SUBJECT:

US Bio-Chem Medical Laboratories, Inc.,

Petitioner,

Health Care Financing Administration

Civil Remedies CR632
Docket No.A-2000-37
Decision No. 1731

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

US Bio-Chem Medical Laboratories, Inc. (Bio-Chem), appealed a December 7, 1999 decision by Administrative Law Judge (ALJ) Steven T. Kessel. US Bio-Chem Medical Laboratories, Inc., DAB No. CR632 (1999) (ALJ Decision). The ALJ found that Bio-Chem had failed to comply with the Clinical Laboratory Improvement Amendments (CLIA), 42 U.S.C. � 263a, and with implementing regulations set forth at 42 C.F.R. Part 493. Specifically, the ALJ found that Bio-Chem had failed to comply with a condition for CLIA certification requiring Bio-Chem to cooperate, pursuant to 42 C.F.R. � 493.1773(a), in a CLIA inspection of its facilities. The ALJ found that Bio-Chem had refused to produce documents requested by inspectors conducting a CLIA complaint investigation. The ALJ Decision accordingly sustained the determination by the Health Care Financing Administration (HCFA) to impose the following three remedies: 1) cancellation of Bio-Chem's approval to receive Medicare payments for laboratory services, effective June 14, 1999, pursuant to 42 C.F.R. �� 493.1773(d),(g) and 493.1842, and denial of payment to Bio-Chem under State Medicaid programs for laboratory services performed on or after June 14, 1999, pursuant to section 1902(a)(9)(C) of the Social Security Act and 42 C.F.R. � 440.30(c); 2) suspension of Bio-Chem's CLIA certificate effective June 14, 1999, pursuant to 42 C.F.R. �� 493.1773(d),(g) and 493.1840(d)(2)(ii); and 3) revocation of Bio-Chem's CLIA certificate, pursuant to 42 C.F.R. �� 493.1773(g) and 493.1840(e)(1).

For the reasons stated below, we affirm the ALJ Decision. That decision is based on substantial evidence in the whole record and correctly applies the law. Bio-Chem's arguments are collateral attacks on the decision that have no merit.

Factual Background

The following facts are undisputed.⁽¹⁾ Bio-Chem held a certificate of waiver under CLIA, meaning that Bio-Chem was authorized to perform only those laboratory tests listed at 42 C.F.R. � 493.15(c). On May 25, 1999, HCFA inspectors arrived at Bio-Chem to investigate a complaint that Bio-Chem was performing unauthorized tests. During the course of the visit, one of the inspectors noticed the presence of reagents that are used for blood typing. Bio-Chem was not authorized to perform blood typing. The inspectors requested that a Bio-Chem employee produce its patient log book to ascertain when Bio-Chem had done blood typing tests and what other tests Bio-Chem had performed.

The President of Bio-Chem then interrupted the inspection, requesting to know the identity of the complainant. Hearing Transcript (Tr.) at 84; HCFA Exhibit 5, at 3. The inspectors informed the President that HCFA could not divulge the name of the complainant. HCFA Exhibit 5, at 3. The President of Bio-Chem then refused to hand over the patient log book. The inspectors repeated the request for the log book and explained to the President the possible ramifications for a refusal to produce the log book. When Bio-Chem's President continued to refuse the log book, the inspectors terminated the inspection of Bio-Chem and left the premises. HCFA later disclosed the identity of the complainant to Bio-Chem.

Discussion

In an appeal of an ALJ decision, our standard of review on a disputed issue of law is whether the decision is erroneous; for a disputed issue of fact, the standard is whether the ALJ decision is supported by substantial evidence in the whole record. CLIA Guidelines � 4(b).

Bio-Chem did not take specific exception to any of the ALJ's findings of fact or conclusions of law (FFCLs). Substantial evidence in the whole record supports the ALJ's findings, and his conclusions correctly state the applicable law authorizing the actions that HCFA took. Bio-Chem clearly had notice that CLIA regulations provided an unconditional right to inspect Bio-Chem's laboratory, and had notice of what the possible consequences could be of obstructing such an inspection. Yet, Bio-Chem admitted that it had refused to produce its log book. None of Bio-Chem's arguments specifically call into question the facts found by the ALJ or his analysis of the applicable law.⁽²⁾

Instead, Bio-Chem raised a number of arguments that challenge HCFA's authority to act against Bio-Chem, that assert Bio-Chem's right to know who complained against it and why, or that charge that Bio-Chem has been discriminated against. As HCFA pointed out, there is a question about whether some of these arguments, and the underlying factual assertions, were timely raised. In any event, we conclude that the arguments do not provide a basis for reversing the ALJ Decision.

Bio-Chem challenged HCFA's authority to act against Bio-Chem, asserting that Bio-Chem has never participated in the Medicare program.⁽³⁾ Bio-Chem's position is based on a misunderstanding of the scope of CLIA and HCFA's role in establishing and certifying compliance with CLIA requirements. While HCFA has jurisdiction over the Medicare program, it has numerous other responsibilities, including the implementation of CLIA. See 42 C.F.R. Part 493. Moreover, the CLIA regulations at Part 493 clearly apply to a broader set of laboratories than those participating in Medicare. See 42 U.S.C. � 263a(a); 42 C.F.R. �� 493.1 and 493.3.

Many of Bio-Chem's arguments were based on its asserted right under the United States Constitution to know who complained against it. Bio-Chem also implied that the fact that HCFA ultimately disclosed the complainant means that HCFA should have disclosed it earlier. The key problem with these arguments is that they assume that the right to know the complainant, if established, would also establish that Bio-Chem had the right to refuse to produce the log book and that HCFA's remedies were unauthorized.⁽⁴⁾ As the ALJ concluded, however, the right to inspect is unconditional and Bio-Chem could not reasonably refuse to produce the log book based on the inspectors' failure to disclose the complainant at that time. Moreover, Bio-Chem was informed of the nature of the complaint and did not assert that it needed to know who complained in order to understand the scope of the authorized inspection. We also note that, while Bio-Chem attributed its refusal to the inspectors' failure to disclose, the record suggests a different reason since the refusal occurred under circumstances where the inspectors had reason to question whether Bio-Chem was engaging in testing outside the scope of its CLIA certificate of waiver.

Bio-Chem also alleged violation of its civil rights, asserting that it had suffered discrimination both because it did not have a pathologist on staff and because of its minority-owned status. Bio-Chem attempted to show a pattern of such discrimination, but did not provide any evidence to establish a connection between such alleged discrimination and the attempted inspection here. Moreover, we know of no special protection accorded to laboratories merely because they do not have a pathologist on staff.

Bio-Chem further argued that it had provided evidence that it was referring out non-waiver tests, which the ALJ ignored in his decision. What tests were referred to other laboratories is irrelevant, however, to the basis for the ALJ Decision -- Bio-Chem's refusal to permit an inspection of its records. The ALJ specifically found that this basis was sufficient and that he need not reach other compliance issues raised before him. ALJ Decision at 7-8. Furthermore, while Bio-Chem may have submitted some evidence regarding the referral of tests, that evidence is contradicted by Bio-Chem's own admissions that some non-waiver tests were conducted on its premises, as HCFA pointed out. Tr. at 80 and 86.

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). To accomplish this purpose, HCFA reasonably determined it must have the ability to conduct unannounced inspections. Clearly, the position advanced here by Bio-Chem would undercut the Congressional intent in CLIA by permitting a laboratory to refuse an inspection and then to evade the consequences by mounting collateral attacks on HCFA. While Bio-Chem offered to permit an inspection now that it knows who the complainant is, such an inspection would not provide the same assurance as if Bio-Chem had permitted the log book to be examined immediately upon the inspectors' request.

Conclusion

For the reasons discussed above, we uphold the ALJ Decision. We affirm and adopt each of the FFCLs from that decision and incorporate the ALJ's analysis here.

Donald F. Garrett

Marc R. Hillson

Judith A. Ballard
Presiding Board Member

1. This summary of the undisputed facts is intended to provide a general framework for understanding this decision. The reader should consult the ALJ Decision for a detailed statement of the relevant facts.

2. Bio-Chem's arguments imply that Bio-Chem was not informed at the time of the inspection of the nature of the complaint against it. The ALJ found, however, that the inspectors had informed Bio-Chem's President of the reason for the visit, which was to investigate whether Bio-Chem was performing unauthorized tests. ALJ Decision at 5-6. This finding was based on testimony by one of the inspectors. Bio-Chem did not allege that it had provided any evidence to the contrary, which the ALJ had failed to consider.

3. In several letters to the Board, Bio-Chem similarly questioned whether the procedures set forth at 42 C.F.R. Part 498 apply to an entity not participating in Medicare. While Part 498 was originally published to govern appeals of determinations that affect participation in the Medicare program, the types of determinations subject to Part 498 procedures have been expanded over time to include CLIA determinations. 61 Fed. Reg. 32,350 (1996). This is reflected in � 498.3 on "Scope and Applicability." Specifically, � 498.3(a)(2) provides in pertinent part:

The determinations listed in this section affect participation in the Medicare program. Many of the procedures of this part also apply to other determinations that do not affect participation in Medicare. Some examples follow:

(iii) HCFA's determination under the Clinical Laboratory Improvement Act (CLIA), to impose alternative sanctions or to suspend, limit, or revoke the certificate of a laboratory even though it does not participate in Medicare.

The CLIA regulations at Part 493 incorporate by reference the hearing procedures in subpart D of Part 498 and the request for review provisions in subpart E of Part 498.

4. Bio-Chem specifically invoked the Sixth and Tenth Amendments to the Constitution (misciting them as Articles VI and X). Bio-Chem Appeal Brief at 2 and 9. The Sixth Amendment provides, "In all criminal prosecutions, the accused shall enjoy the right . . . to be informed of the nature and cause of the accusation; [and] to be confronted with the witness against him . . . ." Bio-Chem did not explain how this Amendment applies in this administrative context, nor how it justified Bio-Chem's refusal to produce the log book. The Tenth Amendment provides, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Bio-Chem appeared to argue that it had reserved to itself the power to know the complainant since HCFA had not been specifically delegated the authority to withhold the complainant's name. This is a strained reading of the Tenth Amendment, however, which is directed at State sovereignty, not individual rights.