Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
RNA Laboratories, Inc., and, Ter-Zakarian Medical Clinic, |
DATE: October 23, 2001 |
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Centers for Medicare & Medicaid
Services.
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Docket No.C-01-336 Docket No.C-01-337 |
DECISION | |
DECISION I sustain the determinations of the Centers for Medicare & Medicaid Services (CMS, formerly known as the Health Care Financing Administration or "HCFA") to impose sanctions pursuant to the Clinical Laboratory Improvement Amendments (CLIA), 24 U.S.C. � 263a and implementing regulations at 42 C.F.R. Part 493, against Petitioners, RNA Laboratories, Inc. (Petitioner RNA) and Ter-Zakarian Medical Clinic (Petitioner Ter-Zakarian). These sanctions consist of the following:
During the two-year period which follows the revocation
of the CLIA certificate of Petitioner RNA or Petitioner Ter-Zakarian,
CMS may revoke the CLIA certificate of any laboratory that is owned or
operated by a person who owned or operated Petitioner RNA or Petitioner
Ter-Zakarian. Effectively, my decision precludes Hovanes Ter-Zakarian,
M.D., the owner of Petitioner Ter-Zakarian and the medical director of
Petitioners RNA and Ter-Zakarian, from owning or operating another laboratory
during the two-year period which follows the revocation of the CLIA certificates
of Petitioners RNA and Ter-Zakarian. I base my decision in these cases on my findings that
Petitioners did not comply with regulatory conditions which governed their
participation in CLIA. CMS established a prima facie case, which Petitioner
did not rebut, that Petitioners RNA and Ter-Zakarian each failed to comply
with conditions of participation that are stated at 42 C.F.R. �� 493.801
and 493.1403. I. Background The facts and law that I recite in this background section
are not disputed by the parties. These two cases involve enforcement actions taken against
Petitioners by CMS pursuant to CLIA and regulations that are published
at 42 C.F.R. Part 493. A laboratory must comply with CLIA participation
requirements in order to be eligible for payment from the federal Medicare
program for services that it provides to beneficiaries of that program.
24 U.S.C. � 263a; 42 C.F.R. Part 493. CLIA participation requirements are set forth in applicable
regulations at 42 C.F.R. Part 493 as conditions and standards of participation.
A condition of participation is a broadly stated general requirement
that a laboratory must meet in order to qualify to participate under CLIA.
A standard of participation sets forth the specific requirements
which must be met by a laboratory in order to satisfy the more general
requirement of a condition of participation. The Secretary of the United States Department of Health
and Human Services (Secretary) is charged with enforcing the requirements
of CLIA. The Secretary has delegated his CLIA enforcement authority to
CMS. The regulations at 42 C.F.R. Part 493 establish sanctions that CMS
may impose against a laboratory that fails to comply with one or more
CLIA conditions. CMS may impose principal sanctions against a
noncompliant laboratory which include revocation of that laboratory's
CLIA certificate. 42 C.F.R. � 493.1806(b). It may also impose alternative
sanctions against a noncompliant laboratory in lieu of or in addition
to principal sanctions. 42 C.F.R. � 493.1806(c). CMS may also cancel a
laboratory's approval to receive Medicare payments for its services, where
the laboratory is found not to be complying with one or more CLIA conditions.
42 C.F.R. � 493.1807(a). Additionally, CMS may suspend or revoke a laboratory's
CLIA certificate if that laboratory is owned or operated by an individual
who, within the previous two years, owned or operated a laboratory whose
CLIA certificate was revoked. 42 C.F.R. � 493.1840(a)(8). Each Petitioner is a clinical laboratory that is located
in the Los Angeles, California area. Petitioner RNA's mailing address
is in North Hollywood, California, and Petitioner Ter-Zakarian's mailing
address is in Santa Monica, California. Petitioner Ter-Zakarian is owned
by Dr. Ter-Zakarian. Dr. Ter-Zakarian serves as the medical director of
Petitioner Ter-Zakarian in addition to being its owner. Dr. Ter-Zakarian
also served as the medical director of Petitioner RNA. Petitioner RNA
was owned by a corporation that was owned by Dr. Ter-Zakarian's brother,
Vahe Ter-Zakarian. Each Petitioner was inspected on behalf of CMS in order
to determine its compliance with CLIA requirements. CMS determined that
each Petitioner failed to comply with CLIA conditions of participation.
CMS determined to impose principal sanctions against each Petitioner which
included revocation of that Petitioner's CLIA certificate and cancellation
of each Petitioner's authority to receive payments for Medicare services
performed by that Petitioner. CMS also determined to impose alternative
sanctions against Petitioners. These included imposition of civil money
penalties against each Petitioner. A laboratory that is dissatisfied with a determination
by CMS to impose sanctions against it may request a hearing before an
administrative law judge to contest CMS's determination. 42 C.F.R. � 493.1844(a)(3).
Hearing requests were filed on behalf of Petitioners RNA and Ter-Zakarian.
Each of these requests was assigned a separate docket number and each
case was assigned to me. I decided to conduct a consolidated hearing in
these two cases inasmuch as they involved similar issues and common evidence.
I did not formally consolidate the cases due to the fact that the parties
requesting hearings in the two cases were not the same entities. After the hearing requests were filed, Dr. Ter-Zakarian
asserted through his counsel that he was the real party in interest in
the hearing request filed by Petitioner Ter-Zakarian. Dr. Ter-Zakarian
sought to challenge - insofar as it might apply to him - a statement in
CMS's notice of remedies to Petitioner Ter-Zakarian which advised Dr.
Ter-Zakarian, in his capacity as director and owner of Petitioner Ter-Zakarian,
that CLIA and implementing regulations prohibit the owners, operators,
and directors of a laboratory whose CLIA certificate is revoked from owning,
operating, and directing any laboratory for at least two years from the
date of the revocation. Notice from CMS to Dr. Ter-Zakarian as director
and owner of Petitioner Ter-Zakarian, dated December 7, 2000.
I reserved deciding whether Dr. Ter-Zakarian had a hearing
right independent of that of Petitioner Ter-Zakarian. I conducted an in-person
hearing in Los Angeles, California, on March 21 and 22, 2001 in which
I permitted both Petitioners and Dr. Ter-Zakarian to participate. I recessed
the hearing until March 27, 2001 when I received additional testimony
by telephone. At the hearing I received into evidence exhibits from CMS
which are identified as HCFA Ex. 1 - HCFA Ex. 18. I received exhibits
into evidence from Petitioners which are identified as P. Ex. 1 - P. Ex.
23. I also identified but did not receive into evidence exhibits from
Petitioners which are identified as P. Ex. 24 and P. Ex. 25. II. Issues, findings of fact and conclusions of law
The issues in this case are whether:
I make findings of fact and conclusions of law (Findings) to support my decisions in these cases. I set forth each Finding below as a separately numbered heading.
CMS's notice, in which it announced its intention of imposing sanctions against Petitioner Ter-Zakarian, was addressed to Dr. Ter-Zakarian as "Director and Owner." Letter from CMS to Dr. Ter-Zakarian dated December 7, 2000. It contained the following statement:
Id. Dr. Ter-Zakarian asserts that this language
is a sanction determination that is aimed at him, personally, and that
he is entitled to a hearing to contest that determination. Other administrative law judges have held that a laboratory
owner or director has a right to a hearing to challenge revocation of
a laboratory's CLIA certificate. Carlos A. Cervera, M.D., Docket
No. C-99-797, Ruling Denying HCFA's Motion to Dismiss and Granting Extension
of Time for Submission of Readiness Reports, December 21, 1999; Allstate
Medical Laboratory, Inc., Docket No. C-99-309, Ruling, October 6,
1999; Eugene R. Pocock, M.D., DAB CR527 at 5 (1998). These rulings
and decision have been cited favorably by the Departmental Appeals Board
in Sentinel Medical Laboratories, Inc., DAB No. 1762 at n.6 (2001).
I follow these rulings and decisions and hold that Dr. Ter-Zakarian has
a right to a hearing to challenge the effect that a revocation of Petitioners'
CLIA certificates may have on him. In their post hearing brief Petitioners made the suggestion that I should "defer ruling on. . . [CMS's] sanction action pending a separate hearing for Dr. Ter-Zakarian . . . ." Petitioners' post hearing brief at 21. Petitioners did not elaborate on this suggestion and I am unsure as to what they are requesting. I have given Dr. Ter-Zakarian a hearing in this case. Although I reserved deciding what hearing rights he was entitled to until after the in-person hearing, I allowed him to participate in that hearing and to give testimony and present evidence. Petitioners have not asserted that there are issues that affect Dr. Ter-Zakarian that have not been aired fully or that they or Dr. Ter-Zakarian have been denied the opportunity to present relevant evidence.
The CLIA condition of participation that is set forth
at 42 C.F.R. � 493.801 provides for mandatory enrollment of a clinical
laboratory in an approved proficiency testing program and governs the
manner in which a laboratory will conduct its proficiency testing. The
purpose of proficiency testing is to measure the competence of a laboratory's
clinical testing. Tr. at 74. The CLIA condition of participation which
governs proficiency testing states explicitly that a laboratory must test
its proficiency testing samples in the same manner as it tests patients'
specimens. 42 C.F.R. � 493.801(a). A laboratory must perform its proficiency
testing exactly as it tests patients' specimens if proficiency testing
is to be a measure of the laboratory's competence. Proficiency testing
would be meaningless if a laboratory tested its proficiency testing samples
differently from patient specimens because, under
that circumstance, proficiency testing would not measure the laboratory's
competence to handle patient test specimens. Testing proficiency testing samples in the same manner
as patients' specimens means that the proficiency testing samples must
be integrated fully into the laboratory's testing regime. The requirement
for full integration is spelled out in the standards that are stated at
42 C.F.R. � 493.801(b). The laboratory must use the same techniques to
test proficiency testing samples and patient specimens. 42 C.F.R. � 493.801(b)(1).
A laboratory must not test proficiency testing samples a greater or fewer
number of times than it tests patient specimens. 42 C.F.R. � 493.801(b)(2).
The laboratory must not collaborate with any other individual or entity
in the performance of proficiency testing. 42
C.F.R. � 493.801(b)(3). It must maintain complete and accurate documentation
of all proficiency testing. 42 C.F.R. � 493.801(b)(5). Both Petitioner RNA and Petitioner Ter-Zakarian enrolled
in an approved proficiency testing program that is operated by the American
Association of Bioanalysts Proficiency Testing Service (AAB). Petitioner
RNA and Petitioner Ter-Zakarian received the same proficiency testing
samples from AAB at the same times. At regular intervals throughout the
year, AAB sends to all of its enrollees a group of five proficiency testing
samples for each of the tests for which proficiency testing is required.
Each laboratory that is enrolled with AAB receives identical samples from
AAB for each test for which the laboratory is enrolled for proficiency
testing. Tr. at 69 - 70. I take notice of the fact that the AAB refers
to each mailing of samples to enrolled laboratories as an "event." Each laboratory that receives proficiency testing samples
from AAB for an event is required to perform its proficiency testing within
a specified period of time and to mail its testing results back to AAB.
AAB provides each enrolled laboratory with a form that the laboratory
completes in conjunction with its proficiency testing. The laboratory
inserts appropriate codes to indicate the reagents it used to perform
its tests and the type of equipment that it used. It also verifies the
name of the individual who performed the proficiency testing. Tr. at 71
- 72. CMS alleges that Petitioners RNA and Ter-Zakarian failed
to comply with the CLIA condition at 42 C.F.R. � 493.801 in that these
laboratories failed to test proficiency testing samples in the same manner
as patients' specimens. More specifically, CMS asserts that Petitioners
failed to comply with several of the standards that are a part of this
condition and that their failures to comply with these standards were
so egregious as to comprise a failure by each of them to comply with the
overall condition. CMS made a prima facie case to support its allegations
which Petitioners did not rebut. The evidence offered by CMS establishes
such a high degree of irregularity in the manner in which Petitioners
conducted their proficiency testing as to establish a failure by Petitioners
to comply with the overall condition of participation that is stated at
42 C.F.R. � 493.801(a). Most significantly, the evidence shows that Petitioners engaged in prohibited inter-laboratory communications about proficiency test samples prior to reporting test results. Additionally, the evidence demonstrates other failures by one or both of Petitioners to conduct proficiency tests in the same manner as they tested patients' specimens. These additional failures included failure by Petitioner RNA to document the handling, preparation, processing, examination, and each step of proficiency testing and failure by Petitioner Ter-Zakarian to test proficiency test samples the same number of times that it tested regular patient test samples.
A laboratory which is engaged in proficiency testing:
42 C.F.R. � 493.801(b)(3). It is important that a laboratory conduct its proficiency
testing honestly. Communications between laboratory personnel about ongoing
proficiency testing frustrates the premise of proficiency testing that
proficiency testing samples are to be tested in the same manner as are
patients' specimens. Proficiency testing results that have been tainted
by inter-laboratory communications are not a meaningful measure of a laboratory's
competence to do testing. Tr. at 75. The evidence offered by CMS establishes that, for the
third proficiency testing event in 1999, Petitioner RNA and Petitioner
Ter-Zakarian submitted identical proficiency testing results for all five
samples tested in each of nine different categories of tests. Tr. at 90
- 91; 94; HCFA Ex. 9 at 5 - 6. Both laboratories reported identical test
results for all five samples tested in each of the testing categories
of: cholesterol, glucose, triglycerides bicarbonate, chloride, creatinine,
potassium, sodium, and, urea nitrogen. Ids. In total, Petitioner
RNA and Petitioner Ter-Zakarian reported identical testing results for
45 separate samples tested in nine separate categories. Ids. The evidence of identical proficiency testing results
on so many tests is powerful circumstantial proof that Petitioners engaged
in prohibited communications with each other in conducting proficiency
testing. As is made clear by the expert testimony of Dennis Jay, Ph.D.,
the technical director of AAB's proficiency testing program, there is
no rational explanation for the identical test results submitted by Petitioners
other than prohibited communication between the two laboratories. That
is so given: the identical results reported by the two laboratories in
45 separate instances; and, the presence of many variables that logically
would render extraordinarily unlikely the submission of identical results
in so many instances without a prohibited information exchange occurring
between the two laboratories. Tr. at 60, 70 - 101. Dr. Jay has extensive experience in laboratory operations.
In his capacity as the technical director of AAB's proficiency testing
program he has reviewed numerous proficiency testing reports submitted
by many laboratories. The essential point that Dr. Jay made in his testimony
is that, based on his experience, two independently operated laboratories
generally would not be likely to produce identical proficiency
testing results for any given sample. A proficiency testing score may be affected by the chemical
reagent that the laboratory uses to perform testing. Tr. at 73. It might
be affected by the make of analyzer which a laboratory uses to process
a particular type of test. Id. The test result may be affected
by temperature within an analyzer. Id. at 76. It might be affected
by the skills of the technician who performs the test. Id. It may
also be affected by the physical environment of the laboratory in which
the test is performed. Id. Given all of these variables, there is a high likelihood
that test results will vary among samples tested within a single laboratory
and among samples tested between different laboratories. Tr. at 77. Indeed,
the proficiency testing program operates on the assumption that identical
results would be an aberration and not the norm. AAB has acknowledged
the high likelihood of variance by deciding that there is no such thing
as one "correct" proficiency testing result. AAB grades an individual
proficiency testing score based on the proximity of that score to a mean
score for the sample at issue. Tr. at 72 - 73. A "passing" score on a
proficiency test is one that falls within grading limits that are calculated
based on the mean score. Id. It is highly implausible that two laboratories could produce
identical test results for multiple samples in a range of tests without
communicating with each other about test results. See Tr. at 98
- 101. When two laboratories produce identical test results in multiple
samples and in different tests the logical inference to be drawn is that
they collaborated in obtaining or reporting the results. The inference that Petitioners engaged in prohibited communications
is reinforced by their close geographic and management relationship. Dr.
Jay's experience is that two laboratories which produce identical proficiency
testing scores on multiple samples invariably are located in close physical
proximity to each other. In this case the two laboratories
were located only a few miles from each other and had the same medical
director, Dr. Ter-Zakarian. The inference of collaboration between Petitioner RNA
and Petitioner Ter-Zakarian also is reinforced by the failure of Petitioner
RNA to produce any analyzer printouts which would show actual testing
results. The absence of such documents lends support to a conclusion that
Petitioner RNA did not actually conduct proficiency testing on the samples
for which it reported identical findings as were obtained by Petitioner
Ter-Zakarian. Petitioners did not offer persuasive evidence or arguments
that rebutted the evidence introduced by CMS showing a prohibited exchange
of information between Petitioner RNA and Petitioner Ter-Zakarian. Petitioners
argue, first, that Dr. Jay's testimony is not credible because it is based
on "bad science." They assert that his testimony must be disregarded because
it is "anecdotal" and not based on any statistical analysis. I agree with
Petitioners that no evidence was offered by CMS which establishes the
statistical probability that the 45 identical test results were tainted
by collusion. But, I do not agree with Petitioners that statistical analysis
is necessary to reach the conclusion that a prohibited exchange of information
lay behind the identical test results. Dr. Jay's testimony was credible and persuasive. I find
here, as I did in Stanley Boykansky, M.D., DAB CR690 (2000), that
Dr. Jay's opinion is based not on statistical evidence but on his practical
experience and knowledge of laboratory operations. It is not necessary
to establish the statistical probability of two laboratories producing
identical results in any given test in order to find that it is highly
unlikely that they would produce those identical results independently.
Dr. Jay testified persuasively that the many variable factors that could
affect test results made it extraordinarily unlikely that two laboratories
independently would produce so many identical test results. Dr. Jay's
opinion was buttressed by his experience. Dr. Jay testified that he had
never found identical proficiency testing results in specified tests except
with laboratories that were located in close geographic proximity to each
other. Tr. at 96. Second, Petitioners argue that, in fact, Petitioner Ter-Zakarian
conducted its proficiency tests successfully for the third testing event
in 1999. As evidence for that assertion they point to analyzer printouts
that were generated by Petitioner Ter-Zakarian that confirmed the proficiency
test values that this Petitioner reported. P. Ex. 5 at 20 - 28. However,
the likelihood that Petitioner Ter-Zakarian may actually have performed
its proficiency tests begs the question of whether it engaged in prohibited
communications with Petitioner RNA. Petitioners have not produced any
credible evidence showing that Petitioner RNA independently came up with
the identical test results that were obtained by Petitioner Ter-Zakarian
in 45 separate tests. Third, Petitioners argue that Petitioner RNA performed
its proficiency testing independently of Petitioner Ter-Zakarian for the
third testing event in 1999. They argue that Petitioner RNA scored successfully
for 115 values on chemical analytes that were not reported or tested by
Petitioner Ter-Zakarian. They reason that it would be illogical for Petitioner
RNA to conduct these tests independently from Petitioner Ter-Zakarian
but then to engage in prohibited communications with Petitioner Ter-Zakarian
concerning the 45 tests in which identical results were obtained by the
two laboratories. I find this argument to be unpersuasive. The fact that
Petitioner RNA may have performed some of its proficiency testing
independently from Petitioner Ter-Zakarian is not a basis to conclude
that it performed all of its proficiency testing independently.
A clinical laboratory is required to:
42 C.F.R. � 493.801(b)(5). The evidence offered by CMS establishes that Petitioner
RNA failed to produce documents which were necessary to verify the accuracy
of its proficiency testing. HCFA Ex. 5 at 4; Tr. at 265. Petitioner RNA
concedes that it has not produced the analyzer reports that would show
actual proficiency testing results. Petitioners' post hearing brief at
10. It suggests that its failure to do so is not a significant failure
to comply with CLIA requirements because it produced the testing report
forms that it used to record proficiency testing results. However, the regulation requires a laboratory to produce all of its records and to document each step in the testing and reporting of proficiency testing results. 42 C.F.R. � 493.801(b)(5). Production of a partial set of records does not satisfy this requirement. Moreover, the records that are missing are precisely the records that would be necessary to establish whether Petitioner RNA performed proficiency testing honestly. The analyzer reports contain the raw data and test results that a laboratory produces when it conducts a proficiency test. In the absence of this information, there is no way to verify the accuracy of Petitioner RNA's testing report forms.
The proficiency testing requirements include the requirement that a clinical laboratory:
42 C.F.R. � 493.801(b)(2). The purpose of this requirement is to assure that proficiency
testing samples do not receive special handling by a laboratory but are
integrated into the laboratory's regular workload. That makes proficiency
testing a true measure of a laboratory's testing competence. CMS presented a prima facie case that established a pattern
in the way Petitioner Ter-Zakarian conducted its proficiency testing.
When Petitioner Ter-Zakarian conducted proficiency testing it often ran
tests of proficiency testing samples multiple times. In contrast, Petitioner
Ter-Zakarian routinely tested patients' specimens only once. For example,
evidence introduced by CMS shows that, in the third proficiency testing
event of 1999, Petitioner Ter-Zakarian ran proficiency tests for routine
chemistry twice (back to back) on October 21, 1999 and then tested them
a third time later on that same day. HCFA Ex. 11 at 13 - 16. It tested
proficiency testing samples for glyco-hemoglobin twice on October 19,
1999 whereas it tested patient samples only one time on that date. Id.
at 17 - 19; see Tr. at 256. Evidence introduced by CMS shows that
Petitioner also ran proficiency tests more times than it ran patients'
specimens for samples tested in the other 1999 proficiency testing events
and in the 2000 proficiency testing events as well. HCFA Ex. 5 at 4 -
6; HCFA Ex. 10 at 12 - 20; HCFA Ex. 12 at 4 - 8; HCFA Ex. 13 at 5 - 9. From this evidence I infer that Petitioner Ter-Zakarian
was concerned that it might not be conducting proficiency tests competently
and, so, ran them multiple times. See Tr. at 258. I also infer
that Petitioner Ter-Zakarian often and egregiously contravened the requirement
that it test proficiency testing samples and patients' specimens the same
number of times. Petitioners argue that Petitioner Ter-Zakarian tested proficiency testing samples in the same manner as it tested patients' specimens because it used the same equipment and testing techniques for both types of tests. Petitioners' post hearing brief at 14 - 15. This argument does not address the allegations or the evidence offered by CMS. The issue here is whether Petitioner invalidated proficiency testing by testing proficiency testing samples more times than it tested patients' specimens. It is not whether Petitioner used different types of equipment or techniques to perform proficiency tests than it used to test patients' specimens.
The failures by Petitioners RNA and Ter-Zakarian to comply
with standards of participation set forth at 42 C.F.R. � 493.801(b) were
so egregious as to be failures by these two Petitioners to comply with
the overall condition that is stated at 42 C.F.R. � 493.801(a). These
failures so compromised the proficiency testing results that Petitioners
reported that they made proficiency testing useless as measures of the
laboratories' competency. Petitioners RNA and Ter-Zakarian did not conduct proficiency
testing honestly during the third event in 1999. Their collaboration in
producing test results renders meaningless the results that they submitted.
Indeed, for the 9 tests and the 45 samples that are at issue it is not
possible to discern whether Petitioner RNA conducted proficiency testing
at all. Petitioner RNA's failure to maintain its original testing data
made it impossible to verify what that Petitioner did or did not do as
proficiency testing. And, the fact that Petitioner Ter-Zakarian tested
proficiency testing samples two or three times whereas it tested patients'
specimens only once invalidated the results that this Petitioner obtained
on its proficiency tests. Petitioners argue that the deficiencies established by
CMS are only minor standard level deficiencies. I disagree with this contention
for the reasons that I have just stated. Petitioners' deficiencies fundamentally
affected the validity of their proficiency testing. Petitioners also argue that CMS did not make a prima facie
showing that Petitioner RNA sent any proficiency testing samples to Petitioner
Ter-Zakarian for analysis or that Petitioner Ter-Zakarian sent any proficiency
testing samples to Petitioner RNA for analysis in violation of the requirements
of 42 C.F.R. � 493.801(b)(4). They argue that Petitioners may not be found
to have contravened the condition at 42 C.F.R. � 493.801(a) inasmuch as
CMS did not establish an unlawful referral of proficiency testing samples
from one Petitioner to the other. I am not persuaded by this argument. The improper exchange of information between Petitioners would be an unlawful "referral" of proficiency testing samples under the holdings of Oakland Medical Group, DAB No. 1755 (2000) and Stanley Boykansky, M.D., DAB No. 1756 (2000). But, I do not need to find an unlawful referral of proficiency testing samples by one Petitioner to the other in order to find that these Petitioners failed to comply with the CLIA condition that is set forth at 42 C.F.R. � 493.801(a). The egregious failures by both Petitioners to comply with the standard that is set forth at 42 C.F.R. � 493.801(b)(1), by Petitioner RNA to comply with the standard that is set forth at 42 C.F.R. � 493.801(b)(5), and by Petitioner Ter-Zakarian to comply with the standard that is set forth at 42 C.F.R. � 493.801(b)(2), is sufficient basis for me to find condition-level noncompliance by these Petitioners.
The condition of participation that is set forth at 42
C.F.R. � 493.1403 requires a clinical laboratory to have a director who
is responsible for the overall management and direction of the laboratory.
It requires that the laboratory director provide management and direction
that comports with standards set forth at 42 C.F.R. � 493.1407. Under
this latter regulation a laboratory director must, among other things,
assure that proficiency testing is conducted in compliance with the requirements
of all applicable regulations. The laboratory director is the individual who bears responsibility
for assuring that a clinical laboratory meets the quality control standards
that are at the heart of CLIA requirements. Tr. at 280 - 281. Ultimately,
the laboratory director is the person who assures that a clinical laboratory
does a competent job testing patients' specimens. It is no exaggeration
to say that the success or failure of a laboratory director in discharging
his or her responsibilities may have life or death consequences for many
patients who rely on a laboratory to perform clinical testing of their
specimens. CMS introduced evidence which establishes a prima facie
case that both Petitioners RNA and Ter-Zakarian failed to comply with
the condition governing the performance of the laboratory director. The
evidence supports findings of egregious failures by Petitioners to comply
with the standards that are set forth at 42 C.F.R. � 493.1407. I may infer
from this evidence of noncompliance that the failures of Petitioners to
comply with these standards were so serious as to violate the overall
condition governing the position of laboratory director. I find that Petitioners failed to rebut this evidence. Indeed, Petitioners offered no meaningful response to CMS' allegations and evidence except to aver that they complied with the condition governing proficiency testing. As I discuss above, at Finding 2, Petitioners did not comply with the condition governing proficiency testing. The failures by Petitioners to comply with the proficiency testing condition also are failures to comply with the laboratory director condition because these failures establish the absence of proper management of the laboratories' activities. Furthermore, the unrebutted evidence offered by CMS with respect to Petitioner Ter-Zakarian establishes that this Petitioner's management failures involved more than its failures to conduct proficiency testing according to the requirements of 42 C.F.R. � 493.801.
CMS offered evidence to establish a prima facie case that
Petitioner RNA did not comply with the laboratory director condition.
In the case of Petitioner RNA, the prima facie evidence of its failure
to comply with the laboratory director condition is its failure to comply
with the proficiency testing condition. As I discuss above, at Finding
2, Petitioner RNA engaged in a prohibited exchange of information with
Petitioner Ter-Zakarian and failed to maintain records of its proficiency
testing. I find that this evidence establishes a failure by Petitioner
RNA's laboratory director to exercise the oversight and management responsibilities
that are his responsibilities. Petitioner RNA did not rebut this prima facie evidence of its failure to comply with the laboratory director condition. At Finding 2, I discuss why I do not find to be persuasive Petitioner's arguments which address allegations that it did not comply with the proficiency testing condition. Petitioner makes the additional assertion with respect to the laboratory director condition that it was the fault of Petitioner RNA or its owner, and not of the laboratory director if Petitioner RNA failed to produce proficiency testing documentation. I find this argument not to be persuasive because creation and preservation of records of proficiency testing were tasks that were within the scope of the laboratory director's responsibilities.
CMS offered evidence that Petitioner Ter-Zakarian failed to comply with the laboratory director condition by failing to comply with the condition governing proficiency testing. Additionally, CMS offered evidence to show that Petitioner Ter-Zakarian failed in other respects to comply with the laboratory director condition. This additional evidence consisted of the following:
The evidence offered by CMS is prima facie proof that Petitioner Ter-Zakarian did not comply with the laboratory director condition. It establishes a wholesale failure by Petitioner's laboratory director to manage or direct the laboratory in compliance with applicable requirements. Petitioner offered no evidence which persuasively rebutted the proof offered by CMS and I find, therefore, that Petitioner Ter-Zakarian failed to comply with the laboratory director condition.
In its posthearing brief, CMS urges that I find that Petitioners RNA and Ter-Zakarian failed to comply with the requirements that are set forth at 42 C.F.R. � 493.1773. However, at the in-person hearing, I asked counsel for CMS what allegations CMS intended to pursue and counsel offered the following statement:
Tr. at 16. This statement by counsel is ambiguous but
it may be interpreted reasonably to mean that CMS was not pursuing allegations
that it had made concerning Petitioners' failure to comply with the requirements
of 42 C.F.R. � 493.1773. I interpreted the statement to mean that and
so did Petitioners. In light of that I find that CMS withdrew its allegations that Petitioners failed to comply with the CLIA condition of participation that is stated at 42 C.F.R. � 493.1773. However, this withdrawal has no affect on my decision in this case inasmuch as it is unnecessary that CMS establish that Petitioners failed to comply with more than one CLIA condition in order for there to be a basis for CMS to impose the remedies that CMS determined to impose.
CMS determined to impose the following remedies against
Petitioners RNA and Ter-Zakarian:
CMS may impose each or all of these remedies that in any
instance where a laboratory has failed to comply with one or more CLIA
conditions. 42 C.F.R. �� 493.1814; 493.1834. There is a basis for imposition
of these remedies here in that I have found that Petitioners each failed
to comply with CLIA conditions. I have no authority in these cases to decide whether any
of the remedies that CMS determined to impose is appropriate. CMS's choice
of remedy, as opposed to its authority to impose a remedy, is not an issue
which I may hear and decide. See, e.g.,42 C.F.R. � 493.1844(b)(3).
A laboratory's right to a hearing, or that of a laboratory's owner or
operator, is a right to assert that a basis does not exist to impose remedies. CMS's remedy determinations do not directly affect Dr.
Ter-Zakarian. However, there is a significant indirect consequence for
Dr. Ter-Zakarian which results from my decision to uphold the revocation
of Petitioners' CLIA certificates. The due process implications of this
indirect effect are the basis for my decision to grant Dr. Ter-Zakarian
a hearing. See Finding 1 above. Applicable regulations provide for the revocation of a laboratory's CLIA certificate where that laboratory's owner or operator owned or operated a laboratory whose CLIA certificate has been revoked within the preceding two-year period. 42 C.F.R. � 493.1840(a)(8). The regulation does not specifically prohibit such an individual from owning or operating a laboratory. However, that is the practical effect of the regulation. Thus, CMS may revoke the CLIA certificate of any laboratory that Dr. Ter-Zakarian owns or operates within a two-year period from the date of revocation of the CLIA certificate of Petitioner RNA or of Petitioner Ter-Zakarian.
Prior to the hearing of this case Petitioners made four
motions. These motions are: (1) Petitioners' Motion to Exclude Evidence
of Identical or Very Similar Proficiency Testing Events as Improper "Probability
of Guilt" Evidence; (2) Petitioners' Motion to Preclude Dennis W. Jay,
Ph.D., DABCC, from Giving Testimony Concerning Statistical Analysis and
Probability; (3) Petitioner Ter-Zakarian Medical Clinic's Motion to Dismiss
for Lack of Jurisdiction; and (4) Petitioners' and Real Party in Interest
Request for Consideration of Due Process Violations. I reserved deciding
these motions. Petitioner withdrew motion (3) and has renewed its request
that I decide motions (1), (2), and (4). I now deny these motions. I have dealt with Petitioners' arguments concerning motions (1) and (2) above, at Finding 2. I find that neither Petitioners nor Dr. Ter-Zakarian has been denied due process and, therefore, I deny motion (4). |
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JUDGE | |
Steven T. Kessel Administrative Law Judge |
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