Petitioner, Melvin C. Murphy, M.D., P.C., moved for summary disposition in this case. The Health Care Financing Administration (HCFA) made a cross motion for summary disposition. I conclude that there are no material facts which are in serious dispute. Based on these facts and on the applicable law, I find that Petitioner failed to comply with the Clinical Laboratory Improvement Amendments of 1988, section 353 of the Public Health Services Act, 42 U.S.C. � 263(a) (CLIA), and with implementing regulations published at 42 C.F.R. Part 493, by intentionally referring proficiency tests to another laboratory. Based on that finding, I grant HCFA's cross motion for summary disposition. I sustain a revocation of Petitioner's CLIA certificate for a minimum period of one year. Additionally, I sustain HCFA's determination to cancel approval for Petitioner to receive Medicare payment for all laboratory services for a period of one year.

I had scheduled an in-person hearing to take place in this case beginning on June 7, 1999. There is no need for the hearing in light of my decision to enter summary disposition in favor of HCFA. Consequently, I cancel the scheduled hearing.

I. BACKGROUND

A. Procedural history and background facts

Petitioner is a medical practice located in Southfield, Michigan, which also has a CLIA certified laboratory. Petitioner is owned and operated by Melvin C. Murphy, M.D.. On June 29, 1998, HCFA notified Petitioner of HCFA's determination to cancel the laboratory's approval to receive Medicare payments for one year and to revoke Petitioner's CLIA certification. HCFA Ex. 2. HCFA advised Petitioner that it had based its determination to impose sanctions against Petitioner pursuant to CLIA on findings that Petitioner referred proficiency testing samples or portions of samples to another laboratory for analysis, and failed in other respects to comply with CLIA requirements. Id. at 2.

Petitioner requested a hearing. The case was assigned to me for a hearing and a decision. Petitioner moved for summary disposition. HCFA then cross moved for summary disposition. Petitioner submitted two exhibits (P. Ex. 1 and P. Ex. 2) with its motion and submitted a third exhibit (P. Ex. 3) with its brief in opposition to HCFA's cross motion. HCFA submitted 15 exhibits (HCFA Ex. 1 - HCFA Ex. 15) with its cross motion. I am receiving P. Ex. 1 - P. Ex. 3 and HCFA Ex. 1 - HCFA Ex. 15 into evidence. However, I base my decision to enter summary disposition in favor of HCFA only on those facts which I discuss below.

B. Governing law

This case involves allegations that by Petitioner failed to comply with the requirements of CLIA and with implementing regulations. Central to my decision in this case is a provision of CLIA at 42 U.S.C. � 263(a)(4)(I) which states that:

Any laboratory that the Secretary determines intentionally refers its proficiency testing samples to another laboratory for analysis shall have its [CLIA] certificate revoked for at least one year . . . .

This section of CLIA is implemented in regulations at 42 C.F.R. � 493.1840(b). Additionally, 42 C.F.R. � 493.1842(a)(1) provides that HCFA shall cancel a laboratory's approval to receive Medicare reimbursement for its services if HCFA determines to suspend or revoke the laboratory's CLIA certificate. The remedy of revocation may not go into effect until after the laboratory against whom the remedy is imposed has the opportunity for a hearing and a decision by an administrative law judge. The remedy of cancellation of approval to receive reimbursement may go into effect prior to a hearing and a decision by an administrative law judge. 42 C.F.R. � 493.1842(b).

The issue in this case is whether Petitioner, a CLIA certified laboratory, intentionally referred proficiency testing samples to another laboratory for analysis. In its notice letter to Petitioner, HCFA raised additional issues regarding whether Petitioner complied with CLIA conditions of certification. HCFA Ex. 2. I do not address these additional issues here inasmuch as they involve controverted questions of material fact. It is unnecessary for me to resolve these additional issues in order for me to decide whether Petitioner intentionally referred proficiency testing samples to another laboratory for analysis.

I make findings of fact and conclusions of law (Findings) to support my decision that Petitioner intentionally referred proficiency testing samples to another laboratory for analysis. I set forth each Finding below as a separate heading. I discuss each Finding in detail.

1. I base my decision in this case on material facts that are not in dispute.

The standard for imposing summary disposition is well established. Summary disposition is appropriate only where the disposition is made based on material facts that are not in dispute. Summary disposition cannot be made where material facts are controverted because due process considerations require an evidentiary hearing in order to decide controverted facts. Where inferences are made from facts which are averred to support a motion those inferences must be made in a manner that is most favorable to the party that opposes the motion.

However, it is not sufficient for a party simply to aver that it disputes allegations of facts in order to avoid possible entry against it of summary disposition. Where a party seeking summary disposition asserts material facts as the basis for its motion, the opposing party, if it disputes those facts, must deny the asserted facts credibly in order to establish a dispute as to those facts. It will not suffice for a party to assert merely that it "disputes" facts or that it is without a basis to admit them or deny them.

The facts on which I base this decision are not in dispute. The facts on which I rely as stated in the following Findings are facts which Petitioner either admits or which Petitioner has not denied credibly. Some of the material facts in this case are facts which Petitioner has averred, either directly in affidavits which Petitioner submitted, or through briefs which Petitioner's counsel submitted on his behalf.

2. Petitioner's laboratory director referred proficiency testing samples to another laboratory for analysis.

In 1992, Petitioner contracted with Dr. Gurcharan Gagneja to serve as Petitioner's laboratory director. P. Ex. 1 at 2. Dr. Gagneja served in that capacity until March, 1998. Id. Dr. Gagneja's duties as Petitioner's laboratory director included conducting patient tests and operating the laboratory. Id. The responsibility to perform proficiency tests was implicit in Dr. Gagneja's duties as laboratory director. Id.

Dr. Gagneja spent only part of his time onsite at Petitioner. Dr. Gagneja managed another laboratory in California. P. Ex. 1 at 2. In January, 1995, Dr. Gagneja acquired the Clinical Laboratory of Hemet, California (Hemet laboratory). HCFA Ex. 5. He has served as the director of the Hemet laboratory. Dr. Murphy was aware of Dr. Gagneja's California duties. P. Ex. 1 at 2. Dr. Murphy paid for Dr. Gagneja's air fare so that Dr. Gagneja could travel from California to Michigan to perform his duties as laboratory director in Michigan. Id. Dr. Murphy was aware that Dr. Gagneja was taking materials from Petitioner to California. P. Ex. 1 at 3. Dr. Gagneja preferred to work with particular brands of equipment or leased equipment. Id. at 3.

On November 19 - 27, 1996, examiners from the State of California, Department of Health Services Laboratory Field Services Branch (California State Agency) conducted an investigation of the Hemet laboratory. Id. The examiners photocopied documents from Dr. Gagneja's office at the Hemet Laboratory. HCFA Ex. 4 at 3. The examiners concluded that Dr. Gagneja was performing proficiency tests at the Hemet laboratory for both Petitioner and the Hemet laboratory.

The documents that the examiners discovered during the course of their investigation of the Hemet laboratory included proficiency testing records for both the Hemet laboratory and Petitioner, some of which were commingled. HCFA Ex. 4 at 3. The proficiency test results for Petitioner included test results for the third testing event in 1995 and the first, second, and third testing events for 1996. Id. at 4. The documents that the examiners discovered in Dr. Gagneja's office included an envelope which contained proficiency tests results for Petitioner's third quarter of 1995. Id. These test results were accompanied by a Federal Express label that was addressed to Petitioner from the testing service. Id. Dr. Gagneja admitted that he was doing the proficiency testing for Petitioner. Id. at 4.

The examiners subsequently found additional evidence which convinced them that Dr. Gagneja was performing proficiency testing at the Hemet laboratory for both the Hemet laboratory and Petitioner. For example, for the third quarter of 1995, both laboratories produced identical scores for all five proficiency testing samples of Digoxin that they tested. HCFA Ex. 5 at 5. There was a high degree of identity between test results for Petitioner and the Hemet laboratory for all three testing events in 1996. Id. at 6 - 9. The examiners discovered a tape in the Hemet laboratory which contained the Digoxin test sample results for the third quarter of 1995 for both Petitioner and the Hemet laboratory. Id. The tape was dated October 10, 1995. In fact, the testing service did not ship to Petitioner test samples for proficiency testing for the third quarter of 1995 until October 17, 1995. Id.

From the aforesaid evidence, HCFA asks that I infer that Dr. Gagneja took proficiency testing samples from Petitioner to the Hemet laboratory and performed proficiency tests for Petitioner at the Hemet laboratory. Petitioner does not dispute any of the aforesaid evidence. Nor does Petitioner argue strongly that it would be unreasonable for me to infer from this evidence that Dr. Gagneja performed proficiency tests for Petitioner at the Hemet laboratory. Petitioner asserts, however, that the evidence permits reasonable inferences leading to a conclusion that Dr. Gagneja did not do proficiency testing for Petitioner at the Hemet laboratory. Petitioner argues that, if reasonable inferences that are favorable to Petitioner may be drawn from the evidence, then those inferences must be drawn.

Petitioner asserts merely that it "appears that the proficiency tests for . . . [Petitioner's] laboratory were performed in Southfield as . . . [Dr. Murphy] originally intended. Petitioner's Brief in Response to HCFA's Motion for Summary Disposition (Petitioner's response) at 6. Petitioner argues additionally that the presence of proficiency testing results from Petitioner at the Hemet laboratory can be explained reasonably by the fact that Dr. Gagneja served as laboratory director for both laboratories. "[I]f the actor is a director for both laboratories, materials could easily surface in the other laboratory without comparison." Petitioner's response at 7. Finally, Petitioner argues that the facts adduced by the California State Agency which show a high degree of identity between test results for Petitioner and the Hemet laboratory do not necessarily lead to the conclusion that Dr. Gagneja performed tests for both laboratories at the Hemet laboratory.

Petitioner's arguments notwithstanding, there is only one reasonable inference that may be drawn from the evidence offered by HCFA. That is that Dr. Gagneja performed proficiency tests for Petitioner at the Hemet laboratory. I find other possible explanations for the presence of Petitioner's proficiency test results in Dr. Gagneja's Hemet laboratory office to be so far-fetched as to be not reasonable. I reach my conclusion that the evidence adduced by HCFA shows that Dr. Gagneja performed proficiency tests for Petitioner at the Hemet laboratory for the following reasons:

� The presence at the Hemet laboratory of commingled test results for both Petitioner and the Hemet laboratory strongly suggests that proficiency tests for both laboratories were performed at the Hemet laboratory.

� Petitioner has offered no affirmative evidence to show that proficiency tests for Petitioner were actually performed onsite at Petitioner. The absence of any evidence to show that proficiency tests for Petitioner were performed at Petitioner supports the evidence adduced by HCFA which suggests that these tests were performed at the Hemet laboratory.

� Moreover, evidence offered by Petitioner concerning the whereabouts of proficiency test results supports the inference that Dr. Gagneja referred samples from Petitioner to the Hemet laboratory for testing. Petitioner confirms that Dr. Gagneja maintained results of Petitioner's proficiency tests at the Hemet laboratory. Dr. Murphy avers that he searched for the results of 1995 and 1996 proficiency tests and found the test results to be "missing." Petitioner's Brief in Support of Motion for Summary Disposition at 5. According to Dr. Murphy, he contacted Dr. Gagneja to ask Dr. Gagneja whether he had the test results. Id. at 5 - 6. Dr. Murphy avers that Dr. Gagneja denied having the results, but asserted to Dr. Murphy that HCFA had "confiscated these materials when it raided the Hemet Laboratory in 1996." Id. at 6.

� While it is true that Dr. Gagneja could have innocently commingled results from proficiency tests performed at Petitioner with results of tests performed at the Hemet laboratory, the fact that Dr. Gagneja served as director for both Petitioner and the Hemet laboratory in and of itself does not suggest any innocent reason for his commingling proficiency test results, particularly since the statute and regulations so explicitly require proficiency testing to be done independently and separately.

� Petitioner speculates that Dr. Gagneja transported proficiency testing results from Petitioner to the Hemet laboratory so that Dr. Gagneja could respond to questions from employees of Petitioner while Dr. Gagneja was in California. I find this explanation for Dr. Gagneja's actions to be beyond the realm of reasonable possibility. Proficiency testing results, however, must be completed and the results submitted within approximately two weeks from the date the testing service ships the samples to Petitioner. There would have been no reason for Dr. Gagneja to transport test results to California if, in fact, proficiency testing had been done onsite at Petitioner consistent with the requirements of CLIA because, given the short turn-around time, the tests would have been completed and the results submitted to the testing service by personnel onsite at Petitioner. HCFA Ex. 4 at 5.

� There is, however, a logical reason why Dr. Gagneja would have performed proficiency testing at the Hemet laboratory for both Petitioner and the Hemet laboratory. That is that Dr. Gagneja wanted to assure that the results of his proficiency testing for the two laboratories were consistent.

� The only reasonable inference that may be drawn from the high degree of identity between proficiency test results from Petitioner and proficiency test results from the Hemet laboratory is that Dr. Gagneja was testing samples for both laboratories at the Hemet laboratory and was manipulating test results to assure a high degree of identity. Petitioner notes several possible alternative explanations for these results which, if accepted, would lead to the conclusion that the test results' identity was coincidental and not intentional. I do not find that these alternative explanations are reasonable. The degree of overlap among test results and, in particular, the fact that Dr. Gagneja had developed test results for Petitioner even before test samples were mailed to Petitioner for testing by the testing service leads only to the inference that Dr. Gagneja performed all of the tests at one location and manipulated the test results.

There is no serious dispute as to the credibility of the witnesses whose statements are the basis for my conclusion that Dr. Gagneja performed proficiency tests for Petitioner at the Hemet laboratory. There is no need for me to take the testimony of these witnesses in person. Petitioner has not asserted that the credibility of the California State agency examiners could be shaken by cross examination. Dr. Gagneja's in-person testimony is unnecessary to support a conclusion that he performed proficiency tests for Petitioner at the Hemet laboratory. Petitioner has not asserted that Dr. Gagneja would provide in-person testimony that would challenge the material facts that are offered by HCFA. Nor has Petitioner asserted a need to present via in-person testimony any evidence beyond the contents of the two affidavits which Dr. Murphy submitted and, which I accept as truthful for purposes of deciding whether to impose summary disposition. See P. Ex. 1; P. Ex. 3.

3. The actions of Petitioner's laboratory director are a violation of CLIA's prohibition against a laboratory intentionally sending proficiency testing samples to another laboratory for testing.

The only reasonable conclusion that may be drawn from the undisputed material facts is that Petitioner's laboratory director, Dr. Gagneja, knowingly and willfully transported proficiency samples from Petitioner to the Hemet laboratory so that he could test those samples at the Hemet laboratory. Such conduct by Dr. Gagneja violates CLIA's prohibition against intentionally referring proficiency testing samples from a laboratory to another laboratory for testing. 42 U.S.C. � 263(a)(4)(I); 42 C.F.R. � 493.1840(b).

4. Petitioner is responsible under CLIA for the unlawful actions of its laboratory director.

Petitioner argues that it may not be held responsible under 42 U.S.C. � 263(a)(4)(I) and 42 C.F.R. � 493.1840(b) because there is nothing in the facts or the applicable law which would permit holding Petitioner - as opposed to Dr. Gagneja - responsible for the intentional and unlawful acts of Dr. Gagneja. Petitioner asserts that if Dr. Gagneja transported proficiency testing samples from Petitioner to the Hemet laboratory for testing, he did so without its or Dr. Murphy's permission or knowledge. Moreover, according to Dr. Murphy, Dr. Gagneja lacked both the express and implied authority in his capacity as laboratory director to engage in unlawful conduct. Petitioner asserts that, under principles of State law governing agency, it may not be held liable for the unauthorized acts of Dr. Gagneja.

I disagree with Petitioner's analysis. Contrary to Petitioner's arguments, the issue of Petitioner's responsibility under CLIA is not resolved by principles of State agency law. Petitioner has responsibility under CLIA to comply with all CLIA requirements. Petitioner bears that responsibility regardless whether it or Dr. Murphy authorizes or is aware of conduct by its employees. If the laboratory director fails to execute properly Petitioner's obligation to comply with CLIA requirements then it is Petitioner's duty to assure that the requirements are met.

The statute and applicable regulations which implement CLIA make the laboratory responsible for the actions of its employees where the employee has intentionally referred its proficiency testing samples to another laboratory for analysis. 42 C.F.R. � 493.1840(b). Petitioner assumed responsibility for all the actions of its employees and its agents. Petitioner is liable for Dr. Gagneja's intentional referral of proficiency testing samples for testing from Petitioner to the Hemet laboratory. For purposes of this decision I accept as true Dr. Murphy's assertion that he did not authorize Dr. Gagneja to transport proficiency testing samples to the Hemet laboratory for testing. P. Ex. 1 at 3. I also accept as true Dr. Murphy's assertion that in his capacity as owner of Petitioner, he was unaware that Dr. Gagneja may have transported proficiency testing samples to the Hemet laboratory for testing. Id. Nevertheless, Petitioner is not excused by these facts from liability for the actions of Dr. Gagneja.

Petitioner had a statutory duty to assure that proficiency tests were being performed onsite and not elsewhere. It had an additional duty to maintain test records onsite. 42 C.F.R. � 493.801(b)(5). Petitioner may not evade its responsibility to comply with the requirements of CLIA on the grounds that Dr. Murphy delegated responsibility to operate the laboratory to Dr. Gagneja and then assert that Dr. Murphy was unaware of Dr. Gagneja's actions. DAB CR527 at 20 - 21.

Moreover, although Dr. Murphy may not have authorized Dr. Gagneja's conduct, nor have been aware of it, it is not entirely accurate to characterize Dr. Murphy as being an innocent victim of Dr. Gagneja's actions. Dr. Murphy knew that Dr. Gagneja had the opportunity to perform proficiency tests for Petitioner at the Hemet laboratory. Also, there were facts available to Dr. Murphy that should have alerted him to the likelihood that Dr. Gagneja was performing proficiency tests for Petitioner at another location.

Petitioner's employment relationship with Dr. Gagneja allowed Dr. Gagneja to divide his time between the Hemet laboratory and Petitioner. Dr. Murphy knew that Dr. Gagneja was transporting to the Hemet laboratory materials from Petitioner. The fact that Dr. Gagneja was performing work for Petitioner off-premises certainly should have alerted Dr. Murphy to the possibility that some of the off-premise work might include testing proficiency samples. The fact that Dr. Gagneja was performing proficiency tests for Petitioner at some other location should have been evident to Dr. Murphy from the fact that proficiency test results were not present onsite.