$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of: Central Valley Medical Laboratory, Petitioner,
- v. -
Health Care Financing Administration.
DATE: September 28, 1994
Docket No. C-94-062
Decision No. CR335
DECISION
This case is governed by the Clinical Laboratory Improvement
Amendments of 1988 (referred to throughout this decision as "CLIA"
or "the Act"), 42 U.S.C. 263a, and implementing regulations at
42 C.F.R. Part 493. On November 15, 1993, the Health Care
Financing Administration (HCFA) notified Central Valley Medical
Laboratory (CVML or Petitioner) that HCFA had determined to revoke
Petitioner's CLIA certificate and to cancel its approval to receive
Medicare payments for its services. HCFA advised Petitioner that
it had based its determination on Petitioner's refusal to comply
with a directed plan of correction which HCFA had imposed
previously, resulting in immediate jeopardy to individuals served
by Petitioner. HCFA stated that its determination was justified
also by a pattern of failures by Petitioner to comply with the
requirements of regulations published pursuant to CLIA.
By letter dated January 13, 1994, Petitioner requested a hearing.
I held a hearing in San Francisco, California, on May 10 and 11,
1994. Subsequently, the parties submitted briefs. 1/
I have considered the relevant evidence, the applicable law, and
the parties' arguments. I conclude that HCFA's determination in
this case is supported by the preponderance of the evidence and the
law, and I sustain it.
I. Issues and Conclusions
There are two broad issues in this case which I have resolved in
favor of HCFA. In resolving these issues, I make specific
conclusions of fact and law. These conclusions are set forth
below, beneath the relevant issues. In setting forth these
conclusions, I cite to relevant portions of the decision, at which
I discuss my conclusions in detail.
A. Was HCFA authorized to revoke Petitioner's CLIA
certificate and to cancel Petitioner's approval to receive Medicare
reimbursement for its services based on a pattern of noncompliance
by Petitioner with conditions for certification under CLIA? With
respect to this issue, I conclude that:
1. Petitioner consistently has failed to comply with
conditions for certification under CLIA. Pages 10 - 14.
2. Petitioner's failure to comply with conditions for
certification under CLIA is due to the failure of its owner and
operator to exercise effective supervision of Petitioner's
operations, to institute meaningful quality controls, and to
correct deficiencies that were identified in Petitioner's
operations. Pages 10 - 14.
3. The condition level deficiencies in Petitioner's
operations comprise a pattern of deficiencies in management and in
quality control. Pages 15 - 18.
4. The pattern of failure by Petitioner to comply with
conditions for certification under CLIA demonstrates that
Petitioner is incapable of providing services to its clients which
are consistent with the requirements of CLIA and with implementing
regulations. Pages 15 - 18.
5. Petitioner's pattern of failure to comply with
conditions for certification under CLIA caused immediate jeopardy
to individuals whose tests were performed by Petitioner. Pages 15
- 18.
6. HCFA was authorized by Petitioner's pattern of
failure to comply with conditions for certification under CLIA to
revoke Petitioner's CLIA certificate and to cancel Petitioner's
approval to receive reimbursement from Medicare for its services.
Page 21.
B. Was HCFA authorized to revoke Petitioner's CLIA
certificate and cancel Petitioner's approval to receive Medicare
reimbursement for its services, based on Petitioner's failure to
comply with a directed plan of correction? With respect to this
issue, I conclude that:
7. Petitioner was required by a directed plan of
correction imposed by HCFA to supply HCFA with a list of physicians
and clients who had requested that Petitioner perform cytology
tests. Page 15.
8. Petitioner did not comply with the directed plan of
correction. Pages 18 - 20.
9. Petitioner's failure to comply with the directed plan
of correction was due to the failure of its owner and operator to
supply HCFA with the list of physicians and clients required by the
plan of correction. Pages 18 - 20.
10. Petitioner's failure to comply with the directed
plan of correction resulted in immediate jeopardy to patients whose
tests had been performed by Petitioner. Pages 18 - 20.
11. HCFA was authorized by Petitioner's failure to
comply with the directed plan of correction to revoke Petitioner's
CLIA certificate and to cancel Petitioner's authority to receive
reimbursement from Medicare for its services. Page 21.
II. Governing law
A. CLIA
Congress enacted CLIA in order to assure that clinical laboratories
perform medical tests accurately. CLIA was intended by Congress to
establish a single set of standards which govern all providers of
laboratory services, including those which provide laboratory
services to Medicare beneficiaries. H.R. Rep. No. 899, 100th
Cong., 2d Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829
- 3836 (House Report).
The Act defines a clinical laboratory to be:
a facility for the biological, microbiological, serological,
chemical, immuno-hematological, hematological, biophysical,
cytological, pathological, or other examination of materials
derived from the human body for the purpose of providing
information for the diagnosis, prevention, or treatment of any
disease or impairment of, or the assessment of the health of, human
beings.
42 U.S.C. 263a(a).
Under CLIA, the Secretary of the United States Department of Health
and Human Services (Secretary) is authorized to inspect clinical
laboratories and, in effect, license them to perform tests. The
Act 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). The Act 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)(1).
The Act directs the Secretary to establish standards for cytology
testing by clinical laboratories. 42 U.S.C. 263a(f)(4). 2/ The
specific requirements for cytology testing reflect Congress'
concern about the potential adverse consequences to patients of PAP
smear readings based on improperly prepared slides, or of PAP
smears being read by inadequately trained or overworked laboratory
employees. House Report at 3852.
Under CLIA, the Secretary may impose sanctions against clinical
laboratories which have been certified, but which no longer meet
the requirements for certification. These may consist of
intermediate sanctions, including any of the following, either
individually or in combination: directed plans of correction,
civil money penalties, or payment of costs for outside monitoring
of laboratories. 42 U.S.C. 263a(h).
The Act provides for revocation of a CLIA certificate under
specified circumstances. These include, among other things,
failure by a laboratory's owner or operator to comply with
statutory requirements for certification or with standards issued
by the Secretary, failure by the owner or operator to respond to
reasonable requests by the Secretary for materials or information,
or failure by the owner or operator to abide by an intermediate
sanction issued by the Secretary. 42 U.S.C. 263a(i)(1)(C), (D),
(G).
Although not explicitly stated in the Act, it is apparent that
Congress intended that the Secretary employ intermediate sanctions
as a remedy to bring noncompliant clinical laboratories into
compliance with CLIA certification standards. The more serious
sanction of revocation is intended to be applied in cases where
laboratories are incapable of complying with standards, where they
refuse to comply, or where they fail to cooperate with reasonable
requests by the Secretary which are intended to monitor their
compliance with CLIA or to protect individuals, including Medicare
beneficiaries, from the possible adverse consequences of
noncompliance.
B. Regulations
Regulations issued by the Secretary pursuant to CLIA establish
standards for certification of clinical laboratories in addition to
those contained in the Act. The regulations establish a framework
for inspection of clinical laboratories and for certification of
laboratories. They provide for the imposition of sanctions in the
event that laboratories fail to comply with applicable standards.
The regulations define a CLIA certificate to be a certificate which
is issued to a clinical laboratory by HCFA (the agency which has
been delegated authority by the Secretary to administer CLIA) after
an inspection that finds the laboratory to be in compliance with
all condition level requirements. 42 C.F.R. 493.2. 3/ The
regulations define condition level requirements to mean those
requirements for certification under CLIA established in subparts
G through Q of 42 C.F.R. Part 493. Id.
The regulations provide for an enforcement process to assure that
clinical laboratories comply with the requirements of CLIA and
applicable regulations. Enforcement is intended to protect
individuals served by laboratories against substandard testing, to
safeguard the public against health and safety hazards which might
result from noncompliance, and to motivate laboratories to comply
with CLIA requirements. 42 C.F.R. 493.1804(a)(1) - (3).
The regulations give HCFA two types of administrative remedies
which it may employ in appropriate cases. These are alternative
sanctions and principal sanctions. The alternative sanctions which
HCFA may apply in the appropriate case correlate with the
intermediate sanctions described in CLIA. They consist,
individually or in combination, of directed plans of correction,
onsite monitoring, and civil money penalties. 42 C.F.R.
493.1806(c)(1) - (3); see 42 U.S.C 263a(h). The regulations
provide also that, for laboratories that participate in Medicare,
alternative sanctions may include suspension of payments for
Medicare services. 42 C.F.R. 493.1807(b).
The elements of the alternative sanctions which HCFA may impose are
explained by the regulations. 42 C.F.R. 493.1832 - .1836.
Directed plans of correction are described in 42 C.F.R.
493.1832. As one element of a plan of correction, HCFA may direct
a laboratory to submit, within 10 calendar days of notice to the
laboratory of the plan, a list of names and addresses of all
physicians, providers, suppliers, and other clients who have used
some or all of the services of the laboratory since the last
certification inspection or within any other time frame specified
by HCFA. 42 C.F.R. 493.1832(b)(2)(i).
Principal sanctions consist of remedies which HCFA may impose for
any of the reasons set forth in section 263a(i)(1) of the Act. 42
C.F.R. 493.1840(a). For example, HCFA may impose principal
sanctions where a laboratory has not complied with applicable
standards, where its owner, operator, or employees have not
complied with reasonable requests by HCFA for information or
materials, or where the laboratory has not complied with an
alternative sanction. 42 C.F.R. 493.1840(a)(3), (4), (7); see
42 U.S.C. 263a(i)(1)(C), (D), (G). Principal sanctions may
include revocation of a laboratory's CLIA certificate and
cancellation of its approval to receive Medicare payments for its
services. 42 C.F.R. 493.1806, .1807, .1840(a), .1842.
The regulations permit HCFA to revoke a laboratory's certificate
where the laboratory continues to pose immediate jeopardy to
individuals. 42 C.F.R 493.1812(b). The regulations provide
that HCFA will always cancel a laboratory's approval to receive
Medicare reimbursement where HCFA revokes that laboratory's CLIA
certificate. 42 C.F.R. 493.1842(a)(1). They provide also that
HCFA may cancel a laboratory's authority to receive reimbursement
from Medicare for its services where the laboratory fails to comply
with condition level requirements or correct deficiencies within
the time specified by HCFA. 42 C.F.R. 493.1842(a)(2).
The regulations implement Congress' intent that alternative
sanctions be used as a mechanism to remedy deficiencies, but also
to encourage laboratories to comply with CLIA. They implement
Congress' intent further by reserving principal sanctions for those
circumstances where laboratories have demonstrated that they are
either incapable of complying with CLIA or where they have failed
to comply with alternative sanctions which HCFA has imposed
previously. The factors which HCFA considers in determining to
impose a particular sanction are specified by 42 C.F.R.
493.1804(d). Paraphrased here, they include:
(1) whether deficiencies identified by HCFA pose immediate
jeopardy to individuals whose tests the laboratory performs; 4/
(2) the nature, incidence, severity, and duration of the
deficiencies or noncompliance identified by HCFA;
(3) whether the same condition level deficiencies have been
identified repeatedly;
(4) the accuracy and extent of laboratory records relevant to
noncompliance by a laboratory and their availability to HCFA or to
individuals or entities who operate on HCFA's behalf;
(5) the relationship of deficiencies to each other;
(6) the overall compliance history of a laboratory;
(7) the outcome that HCFA intends to achieve through
application of a sanction;
(8) whether the laboratory has improved its operations after
being given a reasonable opportunity to correct deficiencies; and
(9) any recommendation by a State agency operating on HCFA's
behalf as to which sanction would be appropriate.
III. Relevant facts
Subpart A of this section provides background about Petitioner and
its ownership and operation. None of these facts is disputed by
the parties. Subpart B of this section concerns surveys of
Petitioner which were conducted by the State survey agency on
behalf of HCFA, the findings of these surveys, and the alternative
sanctions which HCFA imposed on Petitioner in order to remedy
deficiencies which the surveys uncovered. 5/ Petitioner disputes
at least some of the findings of deficiencies which I discuss in
subpart B. However, for reasons which I shall explain in subpart
B, these findings are administratively final and cannot now be
disputed.
As I discuss in more detail below, there are only four questions of
fact which are within my authority to decide. The first question
is whether condition level deficiencies found by State agency
surveyors constitute a pattern of deficiencies in the management of
Petitioner's operations, as opposed to separate, unrelated
incidents. The second question, assuming such a pattern exists, is
whether this pattern proves that Petitioner is incapable of
providing laboratory services in compliance with CLIA or poses
immediate jeopardy to individuals who rely on Petitioner to perform
clinical tests, including PAP smears. I discuss my findings
concerning these two questions in subpart C of this section.
The third question is whether Petitioner's director and owner
failed to comply with a directed plan of correction. The fourth
question is whether failure to comply with a directed plan of
correction posed immediate jeopardy to individuals whose tests had
been performed by Petitioner. I discuss my findings concerning the
third and fourth questions in subpart D of this section.
A. Petitioner
Petitioner is a clinical laboratory in Modesto, California.
Petitioner has operated under various names and with different
combinations of owners since 1981. Tr. 5/11 at 197 - 99. 6/ It
has operated under its current name since 1991. Tr. 5/11 at 197.
Mahindokht Raiszadeh, M.D., has directed Petitioner since its
inception. Tr. 5/11 at 199. Dr. Raiszadeh has been the sole owner
of Petitioner since August 1992. Id. Dr. Raiszadeh is a physician
who is licensed to practice medicine in the States of Arizona and
California. Tr. 5/11 at 195. She specializes in the fields of
clinical and anatomical pathology, and has been board certified in
these fields since 1975. Tr. 5/11 at 196.
Petitioner's services have included tests in the areas of
chemistry, hematology, serology, cytology, pathology,
histopathology, and bacteriology. Tr. 5/10 at 38 - 39, Tr. 5/11 at
199. The services provided by Petitioner have been provided either
directly by Dr. Raiszadeh or by employees working under her
supervision. Tr. 5/11 at 199 - 203. Dr. Raiszadeh has been
responsible for establishing Petitioner's operating procedures and
for monitoring the quality of its services. Id.
B. Condition level deficiencies in Petitioner's operations
and HCFA's efforts to remedy those deficiencies with alternative
sanctions
Petitioner was surveyed by the State survey agency on behalf of
HCFA on five separate occasions beginning in December 1992. These
surveys produced findings of numerous and repeated condition level
deficiencies in Petitioner's operations. HCFA attempted to remedy
these deficiencies by imposing alternative sanctions, including a
directed plan of correction.
The intent of the regulations governing appeals of HCFA's initial
determinations is that such determinations become final where a
party fails to appeal, fails to appeal timely, or abandons an
appeal. The regulations provide that hearings in cases involving
initial determinations made under CLIA are conducted pursuant to
the regulations contained in 42 C.F.R. Part 498. 42 C.F.R.
493.1844(a)(2). A laboratory that is dissatisfied with an initial
determination by HCFA under CLIA may request a hearing before an
administrative law judge to contest that determination. The Part
498 regulations provide that a party must request a hearing within
60 days of its receipt of a notice of an initial determination. 42
C.F.R. 498.40(a)(2).
The various alternative sanctions imposed by HCFA, including the
directed plan of correction, were initial determinations which
Petitioner had the right to contest in administrative hearings.
However, Petitioner either did not request hearings concerning the
determinations to impose these sanctions, or, in the case of one of
the determinations, withdrew the hearing request that it had filed.
7/ HCFA's initial determinations to impose alternative sanctions
against Petitioner thus became the Secretary's final
determinations, as did the State agency findings of condition level
deficiencies on which HCFA based these initial determinations.
Petitioner seeks now to contest at least some of HCFA's initial
determinations that condition level deficiencies existed.
Petitioner's posthearing brief. I conclude that Petitioner's
objections to the findings are either untimely or were made by it
previously in connection with a hearing request which Petitioner
withdrew. Therefore, I accept the findings of condition level
deficiencies made by the State agency in its five surveys of
Petitioner. I conclude also that Petitioner no longer has the
opportunity to dispute the authority of HCFA to impose alternative
sanctions against it based on the findings of these surveys.
The first of the five surveys was conducted on December 9, 1992.
The surveyors found seven condition level deficiencies. HCFA Ex.
1. A condition level deficiency was found in quality control in
the performance of moderate and high complexity tests. HCFA Ex. 1
at 11 - 12; 42 C.F.R. 493.1223. Condition level deficiencies
were found in the areas of bacteriology and hematology testing.
HCFA Ex. 1 at 12 - 15; 42 C.F.R. 493.1227, 493.1253.
Condition level deficiencies were found in the performance of the
laboratory director of a laboratory performing both moderate and
high complexity testing. HCFA Ex. 1 at 16, 26; 42 C.F.R.
493.1403, 493.1441. A condition level deficiency was found in the
performance of the general supervisor of a laboratory performing
high complexity testing. HCFA Ex. 1 at 31; 42 C.F.R. 493.1459.
Finally, a condition level deficiency was found in quality
assurance in the performance of moderate and high complexity tests.
HCFA Ex. 1 at 35 - 36; 42 C.F.R. 493.1701.
The surveyors concluded that Petitioner was not following
manufacturers' instructions in the performance of tests, was not
documenting quality control checks, or, in some cases, was not
performing such checks. HCFA Ex. 1 at 8, 13. The surveyors found
that Dr. Raiszadeh was permitting unlicensed and unsupervised
personnel to make quality control decisions routinely. Id. at 17.
The surveyors found also that Dr. Raiszadeh was failing to carry
out her overall duties to supervise and exercise oversight over
Petitioner's activities. Id. at 31.
HCFA provided Petitioner the opportunity to submit a plan of
correction to remedy the deficiencies found in this survey. HCFA
Ex. 2, 3. Petitioner did not respond. HCFA gave Petitioner a
second opportunity. HCFA Ex. 4. This time, Petitioner responded;
however, HCFA determined the response to be inadequate and
incomplete. HCFA Ex. 5.
The State agency resurveyed Petitioner on February 17, 1993. On
this occasion, the surveyors found nine condition level
deficiencies in Petitioner's operation. HCFA Ex. 6. Essentially,
the surveyors' findings were the same as those in the first survey.
Id.; Tr. 5/10 at 78. However, at this second survey, the surveyors
examined more closely the chemistry testing being performed by
Petitioner. The surveyors found additional deficiencies in this
area, associated essentially with their findings that Petitioner's
employees were making numerous unauthorized adjustments to
laboratory equipment which was being used to perform chemical
analysis. HCFA Ex 6 at 18; Tr. 5/10 at 79 - 80.
On March 2, 1993, the State agency advised Petitioner that it was
recommending that HCFA impose principal sanctions against it,
consisting of suspension of Petitioner's CLIA certificate and
suspension of Petitioner's receipt of Medicare and Medicaid
reimbursement. HCFA Ex. 8. On March 3, 1993, HCFA advised
Petitioner that it had determined to suspend its CLIA certificate
and to suspend Medicare and Medicaid reimbursement to Petitioner.
HCFA Ex. 9.
The State survey agency conducted a third survey of Petitioner on
March 18, 1993. Based on this survey, the surveyors concluded that
two condition level deficiencies persisted. HCFA Ex. 10. These
deficiencies were in the areas of quality assurance and in the
performance of the duties of laboratory director for a laboratory
performing moderate complexity testing. Id. at 23 - 24, 31 - 32;
42 C.F.R. 493.1403, 493.1701. Several of the deficiencies
which the surveyors found at this survey had been found to exist in
previous surveys. For example, the surveyors found that
Petitioner's employees continued to make unauthorized adjustments
to laboratory equipment used to perform chemical analysis. HCFA
Ex. 10 at 20.
On the basis of this survey and the two previous surveys, HCFA
imposed alternative sanctions against Petitioner. HCFA Ex. 13.
These sanctions, which were communicated to Petitioner in a notice
dated March 30, 1993, supersede the principal sanctions which HCFA
advised Petitioner it was imposing in its March 3, 1993 notice to
Petitioner. Id.; see HCFA Ex. 9. The alternative sanctions
consisted of onsite monitoring of Petitioner and suspension of
Medicare payments to Petitioner. Petitioner requested a hearing,
but then withdrew the request. Supra n.6.
The State survey agency surveyed Petitioner for a fourth time on
April 29, 1993. The survey was conducted as part of the onsite
monitoring alternative sanction which HCFA had imposed against
Petitioner. The surveyors found three condition level
deficiencies. HCFA Ex. 38. Once again, the surveyors documented
problems in operating the equipment used to conduct chemistry
tests. Id. at 10 - 11, 18. They again found that Dr. Raiszadeh,
acting in her supervisory capacity, had failed to assure that
Petitioner met the quality of service requirements of CLIA
regulations. Id. at 23 - 28. They found a continuing failure by
Petitioner to maintain a quality assurance plan and a continuing
deficiency in assuring that accurate laboratory testing services
were being provided. Id. at 31 - 36.
On June 9, 1993, HCFA advised Petitioner that, based on the
findings of the April 29, 1993 survey, the alternative sanctions
previously imposed by HCFA would remain in effect. HCFA Ex. 39 at
1 - 2. HCFA further advised Petitioner that it had determined to
impose an additional alternative sanction consisting of a directed
plan of correction. Id. at 2. Petitioner was advised of its right
to request a hearing regarding this determination. Id. However,
Petitioner did not request a hearing.
Petitioner sent its own proposed plan of correction to HCFA on June
4, 1994. However, after reviewing Petitioner's proposal, HCFA
determined that it was inadequate. HCFA provided Petitioner with
an explanation for its determination on July 15, 1993. HCFA Ex.
40. In response, Petitioner supplied additional information and
explanation to HCFA. HCFA reviewed the additional material, and on
August 23, 1993, advised Petitioner that it failed to resolve
HCFA's concerns about ongoing deficiencies in Petitioner's
operations. HCFA Ex. 41. HCFA advised Petitioner that the
previously determined alternative sanctions would remain in effect.
Id.
The State agency conducted a fifth survey of Petitioner from August
23 - 26, 1993. This survey was triggered by Petitioner informing
HCFA that it had decided to discontinue testing in several
specialties and subspecialties, but that it intended to continue to
conduct tests in the areas of cytology and histology. Tr. 5/11 at
47 - 48. The State agency concluded that, given Petitioner's
history of deficiencies, it could not be entrusted to perform
testing in these areas without an additional survey being
conducted. Id.
The August 1993 survey focused on Petitioner's conduct of cytology
tests. HCFA Ex. 42. The surveyors concluded that Petitioner
manifested four condition level deficiencies. Id. One of these
specifically related to the manner in which Petitioner performed
cytology tests. Id. at 9 - 16; 42 C.F.R. 493.1257. The others
consisted of repeat findings of deficiencies in the performance of
duties by the laboratory director, the technical supervisor, and in
quality assurance. HCFA Ex. 42 at 16 - 28; 42 C.F.R.
493.1441, .1447, .1701.
The surveyors concluded that the cytology testing performed by
Petitioner manifested serious deficiencies, which resulted in a
failure by Petitioner to assure accurate and reliable testing.
HCFA Ex. 42 at 10. The surveyors reviewed 421 PAP smear slides and
found them to be unreadable due to inadequate preparation or poor
staining. Id. at 11. They found that Petitioner had nevertheless
issued patient test reports for all 421 of these PAP smears. Id.
The surveyors found additional deficiencies involving the manner in
which Petitioner performed cytology tests. They found that
Petitioner had not maintained accurate records of the number of PAP
smear slides that were being read during a 24-hour period. HCFA
Ex. 42 at 10. They found that Petitioner was not comparing
malignant and premalignant gynecology reports with previous test
results. Id. They found several cases in which Petitioner had
rendered negative reports on PAP smear slides which demonstrated
apparent abnormalities. Id. at 23 - 24.
On September 15, 1993, HCFA informed Petitioner that, based on the
results of the August survey, it had determined to impose
additional sanctions. HCFA Ex. 45 at 1 - 2. HCFA advised
Petitioner that it was proposing to revoke Petitioner's certificate
in cytology because there existed immediate jeopardy to patients
being served by Petitioner. Id. HCFA advised Petitioner that,
pending revocation, additional sanctions would apply. These
additional sanctions included limitation of Petitioner's CLIA
certificate in cytology and limitation of Medicare and Medicaid
payments in cytology. Id. Petitioner was advised that, effective
September 29, 1993, it could conduct no additional tests in
cytology. Id. HCFA told Petitioner that these sanctions would not
be rescinded unless HCFA could verify that the deficiencies had
been corrected.
On September 20, 1993, Petitioner replied by advising HCFA that,
effective September 27, 1993, it would discontinue testing in
cytology. HCFA replied to Petitioner by letter dated October 1,
1993. HCFA Ex. 46. HCFA advised Petitioner that it was imposing
alternative sanctions consisting of limitation of Petitioner's
certificate in cytology and suspension of Petitioner's Medicare and
Medicaid payments in cytology. HCFA advised Petitioner further
that it was imposing a directed plan of correction. Id. at 2.
Petitioner was directed to:
submit to the State Survey Agency within 10 calendar days, a
list of the names and addresses of the physicians, and other
clients who have used the laboratory's services in Cytology during
the period January 20, 1993 to the present.
Id. HCFA advised Petitioner that it was entitled to request a
hearing regarding this determination. Id. Petitioner did not
request a hearing.
C. Petitioner's pattern of condition level deficiencies and
the potential for harm resulting from those deficiencies
It is evident from the foregoing that, despite repeated surveys by
HCFA and the imposition of alternative sanctions aimed at
remediation, Petitioner has persisted in manifesting condition
level deficiencies in its operations. There is a definite pattern
to these deficiencies, and I conclude from this pattern that
Petitioner either is incapable of, or unwilling to, correct them.
I conclude, furthermore, that the nature of these deficiencies is
such as to pose a risk of serious harm to individuals whose tests
were performed by Petitioner. This constitutes immediate jeopardy
within the meaning of relevant regulations. 42 C.F.R. 493.2.
A central finding in each of the survey reports is the failure of
Dr. Raiszadeh, acting as Petitioner's director, to assert
meaningful control over the quality of the tests which Petitioner
performed. These tests included bacteriology tests, chemistry
tests, and preparation of slides of PAP smears, as well as the
reading of those slides. Numerous errors were identified in the
performance of these tests. They included failure to perform the
tests in accordance with the directions issued by the suppliers of
testing materials and the manufacturers of equipment utilized by
Petitioner. They included failure to produce slides of PAP smears
which were readable.
Another central finding in each of the survey reports is the
failure of Dr. Raiszadeh, in her capacity of director and
supervisor, to establish procedures which addressed the performance
deficiencies identified by the surveyors or to supervise employees
effectively. Thus, the surveyors repeatedly identified the same
errors in the management of equipment to perform chemistry tests.
The surveyors also repeatedly identified failures by Petitioner to
document its procedures adequately and to establish meaningful
quality control protocols.
The deficiencies in operations identified by the State agency
surveyors must be attributed largely to Dr. Raiszadeh's failure to
supervise adequately Petitioner's operations or to implement
meaningful quality control. It is apparent also that Dr. Raiszadeh
did not institute meaningful changes in Petitioner's operations
despite repeated surveys and findings of deficiencies, coupled with
the imposition of alternative sanctions by HCFA.
These repeated deficiencies establish a pattern of deficiencies,
both in the performance of tests by Petitioner and in the
management of Petitioner's operations. This pattern of
deficiencies placed individuals whose tests were performed by
Petitioner at a risk of serious harm and, thus, in immediate
jeopardy. The deficiencies identified by the surveyors relate
directly to the quality and reliability of tests performed by
Petitioner. For example, the surveyors found that Petitioner's
staff repeatedly was making unauthorized adjustments to chemistry
testing equipment, thereby jeopardizing the accuracy of the tests.
These tests had been referred to Petitioner by physicians in order
to assist them in diagnosing their patients' medical conditions.
Both the referring physicians and their patients were at the mercy
of Petitioner's testing procedures. Petitioner's quality
deficiencies called into question the accuracy of the test results
which it reported to physicians, and the diagnoses that these
physicians may have made based on those reported test results.
I conclude, furthermore, that Petitioner's failure to prepare
properly PAP smear slides in 421 cases, coupled with its sending of
reports based on those slides, is not only a part of this pattern,
but in and of itself demonstrates deficiencies which pose a serious
risk of harm and immediate jeopardy to patients. These slides were
prepared from tests which were made to detect the possible presence
of malignancies. Physicians relied on Petitioner's interpretation
of the tests to decide whether additional procedures were
necessary. Tr. 5/10 at 250 - 51.
Petitioner asserts that the deficiencies identified by the
surveyors do not establish a pattern of deficiencies in
Petitioner's operations. Petitioner's posthearing brief at 4.
Petitioner argues that it may be inferred that these deficiencies
showed no jeopardy to patient care because HCFA allegedly "removed"
its suspension of Petitioner's CLIA certificate on March 30, 1993.
The record does not support this assertion. The notice which HCFA
sent to Petitioner on March 30, 1993 does not reflect a
determination by HCFA that the deficiencies identified to
Petitioner posed no jeopardy to patient care. To the contrary,
that notice states:
Failure to meet these . . . [CLIA] requirements and standards
therein seriously limits the facility's capacity to furnish an
adequate level of quality of care or services.
HCFA Ex. 13 at 1. HCFA's determination to impose alternative
sanctions in lieu of principal sanctions may indicate that, as of
March 30, 1993, HCFA had not given up hope that Petitioner might
cure its deficiencies. However, it does not by any stretch suggest
that HCFA had concluded that the existing deficiencies were less
than serious, or that they did not threaten patients with serious
harm. Furthermore, my conclusion that the pattern of deficiencies
at Petitioner poses immediate jeopardy to individuals is based on
the entire record of the inspections of Petitioner, and not on the
record as it stood on March 30, 1993.
Petitioner argues also that the survey which was performed on April
29, 1993 showed that the deficiencies identified by the surveyors
did not pose immediate jeopardy to patients. Petitioner's
posthearing brief at 4; see HCFA Ex. 38. I do not agree with
Petitioner's characterization of the results of this survey. As I
find above, the surveyors who conducted the April 29, 1993 survey
identified three condition level deficiencies. HCFA Ex. 38.
Although the surveyors did not state explicitly that these
deficiencies constituted immediate jeopardy, it is apparent from
the deficiencies that they addressed the central issue of the
reliability and quality of Petitioner's services. Moreover, my
conclusion that Petitioner's deficiencies pose immediate jeopardy
to individuals is based on the cumulative record of deficiencies
and not solely on the April 29, 1993 survey.
Finally, Petitioner asserts that the reports of surveys contain
inaccuracies and unjustified conclusions. As I find above,
Petitioner had the opportunity to challenge the findings of these
surveys and HCFA's determinations which were based on these
surveys, and either failed to avail itself of the opportunity or
withdrew its hearing request. It would not be appropriate now for
me to permit Petitioner to bootstrap into this case arguments that
it had the opportunity to make previously, but which it did not
make.
I conclude from the pattern of deficiencies manifested by
Petitioner that it is incapable of complying with the requirements
of CLIA. The record of this case establishes repeated
identification of serious deficiencies by State agency surveyors.
These deficiencies, as I have found, did not vary substantially
from survey to survey. They were so serious as to call into
question the capacity of Petitioner to conduct tests that were
reliable and accurate. HCFA attempted repeatedly to encourage
Petitioner to ameliorate these deficiencies, to no avail.
D. Petitioner's failure to comply with the directed plan of
correction and the potential for harm arising from Petitioner's
failure to comply
On October 1, 1993, HCFA imposed a directed plan of correction on
Petitioner which required Petitioner, within 10 days, to supply
HCFA with a list of the names and addresses of physicians and other
clients who had requested that Petitioner perform cytology services
after January 20, 1993. HCFA Ex. 46 at 2. HCFA contends that
Petitioner refused to comply with this directive. Petitioner
denies that it refused to comply. Petitioner's posthearing brief
at 5 - 6.
Dr. Raiszadeh and Petitioner failed to comply with the directed
plan of correction. I conclude that this failure placed in
immediate jeopardy those individuals whose PAP smears had been
processed and interpreted by Petitioner.
HCFA premised the plan of correction on its conclusion that, in 421
instances, although Petitioner prepared PAP smear slides which
could not be read meaningfully, Petitioner had, nonetheless, sent
reports to physicians in those cases. HCFA concluded that it was
urgent that these physicians be notified so that they could make
informed judgments as to whether their patients could be retested
for the presence of abnormalities or malignancies. As one of the
surveyors testified, based on her findings:
[T]hese 421 patients think that they have a negative PAP smear
when, in essence, they may not because you can't tell what was on
these slides.
Tr. 5/10 at 250.
The directed plan of correction was unequivocal. Petitioner could
have complied simply by furnishing HCFA with the names and
addresses of physicians and other clients who requested that
Petitioner perform tests beginning on January 20, 1993.
However, notwithstanding Petitioner's assertions to the contrary,
the record demonstrates that Dr. Raiszadeh and Petitioner did not
comply with the plan. In the weeks subsequent to the imposition of
the plan, there were several conversations between a HCFA
representative and Dr. Raiszadeh about the plan. In those
conversations, Dr. Raiszadeh made it plain that she would not
comply with the plan. On October 15, 1993, in a telephone
conversation, Dr. Raiszadeh advised the HCFA representative that
Petitioner was ceasing its operations and that, therefore, it did
not need to provide HCFA with a client list. Tr. 5/11 at 100 - 01.
In a followup conversation on October 18, 1993, Dr. Raiszadeh
stated that she had decided to notify clients herself and would not
be providing HCFA with a client list. Id. at 101.
Petitioner did not send a list of physicians and clients to HCFA in
compliance with the directed plan of correction. On November 20,
1993, nearly two months after HCFA had imposed the plan, Petitioner
sent HCFA a letter which listed the names of five physicians. CVML
Ex. 20. That letter did not purport to contain a complete list of
the names of the physicians or clients who had referred samples to
Petitioner, it did not provide any information which would enable
HCFA to ascertain whether these physicians had referred samples to
Petitioner after January 20, 1993, and it did not provide HCFA with
the addresses of the physicians who were listed. Id.
Petitioner sent letters also to various physicians informing them
that their patients had abnormal cytology tests. CVML Ex. 15, 17.
These letters do not comply with the directed plan of correction.
First, they do not purport to constitute complete notification of
physicians or clients who patronized Petitioner after January 20,
1993. More important, the directed plan of correction did not
offer Petitioner the option of notifying physicians and clients in
lieu of providing HCFA with a list of those individuals. One
obvious purpose of the plan was to give HCFA the opportunity to
provide these individuals with notification in order to assure that
they were properly notified of Petitioner's deficiencies.
Implicitly, HCFA had determined that Petitioner could not be
trusted with that responsibility.
On November 30, 1993, HCFA told Dr. Raiszadeh that her submission
of November 19, 1993 did not constitute compliance with the
directed plan of correction. HCFA Ex. 49; see CVML Ex. 20. It
provided Dr. Raiszadeh and Petitioner with an additional
opportunity to comply with the plan. HCFA Ex. 49. HCFA received
no response.
As I find above, Petitioner's failure to produce readable PAP
smears in 421 cases, coupled with its preparation and transmission
of reports to physicians in those cases, placed the individuals
whose PAP smears were involved in immediate jeopardy. These
individuals were placed in additional jeopardy by the failure of
Dr. Raiszadeh and Petitioner to comply with the directed plan of
correction. It was urgent that HCFA be able to notify the
physicians whose patients' PAP smears were involved that the
results might be inaccurate. Potentially, any of these individuals
could have had a malignancy which had not been detected. The
failure of Dr. Raiszadeh and Petitioner to respond to the directed
plan of correction by providing HCFA with the list of physicians
and clients mandated by the plan resulted in a delay in
notification of the physicians.
HCFA was able eventually to construct a list of physicians who had
referred PAP smears to Petitioner. HCFA sent a letter of
notification to these physicians in December 1993. HCFA Ex. 50.
This was more than two months after HCFA had imposed the directed
plan of correction and after fruitless efforts to obtain a list of
referring physicians and clients from Dr. Raiszadeh and Petitioner.
IV. HCFA's authority to impose principal sanctions
Petitioner engaged in a pattern of deficiencies which posed
immediate jeopardy to individuals and which established Petitioner
to be incapable of meeting the requirements of CLIA. Petitioner
failed to comply with a directed plan of correction, placing
individuals in immediate jeopardy. I conclude that HCFA was
justified in imposing the principal sanctions which it imposed in
this case either by Petitioner's pattern of deficiencies or by its
failure to comply with the directed plan of correction.
To briefly restate my analysis of the basis for the imposition of
principal sanctions, such sanctions may be imposed under CLIA and
relevant regulations where a laboratory fails to comply with CLIA
requirements, where it fails to comply with an alternative
sanction, or where it fails to respond to HCFA's reasonable
requests for information. 42 U.S.C. 263a(i)(1); 42 C.F.R.
493.1840(a). 8/
The relevant law and the evidence in this case give HCFA ample
grounds to revoke Petitioner's CLIA certificate and to cancel its
approval to receive Medicare reimbursement for its services. It is
evident that alternative sanctions have failed to induce Petitioner
to comply with CLIA. Petitioner consistently has failed to comply
with CLIA certification requirements and in doing so has posed
immediate jeopardy to individuals. Petitioner has failed to comply
with an alternative sanction, the directed plan of correction.
This failure also has placed individuals in immediate jeopardy.
These failures are the direct consequence of the failures of
Petitioner's owner and director, Dr. Raiszadeh, to comply with the
requirements of CLIA or with the alternative sanctions which HCFA
imposed against Petitioner.
This concludes my analysis of the law and evidence in this case.
____________________________
Steven T. Kessel
Administrative Law Judge
1. With its posthearing brief, Petitioner submitted a letter
requesting that I admit in evidence four additional exhibits. One
of the exhibits, CVML Exhibit (Ex.) 29, had been offered and
rejected at the hearing. Also, I am rejecting the other exhibits,
CVML Ex. 4, 6, and 11. Although these three had been listed as
proposed exhibits, they were not offered at the hearing. See
Transcript, May 11, 1994, at 235 - 38. Their presentation after
the hearing is untimely and Petitioner has offered no legitimate
reason for their untimely presentation.
2. The Secretary is directed to establish cytology testing
standards that include standards governing: (i) the maximum number
of cytology slides that may be screened by an individual in a
24-hour period; (ii) record-keeping of cytology tests; (iii)
rescreening of cytological preparations; (iv) periodic confirmation
and evaluation of the proficiency of individuals who perform
cytology tests; (v) procedures for detecting inadequately prepared
slides and for assuring that no diagnoses are made based on
inadequately prepared slides; (vi) requirements that all cytology
tests be performed on the premises of a laboratory that is
certified to perform such tests; (vii) requirements for retention
of cytology slides by clinical laboratories; and (viii) standards
requiring periodic inspection of laboratories performing cytology
tests. 42 U.S.C. 263a(f)(4)(B).
3. The regulations specify also that a CLIA certificate may
consist of a certificate which has been issued where a laboratory
has been found to be out of compliance with one or more condition
level requirements, and where alternative sanctions have been
imposed by HCFA. 42 C.F.R. 493.2. Alternative sanctions are
defined to be synonymous with intermediate sanctions as specified
by the Act. Id.
4. The term "immediate jeopardy" is defined at 42 C.F.R.
493.2 to mean:
a situation in which immediate corrective action is necessary
because the laboratory's noncompliance with one or more condition
level requirements has already caused, is causing, or is likely to
cause, at any time, serious injury or harm, or death, to
individuals served by the laboratory or to the health or safety of
the general public. This term is synonymous with imminent and
serious risk to human health and significant hazard to the public
health.
5. Surveys of Petitioner were conducted on HCFA's behalf by the
Office of Laboratory Field Services of the California Department of
Health Services. This agency is the State agency which HCFA has
authorized to conduct surveys for it of clinical laboratories in
California.
6. The transcript for May 10, 1994 contains pages numbered 1 -
322. The transcript for May 11, 1994 contains pages numbered 1 -
238. I cite to the May 10 transcript as "Tr. 5/10 at (page)." I
cite to the May 11 transcript as "Tr. 5/11 at (page)."
7. On March 30, 1993, HCFA advised Petitioner that it was
imposing alternative sanctions, based on findings of condition
level deficiencies at a survey conducted on March 18, 1993. See
HCFA Ex. 10. Petitioner requested an administrative hearing
regarding this determination. I scheduled a hearing in the case.
On September 24, 1993, Petitioner notified me that it was
withdrawing its request for a hearing. On October 6, 1993, I
dismissed Petitioner's hearing request.
8. Both the Act and regulations provide that principal
sanctions should be imposed based on a failure by a laboratory's
owner or operator to comply with CLIA requirements or to fulfill
obligations established by the Act and regulations. That test is
met here. Dr. Raiszadeh is the owner and operator of Petitioner.
There is no question in this case that actions of Petitioner or
failures of Petitioner to act were the consequence of decisions
made by Dr. Raiszadeh.