CASE | DECISION |JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

James Bryant, M.D,

Petitioner,

DATE: August 28, 2003
                                          
             - v -
 

Centers for Medicare & Medicaid

 

Docket No.C-02-601
Decision No. CR1080
DECISION
...TO TOP

DECISION

Petitioner, James Bryant, M.D., was not an owner or operator of GenSys, Incorporated within the meaning of 42 U.S.C. § 263a(i)(3). Accordingly, he has no right to a hearing on or to request a reopening of my decision in Gen Sys Incorporated (Gen Sys). (1) Further, because Petitioner was not an owner or operator of Gen Sys within the meaning of 42 U.S.C. § 263a(i)(3), he is not subject to the two-year ban on owning or operating a clinical laboratory that is imposed by that statute. The Centers for Medicare & Medicaid Services (CMS) declaration that 42 U.S.C. § 263a(i)(3) and its two-year ban applies to Petitioner is in error. The petition to reopen and revise the decision in Gen Sys is denied and the request for hearing is dismissed.

I. PROCEDURAL HISTORY

On April 15, 2002, I granted summary judgment for CMS in the case of Gen Sys. I affirmed the CMS suspension of the Gen Sys CLIA (2) certificate based on the existence of two condition-level deficiencies existing between the date of the survey, April 16, 1999, and the suspension of the laboratory's CLIA certificate on August 3, 1999. Pursuant to 42 C.F.R. § 493.1844(d)(4)(ii), the Gen Sys CLIA certificate was revoked effective the date of my decision. There is no dispute that Petitioner did not participate as a party in the Gen Sys case, either on his own or on the laboratory's behalf.

In a letter dated May 23, 2002, CMS notified Petitioner that, based on my decision in Gen Sys, Petitioner would not be able to own, operate, or direct another laboratory until on or after April 15, 2004, two years from the effective date of the revocation of the Gen Sys CLIA certificate. Petitioner's Exhibit (P. Ex.) 1. CMS asserted in the notice that Petitioner was also no longer eligible to direct the four other CLIA-certified laboratories that he then directed. The notice advised Petitioner that he had the right to request a hearing before an administrative law judge (ALJ) of the Department of Health and Human Services, Departmental Appeals Board (DAB).

Petitioner filed a "Verified Emergency Petitioner for Expedited Appellate Review" of the Gen Sys decision and its effect upon him with the Appellate Panel (Board) of the DAB. On June 7, 2002, the Board dismissed the petition for review on grounds that Petitioner was not a party to the Gen Sys proceedings and, thus, the Board assumed there was no record development related to Petitioner and nothing for the Board to review. The Board noted that Petitioner might be able to state grounds that would cause me to reopen the Gen Sys decision, but found no authority for it to directly review the CMS May 23, 2002 notice to Petitioner that he was subject to the two-year ban pursuant to 42 U.S.C. § 263a(i)(3). See Gen Sys, Incorporated, Civil Remedies Docket No. C-00-007, Appellate Division Docket No. A-02-90 (June 7, 2002)

On June 5, 2002, Petitioner filed a "Verified Emergency Petition for Expedited Hearing on the CMS Determination of Petitioner's Ineligibility for Directorship and Ownership" with the Civil Remedies Division (CRD) of the DAB. Petitioner alleges that CMS has improperly applied the two-year ban of 42 U.S.C. § 263a(i)(3) to him. The petition was assigned docket number C-02-601 and assigned to Judge Richard Smith on June 12, 2002. The case was reassigned to me for hearing and decision on June 25, 2002.

A hearing was conducted in this matter on September 23, 2002, in Chicago, Illinois, the substance of which is recorded in a 206 page transcript (Tr.) of the proceedings. Petitioner's exhibits (P. Exs.) 1 and 2 were offered and admitted. Tr. at 112-16. CMS offered CMS exhibits (CMS Exs.) 1, 5, 8, 9, 10 and 11. CMS Exs. 1, 5 and 8 were admitted. CMS exhibits 9, 10, and 11 were not admitted for reasons discussed in the transcript and are not considered in this decision. Tr. at 11-22. CMS presented the testimony of Gail Brugioni and Bonita Schimeca. Petitioner called Robert Daly and himself to testify.

The Parties filed their opening post-hearing briefs on November 15, 2002. Response briefs were filed on December 10, 2002.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. FINDINGS OF FACT

The following findings of fact are based on all the evidence of record:

1. The Gen Sys CLIA certificate was suspended August 3, 1999, due to deficiencies found during a survey completed on April 16, 1999. Tr. at 32-33.

2. Petitioner signed a HCFA Form 209 on August 7, 2000, indicating that he became laboratory director for Gen Sys. Tr. at 33; CMS Ex. 8, at 1.

3. On April 15, 2002, I granted summary judgment for CMS in the case of Gen Sys, affirming the CMS suspension of the Gen Sys CLIA certificate and revoking that certificate effective the date of my decision.

4. The revocation of the Gen Sys CLIA certificate was based on the existence of two condition-level deficiencies existing between the date of the survey, April 16, 1999, and the suspension of the laboratory's CLIA certificate on August 3, 1999.

5. Petitioner did not participate as a party in the Gen Sys case, either on his own or the laboratory's behalf.

6. In a letter dated May 23, 2002, CMS notified Petitioner that based on my decision in Gen Sys, Petitioner would not be able to own, operate, or direct another laboratory until on or after April 15, 2004, two years from the effective date of the revocation of the Gen Sys CLIA certificate. P. Ex. 1.

7. Petitioner remained listed with CMS as the Gen Sys laboratory director until June 3, 2002. Tr. at 155.

8. No human samples were being tested at Gen Sys during the period from August 7, 2000 through June 3, 2002, while Petitioner was laboratory director.

9. Petitioner reviewed and approved a procedure for the Gen Sys laboratory while he was registered as laboratory directory. Tr. at 68; CMS Ex. 5.

B. CONCLUSIONS OF LAW

1. Petitioner's execution of the HCFA Form 209 listing himself as director on August 7, 2000 (Tr. at 31; CMS Ex. 8, at 1), his approval of the procedure (Tr. at 68; CMS Ex. 5) in April 2001, and his letter to CMS indicating he was no longer laboratory director (Tr. at 155) in June 2002, are all acts that indicate he was laboratory director.

2. There is no regulatory or statutory right to a hearing to challenge application of the two-year ban of 42 U.S.C. § 263a(i)(3).

3. Owners and operators have a right to request a hearing to challenge the suspension, limitation and proposed revocation of their laboratory's CLIA certificate.

4. Petitioner had no right to request a hearing to challenge the CMS notice that he was subject to the two-year ban of 42 U.S.C. § 263a(i)(3), but if he was an operator of Gen Sys as CMS asserts, he had a right to have a hearing prior to revocation of the laboratory's CLIA certificate.

5. Congress intended to apply the two-year ban to owners and operators whose conduct "precipitated the revocation" of the CLIA certificate or if they bore "ultimate responsibility for the conduct" that led to the revocation.

6. Petitioner did not precipitate and was not ultimately responsible for the conduct that caused the revocation of the Gen Sys CLIA certificate and he was not an operator against whom Congress intended to apply the two-year ban of 42 U.S.C. § 263a(i)(3).

7. Petitioner was not an operator and had no statutory right to participate in the Gen Sys proceedings, and he has no standing to request reopening of the decision in that case.

III. DISCUSSION

A. ISSUES

1. Whether Petitioner has the right to request a hearing to challenge the application to him of the two-year ban of 42 U.S.C. § 263a(i)(3)?

2. Whether Petitioner was an owner or operator of Gen Sys, Incorporated within the meaning of 42 U.S.C. § 263a(i)(3)?

3. Whether Petitioner can request reopening of the underlying decision in Gen Sys?

B. APPLICABLE LAW

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories. Pub. L. No. 100-578, amending § 353 of the Public Health Service Act, codified at 42 U.S.C. § 263a et seq. The purpose of CLIA is to ensure the accuracy and reliability of laboratory tests, and hence the public health of all Americans. See H.R. Rep. No. 899, 100th Cong. 2d Sess. 8, 18 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3839. CLIA grants the Secretary of Health and Human Services (Secretary) broad enforcement authority, including the ability to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more requirements for certification. The Secretary has exercised his authority under 42 U.S.C. 263a(f) and issued regulations implementing CLIA. See 42 C.F.R. Part 493.

The Secretary's regulations give CMS broad authority to ensure that laboratories perform as Congress intended, including authority to inspect and sanction laboratories that fail to comply with the regulatory requirements. CMS certification of a laboratory under CLIA is dependent upon whether the laboratory meets the conditions for certification set out in the statute and regulations. 42 U.S.C. § 263a(f)(1)(E); 42 C.F.R. § 493.1 et seq. Pursuant to the enforcement provisions of the regulations, CMS may impose principal or alternative sanctions when it finds that a laboratory has a "condition-level" deficiency. 42 C.F.R. § 493.1804(b)(2). Principal sanctions include suspension, limitation, or revocation of a CLIA certificate. 42 C.F.R. § 493.1806(b). Alternative sanctions include a directed plan of correction, state on-site monitoring, and civil money penalty. 42 C.F.R. § 493.1806(c). Cancellation and suspension of Medicare payments are also authorized. 42 C.F.R. § 493.1807(a). Where none of the deficiencies are a violation of a condition-level requirement, the laboratory must submit a plan of correction and show on revisit that it has corrected the deficiencies. 42 C.F.R. § 493.1816.

CLIA provides at 42 U.S.C. § 263a(i)(1) that a laboratory's certificate may be suspended, revoked, or limited only after reasonable notice and opportunity for hearing to "the owner or operator of the laboratory . . . " The implementing regulations provide that a laboratory or prospective laboratory dissatisfied with an initial determination listed in 42 C.F.R. § 493.1844(b) is entitled to a hearing before an administrative law judge (ALJ). 42 C.F.R. § 493.1844(a). The hearing procedures found in subpart D of Part 498 are incorporated by reference. 42 C.F.R. § 493.1844(a)(2). The "suspension, limitation or revocation of the laboratory's CLIA certificate . . . because of noncompliance . . . ." is the first listed initial determination subject to hearing before an ALJ. 42 C.F.R. § 493.1844(b)(1). Section 498.74 of 42 C.F.R. provides that, absent appeals to the DAB or the U.S. District or Circuit Courts, my decision is final unless I reopen and revise that decision. The regulation specifies no time-limit for reopening and revising a decision.

In addition to sanctions directed against laboratories, the CLIA statute provides the following with respect to the owners and operators of non-compliant laboratories:

(3) Ineligibility to own or operate laboratories after revocation.

No person who has owned or operated a laboratory which has had its certificate revoked may, within 2 years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this section.

42 U.S.C. § 263a(i)(3). The implementing regulations do not include any express provision implementing or imposing this two-year prohibition against an offending owner or operator. (3) However, the regulations provide that CMS may revoke a laboratory's CLIA certificate if it finds that the owner or operator has -

[w]ithin the preceding two-year period, owned or operated a laboratory that had its CLIA certificate revoked. (This provision applies only to the owner or operator, not to all of the laboratory's employees.)

42 C.F.R. § 493.1840(a)(8).

CLIA does not include a definition of the term operator. However, the regulations define an "operator" as:

the individual or group of individuals who oversee all facets of the operation of a laboratory and who bear primary responsibility for the safety and reliability of the results of all specimen testing performed in that laboratory. The term includes-

(1) A director of the laboratory if he or she meets the stated criteria . . . .

42 C.F.R. § 493.2.

The "stated criteria" for a laboratory director to be considered an operator are those criteria described in the introductory sentence of the section, i.e., whether a person oversaw all facets of the operation of the laboratory and bore primary responsibility for the safety and reliability of the results of the all specimen testing performed in the laboratory. Sol Teitlebaum, M.D., DAB No. 1849, at n. 7 (2002). There are condition level requirements for a CLIA certified laboratory to have a qualified laboratory director who is required to assume oversight and responsibility for the laboratory and the results of its testing. See 42 C.F.R. §§ 493.1403, .1405, .1407, .1441, .1443, .1445.

C. ANALYSIS

Petitioner in this case was a laboratory director who CMS asserts is subject to the two-year ban on owning or operating another laboratory imposed against owners and operators by 42 U.S.C. § 263a(i)(3). The CMS theory is that the regulation defines "operator" to include the director of the laboratory if he or she meets the criteria for being considered an operator. CMS takes the position that any laboratory director of a CLIA certified laboratory, who was director on or after the date of a deficiency finding that leads to revocation of the laboratory's CLIA certificate, is subject to the two-year ban. Tr. at 124-25.

This case presents interesting procedural and jurisdictional questions. If, as CMS asserts, Petitioner was an "operator" (4) of Gen Sys within the meaning of 42 U.S.C. § 263a(i)(3) and thus subject to the two-year ban imposed by that statute, then was he entitled to reasonable notice and opportunity to be heard on the matter of the revocation of the Gen Sys CLIA certificate as provided by Congress at 42 U.S.C. § 263a(i)(1)? If Petitioner was, as an operator, entitled to reasonable notice and opportunity to be heard, then is it necessary to reopen the Gen Sys case so that he can challenge the suspension and revocation of the Gen Sys CLIA certificate and/or to present his argument that he was not a proper party to that proceeding? CMS argues that Petitioner knew of the Gen Sys proceedings but does not allege that it gave Dr. Bryant the notice required by the statute or 42 C.F.R. § 493.1844(g); thus should the failure to provide notice be construed against CMS or be considered a bar to CMS attempting to enforce the two-year ban against Petitioner? Does Petitioner have a right to have a hearing to challenge the alleged imposition of the two-year ban separate from any request to reopen the Gen Sys case? It is appropriate to establish a context prior to addressing these questions.

1. The Gen Sys decision.

My decision in Gen Sys, dated April 15, 2002, speaks for itself. It is important to note however, that decision was on a CMS motion for summary judgment and not after a full trial of the case. The summary judgment standard required that I construe all facts in favor of the nonmovant, Gen Sys, to determine whether there were any issues for hearing or whether the case had to be resolved as a matter of law against Gen Sys as CMS argued. Gen Sys, at 8-9. Based on my review of the pleadings and affidavits filed in the case, I concluded that summary judgment was appropriate as there were no material issues of fact to be resolved with regard to two condition-level deficiencies, either of which justified suspension and revocation of the Gen Sys CLIA certificate. I concluded that the condition-level deficiencies related to lack of a qualified technical supervisor and lack of a qualified laboratory director existed between April 16, 1999, the date of the survey of Gen Sys, and August 3, 1999, the date the Gen Sys CLIA certificate was suspended and presumably all CLIA related operations stopped. Id. at 10, 12. I did not consider and made no findings regarding the other deficiencies alleged by CMS. In determining the reasonableness of the suspension and revocation of the Gen Sys CLIA certificate, I construed the facts most favorably to Gen Sys for purposes of summary judgment and found that Gen Sys did have a qualified laboratory director from August 10, 1999 to September 20, 1999, and then beginning again on August 7, 2000 when Petitioner reported himself to CMS as laboratory director. I assumed in that decision that Dr. Bryant's relationship with Gen Sys continued through the date of my decision as I had no evidence that indicated that he had ended his relationship with Gen Sys. Id. at 14. I note that I made no specific finding in my decision in Gen Sys that Dr. Bryant was subject to the two-year ban of 42 U.S.C. § 263a(i)(3) as an operator of Gen Sys or a laboratory director with equivalent duties and responsibilities. Neither the petitioner in Gen Sys nor CMS appealed my decision.

I have advised the Parties in this case on more than one occasion that I did not intend to automatically reopen the Gen Sys decision by taking evidence on Dr. Bryant's "petition." (5) Rather, I intended to take all the evidence and hear the respective positions of both Parties before deciding whether to reopen Gen Sys or to determine whether Dr. Bryant had any other recourse.

2. Facts related to the petition to reopen or for hearing.

The Gen Sys CLIA certificate was suspended August 3, 1999 due to deficiencies found during a survey completed on April 16, 1999. Tr. at 32-33. It is not disputed that Petitioner signed a HCFA Form 209 on August 7, 2000, indicating that he became laboratory director for Gen Sys, Inc. Tr. at 33; CMS Ex. 8, at 1. It is not disputed that Petitioner was not laboratory director before August 7, 2000, although he had signed an earlier form in May 2000 indicating he was but that form was declared invalid by CMS. Tr. at 36-38. The record further indicates that Dr. Bryant remained listed with CMS as the Gen Sys laboratory director until June 3, 2002, after the date of my decision in Gen Sys. Tr. at 155.

The evidence does not lead me to believe that Gen Sys was testing any human samples during the period from August 7, 2000 through June 3, 2002, while Dr. Bryant was laboratory director. The fact that the CLIA certificate was suspended on August 3, 1999, creates a rebuttable presumption that no further CLIA regulated testing occurred after that date. CMS has not rebutted that presumption. In fact, the CMS witness, Ms. Scimeca, admitted that while she knew Gen Sys worked on a plan of correction while Petitioner was laboratory director, she had not visited the laboratory since April 1999 and had no idea whether it was doing any testing after that date. Tr. at 71-72, 78. Robert Daly, Manager, Non-Long Term Care Branch, Division of Survey and Certification of the CMS Chicago Region also indicated he had no knowledge of whether the Gen Sys laboratory operated after suspension of its CLIA certificate on August 3, 1999. Tr. at 140. The evidence does show that Dr. Bryant did take actions consistent with being laboratory director during the period August 7, 2000 through June 3, 2002, including but not limited to signing an official form that reported to CMS that he was the laboratory director (Tr. at 31; CMS Ex. 8, at 1), submitting a letter to CMS advising he had resigned as laboratory director (Tr. at 155), and reviewing and approving a procedure for the laboratory (Tr. at 68; CMS Ex. 5).

Based on the evidence of record, I agree with Petitioner's characterization that Gen Sys was not "operating," at least to the extent that it was not operating as a CLIA laboratory with human testing being conducted. However, I also agree with CMS that there was at least a low level of activity at Gen Sys that involved trying to recover its CLIA status. Petitioner suggests that he was only a "potential" laboratory director to the extent that the laboratory was not operating and he was listed as laboratory director to remedy one of the condition level deficiencies found at Gen Sys. However, Petitioner points to no statute or regulation that creates or recognizes such status. Petitioner's Post-hearing Brief at 10-13. Petitioner testified that he had no employment contract, received no compensation, did not evaluate personnel, did not certify test samples, did not sign test results, did no quality control reviews and did not perform many laboratory director duties required by regulations because the laboratory was not operating. He admitted to signing the one laboratory procedure admitted in evidence as CMS Ex. 5. However, he testified that he knew the CLIA certificate had been suspended and he was told that the laboratory was not testing any human samples while he was listed as laboratory director. Tr. at 150-56. Petitioners execution of the HCFA Form 209 listing himself as director on August 7, 2000 (Tr. at 31; CMS Ex. 8, at 1), his approval of the procedure (Tr. at 68; CMS Ex. 5) in April 2001, and his letter to CMS indicating he was no longer laboratory director (Tr. at 155) in June 2002, are all acts that would be performed by a laboratory director and distinguish this case from Edward Ming-Che Lai, M.D., DAB CR848 (2001), where it was found that the petitioner took no acts consistent with being a laboratory director after a certain time. While the laboratory was not operating and Petitioner could not have been performing all the duties required of a laboratory director, the laboratory nevertheless continued to be subject to CLIA and Petitioner was nevertheless the "laboratory director" with in the meaning of the regulations.

3. Issues.

(a) Whether Petitioner has the right to request a hearing to challenge the application to him of the two-year ban of 42 U.S.C. § 263a(i)(3)?

(i) There is no regulatory or statutory right to a hearing to challenge application of the two-year ban of 42 U.S.C. § 263a(i)(3).

Title 42 U.S.C. § 263a(i)(3) provides the following with respect to the owners and operators of noncompliant laboratories:

(3) Ineligibility to own or operate laboratories after revocation.

No person who has owned or operated a laboratory which has had its certificate revoked may, within 2 years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this section.

This statutory disability arises by operation of law immediately upon revocation of a laboratory's CLIA certification. The statute requires no action by the Secretary for the two-year ban to take effect, no discretion is granted the Secretary, and there is no appeal right specified. The Secretary has not promulgated regulations implementing this provision of the statute. Therefore, the regulations do not specifically provide a right to a hearing to an owner, operator, or director to challenge the application of the two-year statutory ban, which is also not listed in the regulations as an initial decision of CMS or the Secretary. 42 C.F.R. § 493.1844(b). The statute and regulations only grant a right to a hearing to challenge the CMS decision to sanction the laboratory and the basis for that decision. (6) Id.

(ii) Owners and operators have a right to request a hearing to challenge the suspension, limitation and proposed revocation of their laboratory's CLIA certificate.

The plain language of 42 U.S.C. § 263a(i)(1)(C) provides a hearing to an "owner or operator" to challenge the revocation of their laboratory's CLIA certificate. Section 263a(i)(1)(C) of 42 U.S.C. states:

[T]he certificate of a laboratory issued under this section may be suspended, revoked, or limited if the Secretary finds, after reasonable notice and opportunity for hearing to the owner or operator of the laboratory, that such owner of operator or any employee of the laboratory -

* * * *

(C) has failed to comply with . . . the standards prescribed by the Secretary under subsection (f) of this section . . . .

(Emphasis added.)

Section 493.1844 of 42 C.F.R. sets forth the appeals procedures for CLIA cases. Subsection (1) of section 493.1844(a) provides that the section applies to all laboratories and prospective laboratories "that are dissatisfied with any initial determination under paragraph (b) of this section." While the regulatory language suggests that the right to request a hearing is with the laboratory, the statute is plain that it is the owners and operators of the laboratory who are granted the right to request a hearing. In order to construe 42 C.F.R. § 493.1844(a) consistent with the statute, the term "laboratory" in the regulation must be construed to include the owners or operators of the laboratory in question.

Section 493.1884(b)(1) of 42 C.F.R. provides that a CMS determination to suspend, limit, or revoke a laboratory's CLIA certificate is an initial determination which is subject to review, under section 493.1884(a)(2), by DAB ALJs. Therefore, the plain language of the regulation gives me jurisdiction to hear appeals involving the suspension and/or revocation of a CLIA certificate brought by owners and operators who have the right to hearing under CLIA. When the facts of a given case raise issues as to who are the owners and operators entitled to exercise the right to hearing, such issues must be resolved in the hearing process both to determine the proper parties and the scope of my jurisdiction. If an ALJ concludes after inquiry that an individual is not an "owner or operator" within the meaning of CLIA, the individual is not entitled to request a hearing to challenge a CLIA certificate suspension or revocation. However, when it is found the individual is not an owner or operator for purposes of requesting a hearing, CMS and the Secretary cannot then conclude that the individual is an "owner or operator" for purposes of application of the two-year ban. My conclusions in this regard do not grant owners and operators a hearing to challenge the imposition of the two-year ban of 42 U.S.C. § 263a(i)(3); rather, I recognize the owners' and operators' right to request a hearing to contest the CMS findings of deficiencies and whether they are responsible for any alleged regulatory violations.

The CLIA statute refers to owners and operators as having a right to a hearing and as being subject to the two-year ban and not laboratory directors. However, by regulation, specifically 42 C.F.R. § 493.2, the Secretary has expanded the definition of operator to include laboratory directors who meet the criteria of, or have equivalent duties and responsibilities of an operator. Based on this regulatory definition of operator, CMS asserts that the two-year ban of 42 U.S.C. § 263a(i)(3) applies equally to laboratory directors who fit the definition. Because those laboratory directors who meet the definition are considered operators, the operator's statutory right to hearing must logically extend to those laboratory directors who are defined as operators to avoid an obvious inconsistency arising between the regulations and the statute. Accordingly, CMS cannot argue on one hand that a laboratory director is an operator and subject to the two-year ban, but on the other hand not entitled to request a hearing as an operator.

My conclusions are consistent with prior DAB and ALJ decisions. See e.g., Sol Teitlebaum, M.D., DAB CR863 (2002), aff'd DAB No. 1849 (2002); Carlos A. Cervera, M.D., DAB CR939 (2002); Edward Ming-Che Lai, M.D., DAB CR848 (2001); RNA Laboratories, Inc. and Ter-Zakarian Medical Clinic, DAB CR829 (2001); Sentinel Medical Laboratories, Inc., DAB CR679 (2000), aff'd DAB No. 1762 (2001); Eugene R. Pocock, M.D., DAB CR527 (1998).

In summary, an individual who is an operator or a laboratory director who has equivalent duties and responsibilities as an operator has a right to a hearing on whether a laboratory's CLIA certificate should be revoked. In the hearing process, an owner, operator or laboratory director may raise any issues regarding whether they are a proper party to the proceedings and whether they are subject to my jurisdiction. (7) An individual who is not an operator or equivalent does not have a right to a hearing and is not a proper party, but is also not subject to the two-year prohibition of 42 U.S.C. § 263a(i)(3).

(iii) Petitioner had no right to request a hearing to challenge the CMS notice that he was subject to the two-year ban of 42 U.S.C. § 263a(i)(3), but if he was an operator of Gen Sys as CMS asserts, he had a right to have a hearing prior to revocation of the laboratory's CLIA certificate.

I conclude that Petitioner, Dr. Bryant has no right to a hearing to challenge the CMS notice that he was subject to the two-year ban of 42 U.S.C. § 263a(i)(3). However, if CMS is correct that Dr. Bryant was a laboratory director of Gen Sys who also met the statutory and regulatory definitions of an operator, then Dr. Bryant had a right to notice and an opportunity to be heard on the issue of whether the Gen Sys certificate should have been revoked and whether he was a proper party to such proceeding. 42 U.S.C. § 263a(i)(1)(c); 42 C.F.R.§ 493.1884(a).

CMS argues that Petitioner knew about the proceedings against Gen Sys and Petitioner does not deny he had knowledge. CMS Brief at 5. However, there is no dispute that CMS did not give Petitioner the notice of sanctions and advice of appeal rights required by 42 C.F.R. § 493.1844(g). As a result, Petitioner was not on notice that he was considered by CMS to be responsible for the deficiencies at Gen Sys and he was not afforded an opportunity to appear in the Gen Sys proceeding to defend the laboratory or himself. One remedy for this clear violation of due process would be to reopen Gen Sys so that Petitioner could have an opportunity to dispute that he was a proper party or to defend the laboratory. Another remedy would be to conclude that CMS is simply barred from finding Petitioner was responsible for the laboratory. Barring CMS from finding Petitioner was responsible for the laboratory would be consistent with achieving administrative finality, but might run afoul of the important purpose of CLIA. However, if it is concluded that Petitioner was not an operator of Gen Sys within the meaning of the regulation or the statute, then he would have no right to participate in Gen Sys, but he also would not be subject to the two-year ban as a matter of law.

(b) Whether Petitioner was an owner or operator of Gen Sys within the meaning of 42 U.S.C. § 263a(i)(3)?

(i) Congress intended to apply the two-year ban to owners and operators whose conduct "precipitated the revocation" of the CLIA certificate or if they bore "ultimate responsibility for the conduct" that led to the revocation.

CLIA, as codified at 42 U.S.C. § 263a, includes no specific definition of the term operator. Section 263a(i)(3) of 42 U.S.C. states that "(n)o person who has owned or operated a laboratory which has had its certificate revoked" may own or operate another laboratory for two years. The plain language of the statute seems to apply to all present and past owners and operators of a laboratory extending its two-year ban to all without consideration of whether they caused the revocation of the laboratory's CLIA certificate. However, as Petitioner has pointed out, such a literal interpretation does not seem reasonable. Because the plain language of the statute may not reflect the intent of Congress, review of the legislative history of the statute is appropriate in determining how it should be applied. U.S. v. Five Gambling Devices, 346 U.S. 441 (1953); U.S. v. Thirty-Seven (37) Photographs, 402 U.S. 363 (1971) (court will look to legislative history to construe a statute and avoid constitutional questions). The CLIA legislative history includes the following note of the Congressional committee related to the two-year ban of 42 U.S.C. § 263a(i)(3) :

The Committee intends that an owner or operator whose conduct has precipitated the revocation not be allowed simply to begin operating a new or existing laboratory during the period of revocation, when such person bore ultimate responsibility for the conduct giving rise to the revocation.

Pub. L. No. 100-578, 102 Stat 2903 (1988); H.R. Rep. No. 899, at 35. The committee clearly intended to prevent owners and operators who failed to properly administer a CLIA laboratory leading to revocation of that laboratory's CLIA certificate from simply opening another laboratory. The language of the note further indicates that the committee intended to apply the two-year ban to owners and operators when their conduct "precipitated the revocation" of the CLIA certificate or they bore "ultimate responsibility for the conduct" that led to the revocation.

Thus, to determine whether Petitioner, Dr. Bryant, was an "operator" within the meaning of 42 U.S.C. § 263a(i)(3) for purposes of application of the two-year ban and to determine whether he was a proper party to the Gen Sys proceedings, it is necessary to determine whether his conduct "precipitated the revocation" of the Gen Sys CLIA certificate or whether he bore "ultimate responsibility for the conduct" that led to the revocation.

(ii) Petitioner did not precipitate and was not ultimately responsible for the conduct that caused the revocation of the Gen Sys CLIA certificate and he was not an operator against whom Congress intended to apply the two-year ban of 42 U.S.C. § 263a(i)(3).

I agree with CMS that, given the definition of laboratory director and the comprehensive description of laboratory directors' responsibilities, the regulations establish a presumption that a laboratory director is also an operator. 42 C.F.R. §§ 493.2; 493.1403; 493.1405; 493.1407, .1441, .1443, .1445. Therefore, CMS can establish a prima facie case that an individual was an operator by proving that he/she was registered as the laboratory director. However, the presumption is rebuttable.

In this case, I have concluded that Petitioner was the registered laboratory director for Gen Sys from August 7, 2000 through June 3, 2002. Thus, there is the rebuttable presumption that he was an operator. However, in granting summary judgement for CMS in Gen Sys, I concluded revocation was appropriate based on the lack of a qualified technical supervisor and lack of a qualified laboratory director between April 16, 1999, the date of the survey of Gen Sys, and August 3, 1999, the date the Gen Sys CLIA certificate was suspended and presumably all CLIA related operations stopped. Gen Sys at 10, 12. I made no findings in Gen Sys as to whether other deficiencies or the failure to correct deficiencies after August 3, 1999 provided a basis for revocation as such findings were unnecessary given the CMS motion for summary judgment. Because Petitioner became laboratory director after the suspension of the Gen Sys CLIA certificate, he cannot be said to have precipitated or been ultimately responsible for the conduct that gave rise to those condition-level deficiencies that caused the revocation. CMS argues that Petitioner should nevertheless be held responsible because he failed to correct the deficiencies that caused the revocation. CMS overlooks that it failed to ensure Petitioner was made a party to the Gen Sys proceeding, that it requested summary judgment rather than pursuing a full trial where all issues could have been addressed, and that it filed no appeal of my decision on summary judgment. My decision in Gen Sys was not based on the failure to correct condition-level deficiencies or their continued existence at the time of the hearing, rather it was based on the existence of those deficiencies as specified in the decision. The Gen Sys decision was never appealed by either party and is now final.

I conclude that Petitioner did not precipitate and was not ultimately responsible for the conduct that caused the revocation of the Gen Sys CLIA certificate. Thus, I conclude that Petitioner was not an operator against whom Congress intended to apply the two-year ban of 42 U.S.C. § 263a(i)(3).

(c) Whether Petitioner can request reopening of the underlying decision in Gen Sys?

As already discussed in detail, Petitioner was not an operator of Gen Sys within the meaning of CLIA for purposes of challenging revocation of the Gen Sys CLIA certificate or for application of the two-year ban. Accordingly, he had no statutory right to participate in the Gen Sys proceedings and he has no standing to request reopening of the Gen Sys decision. The petition to reopen Gen Sys is denied.

IV. CONCLUSION

For the foregoing reasons, the petition to reopen and revise Gen Sys and/or for a hearing is denied.

JUDGE
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Keith W. Sickendick

Administrative Law Judge

FOOTNOTES
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1. See Gen Sys Incorporated, DAB CR889 (2002).

2. Clinical Laboratory Improvement Amendments of 1988, codified at 42 U.S.C. § 263a (CLIA).

3. This prohibition is a statutory disability rather than a sanction as that term is used in CLIA and its implementing regulations. Black's Law Dictionary (6th ed.1990) defines disability as the "want of legal capability to perform an act" while a sanction is "a penalty or punishment provided as a means of enforcing obedience to a law." Disability seems the more apt characterization of the "ineligibility" to own or operate imposed by the statute. Furthermore, the regulations are very specific in listing the sanctions that CMS may impose and the two-year ban or ineligibility provided by the statute is not included. See 42 C.F.R. §§ 493.1, 493.1806 - 1807.

4. It has never been alleged that Dr. Bryant was an owner of the laboratory.

5. I refer to Petitioner's filing invoking my jurisdiction as a "petition" as that is the term he used - a term which accurately describes the nature of his request.

6. The Secretary has provided by regulation that a laboratory's CLIA certificate may be suspended, limited or revoked if it is determined that an owner or operator has owned or operated a laboratory which had its CLIA certificate revoked within the preceding two years. 42 C.F.R. § 493.1840(a)(8). Thus, it is necessary for CMS to correctly determine who is subject to the two-year ban in order to enforce this regulatory provision.

7. Ideally such issues will be identified early in the hearing process by motion or otherwise to minimize wasted time and other resources.

CASE | DECISION | JUDGE | FOOTNOTES