SUBJECT:

Bolsa Medical Group Laboratory; Sheldon Barasch, M.D.,

Petitioner,

Centers for Medicare & Medicaid

DECISION

I enter summary judgment in favor of the Centers for Medicare & Medicaid Services (CMS) ⁽¹⁾ sustaining its determination to impose remedies against Petitioner, Bolsa Medical Group Laboratory, under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). CMS properly suspended and revoked Petitioner's CLIA certificate for a period of one year. CMS also properly canceled Petitioner's approval to receive Medicare/Medicaid payments for its services, effective October 4, 2000.

I. Background

Petitioner is a laboratory conducting business in Westminister, California. Sheldon Barasch, M.D., is Petitioner's Director. Pacific Coast Hematology/Oncology Medical Group, Inc. (Pacific Coast) was at the relevant time a laboratory conducting business in Fountain Valley, California. Mr. An Bui, a laboratory technician, was part of Petitioner's testing personnel. Mr. Bui was also employed by Pacific Coast.

Petitioner participated in a proficiency testing (PT) program operated by the American Association of Bioanalysts (AAB), as did Pacific Coast. As a participant in the PT program, the AAB would mail to Petitioner a group of specimens several times a year. Petitioner was required to test these specimens for analytes for which they did patient testing and mail the results to the AAB by a date certain, approximately 10 days after receiving the samples. Petitioner was required to test the specimens for chemistry, hematology, and endocrinology.

By letter dated September 19, 2000, CMS served Petitioner with a notice of proposed sanctions due to improper proficiency referral. It was noted that in the course of a survey completed on June 6, 2000 by the California Department of Health Services, Laboratory Field Services, it was found that the laboratory was not in compliance with the following three CLIA conditions:

•D2000: 42 C.F.R. § 493.801 Enrollment and testing of samples (proficiency testing).

•D6000: 42 C.F.R. § 493.1403 Laboratory director; moderate complexity testing.

•D6063: 42 C.F.R. § 493.1421 Testing personnel; moderate level complexity testing.

CMS Ex. 1. In addition, numerous CLIA standard level requirements were found to be not met.

The notice further stated that the condition of proficiency testing was supported by deficiency D2013 at 42 C.F.R. § 493.801(b)(4), as Petitioner participated in improper proficiency testing referral activities by engaging in interlaboratory communications pertaining to the results of proficiency testing before the date the laboratory was required to report its proficiency testing results. Specifically, CMS noted that Petitioner compared and averaged results with another laboratory before reporting the results to the AAB proficiency testing program. The deficiencies found were detailed in an enclosed Statement of Deficiencies.

CMS concurred with the State agency findings and recommendations to impose the following sanctions:

•Revocation of the laboratory's CLIA certificate for one year.

•Cancellation of the laboratory's approval to receive Medicare payments for its services performed on or after October 4, 2000.

•Cancellation of payments under the Medicaid program for services performed on or after October 4, 2000.

CMS Ex. 1. The notice further informed Dr. Barasch that, under 42 C.F.R. § 493.1840(a)(8), the revocation of a laboratory's certificate would prohibit the laboratory's owner(s) or operator(s), including the laboratory director, from owning or operating or directing a laboratory for at least two years from the date of revocation.

In an additional notice dated October 6, 2000, CMS further imposed the principal sanction of the suspension of Petitioner's CLIA certificate, effective October 11, 2000. CMS Ex. 2.

By letter dated October 10, 2000, Petitioner requested a hearing. On November 20, 2000, Dr. Barasch also requested a hearing to contest the revocation of the laboratory's certificate, because such revocation would, pursuant to 42 C.F.R. § 493.1840(a)(8), bar him from owning, operating, or directing a laboratory for a period of two years. ⁽²⁾ On July 24, 2001, I issued an order denying CMS's motion to dismiss Dr. Barasch's hearing request asserting that he was not a proper party.

On February 26, 2003, I held a prehearing telephone conference, at which time the parties agreed that this case may be decided by summary judgment, and that, in view of the following stipulation of fact, there remained no factual issues requiring an in-person hearing:

Mr. Bui, a laboratory technician, employed by Bolsa Medical Group Laboratory, as well as, Pacific Coast Hematology and Oncology Laboratory, performed separate Proficiency Tests (PT) at both laboratories on the same type of chemistry machine in the course of Proficiency Testing for 1999, and in some instances compared the samples from both locations and averaged the PT test results. These results were then reported to the AAB as the results of PT samples.

CMS filed a brief in support of summary judgement on April 16, 2003, and Petitioner did likewise on April 23, 2003. On May 2, 2003, CMS filed a reply brief, and Petitioner filed a reply brief on April 30, 2003. CMS submitted 18 proposed exhibits with its motion for summary judgment, and Petitioner submitted 36 proposed exhibits. In the absence of objection from either party, I admit CMS's proposed exhibits into evidence as CMS Exs. 1 - 18 and Petitioner's exhibits as P. Exs. 1 - 35.

Based on the documentary evidence, the arguments of the parties, and the applicable law and regulations, I find that there are no genuine issues of material fact in dispute and that CMS is entitled to judgment as a matter of law. I further find that Petitioner was not in compliance with at least one of the conditions of participation under CLIA and that CMS was authorized to revoke Petitioner's CLIA certificate and cancel its approval to receive Medicare/Medicaid payments for its services.

II. Applicable Law and Regulations

CLIA was designed to promote accurate medical tests by clinical laboratories. Congress' goal was to establish a single set of standards applicable to all laboratory services, including those provided to Medicare beneficiaries. See, H.R. Rep. 899, 100^th. Cong., 2^nd Sess. 8 (1988), reprinted in 1998 U.S.C.C.A.N. 3828.

Under CLIA, the Secretary of the Department of Health and Human Services (Secretary) is authorized to inspect clinical laboratories and, in effect, license them to perform tests. CLIA prohibits a clinical laboratory from soliciting or accepting specimens for testing unless it has first received from the Secretary a certificate authorizing it to perform the specific category of tests which the laboratory intends to perform. 42 U.S.C. § 263a(b). CLIA directs the Secretary to establish standards to assure that clinical laboratories certified by the Secretary perform tests that are valid and reliable. 42 U.S.C. § 263a(f).

The standards for operation of clinical laboratories promulgated by the Secretary pursuant to the enabling legislation are found at 42 C.F.R. Part 493. Regulations governing the performance of proficiency tests by clinical laboratories are found at 42 C.F.R. § 493.801. A clinical laboratory must enroll in an approved PT program. A clinical laboratory must notify the Department of Health and Human Services of each program or programs in which it chooses to participate to meet PT standards. CMS approves certain companies to administer proficiency tests under CLIA. Sections 931 and 933 of 42 C.F.R. require that these approved testing services send out, three times each year at approximately equal intervals, proficiency test samples to be analyzed by each laboratory for routine chemistry and endocrinology. A minimum set of five samples are sent for each testing event. The participating laboratories then perform the tests and submit their results on forms provided by the testing services. The testing services grade the results and report them to CMS. To determine the accuracy of a laboratory's response for qualitative and quantitative chemistry tests or analytes, the testing service must compare the laboratory's response for each analyte with the response that reflects agreement of either 90 percent of 10 or more reference laboratories or 90 percent or more of all participating laboratories. ⁽³⁾ A laboratory is required to examine or test each PT sample that it receives in the same manner that it tests patient specimens. 42 C.F.R. § 493. 801(b). The regulation explicitly prohibits a laboratory from sending PT samples to another laboratory for analysis which the laboratory is certified to perform itself. 42 C.F.R. § 493.801(b)(4). The laboratory must document 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(b)(5).

Laboratories that perform tests on proficiency samples must not engage in any inter-laboratory communications pertaining to the results of proficiency testing samples until after the date by which the laboratory must report proficiency testing results to the testing service for the testing event in which the samples were sent. 42 C.F.R. § 493.801(b)(3). Any laboratory that the Secretary determines intentionally refers its PT samples to another laboratory for analysis shall have its certificate revoked for at least one year. 42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4). The regulations further provide that, when CMS revokes a laboratory's CLIA certificate, it will also cancel that laboratory's approval to receive Medicare reimbursement for services rendered. 42 C.F.R. § 493.1842(a).

Additionally, a participating laboratory is required to test PT samples in the same manner as patient specimens and have a director who provides overall management and direction in accordance with 42 C.F.R. §§ 493.801, 493.1441, and 493.1445. A laboratory that does not treat PT testing samples in the same manner as patient samples may have its certificate of accreditation revoked. 42 C.F.R. §§ 493.61(b)(1) and (c)(3).

Furthermore, 42 C.F.R. Part 493, Subpart E, requires CMS or its agent to conduct, on a representative sample basis or in response to substantial allegations of noncompliance, surveys of an accredited laboratory as a means of validating its performance.

III. Issue

Whether Petitioner failed to comply with at least one of the conditions of participation in CLIA, thereby giving CMS authority to impose remedies against Petitioner, including the cancellation of all Medicare and Medicaid payments for laboratory services furnished by Petitioner, the suspension and revocation of the CLIA certificate issued to Petitioner, and consequently prohibiting Dr. Barasch from owning, operating, or directing a laboratory for two years from the date of revocation of Petitioner's CLIA certificate.

IV. CMS's Contentions

CMS contends that Petitioner failed to comply with CLIA condition level requirements of 42 C.F.R. Part 493 for clinical laboratories. Based on the survey completed on June 6, 2000, CMS concluded that Petitioner incurred the following deficiencies:

•The laboratory shared proficiency testing materials and/or results with Pacific Coast.

•The laboratory knowingly and intentionally received and tested proficiency testing samples from another laboratory, and did not test them in the same manner as patient samples.

•The Laboratory Director failed to be responsible for the overall operation and administration of the laboratory, including the employment of personnel who were competent to perform test procedures promptly and accurately, and for assuring compliance with applicable regulations.

•Testing personnel failed to have the skills necessary for reporting test results, failed to maintain required proficiency testing records, failed to test specimens in the same way as patient specimens, and failed to document corrective action when test systems deviated from established performance specification.

CMS Ex. 12, at 1 - 3.

CMS specifically contends that even if Petitioner did not physically transfer PT samples from its laboratory to Pacific Coast, the act of analyzing and comparing the PT results arrived at separately by each laboratory and the reporting of an average of these results to AAB amounts to improper collaboration and constructive referral of PT samples in violation of 42 C.F.R. § 493.801(b)(3) and 42 C.F.R. § 493.801(b)(4). CMS Br. at 5.

Accordingly, CMS asks that I sustain the revocation of Petitioner's CLIA certificate for one year and the withdrawal of approval to receive Medicare/Medicaid payments for laboratory services.

V. Petitioner's Contentions

Petitioner contends that there is no evidence that the laboratory violated 42 C.F.R. § 493.801(b)(4). At most, states Petitioner, the evidence may show a violation of 42 C.F.R. § 493.801(b)(3). That section prohibits interlaboratory communications pertaining to PT results until after the date by which the laboratory must report proficiency testing results to the testing service. P. Br. at 8. It is Petitioner's position that communications pertaining to results of proficiency testing do not constitute sufficient grounds for revocation of its laboratory's certificate. On the other hand, Petitioner asserts that the actual physical transport of the sample from one laboratory to another is necessary before a finding of unlawful referral can be made. Consequently, argues Petitioner, revocation of the laboratory's certificate is not mandatory in this case. P. Br. at 10.

VI. Findings of Fact and Conclusions of Law

I hereby make the following findings of fact and conclusions of law:

1. Petitioner is a clinical laboratory located in Westminster, California, engaging in moderate complexity testing for hematology, endocrinology, and chemistry. CMS Ex. 12, at 4.

2. Bolsa Medical Group owns and operates Bolsa Medical Group Laboratory, Inc. CMS Ex. 10, at 1.

3. Sheldon Barasch, M.D., was Petitioner's laboratory director. CMS Ex. 1. As laboratory director, he was responsible for Petitioner's overall operation and administration and for ensuring compliance with applicable regulations. His responsibilities included the employment of competent personnel to perform test procedures, record and report test results promptly, accurately and proficiently.

4. Mr. An Bui was part of Petitioner's testing personnel. He also did testing for Pacific Coast. CMS Ex. 14.

5. The AAB would mail to laboratories participating in its PT program a minimum set of five specimens three times per year. The laboratories were required to test these specimens for analytes for which they did patient testing and mail their results to the AAB.

6. Testing samples for Petitioner included hematology, endocrinology, and chemistry. CMS Ex. 12, at 4.

7. The testimonial and documentary evidence submitted by CMS shows that Petitioner reported PT results to the AAB for 1999 testing events that were obtained through interlaboratory communications and intentional referral of PT specimens to another laboratory for analysis.

8. Petitioner's PT samples for the 1999 testing events were not examined with the laboratory's regular patient workload, in violation of 42 C.F.R. § 493.61 and the condition level requirement set forth at 42 C.F.R. § 493.801.

9. The laboratory director failed to ensure that PT samples were tested in the same man as patient samples as required by 42 C.F.R. § 493.801(b)(1).

10. Petitioner did not test proficiency samples with the laboratory's regular patient workload by personnel who routinely perform the testing in the laboratory, using the laboratory's routine methods. 42 C.F.R. § 493.801(b)(1).

11. The laboratory director did not attest to the routine integration of the proficiency testing samples into the patient workload and to the use of the laboratory's routine methods. 42 C.F.R. § 493.801(b)(1).

12. Petitioner did not meet the standard for director responsibilities set forth at 42 C.F.R. § 493.1407(e)(14).

13. Petitioner was in violation of the condition for laboratory director in failing to provide proper overall management and direction to the facility.

14. Pursuant to 42 U.S.C. § 263a(f), the Secretary is directed to ensure that certified clinical laboratories perform tests that are valid and reliable.

15. Petitioner's intentional referral of PT samples constitutes a violation that carries a mandatory CLIA certificate revocation for at least one year. 42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4).

16. Petitioner's actions justify suspension and revocation of its CLIA certificate and cancellation of approval to receive Medicare/Medicaid reimbursement

17. The revocation of Petitioner's CLIA certificate for a period of one year is not unreasonable in light of the failure to satisfy the condition level requirements mentioned above.

18. Dr. Barasch was the laboratory director of Petitioner, as defined in 42 C.F.R. § 493.2. As a result of the revocation of Petitioner's CLIA certificate for a period of one year, Dr. Barasch is prohibited from owning, operating, or directing a laboratory for a period of two years. 42 C.F.R. § 1840(a)(8).

VII. Discussion

A. Petitioner reported PT results to the AAB for testing events of 1999 that were obtained through interlaboratory communications and intentional referral of PT specimens to another laboratory for corroboration.

Petitioner has admitted that Mr. Bui, a laboratory technician employed by Bolsa Medical Group Laboratory as well as Pacific Coast Hematology and Oncology Laboratory, performed separate proficiency tests at both laboratories on the same type of chemistry machine in the course of proficiency testing for 1999 and in some instances compared the samples from both locations and averaged test results. Those results were then reported to the AAB as the results of PT samples. Consequently, Petitioner does not dispute that its laboratory reported results of PT samples to AAB that were obtained through improper interlaboratory communication and collaboration. The thrust of Petitioner's argument is that a referral of a testing sample to another laboratory may not occur without an actual physical transport of the sample.

In this case, says Petitioner, the few instances of collaboration were so minimal as not to warrant the imposition of a principal sanction of revocation of the facility's CLIA license. Petitioner adds that Mr. Bui compared the results of PT sample testing at Bolsa Medical Group and Pacific Coast Hematology and Oncology based upon an honest mistake. This assertion is based on the speculation that Mr. Bui incorrectly assumed that, since the two laboratories used exactly the same machines with the same controls run by the same person, the proficiency testing results should be the same. P. Reply Br. at 2. I find Petitioner's assertion to be mere conjecture inasmuch as there is no statement in the record by Mr. Bui to support the assumption.

A review and comparison of the PT results reported by Petitioner during the three testing events of 1999 reveals that the instances of collaboration between Bolsa Medical and Pacific Coast were not few nor minimal. For the first quarter testing event of 1999, I note that Bolsa Medical Group and Pacific Coast submitted in excess of 40 identical results in the five groups of PT samples consisting of more than a dozen constituents. CMS Ex. 10, at 1; CMS Ex. 11, at 1. That same pattern was repeated during the second and third quarter testing events of 1999. CMS Exs. 6, 7, 8, and 9, at 1. Thus, the two labs in question submitted more than 100 identical PT results for all testing events of 1999. It is undeniable that the communication and collaboration with respect to PT samples was wholesale. Consequently, I find that Petitioner's flagrant failure to comply with PT requirements for all three testing events in 1999 constitutes noncompliance with the overall condition for participation in PT set forth in section 493.801. This deficiency alone would justify revocation of the laboratory's certification for at least one year.

Furthermore, the significance attached to the accuracy and reliability of laboratory testing cannot be understated. As stated by Dr. Dennis Jay, the former Technical Director of AAB's Proficiency Testing Service, in his affidavit supplied by CMS:

The purpose of PT is to verify that the lab is getting test results consistent with what other labs in a similar group are getting, in order to ensure the accuracy of the testing being performed on real patient samples. If a lab receives a PT score of less than 80 per cent it is supposed to go back and investigate and see what might have caused this failure, and to correct the action before the lab does further testing. This is one of the many means that labs have of finding errors in systems, and labs could then correct them on their own before they do any harm to patients.

CMS Ex. 17, ¶ 12.

It is therefore critical to obtain PT results only through independent testing of samples in the same manner as patient samples are tested so as not to undermine the integrity of the proficiency program. Whether a laboratory engages in cheating through referral or collaboration, the end result is the same. That sort of activity only helps to ensure that those who engage in this improper conduct obtain a passing grade, regardless of the quality of their proficiency testing. It also helps to disrupt the average values against which all other laboratories in a similar group are rated in a manner that makes other laboratories appear to have performed poorly, when in fact those laboratories may be reporting acceptable results. Petitioner's hindsight argument that, even if the facility had not cheated it still would have passed its proficiency test, is unavailing. P. Br. at 13. Whether or not the laboratory would have passed the proficiency tests, even if it had not cheated, is not a consideration under CLIA or its implementing regulations.

In view of the above, I find that Petitioner's actions are tantamount to an intentional referral under 42 C.F.R. § 493.801(b)(4). I cannot agree with Petitioner's narrow construction of the regulations that would require an actual physical transfer of a PT sample before a finding of intentional referral may be made. Consistent with this view, the Board has held that:

Limiting the concept of a referral to a physical transfer is inconsistent with the underlying purposes of the condition for certification. Adopting the values achieved in another laboratory (either with or without having done the tests in one's own laboratory) clearly undercuts the general concept that the PT sample be tested in the same way as regular patient specimens in the laboratory are tested so that the results truly measure the proficiency of the laboratory reporting the PT results.

Oakland Medical Group, P.C., DAB No. 1755, at 18 (2000).

It is beyond question that in this case, Petitioner's laboratory did not submit PT results obtained through testing conducted in the same way as regular patient specimens. Thus, the results arrived at did not truly measure the proficiency of the laboratory.

The importance of proficiency testing has also been underscored in Long Medical Laboratory, DAB CR334 (1994), where the administrative law judge stated as follows:

It is apparent from both the Act itself and its legislative history, that Congress considers proficiency testing conducted pursuant to standards developed by the Secretary to be an important factor in assuring that clinical laboratories conduct tests accurately and reliably. The Act directs the Secretary to develop standards for proficiency testing. 42 U.S.C. § 263a(f)(3). The House of Representatives committee report which supported the Act provides that:

To maintain its certification under the bill [CLIA], a laboratory would have to participate successfully in a proficiency testing program that met the standards established by the Secretary. The Committee believes that proficiency testing should be the central element in determining a laboratory's competence, since it purports to measure actual test outcomes rather than merely gauging the potential for accurate outcomes.

DAB CR334, at 4 (citation omitted).

Consistent with the Congressional intent in enacting the CLIA legislation, the regulations do not provide for lesser sanctions when a laboratory cheats by collaboration as opposed to actual physical referral. To allow a laboratory to go under the regulatory radar because it chooses to cheat by collaboration rather than physical transfer of specimens would make a nullity of the letter as well as the spirit of the CLIA legislation.

B. Petitioner failed to examine PT samples with its regular patient workload.

Deviation from the standard practice of routine testing, handling, and reporting of PT samples is a violation of the requirements under 42 C.F.R. § 493.801(b)(1) and (5). Petitioner's employee, Mr. Bui, admitted that he shared and compared PT results between Pacific Laboratory and Bolsa Medical Group Laboratory. CMS Ex. 13, at 7. Petitioner claims that Mr. Bui compared and averaged the results from Pacific Coast and Bolsa Medical in order to make sure that the results reported to AAB were the most accurate reflection of all test results. P. Br. at 13, 14. He surmised that inasmuch as both laboratories were using identical testing instruments, and the same reagents and controls he could obtain a more perfect score by reporting the mean of the PT results obtained at both labs. Consequently, the results of PT samples reported to AAB were not obtained through testing performed in the manner in which the laboratory would handle its regular workload.

It is obvious that Mr. Bui departed from the requirement of testing PT samples with the regular workload in order to ensure passing scores. Variations in test results are to be expected. However, by processing PT specimens with routine patient testing, the laboratory provides results that truly measure its proficiency. The variability of test results is noted by Dr. Dennis Jay in his affidavit:

Even within a single analyzer system, there are several variables that could cause different PT results, such as temperature differences between different analyzers using the same testing system, lamps that may differ in intensity, defective filters, reagents of a different age, or different types of calibrators. Thus, even in a lab that has received passing scores on its proficiency testing, because of the variables inherent in even a single analyzer system, and using the same reagents, it is highly unlikely that the lab could produce identical results on a repeat run of the same analyte. For two or more labs to obtain identical results for all five samples in more than one analyte is virtually impossible, particularly in the case of certain analytes which normally show more variability in results, such as cholesterol or glucose.

CMS Ex. 17, ¶ 13.

I infer that Mr. Bui lacked the competence to process PT specimens appropriately and to perceive the factors of variability addressed by Dr. Jay. He was, thus, unable to understand that by giving special treatment to PT specimens through sharing, comparison, and averaging, he deviated from the standard practice of routine testing so as to submit results that were virtually impossible to justify. This put into question the accuracy of the laboratory's routine patient testing.

The failure of the laboratory to treat proficiency testing samples in the same manner as patient samples, constitutes a failure to satisfy the requirements of 42 C.F.R. Part 493 by virtue of its accreditation in an approved accreditation program. Moreover, a laboratory that does not treat PT testing samples in the same manner as patient samples may have its certificate of accreditation revoked. 42 C.F.R. §§ 493.61(b)(1) and 493.61(c)(1) and (3).

C. The laboratory director failed to ensure that proficiency testing samples were tested in the same manner as patient samples.

The laboratory director, Dr. Sheldon Barasch, failed to ensure that PT samples were handled in the same manner as patient samples as required by 42 C.F.R. § 493.801(b)(1). The record is devoid of any supervision exercised by Dr. Barasch in the processing of PT samples for the three testing events of 1999. In fact, Dr. Barasch did not sign the attestation statement provided by the PT program documenting that the proficiency testing samples were tested in the same manner as patient specimens, as required by 42 C.F.R. § 493.801(b)(5).

Petitioner argues that the laboratory director's oversight obligations were satisfied because he reapportioned his proficiency testing oversight responsibilities to Dr. Co D.L. Pham, one of the laboratory's owners and appropriately relied on Dr. Pham's professional judgment in connection with the review and submission of test results. Petitioner adds that CLIA does not require that such reapportionment be in writing. P. Br. at 17. As discussed in greater detail below, I note that the regulations require written delegation of duties pursuant to 42 C.F.R. § 493.1407(e)(14). However, even when a laboratory director reapportions performance of his or her duties, he or she remains responsible for ensuring that all duties are properly performed. 42 C.F.R. § 493.1407(b).

D. Petitioner did not meet the condition for laboratory director.

A participating laboratory must have a director who provides overall direction and proper management for a laboratory pursuant to 42 C.F.R. §§ 493.1403 and 1407. The evidence of record and Petitioner's own admissions confirm that proficiency samples were not processed using the laboratory's regular testing procedures. In this regard, it is noted that the PT results reported to AAB were not obtained solely through onsite testing following the facility's routine methods. Dr. Barasch's failure to ensure that the PT scores reported to AAB were solely the result of onsite testing and not those obtained through referral and corroboration with other participating laboratories are a clear indication that he was unaware of the day to day operations of the laboratory. It is obvious that Dr. Barasch did not fulfill his ultimate responsibility to ascertain that proficiency testing and reporting was carried out in accordance with the requirements set forth at 42 C.F.R. § 493.801. It should be noted that Dr. Barasch failed to sign the attestation sheets for the three testing events of 1999, documenting that the PT samples were tested in the same manner as patient specimens. This is a clear violation of 42 C.F.R. § 493.801(b)(1) and (5).

Petitioner appears to contend that the laboratory director is without fault because he delegated his responsibilities to other laboratory personnel. Petitioner also asserts that although he did not delegate his responsibilities in writing, such written delegations are not mandated by statute. I note, however, that the regulations require that the laboratory director specify, in writing, the responsibilities and duties of each consultant and each person engaged in the performance of the preanalytic, analytic, and postanalytic phases of testing; the laboratory director must also identify which examinations and procedures each individual is authorized to perform, whether supervision is required for specimen processing, test performance or results reporting, and whether consultant or director review is required prior to reporting patient results. 42 C.F.R. § 493.1407(e)(14).

Notwithstanding the above, 42 C.F.R. § 493.1407(b) establishes that if the laboratory director reapportions performance of his responsibilities, he or she remains responsible for ensuring that all duties are properly performed. Thus, delegation of responsibilities does not relieve the laboratory director of the duty to provide overall direction and proper management for a laboratory pursuant to 42 C.F.R. §§ 493.1403and 1407.

The failure to meet the condition regarding laboratory director is of such magnitude that this violation alone would suffice to support revocation of Petitioner's certificate.

E. Petitioner's actions justify revocation of its CLIA certificate and cancellation of approval to receive Medicare reimbursement.

Section 493.801(b)(4) of 42 C.F.R. unequivocally establishes that a laboratory must not intentionally send PT samples or portions of samples to another laboratory for any analysis for which it is certified to perform in its own laboratory. Section 493.801(b)(3) prohibits engaging in any interlaboratory communications or collaboration pertaining to the results of PT samples until after the date by which the laboratory must report PT results to the program for the testing event in which the samples were sent. Intentional here means knowing and willful and not inadvertent or not through mere oversight. 42 C.F.R. § 493.2

When PT results are not obtained through independent testing of samples in the same manner as patient samples are tested, the integrity of the entire proficiency program is undermined.

Petitioner raises several contentions in defense of the revocation and cancellation actions undertaken by CMS. According to Petitioner, the evidence does not show that its laboratory referred samples to Pacific Coast in violation 42 C.F.R. § 493.801(b)(4). At most, says Petitioner, Mr. Bui's actions constituted a violation of 42 C.F.R. § 493.801(b)(3), for which the sanction of revocation is not mandatory. However, I find that Mr. Bui's actions are tantamount to an intentional referral and have the same adverse impact on the PT program as an actual physical transfer of specimens. Additionally, Petitioner's wholesale failure to comply with PT requirements for all three 1999 PT events, warrants a finding that it was out of compliance with overall condition for participation in PT set forth in 42 C.F.R. § 493.801. This is especially evident from the laboratory's failure to treat PT testing samples in the same manner as patient samples in violation of 42 C.F.R. §§ 493.61(b)(1) and 493.801(b). Finally, I also note that the condition of laboratory director was not met. Each one of these conditions, alone, would suffice to justify revocation of Petitioner's CLIA certificate.

In view of the foregoing, I find that CMS has established a prima facie case that Petitioner has failed to comply with the conditions of participation noted above. Furthermore, I find that Petitioner has not overcome that showing by a preponderance of the evidence.

F. As a result of the revocation of Petitioner's CLIA certificate, Dr. Barasch cannot own, operate, or direct a laboratory for a period of two years.

Under the regulations, CMS may suspend, limit, or revoke any CLIA certificate if CMS finds that a laboratory's owner or operator has, within the preceding two-year period, owned or operated a laboratory that had its CLIA certificate revoked. 42 C.F.R. § 493.1840(a)(8). Dr. Barasch, as Petitioner's director, was Petitioner's operator as that term is defined in 42 C.F.R. §493.2 As I have sustained the revocation of Petitioner's CLIA certificate, Dr. Barasch, having served as Petitioner's director during the period when the incidents that resulted in Petitioner's CLIA revocation occurred, is required to be prohibited from owing, operating, or directing any laboratory with a CLIA certificate for a period of two years.

VIII. Conclusion

Petitioner incurred condition level deficiencies in the treatment of PT samples and the laboratory director's improper direction and management of laboratory operations for the three testing events in 1999. Accordingly, CMS had a basis for revocation of Petitioner's CLIA certificate, with simultaneous cancellation of its approval to receive Medicare/Medicaid payments for laboratory services.

Jose A. Anglada

Administrative Law Judge

1. The Health Care Financing Administration (HCFA) has been renamed the Centers for Medicare and Medicaid Services. Reference to either shall apply to both names.

2. The request for hearing filed by Bolsa Medical Group Laboratory, Inc., was assigned case number C-01-077, and Dr. Barasch's request was assigned case number C-01-162. I consolidated these cases by order dated July 18, 2001.

3. The score for a sample in routine chemistry is the score determined under 42 C.F.R. § 493.931(c)(2) or (3). The score for endocrinology is determined under 42 C.F.R. § 493.933(c)(2) or (c)(3).