Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:
Ward General Practice Clinic,
Petitioner,
- v. -
Health Care Financing Administration.
DATE: December 27, 1996
Docket No. C-96-443
Decision No. CR451
DECISION
I sustain the determination of the Health Care Financing
Administration (HCFA) to impose sanctions against Ward General
Practice Clinic (Petitioner), pursuant to the Clinical Laboratory
Improvement Amendments of 1988 (CLIA). Additionally, I direct
that Petitioner's CLIA certification be revoked.
I. Background
On July 29, 1996, HCFA sent a notice to Petitioner advising it
that HCFA had determined that Petitioner no longer met the
requirements to perform testing under CLIA, because Petitioner
manifested deficiencies that represented an immediate jeopardy to
patients that it served. HCFA identified the conditions of
participation under CLIA which it had determined Petitioner was
not complying with. HCFA advised Petitioner that it had elected
to impose sanctions against Petitioner, including: suspension of
Petitioner's CLIA certificate, effective August 10, 1996; and
cancellation of Petitioner's approval to receive Medicare
payments for laboratory services, effective August 10, 1996.
Additionally, HCFA advised Petitioner that it proposed revocation
of Petitioner's CLIA certificate, based on a decision by an
administrative law judge, should Petitioner appeal HCFA's
determinations.
On August 8, 1996, HCFA again notified Petitioner that it was
imposing sanctions against Petitioner. HCFA advised Petitioner
that it had received from Petitioner a plan of correction which
purportedly addressed deficiencies that had been identified by
HCFA. HCFA advised Petitioner that the plan of correction did
not correct the deficiencies that HCFA had identified in its July
29, 1996 notice to Petitioner. HCFA affirmed that it would
impose against Petitioner the sanctions that it had described in
its July 29, 1996 notice.
Petitioner requested a hearing, and the case was assigned to me
for a hearing and a decision. I held a prehearing conference, at
which the parties agreed that the case could be heard and decided
based on written submissions. HCFA submitted a brief. With its
brief, HCFA submitted four exhibits (HCFA Ex. 1 - 4) and two
affidavits (Affidavit of Molly Crawshaw and Affidavit of Veronica
Margin). HCFA did not designate the two affidavits as exhibits,
although it plainly intends them to be received into evidence.
Therefore, I have designated the Affidavit of Molly Crawshaw as
HCFA Ex. 5, and the Affidavit of Veronica Margin as HCFA Ex. 6.
Petitioner submitted a written statement, along with several
attachments, which Petitioner designated as Enc # 1, Enc # 2A,
Enc # 2B, Enc # 3, Enc # 4, and Enc # 5. It is apparent that
Petitioner intends these attachments to its brief to be received
into evidence as exhibits. Therefore, I am redesignating
Petitioner's attachments as follows: Enc # 1 ¾ P. Ex. 1; Enc #
2A ¾ P Ex. 2; Enc # 2B ¾ P. Ex. 3; Enc # 3 ¾ P. Ex. 4;
Enc # 4
¾ P. Ex. 5; Enc # 5 ¾ P. Ex. 6.
Neither party has objected to my receiving into evidence the
exhibits offered by the other party. Therefore, I receive into
evidence HCFA Ex. 1 - 6 and P. Ex. 1 - 6. I base my decision in
this case on the parties' exhibits and arguments and the
governing law.
II. Issue, findings of fact and conclusions of law
The issue in this case is whether HCFA is authorized to impose
sanctions against Petitioner, based on Petitioner's failure to
comply with conditions of participation under CLIA. In
sustaining HCFA's determination, I make the following findings of
fact and conclusions of law (Findings), which I discuss in
detail, below.
1. HCFA or its designee is authorized to conduct a
validation inspection of any accredited or CLIA-exempt
laboratory.
2. Where HCFA or its designee conducts an inspection of a
laboratory and where, based on the inspection, HCFA
determines the laboratory to be deficient in complying with
CLIA requirements, HCFA may impose sanctions against the
laboratory.
3. Where HCFA determines that a laboratory is not complying
with a condition or conditions of participation under CLIA,
HCFA may impose sanctions which may include: canceling the
laboratory's approval to receive Medicare payments for its
services; suspension of the laboratory's CLIA certificate;
and revocation of the laboratory's CLIA certificate.
4. Where HCFA determines that a laboratory's failure to
comply with a condition or conditions of participation under
CLIA poses immediate jeopardy to the health and safety of
patients, then HCFA may suspend the laboratory's CLIA
certificate prior to a hearing before an administrative law
judge concerning whether HCFA's determination is authorized.
5. Where an administrative law judge upholds a
determination by HCFA to suspend a laboratory's CLIA
certificate, based on finding that the laboratory's failure
to comply with a condition or conditions of participation
under CLIA poses immediate jeopardy to the health and safety
of patients, then the suspension of the laboratory's CLIA
certificate shall become a revocation of that certificate.
6. It is a matter of discretion whether a laboratory that
has been found not to be complying with a CLIA condition or
conditions of participation may be permitted, in lieu of
imposition of sanctions against that laboratory, to change
the nature of its operations so as to provide only lower
levels of testing.
7. Petitioner failed to comply with CLIA conditions of
participation stated at 42 C.F.R. §§ 493.801, 493.1201,
493.1227, 493.1245, 493.1247, 493.1251, 493.1403, 493.1441,
and 493.1701.
8. Petitioner's failure to comply with CLIA conditions of
participation posed immediate jeopardy to the health and
safety of patients.
9. Petitioner did not correct its failure to comply with
CLIA conditions of participation.
10. Petitioner has a history of not complying with CLIA
requirements.
11. HCFA was authorized to impose sanctions against
Petitioner, including: canceling the Petitioner's approval
to receive Medicare payments for its services; suspension of
Petitioner's CLIA certificate; and revocation of
Petitioner's CLIA certificate.
12. It is reasonable to deny approval to Petitioner to
convert its operations to a lower level of testing, in lieu
of imposing sanctions against Petitioner, in light of the
nature of Petitioner's failure to comply with CLIA
requirements, its history of noncompliance, and its failure
to correct its noncompliance.
III. Discussion
A. Governing law (Findings 1 - 6)
The Secretary of the United States Department of Health and Human
Services (Secretary) has published regulations which implement
CLIA. 42 C.F.R. Part 493. In these regulations, the Secretary
has established both performance criteria for clinical
laboratories and procedures for assuring that clinical
laboratories comply with statutory requirements.
The regulations authorize HCFA or its designee to conduct
validation inspections of any accredited or CLIA-exempt
laboratory, in order to determine whether the laboratory is in
compliance with CLIA requirements. 42 C.F.R. § 493.1780(a). The
regulations confer broad enforcement authority on HCFA, in order
to assure that laboratories comply with CLIA. 42 C.F.R. §
493.1800. Where HCFA determines that a laboratory is not
complying with one or more CLIA conditions, HCFA may impose
principal sanctions against that laboratory which include
suspension and/or revocation of the laboratory's CLIA
certificate. 42 C.F.R. § 493.1806(a), (b). Additionally, HCFA
may cancel a laboratory's approval to receive Medicare payments
for its services, where the laboratory is found not to be
complying with one or more CLIA conditions. 42 C.F.R. §
493.1807.
A laboratory that is dissatisfied with a determination by HCFA to
impose sanctions against it may request a hearing before an
administrative law judge to contest HCFA's determination. 42
C.F.R. § 493.1844. In most circumstances, a determination to
suspend, limit, or revoke a CLIA certificate will not become
effective until after decision by an administrative law judge
upholding HCFA's determination to impose such a remedy. 42
C.F.R. § 493.1844(d)(2)(i). However, if HCFA determines that a
laboratory's failure to comply with CLIA requirements poses
immediate jeopardy to patients, then HCFA's determination to
suspend or limit a laboratory's CLIA certificate will become
effective in advance of a hearing and decision by an
administrative law judge, after HCFA gives notice to the
laboratory of its determination. 42 C.F.R. § 493.1844(d)(2)(ii).
Where an administrative law judge decides to uphold a
determination by HCFA to suspend a laboratory's CLIA certificate,
based on a finding that the failure by the laboratory to comply
with CLIA requirements poses immediate jeopardy to the health and
safety of patients, then the suspension automatically becomes a
revocation of the laboratory's CLIA certificate. 42 C.F.R. §
493.1844(d)(4).
The regulations are silent as to whether a laboratory that has
been found not to be complying with CLIA requirements may convert
its operations to a lower level of testing in order to avoid the
imposition of sanctions against it. I conclude that HCFA has
discretion to determine whether, as an alternative to imposing
sanctions against a laboratory, it should permit that laboratory
to convert its operations to a lower level of testing. It is
reasonable for HCFA to consider the nature of the laboratory's
noncompliance with CLIA requirements, its compliance history, and
the efforts that the laboratory may have made to comply with CLIA
requirements, in determining whether to exercise discretion to
permit a noncompliant laboratory to convert its operations to a
lower level of testing in lieu of imposing sanctions against that
laboratory.
B. Relevant facts (Findings 7 - 10)
Petitioner is a clinical laboratory located in New Orleans,
Louisiana. HCFA Ex. 2 at 1. On July 18, 1996, the Louisiana
Department of Health and Hospitals (Louisiana State agency),
acting as HCFA's designee, conducted a CLIA compliance survey of
Petitioner. The Louisiana State agency found that Petitioner was
not complying with nine CLIA conditions. Id. These conditions
are stated at 42 C.F.R. §§ 493.801, 493.1201, 493.1227, 493.1245,
493.1247, 493.1251, 493.1403, 493.1441, and 493.1701. Id. The
Louisiana State agency found Petitioner's failure to comply with
these CLIA conditions to be so egregious as to pose immediate
jeopardy to the patients served by Petitioner. Id.
On July 29, 1996, HCFA advised Petitioner that it agreed with the
findings made by the Louisiana State agency. HCFA Ex. 2 at 1.
HCFA told Petitioner that it was prepared to impose sanctions
against Petitioner consisting of suspending Petitioner's CLIA
certificate and canceling Petitioner's approval to receive
Medicare payments for laboratory services, effective August 10,
1996. Additionally, HCFA advised Petitioner that it would seek
revocation of Petitioner's CLIA certificate, should Petitioner
ask for review by an administrative law judge of HCFA's
determinations. Id.
HCFA advised Petitioner that a laboratory that does not meet a
CLIA condition may not be certified to participate under CLIA.
HCFA Ex. 2 at 3. HCFA instructed Petitioner to submit a plan of
correction. Id. It advised Petitioner that, if Petitioner
alleged credibly that it was complying with CLIA requirements,
HCFA would determine whether Petitioner was, in fact, complying
with those requirements. Id. HCFA advised Petitioner that, if
Petitioner alleged that it was complying with CLIA requirements,
a resurvey would be conducted of Petitioner to determine whether,
in fact, it was complying with those requirements. HCFA told
Petitioner that, if Petitioner demonstrated at a resurvey that it
had attained compliance with CLIA requirements, then sanctions
would not be imposed against Petitioner. Id.
On July 29, 1996, Petitioner submitted a purported plan of
correction. HCFA Ex. 3. The document does not explain how
Petitioner intended to correct the deficiencies that were
identified in its operations. Rather, Petitioner tacitly
admitted that it had not been complying with CLIA requirements,
and averred that, as of July 24, 1996, only waived procedures and
physician performed testing was being done by Petitioner. Id.
Petitioner's plan of correction does not explain what Petitioner
means by the terms "waived procedures" and "physician performed
testing." See HCFA Ex. 3. However, regulations define the terms
"waived tests" and "provider-performed microscopy (PPM)
procedures." 42 C.F.R. §§ 493.15, 493.19. I conclude that
Petitioner was referring to waived tests and PPM procedures when
it asserted that, as of July 24, 1996, it was performing only
waived tests and physician performed testing.
Under the regulations, waived tests are simple laboratory
examinations and procedures which are cleared by the Food and
Drug Administration for home use, employ methodologies that are
so simple and accurate as to render the likelihood of erroneous
results to be negligible, and which pose no reasonable risk of
harm to the patient if performed incorrectly. 42 C.F.R. §
493.15. The regulations characterize PPM procedures as being
tests of moderate complexity. 42 C.F.R. §§ 493.5(a)(2),
493.19(b)(2). In order to be a PPM procedure, a test must be
performed personally, by a physician, a midlevel practitioner, or
a dentist, on a specimen obtained during a visit by the patient.
42 C.F.R. § 493.19(b)(1)(i) - (iii).
A PPM procedure must be performed primarily by microscope. 42
C.F.R. § 493.19(b)(3). A specimen for a PPM procedure is labile,
or delay in performing the procedure might compromise the
accuracy of the test result. 42 C.F.R. § 493.19(b)(4). In a PPM
procedure, control materials are not available to monitor the
entire testing process. 42 C.F.R. § 493.19(b)(5). Limited
specimen handling or processing is required in performing a PPM
procedure. 42 C.F.R. § 493.19(b)(6). A laboratory may perform
PPM procedures only if it limits its testing to waived tests and
to the tests that are specified in 42 C.F.R. § 493.19(c). The
specified tests include urine sediment examinations. 42 C.F.R. §
493.19(c)(6). It is evident from the definition of a PPM
procedure that such a procedure is more than a simple test with
no risk to a patient if done improperly. Plainly, there exists a
potential for harm to a patient if a PPM procedure is not
performed properly.
On August 8, 1996, HCFA advised Petitioner that it had concluded
that Petitioner's plan of correction did not correct the
deficiencies that had been identified by the Louisiana State
agency and with which HCFA had concurred. HCFA Ex. 4 at 1. HCFA
advised Petitioner that no provisions existed under CLIA
regulations to permit a laboratory to performed only waived tests
and PPM procedures to avoid the imposition of sanctions against
the laboratory for failure to comply with CLIA requirements. Id.
HCFA advised Petitioner that it was imposing the sanctions
enumerated in HCFA's July 29, 1996 letter to Petitioner. Id. at
1 - 2; see HCFA Ex. 2.
I conclude that HCFA has established that, as of July 18, 1996,
Petitioner manifested failures to comply with CLIA conditions and
that these deficiencies posed immediate jeopardy to patients.
HCFA introduced evidence that Petitioner was not complying with
CLIA conditions as of July 18, 1996. The evidence includes the
survey report generated by the Louisiana State agency at its July
18, 1996 survey of Petitioner. HCFA Ex. 1. The evidence is
reinforced and corroborated by the affidavit of Veronica Margin,
one of the surveyors who conducted the July 18, 1996 survey.
HCFA Ex. 6. In her affidavit, Ms. Margin provides convincing and
unrebutted evidence that Petitioner's deficiencies posed
immediate jeopardy to patients. Id.
Petitioner has not denied that the deficiencies identified by
HCFA in fact existed as of July 18, 1996. Nor has Petitioner
denied that the deficiencies posed immediate jeopardy to
patients. Indeed, as I discuss above, the plan of correction
which Petitioner submitted is a tacit admission by Petitioner of
the deficiencies that were identified in Petitioner's operations.
HCFA Ex. 3.
I conclude also that Petitioner did not correct these
deficiencies at any time after July 18, 1996. Petitioner's plan
of correction does not explain how Petitioner intended to remedy
the deficiencies identified by the Louisiana State agency and
HCFA, except to say that Petitioner had converted its operations
to waived tests and PPM procedures. See HCFA Ex. 3. That
assertion does not address the specific deficiencies identified
by HCFA.
Petitioner asserts that it did correct the deficiencies
identified by the Louisiana State agency and by HCFA.
Petitioner's Statement, dated November 15, 1996, at 1.
Petitioner seems to be asserting that it corrected the
deficiencies by ceasing to perform those tests and procedures in
the performance of which Petitioner was found to be deficient. I
do not find that Petitioner corrected its deficiencies simply by
ceasing to perform certain tests and procedures. The
deficiencies that the Louisiana State agency identified not only
involved specific failures by Petitioner to comply with protocols
and safety procedures in performing certain identified tests,
they involved pervasive and systematic failures by Petitioner to
comply with quality control procedures that apply to clinical
laboratories. HCFA Ex. 1; HCFA Ex. 6. Petitioner offers no
assurance that it has corrected these pervasive and systematic
failures merely by ceasing to perform certain tests.
The evidence establishes that Petitioner was found to be
deficient previously, approximately two years prior to the July
18, 1996 survey of Petitioner. HCFA Ex. 5. Thus, Petitioner has
a history of failing to comply with CLIA requirements.
C. Application of the law to the evidence (Findings 11 -
12)
As I find at Part III.B. of this decision, Petitioner has not
complied with CLIA conditions since at least July 18, 1996.
Petitioner's noncompliance poses immediate jeopardy to the health
and safety of patients. Petitioner has not corrected its
deficiencies. As a consequence, HCFA is authorized to impose
sanctions against Petitioner. These include suspension of
Petitioner's CLIA certificate and canceling Petitioner's
authority to receive Medicare reimbursement for its services. 42
C.F.R. § 493.1807. Furthermore, my conclusion that HCFA is
authorized to suspend Petitioner's CLIA certificate means that
Petitioner's certificate is revoked, based on the evidence which
establishes that Petitioner's noncompliance poses immediate
jeopardy to the health and safety of patients. 42 C.F.R. §
493.1844(d)(4).
As I find above at Part III.A. it is a matter of HCFA's
discretion whether to permit a laboratory to convert its
operations to procedures and tests other than those in the
performance of which it has been found to be deficient, in lieu
of imposing sanctions against that laboratory. Here, HCFA has
elected not to permit Petitioner to convert its operations to
waived tests and PPM procedures. I find that exercise of
discretion to be reasonable.
Petitioner's noncompliance with CLIA requirements is a systematic
failure by Petitioner to comply with basic protocol governing the
performance of tests. Petitioner's noncompliance is so egregious
as to constitute immediate jeopardy to the health and safety of
patients. Given that, coupled with Petitioner's failure to
correct or even to address its noncompliance, HCFA has ample
justification to conclude that conversion of Petitioner's
operations would not be a viable substitute for the imposition of
sanctions.
Moreover, the deficiencies identified in Petitioner's operations
raise serious questions as to whether Petitioner would be capable
of converting its operations to waived tests and, in particular,
PPM procedures, without continuing to pose health and safety
threats to patients. Petitioner was found to be deficient in
performing tests of moderate complexity. HCFA Ex. 1. PPM
procedures are tests of moderate complexity. 42 C.F.R. §
493.5(a)(2), 493.19(b)(2). Petitioner was found to be deficient
in performing urinalysis. Id. Certain types of urinalysis are
among the tests which are listed as PPM procedures. 42 C.F.R. §
493.19(c). Finally, Petitioner's history of noncompliance gives
HCFA additional justification for not permitting Petitioner to
convert its operations to waived tests and PPM procedures.
IV. Conclusion
I conclude that HCFA is authorized to impose sanctions against
Petitioner, including suspending Petitioner's CLIA certificate
and canceling Petitioner's authority to receive reimbursement
from Medicare. I direct that Petitioner's CLIA certification be
revoked, inasmuch as Petitioner's failure to comply with CLIA
requirements poses immediate jeopardy to patients and Petitioner
has not corrected outstanding deficiencies.
________________________
Steven T. Kessel
Administrative Law Judge