$05:Civil Money Penalty
Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Blanding Urgent Care Center Laboratory,
Petitioner,
v.
Health Care Financing Administration.
DATE: September 30, 1996
Docket No. C-95-171
Decision No. CR438
DECISION
I conclude that Petitioner, Blanding Urgent Care Center Laboratory, is subject
to revocation of its CLIA 1/
certificate for a one-year minimum mandatory period, and to concomitant cancellation
of Medicare 2/
payments for laboratory services.
In reaching this conclusion, I determine that the word "intentionally"
is defined differently in CLIA for
civil violations than for criminal violations.
Procedural Background
Only civil violations are alleged in this case. In a letter to Petitioner dated
June 15, 1995, the Health Care
Financing Administration (HCFA) of the United States Department of Health and
Human Services
(DHHS), proposed to revoke Petitioner's CLIA certificate for one year, pursuant
to 42 C.F.R.
493.1840(b), and stated it would suspend Petitioner's Medicare payments for
all tests.
HCFA's letter further informed Petitioner that the proposed revocation was
the consequence of Petitioner
having intentionally referred certain of its proficiency testing samples, for
2nd quarter 1994 and 1st quarter
1995, to the San Juan Hospital laboratory, rather than conducting the tests
at Petitioner. HCFA's letter
added that the referral was revealed through a survey conducted by the Utah
Department of Health,
Division of Laboratory Services, on May 17, 1995.
In a letter dated August 10, 1995, Petitioner requested a hearing, contending
that Petitioner lacked the
requisite intent to warrant revocation of its CLIA certificate, with regard
to both the 2nd quarter 1994 and
1st quarter 1995 proficiency testing samples. Further, Petitioner contended,
with regard to the 1st quarter
1995 proficiency testing samples, it conducted the tests only in its own laboratory
and did not send the
samples elsewhere.
Subsequently, the parties filed cross motions and briefs. 3/ The facts presented
therein are assumed to be
true for purposes of this Decision. I find that no facts of decisional significance
are in dispute, and
consequently there is no need for an in-person hearing.
Based on the evidence in the written record and the law, in light of the parties'
written arguments, I affirm
HCFA's determination to revoke Petitioner's CLIA certificate for a one-year
minimum mandatory period,
with concomitant cancellation of Petitioner's Medicare payments for laboratory
services.
Issue
The issue is whether Petitioner intentionally referred its proficiency testing
samples to another laboratory
for analysis.
Factual Background
Proficiency testing is designed to determine a laboratory's accuracy in performing
testing for its patients.
Each laboratory enrolls in a proficiency testing program and is sent specimens
[proficiency samples] for
testing, approximately three times a year. The specimens are clearly marked
as proficiency testing
samples, so the technician receiving them knows they are test materials, not
patients' specimens. The
laboratory that is being tested is required to test the proficiency samples
the same way it tests patients'
specimens.
On May 15, 1995, the Utah Department of Health, Division of Laboratory Services
(State PT agency) 4/,
began a survey of Petitioner, a laboratory located in Blanding, Utah. The State
PT agency requested
Petitioner's proficiency testing records and was informed that those records
were not available at that time
because they were stored at San Juan Hospital. The technical consultant for
Petitioner, Michael LaGiglia,
served also as the technical consultant and general supervisor for the San Juan
Hospital laboratory, which
is located in Monticello, Utah, approximately 22 miles from Petitioner. Mr.
LaGiglia informed the State
PT agency that Petitioner's records would be made available on the following
day, May 16, 1995. On May
17, 1995, the State PT agency returned to Petitioner and examined the proficiency
testing (PT) records.
HCFA Ex. 3.
2nd Quarter 1994 Proficiency Testing Samples
Review of Petitioner's 2nd quarter 1994 hematology proficiency testing reports
showed that the
handwritten results retained by Petitioner did not match the results that had
been reported to the PT agency.
HCFA Ex. 3. The results reported to the PT agency for Petitioner's 2nd quarter
1994 hematology
proficiency testing matched an instrument printout which could not have been
created by the type and
model of instrument used at Petitioner, but in fact was created on an instrument
such as that present and
used in the San Juan Hospital laboratory. HCFA Ex. 3.
Mr. LaGiglia tested Petitioner's 2nd quarter 1994 hematology proficiency testing
samples both at Petitioner
and at the San Juan Hospital laboratory. P. Br. 3 - 4. The retesting of Petitioner's
2nd quarter 1994
hematology proficiency testing samples at the San Juan Hospital laboratory was
done as an "internal
quality control measure." Mr. LaGiglia was unaware that his retesting of
Petitioner's 2nd quarter 1994
hematology proficiency testing samples at the San Juan Hospital laboratory was
prohibited by law. P. Br.
4, 14.
The test results on Petitioner's 2nd quarter 1994 hematology proficiency testing
samples from both
Petitioner and the San Juan Hospital laboratory were recorded at Petitioner.
Mr. LaGiglia mistakenly
submitted the results from the San Juan Hospital laboratory as Petitioner's
test results on the 2nd quarter
1994 hematology proficiency testing samples. P. R. Br. 7.
In explaining Petitioner's 2nd quarter 1994 hematology proficiency testing
results to the State PT agency
on May 24, 1995, Mr. LaGiglia stated that proficiency testing samples from Petitioner
are brought back to
San Juan Hospital and run on a test machine that is different from the one present
at Petitioner, and the
results are compared. According to Mr. LaGiglia, it was the "practice"
to compare Petitioner's proficiency
testing results with San Juan's proficiency testing results before reporting
the results to the PT agency.
HCFA Ex. 3.
1st Quarter 1995 Proficiency Testing Samples
Examination of Petitioner's 1st quarter 1995 hematology proficiency testing
records by the State PT agency
revealed proficiency testing results logged in on a patient log sheet that did
not match the results reported
to the PT agency. HCFA Ex. 3.
Petitioner and the San Juan Hospital laboratory received separate proficiency
testing samples on
approximately the same date. The technical consultant analyzed San Juan Hospital
laboratory's sample at
San Juan Hospital and subsequently analyzed Petitioner's sample at Petitioner.
The technical consultant
noticed that the white blood cell count results obtained at Petitioner were
dissimilar to those obtained at
San Juan Hospital. The technical consultant assumed the discrepancy indicated
that Petitioner's analyzer
needed to be recalibrated. The technical consultant proceeded to recalibrate
Petitioner's analyzer and
performed the tests again. The result that was obtained after recalibration
was closer to that of San Juan
Hospital and was reported to the PT agency. HCFA Ex. 2; P. Br. 4, 7; P. R. Br.
5.
Statute and Regulations
CLIA provides both civil sanctions and criminal sanctions:
Civil Sanctions
Any laboratory that the Secretary determines intentionally refers its proficiency
testing samples to
another laboratory for analysis shall have its certificate revoked for at least
one year and shall be subject to
appropriate fines and penalties as provided for in section (h) 5/ of this section.
42 U.S.C. 263a(i)(4).
The implementing regulations regarding such civil sanctions provide:
The laboratory must not send PT samples or portions of samples to another
laboratory for
any analysis which it is certified to perform in its own laboratory. Any laboratory
that HCFA determines
intentionally referred its proficiency testing samples to another laboratory
for analysis will have its
certification revoked for at least one year. Any laboratory that receives proficiency
testing samples from
another laboratory for testing must notify HCFA of the receipt of those samples.
42 C.F.R. 493.801(b)(4).
Adverse action based on improper referrals in proficiency testing. If HCFA
determines
that a laboratory has intentionally referred its proficiency testing samples
to another laboratory for analysis,
HCFA revokes the laboratory's CLIA certificate for at least one year, and may
also impose a civil money
penalty.
42 C.F.R. 493.1840(b).
Criminal Sanctions
Any person who intentionally violates any requirement of this section or any
regulation
promulgated thereunder shall be imprisoned for not more than one year or fined
under Title 18, or both,
except that if the conviction is for a second or subsequent violation of such
a requirement such person shall
be imprisoned for not more than 3 years or fined in accordance with Title 18,
or both.
42 U.S.C. 263a(l).
The implementing regulations regarding such criminal violations provide:
Definitions. Intentional violation means knowing and willful noncompliance
with any
CLIA condition.
42 C.F.R. 493.2.
Section 353 also [p]rovides for imprisonment or fine for any person convicted
of
intentional violation of CLIA requirements.
42 C.F.R. 493.1800(a)(3)(i).
Criminal sanctions. Under section 353(1) of the PHS [Public Health Service]
Act, an
individual who is convicted of intentionally violating any CLIA requirement
may be imprisoned or fined.
42 C.F.R. 493.1806(e).
Findings of Fact and Conclusions of Law
1. Petitioner is a laboratory located in Blanding, Utah that has been certified under CLIA since 1993.
2. CLIA establishes requirements for all laboratories that perform clinical
diagnostic tests on human
specimens. 42 U.S.C. 263a; 42 C.F.R. 493.1800.
3. Petitioner's technical consultant's reporting, by mistake, to the PT agency
the San Juan Hospital
laboratory results as Petitioner's test results, on Petitioner's 2nd quarter
1994 hematology proficiency
testing samples, is irrelevant.
4. Petitioner's technical consultant knew he was retesting Petitioner's 2nd
quarter 1994 hematology
proficiency testing samples in the San Juan Hospital laboratory. HCFA Ex. 3;
P. Br. 4, 14. Thus,
Petitioner's technical consultant's action was deliberate, not inadvertent.
Decision at 10 - 16.
5. Although Petitioner's technical consultant's retesting, in the San Juan
Hospital laboratory, of Petitioner's
2nd quarter 1994 hematology proficiency testing samples, was done as an "internal
quality control
measure," his motive is irrelevant.
6. It is irrelevant that Petitioner's technical consultant was unaware that
his retesting, in the San Juan
Hospital laboratory, of Petitioner's 2nd quarter 1994 hematology proficiency
testing samples was
prohibited by law.
7. Based on the dissimilarity between Petitioner's first white blood cell count
results from Petitioner's 1st
quarter 1995 hematology proficiency testing samples, and those he had obtained
at the San Juan Hospital
laboratory, Petitioner's technical consultant recalibrated Petitioner's analyzer
and retested Petitioner's
proficiency testing samples. HCFA Ex. 2; P. Br. 4, 7; P. R. Br. 5.
8. Petitioner's technical consultant knew he was recalibrating Petitioner's
analyzer and retesting Petitioner's
1st quarter 1995 hematology proficiency testing samples, based on the dissimilarity
in results between the
first white blood cell counts obtained at Petitioner and those he had obtained
at the San Juan Hospital
laboratory. HCFA Ex. 2; P. Br. 4, 7; P. R. Br. 5. Thus Petitioner's technical
consultant's action was
deliberate, not inadvertent. Decision at 10 - 16.
9. A laboratory that obtains analysis of its proficiency testing samples from
another laboratory violates 42
U.S.C.
263a(i)(4) regardless of whether the laboratory reports to the PT agency its
own results or the results
obtained from the other laboratory.
10. Information gleaned from proficiency testing samples at the San Juan Hospital
caused Petitioner's
technical consultant to realize that Petitioner's analyzer needed recalibration.
Petitioner then recalibrated
the analyzer and retested Petitioner's proficiency testing samples after the
recalibration. P. Br. 4 - 5, 7; P.
R. Br. 5; HCFA Ex. 2.
11. Petitioner violated 42 U.S.C. 263a(i)(4) by recalibrating its equipment
and retesting its proficiency
testing samples based upon the results obtained from the testing of separate
proficiency testing samples at
the San Juan Laboratory, irrespective of whether Petitioner reported the results
or not.
12. It is irrelevant that Petitioner's technical consultant was unaware that
his recalibration of Petitioner's
analyzer and retesting of Petitioner's 1st quarter 1995 hematology proficiency
testing samples, based on the
dissimilarity in results between Petitioner's first white blood cell counts
and those he had obtained at the
San Juan Hospital laboratory, were prohibited by law.
13. A laboratory must not send proficiency testing samples or portions of samples
to another laboratory for
any analysis which it is certified to perform in its own laboratory. 42 C.F.R.
493.801(b)(4).
14. A referral of proficiency testing samples to another laboratory for analysis
can occur where
proficiency testing samples are physically carried or transferred from one laboratory
to another for
retesting. Decision at 19 - 23.
15. A referral of proficiency testing samples can occur where the proficiency
testing samples are not
moved from the laboratory, but are retested or otherwise rechecked based on
information gained from
another laboratory. Decision at 19 - 23.
16. Petitioner referred both its 2nd quarter 1994 hematology proficiency testing
samples and its 1st quarter
1995 hematology proficiency testing samples to another laboratory, in each case
the San Juan Hospital
laboratory, for analysis.
17. "Intentionally referred" [as in "intentionally referred"
its proficiency testing samples to another
laboratory for analysis] requires not specific intent, but general intent, that
is, an intent to act. No guilty
knowledge, no culpability, no scienter is required. Motive is irrelevant. It
is necessary merely that a
person act deliberately, that is, not inadvertently.
18. Petitioner's lack of "deliberate fraud" and lack of "knowing
and willful noncompliance with CLIA
conditions," are irrelevant.
19. Petitioner's technical consultant's retesting, in the San Juan Hospital
laboratory, of Petitioner's 2nd
quarter 1994 hematology proficiency testing samples, as an "internal quality
control measure," constitutes
an intentional referral of Petitioner's proficiency testing samples to another
laboratory for analysis.
20. Petitioner's technical consultant's recalibrating of Petitioner's analyzer
and retesting of Petitioner's 1st
quarter 1995 hematology proficiency testing samples, based on the dissimilarity
in results between
Petitioner's first white blood cell counts and those he had obtained at the
San Juan Hospital laboratory,
constitutes an intentional referral of Petitioner's proficiency testing samples
to another laboratory for
analysis.
21. Petitioner, through the action of its technical consultant, intentionally
referred its proficiency testing
samples to another laboratory for analysis during 2nd quarter 1994, in violation
of 42 U.S.C. 263a(i)(4);
42 C.F.R. 493.801(b)(4) and 493.1840(b).
22. Petitioner, through the action of its technical consultant, intentionally
referred its proficiency testing
samples to another laboratory for analysis during 1st quarter 1995, in violation
of 42 U.S.C. 263a(i)(4);
42 C.F.R. 493.801(b)(4) and 493.1840(b).
23. The CLIA statute and applicable regulations require HCFA to revoke a laboratory's
CLIA certificate
for at least one year if the laboratory "intentionally refers" its
proficiency testing samples to another
laboratory for analysis. 42 U.S.C. 263a(i)(4); 42 C.F.R. 493.801(b)(4) and 493.1840(b).
24. Neither I nor HCFA has the discretion in this case to revoke Petitioner's
CLIA certificate for less than
the mandatory minimum period of one year, or to substitute any lesser sanction.
25. I affirm HCFA's one-year revocation of Petitioner's CLIA certificate, with
concomitant cancellation of
Petitioner's Medicare payments for laboratory services.
Discussion
Two words, "intentionally" and "referred," require careful
analysis in determining whether Petitioner
intentionally referred its proficiency testing samples to another laboratory
for analysis. The meaning of
"intentionally" impacts both the 2nd quarter 1994 PT, and the 1st
quarter 1995 PT. The meaning of
"referred" impacts only the 1st quarter 1995 PT.
I. Definitions of "Intentionally" under CLIA
[see Statute and Regulations above]
I conclude that "intentionally" is defined differently in CLIA for
civil violations than for criminal
violations.
The word "intentionally" is found in both the civil section of CLIA and the criminal section of CLIA:
civil:
Any laboratory that the Secretary determines intentionally refers [emphasis
added] its
proficiency testing samples to another laboratory for analysis . . . .
42 U.S.C. 263a(i)(4).
criminal:
Any person who intentionally violates [emphasis added] any requirement of this
section
or any regulation promulgated thereunder . . . .
42 U.S.C. 263a(l).
Although the term "intentionally" is used in both the civil and criminal
sections of CLIA, the term need not
be accorded the same meaning in each of these sections. Upon careful analysis,
I conclude that the term
"intentionally refers" as it appears at 42 U.S.C. 263a(i)(4) indeed
does not have the same meaning as the
term "intentionally violates" which appears at 42 U.S.C. 263a(l).
To begin with, the phrases are different
in that one contains the word "refers" and one contains the word "violates."
This is discussed more fully
below.
A. Parties' arguments
[see Factual Background above]
Petitioner's arguments
Petitioner argues that "intentionally" [as in "intentionally
referred its proficiency testing samples to another
laboratory for analysis"] means that a lab intended to report another lab's
PT results as its own. P. Br. 7,
13, 28. Regarding the 2nd quarter 1994 PT, Petitioner maintains that the referral
was made to the San Juan
Hospital laboratory for internal quality control measures, and Mr. LaGiglia
mistakenly submitted the
results obtained in the San Juan Hospital laboratory to the PT agency as Petitioner's
PT results. Id. at 4, 14.
Consequently, Petitioner argues, HCFA is without authority to revoke Petitioner's
CLIA certificate because
Petitioner did not manifest the requisite intent.
Petitioner urges consistent construction of the term "intentional"
in the civil and criminal contexts, noting
the "draconian" outcome of revocation. Id. at 18 - 28. Petitioner
contends that the term "intentionally" in
the civil context of CLIA should require "the deliberate motive of deceiving
the testing agency by
reporting the other labs's [sic] proficiency testing results as its own."
P. Br. 18. Petitioner adds that
"intentional" must be construed so that criminal penalties cannot
be meted out upon a mere showing of
"deliberate taking of action," without consideration of motive. Id.
at 17 - 18.
Petitioner argues further that, although it may have violated some CLIA requirements,
it did not do so
knowingly and willfully. The regulation at 42 C.F.R. 493.2 defines "intentional
violation" as "knowing
and willful noncompliance with any CLIA condition." Petitioner contends
that HCFA accordingly must
establish that Petitioner's violation was knowing and willful, before HCFA can
revoke Petitioner's CLIA
certificate.
HCFA's arguments
HCFA urges consideration of the definition of "intentionally" [as
in "intentionally referred its proficiency
testing samples to another laboratory for analysis"] found in Long Medical
Laboratory v. HCFA, DAB
CR334 (1994), at 6. HCFA Br. 8 - 9. In Long, Administrative Law Judge Steven
Kessel determined that
"intentionally" should be given its common and ordinary meaning. Applying
a dictionary definition of that
term, Judge Kessel concluded that "when one acts intentionally, he or she
acts deliberately," regardless of
motivation. HCFA Br. 8 - 9.
To Petitioner's stated objective of "quality control" as the reason
for referring its proficiency testing
samples to the San Juan Hospital laboratory, HCFA responds as follows: "(P)roficiency
testing is a test for
which no second chance or 'quality control' is permitted." HCFA Br. 9.
HCFA further maintains that it is irrelevant whether Petitioner intended to
report the results of the San Juan
Hospital laboratory as Petitioner's results. The statute requires revocation
of a CLIA certificate where a
laboratory intentionally refers its proficiency testing to another laboratory
for analysis. 42 U.S.C.
263a(i)(4). 42 C.F.R. 493.801(b)(4). The statute does not require also that
a laboratory intentionally
report the second laboratory's results as its own. HCFA Br. 10.
HCFA argues that the civil and criminal sections of CLIA are distinct and separate.
CLIA contains
sections dealing with the civil penalties that may be imposed against a laboratory
for noncompliance with a
CLIA condition [42 U.S.C. 263a(h) and (i)]; and a separate section providing
criminal penalties for
individuals who intentionally violate the CLIA statute or regulations [42 U.S.C.
263a(l)].
HCFA's position is that the criminal sanctions section of CLIA [42 U.S.C. 263a(l)]
provides HCFA with
the discretion to refer intentional violations of statutory requirements to
the Department of Justice for
criminal prosecution. HCFA R. Br. 7. HCFA maintains that Congress fully intended
to provide HCFA
with the authority to impose a program sanction, e.g., revocation of the CLIA
certificate, and, at the same
time, have the discretion to refer the matter for criminal prosecution. Id.
at 8.
B. Purpose of CLIA
The Clinical Laboratory Improvement Amendments of 1988 (CLIA) require certification
of all laboratories
that perform clinical diagnostic tests on human specimens. The authority to
enforce CLIA requirements is
granted to the Secretary of Health and Human Services (Secretary). 42 U.S.C.
263a (esp. 263a(f)); 42
C.F.R. 493.1800; See Consumer Federation of America and Public Citizen v. U.S.
Dept. of Health and
Human Services, 83 F. 3d 1497 (D.C. Cir. 1996).
CLIA was established to address the issue of unacceptably high error rates
at unregulated laboratories and
the dangers to patients that these high laboratory error rates posed. H.R. Rep.
No. 899 at 14, reprinted in
1988 U.S.C.C.A.N. at 3831; S. Rep. No. 561, 100th Cong., 2nd Sess. 3-4.
The importance of proficiency testing as a means of measuring and ultimately
ensuring laboratory
competence was noted by Congress as follows:
The Committee's investigation focused particularly on proficiency testing
because it is considered
one of [the] best measures of laboratory performance. It is arguably the most
important measure, since it
reviews actual test results rather than merely gauging the potential for good
results . . .
Proficiency testing is a method of externally validating the level of a laboratory's
performance.
Proficiency testing is not currently conducted by HHS, but is conducted by private
agencies. . . . The
standard testing methodology currently in use involves sample test specimens
being sent by mail to a
laboratory by the proficiency testing agency. The laboratory then analyzes the
samples and returns the
results of the test to the proficiency testing organization. The proficiency
testing organization typically
calculates the mean of the test results, determines an acceptable range variation
based on standard
deviations from the mean, and reports the results to the lab.
The major problems identified by the Committee were lax Federal oversight
and direction, lack of
proficiency testing for many analytes, inconsistent criteria for acceptable
laboratory performance, and
improprieties by laboratories in handling specimen samples.
. . .
A significant deficiency in the current proficiency testing regime is its inability
to assure that
proficiency testing samples are treated like patient specimens. Samples are
mailed to laboratories, and
although proficiency testing organizations recommend that tests be treated in
the same manner as patient
samples, there was evidence that laboratories retest samples repeatedly to ensure
satisfactory results and
send proficiency testing samples out to other laboratories for analysis. The
only way to guarantee that
samples are treated by the same personnel, at the same speed, using the same
equipment as patient
specimens is though [sic] blind or on-site proficiency testing. The committee
learned, however, that such
testing can be quite expensive and may have to be used with discretion to assure
proper processing of
specimens.
H.R. No. 899, reprinted in 1988 U.S.C.C.A.N. at 3828, 3836, 3837.
Thus, Congress, in enacting CLIA, was concerned about, among other things,
laboratories that were
sending their proficiency testing samples to other laboratories for analysis
or retesting to ensure a
satisfactory result. It is within this context that Congress authored the prohibition
on intentional referrals
of proficiency testing, at 42 U.S.C.
263a(i)(4).
C. Definition of "intentionally," as in "intentionally refers"
"Intentionally" is not defined in the CLIA statute, but some assistance
is found in the regulations.
"Intentional violation" is defined in the regulations as "knowing
and willful noncompliance with any CLIA
condition." 42 C.F.R. 493.2 ("Definitions").
The phrase "intentional violation" does not appear elsewhere in the
pertinent regulations, other than in the
definitions section, as just quoted, and as follows:
Section 353 also [p]rovides for imprisonment or fine for any person convicted
of intentional
violation of CLIA requirements.
42 C.F.R. 493.1800(a)(3)(i).
The phrase "intentionally violating" appears in the pertinent regulations,
also solely in connection with
criminal sanctions:
Criminal sanctions. Under section 353(1) of the PHS [Public Health Service]
Act, an individual
who is convicted of intentionally violating any CLIA requirement may be imprisoned
or fined.
42 C.F.R. 493.1806(e).
After careful study of the pertinent portions of the statute and the regulations,
I conclude that "intentional
violation" is defined by the regulations for the sole purpose of clarifying
the phrase "intentionally violates,"
which is found in the CLIA statute only in the criminal section [42 U.S.C. 263a(l)].
The "knowing and
willful" requirement provided by the regulation is consistent with the
element of criminal offenses known
as "scienter," "culpability," or "guilty knowledge."
By providing a definition for "intentional violation", the authors
of the regulations have explicitly provided
guidance on how to interpret 42 C.F.R. 493.1800(a)(3)(i) and 493.1806(e). There
is little doubt that,
with respect to the imposition of criminal sanctions, in determining whether
there was an intentional
violation, the legal standard of "knowing and willful" is to be applied.
Thus, I agree with Petitioner to the extent that criminal penalties under CLIA
cannot be meted out without
a showing of "knowing and willful noncompliance" with a CLIA condition.
I disagree with Petitioner's
argument, however, that revocation is such a severe penalty that a similar standard
regarding intent should
apply to revocation as applies to criminal penalties.
Criminal convictions, particularly for persons who work in health care, trigger
extremely serious
consequences. It is reasonable to require proof of specific intent before subjecting
a person to criminal
penalties under CLIA. CLIA has clearly delineated two distinct types of penalties
-- the first, directed at a
laboratory and involving civil sanctions (regarding the laboratory's CLIA certificate,
civil money penalties,
costs and the like); -- and the second, directed at a person and involving criminal
penalties (imprisonment
or a fine or both). [See 42 C.F.R. 493.1806 for available sanctions.]
Under CLIA, a laboratory is subject to inspection and a variety of civil penalties
for failing to comply with
CLIA standards. 42 U.S.C. 263a(g), (h), (i). ["Principal sanctions,"
such as suspension, revocation, and
limitation of the laboratory's CLIA certificate, are provided by 42 U.S.C. 263a(i).
"Intermediate" or
"alternative sanctions," such as directed plans of correction, civil
money penalties, and onsite monitoring
costs, are provided by 42 U.S.C. 263a(h).]
In sharp contrast are the CLIA penalties that are criminal in nature. 42 U.S.C.
263a(l). The potential
penalties include imprisonment for up to one year and a fine or both. Even more
serious, a repeat offender
can be imprisoned for up to three years and fined or both.
The regulations go to the effort of defining "intentional violation"
to ensure that sufficient scienter is
proved before a person can be convicted of a criminal violation under CLIA.
The fact that "intentional
violation" is specifically defined in the regulations [42 C.F.R. 493.2]
suggests that the definition is
different from its common and ordinary meaning, and in fact, it is.
Nowhere do the regulations define the term "intentionally referred,"
which is contained in the regulations at
42 C.F.R. 493.801(b)(4) and 493.1840(b). "Intentionally refers" is
found in the statute at 42 U.S.C.
263a(i)(4). Neither Congress nor the Secretary chose to define or modify the
word "intentionally" in the
context of "intentionally referred its proficiency testing samples to another
laboratory for analysis." Where
"intentionally" is not specifically defined in the context of CLIA
civil sanctions, one can infer that it should
be given its common and ordinary meaning.
This conclusion is in accordance with that of Administrative Law Judge Steven
Kessel in the case of Long
Medical Laboratory v. HCFA, DAB CR334 (1994). Although in Long Petitioner admitted
that it had
intentionally referred proficiency testing samples for testing, Judge Kessel
nonetheless determined that the
word "intentionally" should be given its common and ordinary meaning.
As stated in Long, "intention" is a
determination to act in a certain way. Long, at 6 (citing Webster's New Collegiate
Dictionary, 1975 ed., at
601). When one acts "intentionally," he or she acts deliberately,
regardless of motivation. Long, at 6 - 9.
Accordingly, I find that "intentionally referred" [as in "intentionally
referred" its proficiency testing
samples to another laboratory for analysis] requires not specific intent, but
general intent, that is, an intent
to act. No guilty knowledge, no culpability, no scienter is required. Motive
is irrelevant. It is necessary
merely that a person act deliberately, that is, not inadvertently.
In current practice, where proficiency testing samples are clearly marked,
enabling the technician receiving
them to know they are test materials, not patients' specimens, it is difficult
to conceive of an inadvertent
referral. If proficiency testing samples are referred to another laboratory
for analysis, with the knowledge
that they were proficiency testing samples, the referral can be expected to
be intentional, that is, deliberate,
not inadvertent. 6/
D. Further consideration of Petitioner's arguments regarding definition of
"intentionally," as in
"intentionally refers"
In further considering Petitioner's position regarding the definition of "intentionally,"
as in "intentionally
refers," I begin with Petitioner's philosophical arguments. Petitioner
asks for punishment to fit the "crime,"
stating that revocation and its consequences are "wildly disproportionate"
penalties in relation to
Petitioner's conduct, where there was no intent to deceive, no motive to report
falsely, no bad faith. P. R.
Br. 1 - 4, 7 - 10, 12. "While Blanding [Petitioner] may have committed
certain CLIA violations, it was not
attempting to defraud through a pattern of improper referrals or seeking to
conceal a substandard facility by
using another lab to perform its PT." Id. at 9.
Petitioner shows that Congress provided a wide range of civil sanctions, arguing
that less culpable
noncompliance should be sanctioned less severely. Petitioner points out that
Congress, in drafting CLIA,
was disturbed by the lack of a flexible response to poor proficiency testing.
P. Br. 10. Petitioner states
also that Congress pointed to the need for lesser sanctions, including civil
monetary penalties and
corrective action plans, where a laboratory has either made a good faith effort
to comply with the law or
where the health of patients is not in immediate danger. Petitioner contends
that, by imposing a one year
revocation of its CLIA certificate, HCFA is applying the most severe sanction
possible. 7/ Petitioner
believes that, while it has made good faith efforts to correct the problems
with its testing, it is being unduly
penalized by HCFA's adherence to a rigid enforcement method which is contrary
to the intent of Congress.
It is true that the alternative sanctions Congress provided, the "intermediate
sanctions," may be applied in
countless situations, whether or not those situations involve cheating in proficiency
testing. Even the
principal sanctions of suspension or limitation of a laboratory's CLIA certificate
may be less severe than a
one-year minimum mandatory revocation.
For example, failing to obtain satisfactory performance in proficiency testing,
that is, having unacceptable
error levels, may trigger a sanction less severe [or more severe] than a one-year
revocation. Failing to test
proficiency samples the same way a laboratory tests patients' specimens [42
C.F.R. 493.801, 493.801(b)]
may be penalized by a sanction less severe [or more severe] than a one-year
revocation [42 C.F.R.
493.1812, 493.1814]. Engaging in inter-laboratory communications pertaining
to the results of proficiency
testing sample(s) before the date the laboratory must report the results of
its proficiency testing [42 C.F.R.
493.801(b)(3)] may be penalized by a sanction less severe [or more severe] than
a one-year revocation [42
C.F.R. 493.1812, 493.1814]. In each of these situations, HCFA has discretion
to impose a sanction less
severe or more severe than a one-year revocation.
But where intentional referral of a laboratory's proficiency testing samples
to another laboratory for
analysis has occurred, there is no possibility of a less severe sanction than
a one-year minimum mandatory
revocation. The statute itself specifies the sanction:
Any laboratory that the Secretary determines intentionally refers its proficiency
testing samples to
another laboratory for analysis shall have its certificate revoked for at least
one year . . . .
42 U.S.C. 263a(i)(4).
Congress enacted an especially strong prohibition against intentionally referring
proficiency testing
samples to another laboratory for analysis, by requiring mandatory revocation
for at least one year as the
sanction. Clearly, Congress wanted the practice to stop.
Petitioner argues that, in order for it to have committed an "intentional
referral" within the meaning of the
statute and the regulations, Petitioner must have referred its tests to another
laboratory with the intent of
reporting such results as its own. P. Br. 7, 13, 28.
Petitioner's construction is unreasonable. As HCFA points out, Petitioner's
interpretation of 42 U.S.C.
263a(i)(4) would make it almost impossible for HCFA to revoke a CLIA certificate
pursuant to that
provision, because HCFA would be required to prove a laboratory's "intent
to submit another lab's PT
results as its own." HCFA R. Br. 9.
HCFA points out also that Petitioner's interpretation of 42 U.S.C. 263a(i)(4)
"would make it acceptable
for a laboratory to refer its proficiency testing to another laboratory for
analysis as long as it did not
intentionally report the second laboratory's results as its own. The effect
of such an interpretation would be
to endorse cheating on proficiency testing." HCFA R. Br. 3. "Indeed,
Congress did not require false
reporting because it anticipated that laboratories could simply retest their
proficiency testing samples to
improve their test scores after receiving the analysis from a second laboratory."
Id. at 4.
Petitioner's insistence that referral be with the "intent to submit another
lab's PT results as its own," is far
too narrow a view of what constitutes an intentional referral. The statute requires
revocation of a CLIA
certificate where a laboratory intentionally refers its proficiency testing
to another laboratory for analysis.
42 U.S.C. 263a(i)(4). 42 C.F.R. 493.801(b)(4) and 493.1840(b). The statute does
not require also that
a laboratory intentionally report the second laboratory's results as its own.
HCFA Br. 10.
HCFA need only establish a general intent to act, and not, as Petitioner suggests,
specific intent to report
incorrect or improper test results. It is highly improbable that, within the
framework of civil penalties
against an entity, where no loss of personal liberty is involved, Congress would
require specific intent in
order to establish a CLIA violation under the statute's civil penalty provisions.
Here, a laboratory is subject
to civil administrative sanctions for failure to comply with statutory requirements.
[Even Petitioner
concedes that criminal sanctions traditionally require proof of a greater degree
of scienter and culpability
on the part of the defendant. P. Br. 17.]
Regardless of motivation, Petitioner acted with the requisite general intent,
that is, the intent to act, to
trigger the penalty provisions of CLIA. Petitioner acted deliberately, that
is, not inadvertently, in obtaining
test results elsewhere. It is cheating to look at another's answer on a test,
even if merely to confirm one's
own answer. Anyone looking at answers different from his own would likely compare
and analyze them
before forming any intent about what to do with the other answers.
In summary, two definitions of "intentionally" [as in "intentionally
referred its proficiency testing samples
to another laboratory for analysis"] proposed by Petitioner must be rejected:
The first definition that must be rejected is "knowing and willful noncompliance,"
because that
phrase is applicable in CLIA only to criminal sanctions.
The second definition that must be rejected is "with the intent to submit
another lab's proficiency
testing results as its own."
I find that "intentionally" as found in the civil section of CLIA
means with general intent, regardless of
motivation.
II. Definition of "Referred" under CLIA
[see Factual Background above]
As previously mentioned, the meaning of "referred" impacts only Petitioner's 1st quarter 1995 PT.
[With regard to the 2nd quarter 1994 PT, Petitioner acknowledges that Petitioner's
2nd quarter 1994
hematology PT samples were physically carried from Petitioner to the San Juan
Hospital laboratory, where
they were retested, as an "internal quality control measure." Thus,
Petitioner acknowledges that Petitioner's
2nd quarter 1994 PT samples were "referred" to another laboratory
for testing.]
A. Parties' arguments
Petitioner's arguments
Petitioner argues that it did not physically send its 1st quarter 1995 PT samples
to another laboratory for
analysis --these samples never left Petitioner-- and there consequently was
no referral, and no violation
sufficient to warrant revocation of Petitioner's CLIA certificate. P. Br. 7
- 8.
Petitioner argues further that regulatory language supports its position [P. Br. 7 - 8]:
The laboratory must not send PT samples or portions of samples to another
laboratory for any
analysis which it is certified to perform in its own laboratory.
42 C.F.R. 493.801(b)(4).
HCFA's arguments
HCFA contends that Petitioner is taking too narrow a view of the word referral,
and ignoring the context in
which the word is used within the CLIA statute and regulations. First, HCFA
states that Petitioner's
argument regarding whether or not it referred the 1st quarter 1995 PT samples
is irrelevant when it is
undisputed that Petitioner referred the 2nd quarter 1994 PT samples.
Second, HCFA argues that the facts regarding Petitioner's handling of the 1st
quarter 1995 PT samples
constitute a referral because the laboratory technician 1) tested Petitioner's
proficiency testing samples at
Petitioner; 2) compared the results to results he had obtained on PT samples
at the San Juan Hospital
laboratory and realized the results he had obtained on Petitioner's analyzer
were erroneous; and 3) based on
his discovery, recalibrated Petitioner's analyzer; and 4) retested the samples
at Petitioner on the recalibrated
analyzer and reported the results.
B. Definition of "referred"
HCFA's position is that a referral can occur without the proficiency testing
samples ever being physically
sent to another laboratory for analysis. In other words, Petitioner did not
have to move or transfer the
samples physically from Petitioner to another laboratory in order to commit
a "referral" to another
laboratory for analysis, within the meaning of the CLIA statute and regulations.
Petitioner concedes that Petitioner recalibrated its testing equipment and
retested the PT samples, as a result
of information the technician obtained from his testing of samples that were
sent to the San Juan Hospital
laboratory for proficiency testing. P. Br. 4, 7; P. R. Br. 5.
The word "refer" is defined by the Random House College Dictionary,
revised ed. 1980, at 1108, as "to
direct the attention or thoughts of." The second definition is "to
direct to a person, place, etc., for
information or anything required."
Neither of these definitions would require Petitioner physically to have sent
the PT samples to the San Juan
Hospital laboratory (or to any other laboratory) for analysis. Under either
of these definitions, Petitioner's
recalibration of the equipment and retesting of the PT samples at Petitioner,
based on information, results,
or testing at another laboratory, suffices.
Were I to take Petitioner's argument to its logical conclusion, it would render
the entire concept of
proficiency testing meaningless. Under the scenario offered by Petitioner, a
laboratory, from information it
received from another laboratory, would be able to discover that its equipment
had to be recalibrated,
recalibrate its testing equipment, and retest the PT testing samples to enable
it to pass the proficiency test.
A cardinal rule of statutory construction is to interpret the statute in such
a way that no part is rendered
meaningless. Petitioner's interpretation of the word "referral" as
not including any proficiency testing
sample that is not physically removed from a laboratory for retesting would
do just that, that is, render
meaningless the CLIA statutory provisions prohibiting referrals.
Also, under Petitioner's definition, a referral would not occur in an instance
where a technician brought
equipment to a lab in order to retest a PT sample that had already been tested
on the laboratory's own
equipment. Yet, this would be a referral, irrespective of whether the PT sample
ever left the lab. The PT
sample would be retested, and the results would change or be reaffirmed based
on information discovered
in the retesting.
In handling the 1st quarter 1995 PT samples, Petitioner's technical consultant
knew something was wrong
when he did not get similar results from Petitioner's and the San Juan Hospital
laboratory's proficiency
tests. He inferred from the discrepancy that something was wrong with Petitioner's
analyzer. He then
recalibrated Petitioner's analyzer and re-performed the proficiency testing,
as a result of the information he
had obtained in the testing of PT samples at the San Juan Hospital laboratory.
I find that, for a laboratory to have referred proficiency testing samples
to another laboratory for analysis, it
need not physically take or transfer its proficiency testing samples to another
laboratory. The facts
involving Petitioner's 1st quarter 1995 PT samples, where Petitioner, in effect,
received a second opinion
from another laboratory with regard to Petitioner's PT samples, are sufficient
for me to find that a referral
of Petitioner's proficiency testing samples occurred, within the meaning of
the CLIA statute and
regulations. 42 U.S.C. 263a(i)(4); 42 C.F.R. 493.801(b)(4) and 493.1840(b).
Furthermore, when the
regulation cited by Petitioner is read as a whole, the wording "(t)he laboratory
must not send PT samples or
portions of samples to another laboratory . . . . " [42 C.F.R. 493.801(b)(4)]
does not eliminate from
consideration the other ways in which referral may be accomplished.
To use the terms of the Dictionary definition, Petitioner "directed"
the samples "for information or
anything required," to another laboratory for analysis. By retesting the
samples based on information
gleaned from the proficiency testing at the San Juan Hospital laboratory, Petitioner
referred the samples.
Thus, I find that Petitioner referred its 1st quarter 1995 PT samples to another
laboratory for analysis,
despite the fact that these samples were not removed from Petitioner.
III. HCFA Required to Revoke Petitioner's CLIACertificate for a One-Year Period
Petitioner acknowledges that its handling of CLIA samples was not in accordance
with CLIA standards. P.
Br. 6. Petitioner indicates that it has been diligent in its efforts to correct
the problems and that, in any
event, the deficiencies regarding its handling of PT samples do not warrant
the revocation of its CLIA
certificate for one year. According to Petitioner, Congress intended for a laboratory
certificate to be
revoked only in instances of the most serious misconduct. P. Br. 9.
The CLIA statute and applicable regulations require HCFA to revoke a laboratory's
CLIA certificate for at
least one year if the laboratory "intentionally refers" its proficiency
testing samples to another laboratory
for analysis. 42 U.S.C. 263a(i)(4); 42 C.F.R. 493.801(b)(4) and 42 C.F.R. 493.1840(b).
Neither I nor HCFA has the discretion in this case to revoke Petitioner's CLIA
certificate for less than the
mandatory minimum period of one year, or to substitute any lesser sanction.
Conclusion
Petitioner intentionally referred its proficiency testing samples to another
laboratory for analysis during
2nd quarter 1994 and 1st quarter 1995. Accordingly, Petitioner's CLIA certificate
must be revoked for a
one-year minimum mandatory period, with concomitant cancellation of Petitioner's
Medicare payments for
laboratory services.
Jill S. Clifton
Administrative Law Judge
1. CLIA refers to the Clinical Laboratory Improvement Amendments, enacted in
1988 (42 U.S.C.
263a).
2. Medicaid payments for laboratory services are also affected (42 C.F.R. 493.1809).
3. HCFA filed a Motion to Affirm with a supporting brief (HCFA Br.). HCFA's
submissions were
accompanied by HCFA Exhibits (HCFA Exs.) 1 through 10.
Petitioner filed a Motion to Reverse with a supporting brief (P. Br.).
HCFA filed a Reply brief (HCFA R. Br.).
Petitioner filed a Sur-Reply brief (P. R. Br.).
Petitioner did not object to any of HCFA's exhibits, and I admit HCFA Exs.
1 through 10 into evidence.
Petitioner did not submit any exhibits.
4. The State PT agency is the entity that surveyed Petitioner; Petitioner's
proficiency testing results
were processed by a separate entity which I refer to as the PT agency.
5. "Intermediate" civil sanctions, such as civil money penalties,
are found in 42 U.S.C. 263a(h), and
are alternative remedies to the "principal" civil sanctions of CLIA
certificate suspension, revocation, or
limitation, found in 42 U.S.C. 263a(i).
6. The inclusion by Congress of the word "intentionally" in the civil
context may well be more
significant in the case of "blind" proficiency testing, in which the
laboratory technicians cannot tell the test
samples from patients' specimens. [Patients' specimens of course may be referred
to other laboratories.]
7. HCFA has imposed the minimum sanction specified by 42 U.S.C. 263a(i)(4).