SUBJECT:

Delmarva Professional Services,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

This case arises under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 42 U.S.C. � 263a et seq. Delmarva Professional Services (Delmarva) was a clinical laboratory located in Baltimore, Maryland. The Centers for Medicare & Medicaid Services (CMS) found that deficiencies at Delmarva posed immediate jeopardy to patient health, and revoked the lab's CLIA certificate. Dr. Homer R. Yeh, Ph.D., brings this action to challenge CMS's finding that he was Delmarva's laboratory director/operator, and is therefore prohibited from owning or operating a certified clinical laboratory for two years. Dr. Yeh concedes that he repeatedly held himself out as lab director: he signed the lab's application and other submissions; he attended meetings with representatives from the state agency. Nevertheless, he argues that he should not be considered the lab director because he did not, in fact, perform the duties of lab director, was not qualified to perform those duties, and was rarely even in the lab. According to Dr. Yeh, he only acted on behalf of the true lab director, Mr. Timothy Frank, because, following the revocation of his predecessor laboratory's license, Mr. Frank was prohibited from owning or operating another laboratory.

For the reasons discussed below, I sustain CMS's determination that Dr. Yeh was Delmarva's lab director/operator and is therefore subject to sanction.

I. Background

Following a February 1, 2005 survey conducted by the Maryland Department of Health and Mental Hygiene (State Agency), the State Agency and CMS agreed that Delmarva had serious deficiencies that posed immediate jeopardy to the health of the patients it served. CMS Exhibit (Ex.) 1. CMS therefore revoked Delmarva's CLIA certificate, and so advised Dr. Yeh in letters dated March 14, 2005, and May 10, 2005. Petitioner (P.) Exs. 3, 4.

Dr. Yeh appeals. He agrees that CMS appropriately revoked Delmarva's CLIA certificate, but argues that he performed none of the duties of a laboratory director, and therefore was neither lab director nor operator. CMS now moves for summary disposition, which Dr. Yeh opposes. With its Brief and Motion for Summary Disposition (CMS Br.), CMS files 13 exhibits (CMS Exs. 1-13). With his brief (P. Br.), Dr. Yeh files 4 exhibits (P. Exs. 1-4). ⁽¹⁾ For purposes of resolving this motion, and, in the absence of objection, I admit CMS Exs. 1-13 and P. Exs. 1-4.

II. Issue

I first consider whether summary disposition is appropriate.

On the merits, the parties agree that Delmarva's deficiencies posed immediate jeopardy to patient health, and that CMS appropriately revoked the lab's CLIA certificate. The sole issue before me is whether Dr. Yeh "operated" the Delmarva laboratory and is thus subject to CLIA's two-year ban.

III. Discussion

I make findings of fact and conclusions of law (findings) to support my decision. I set forth each finding below, in bold and italics, as a separately numbered heading.

A. Summary disposition is appropriate where, as here, Petitioner has not demonstrated any dispute regarding genuine issues of material facts.

Summary disposition is appropriate where the affected party has conceded all of the material facts, or proffered testimonial evidence only on facts that, even if proved, would make no substantive difference in the result. Sol Teitelbaum, M.D., DAB No. 1849, at 9-10, 13 (2002). In requesting summary affirmance, CMS argues that no material facts are in dispute, and points to Dr. Yeh's numerous representations to the State Agency establishing his role with Delmarva. Dr. Yeh concedes that he made the representations, but asserts facts which, if accepted, would establish that he rarely went to the lab, and did not bear any responsibility for its operation. For purposes of summary judgment, I accept Dr. Yeh's factual assertions but conclude, as a matter of law, that an individual who holds himself out as the director/operator of a clinical laboratory in order to obtain certification for that laboratory may not subsequently avoid sanction by showing that he failed to perform the statutory and regulatory duties of the position.

B. Dr. Yeh was Delmarva's laboratory director/operator and is therefore subject to sanction under 42 U.S.C. � 263a(i)(3).

In order to ensure the accuracy and reliability of laboratory tests, and thus the health and safety of those tested, CLIA creates a federal certification process for laboratories that perform clinical diagnostic tests on human specimens. Pub. L. No. 100-58, amending section 353 of the Public Health Service Act, codified at 42 U.S.C. � 263a et seq.; see H.R. Rep. No. 899, 100^th Cong. 2d Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829. To be certified, a laboratory must meet 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. The statute gives the Secretary of Health and Human Services (Secretary) broad enforcement authority, including the authority to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more conditions. Regulations implementing CLIA are found at 42 C.F.R. Part 493.

Anyone who has owned or operated a lab that has had its certificate revoked may not, within two years of the revocation of the certificate, own or operate another lab for which a certificate has been issued. 42 U.S.C. � 263a(i)(3); 42 C.F.R. � 493.1840. A laboratory director "may be considered an operator" if he "oversees all facets of the operation of a laboratory and bears primary responsibility for the safety and reliability of the results of all specimen testing performed in that laboratory." 42 C.F.R. � 493.2; see Sentinel Medical Laboratories, DAB No. 1762, at 13 (2001). Although the language of section 493.2 suggests circumstances under which a laboratory director would not be considered an operator, the regulation that defines the laboratory director's responsibilities makes that possibility seem unlikely; the definition of "laboratory director" fits squarely within the definition of "operator." The laboratory director is responsible for the overall operation and administration of the laboratory, including employing competent personnel, and assuring the lab's compliance with applicable regulations. Even if the director "reapportions performance" of his responsibilities, he remains responsible for ensuring that all duties are properly performed. He must be accessible to the lab to provide onsite, telephone, or electronic consultation, as needed. 42 C.F.R. � 493.1407. The regulation then sets forth a detailed list of responsibilities which, taken together, require the director to "oversee all facets of the operation" and bear "primary responsibility for the safety and reliability" of test results. ⁽²⁾

The uncontroverted evidence establishes that Dr. Yeh signed Delmarva's initial application for CLIA certification, which is dated September 7, 2004. On that application, he is listed as the lab director. In signing the application, he explicitly agreed to operate the lab "in accordance with applicable standards." CMS Ex. 2, at 1, 4. He signed a second application, dated September 27, 2004, again listing himself as the lab director. CMS Ex. 3, at 1, 4. In a "State Compliance Application," dated September 7, 2004, and signed by Dr. Yeh, he is listed as both Delmarva's director and the laboratory supervisor. He provides his home address and Board certification on that document. CMS Ex. 4. In a second "State Compliance Application," dated September 27, 2004, he is again listed as the director and provides his Board certification information and home address. Again, Dr. Yeh signed that application as "laboratory director." He also printed his name next to the signature, and wrote in "Director." CMS Ex. 5.

Dr. Yeh did not simply sign the applications. In order to obtain licensure and a CLIA certificate for Delmarva, he had to convince skeptical state officials that he fully intended to operate the lab. Delmarva had acquired all of the assets of a laboratory named Reference Pathology Services of Maryland, which had surrendered its license after the State Agency identified significant deficiencies. To insure that Delmarva was not simply a continuation of Reference Pathology, the State Agency required Delmarva's management to meet personally with agency staff to discuss its licensure application. Dr. Yeh attended those meetings with state officials on September 10, 2004, and January 5, 2005. At all times, he represented himself as Delmarva's proposed laboratory director. CMS Exs. 11, 12, 13.

The State Agency also required that the proposed lab director submit a letter affirming his responsibilities under state and federal law. CMS Ex. 11 (Kronmiller Decl.). Dr. Yeh signed and submitted several, virtually identical letters, dated September 27, 2004, October 7, 2004, and October 20, 2004. They are written on Delmarva Professional Services letterhead, and state:

In addition to performing the duties of the laboratory director summarized in the next paragraph, I will also be performing the duties of the technical supervisor. . . . All testing specified in the new application will be conducted under my direct supervision, and I will personally monitor all preanalytical, analytical, and post analytical system (sic) to ensure the accuracy and precision of all test results. No test results will be reported until I have reviewed and substantiated that all system controls and validation checks meet the required standards of acceptance.

My role as the laboratory director is to be responsible for the overall operation and administration of the laboratory, including the employment of personnel who are competent to perform test procedures, record and report test results promptly, accurately, and proficiently, and for assuring compliance with applicable regulations.

The letters go on for more than another single-spaced page, detailing his duties as lab director. He says that he "will be accessible daily to the laboratory to provide onsite, telephone or electronic consultation . . . ." CMS Exs. 6, 7, 8.

Accepting Dr. Yeh's representations, CMS issued Delmarva a CLIA certificate of registration, effective November 3, 2004. On its face, the certificate lists Homer R. Yeh as the laboratory director. CMS Ex. 10. Following the issuance of Delmarva's CLIA certificate, Dr. Yeh sent the state a letter, dated November 30, 2004, and then re-dated January 25, 2005, asking permission to add to its testing program. He signed the letter, identifying himself as "Laboratory Director." P. Ex. 1, Attach. 1. Dr. Yeh, even signed the plan of correction following the survey, although he then listed his title as "clinical chemist." CMS Ex. 1.

Notwithstanding all of these representations, Dr. Yeh now asserts that he did not perform any lab director duties, and "could not have performed them even if he had wanted to." He did not supervise any of the lab personnel; he had no idea how the lab operated. P. Br. at 2-3. In some detail, he relates his relationship with Delmarva. After reading about the closure of Reference Pathology Services, Dr. Yeh visited the premises of that laboratory, and had a "friendly talk" with Mr. Timothy Frank. Dr. Yeh learned that the Reference Pathology laboratory had been sold, and that Mr. Frank's wife was the principal owner, with Mr. Richard Steele wanting a share of the ownership. Dr. Yeh admits that he signed the CLIA forms as a "favor for Tim because he indicated that he was broke and bleeding financially and can't find a real qualified Medical Director to be in charge of the overall operation of the 'new' lab." P. Br. at 5; P. Ex. 1, at 2.

Dr. Yeh also acknowledges meeting twice with state officials, but says that Mr. Frank arranged those meetings through Ronald Wick, the lab's cytology supervisor. Someone named Mr. Duley drove them to the meetings, maintaining cell phone contact with the lab and with Mr. Steele, who was in New York. Mr. Steele instructed Dr. Yeh not to say anything about Mr. Frank during the meetings, and to allow Mr. Wick to do all the talking. P. Ex. 1, at 1-3, 5.

When the lab subsequently called him to sign additional letters, CMS Exs. 6, 7, and 8, Dr. Yeh admits that he signed, although he maintains that Mr. Frank wrote the letters himself. Dr. Yeh argues that he was only the "proposed lab director" who never assumed those duties. Ultimately, he was never hired to do anything "except sign the applications and letters addressed to the State." P. Ex. 1, at 3. He acknowledges that, as a result of the letters, a state permit was issued with his name shown as lab director and Mr. Steele as owner, but argues that he was merely a "scapegoat" for Mr. Frank, who, in fact, ran the lab and made all the decisions. P. Ex. 1, at 5, 7.

So, according to Dr. Yeh, even though he repeatedly held himself out as the lab director, he should not be held accountable because he did not perform any of the duties of lab director. Dr. Yeh's position leads to an untenable result. Under his theory, to avoid sanctions resulting from his affiliation with a substandard laboratory, a putative lab director need only perform in a significantly substandard manner. In Sentinel Medical Laboratories, DAB No. 1762, the Departmental Appeals Board implicitly rejected the notion that a complete failure to fulfill one's responsibilities means that one is not the director/operator. There, the putative laboratory operator also argued that he was "a mere victim of the machinations" of the lab owners. He did not dispute that he seldom visited the lab, and failed to provide the oversight mandated by the regulations. ("It was difficult to imagine that Petitioner was exercising any of his CLIA responsibilities.") In rejecting his common law challenge to the imposition of sanctions against a lab employee, the Board noted that his own failures as lab director contributed to the lab's deficiencies, for which he was accountable, and subject to sanction. DAB No. 1762, at 13-14.

Ultimately, CMS could not implement CLIA if applicants were not accountable for their representations. The Administrative Law Judge acknowledged as much in Caroline D. Zohoury, D.O., DAB CR879 (2002), where Petitioner argued that she could not have been the lab director because she lacked the minimal qualifications. The ALJ characterized her position as "nothing more than a baseless and unsubstantiated assertion," and found it "unreasonable to presume CMS somehow has a duty to show her qualifications." Id. at 5, n.3.

Finally, Dr. Yeh maintains that "signing applications and going to two meetings does not create conditions that precipitate revocation of a CLIA license. Suggesting otherwise is ludicrous." P. Br. at 7. In fact, Dr. Yeh's actions, by themselves, justified revocation of Delmarva's CLIA certificate. He admits that he misrepresented his position so that Delmarva could obtain its CLIA certificate. CMS may suspend, limit, or revoke a CLIA certificate if it finds that a laboratory's owner, operator, or employee has been guilty of a misrepresentation in obtaining that certificate. 42 C.F.R. � 493.1840(a)(1).

IV. Conclusion

For all of these reasons, I sustain CMS's determination that Petitioner, Dr. Homer R. Yeh, was Delmarva's laboratory director/operator, and is therefore subject to CLIA's two-year ban on owning or operating another laboratory.

Carolyn Cozad Hughes

Administrative Law Judge

1. P. Ex. 1, Dr. Yeh's declaration, includes four attachments.

2. Among other requirements, the laboratory director must ensure that testing systems "provide quality laboratory services for all aspects of test performance." He must ensure that the physical plant and environmental conditions are appropriate, that selected test methodologies are capable of providing the quality of results required, that adequate verification procedures are used, and that laboratory personnel are performing the test methods as required. The laboratory director must ensure that the lab is enrolled in an approved proficiency testing program, and that quality control and quality assessment programs are established and maintained. He must ensure that all necessary remedial actions are taken and documented whenever significant deviations from the laboratory's established performance specifications are identified, and that patient test results are reported only when the system is functioning properly. He must ensure that reports of test results include information required for interpretation, and that consultation is available to the laboratory's clients. He must employ a sufficient number of qualified lab personnel, who are properly trained for the type and complexity of the services offered. He must ensure that policies and procedures are established for monitoring individuals who conduct certain phases of testing to assure they are competent and maintain their competency. He must make sure that an approved manual is available to all personnel responsible for any aspect of the testing process; and he must specify, in writing, the responsibilities and duties of each consultant and each person engaged in the testing. 42 C.F.R. � 493.1407.