFCL 1, where he found that Petitioner had adequate notice, FFCL 2, where he concluded that Petitioner colluded with other clinical laboratories and FFCL 5, where he concluded that Petitioner failed to comply with a condition of participation stated in 42 C.F.R. � 493.801. We have addressed Petitioner's contentions in the sections of this decision dealing with those FFCLs. Moreover, the ALJ's discussion of CMS's authority to make independent determinations about the nature and severity of Petitioner's noncompliance with CLIA requirements is legally sound, as it is based on the plain language of 42 C.F.R. �� 493.1806(a) and (b) and 493.1807.

We therefore affirm and adopt FFCL 6 without further discussion.

Conclusion

Based on the preceding analysis, we affirm and adopt each of the FFCLs underlying the ALJ Decision and sustain that decision in its entirety. In doing so, we reject Petitioner's request for an alternative remedy, specifically a hearing on the merits of its case.

Judith A. Ballard

Donald F. Garrett

M. Terry Johnson
Presiding Board Member

1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001).

2. Petitioner also included in its appeal an alternative request that, if the Board did not reverse the ALJ Decision, it should order a full hearing on the merits of the case. As indicated below, Petitioner stipulated to the procedures followed by the ALJ which led to the issuance of a decision without an in-person hearing. We therefore deny Petitioner's request.

3. CMS may deem a laboratory to meet all applicable CLIA program requirements if the laboratory obtains a certificate of accreditation, as required in 42 C.F.R. Part 493, Subpart D, and meets the other requirements listed in 42 C.F.R. � 493.551(b).

4. These remedies are also available if a laboratory with a certificate of accreditation fails to meet the requirements of 42 C.F.R. � 493.61, including the requirement that it treat the PT samples in the same manner as patient samples. 42 C.F.R. �� 493.61(b)(1) and (c).

5. See Oakland Medical Group, P.C., DAB No. 1755 (2000); Stanley Boykansky, M.D., DAB No. 1756 (2000), Boykansky v. Health Care Financing Administration, No. 01-3189, 2001 WL 493421 (6^th Cir. May 1, 2001) (dismissed as untimely); Garden City Medical Center, DAB No. 1763 (2001); and Evette Elsenety, M.D., et al., DAB No. 1796 (2001).

6. CMS Exhibit 26 is the Hearing Transcript from the proceeding before the ALJ in Stanley Boykansky, M.D., DAB CR690 (2000). The transcript consists solely of Deborah Sabo's testimony.

7. We do not recount here each of Petitioner's questioned PT results. Those results were before the ALJ and their existence is not in question. Rather, the manner in which the PT results were obtained is at issue.

8. The Sabo affidavit discussed the plan of corrections submitted by Petitioner in response to CMS's findings of deficiencies; it did not pertain to her earlier testimony.