For the reasons explained below, I conclude that the Health Care Financing Administration (HCFA) was authorized under the Clinical Laboratory Improvement Amendments of 1988 (CLIA)⁽¹⁾ to revoke the certificate of waiver for Petitioner's office laboratory. I reach this conclusion because I find that HCFA has established that Petitioner is prohibited from owning or operating a laboratory for two years because he was the director -- and, thus, an "operator" -- of Buffalo Island Lab (Buffalo), located in Manila, Arkansas, whose CLIA certificate was revoked on April 11, 1998.

Factual Background

HCFA asserted the following facts, which Petitioner did not deny. During the period January 8-14, 1998, the Arkansas Department of Health (State Agency) conducted an initial certification survey of Buffalo, which was physically located inside Petitioner's clinic.⁽²⁾ HCFA Ex. 1, ¶¶ 3, 4.⁽³⁾ The HCFA Form 209, Laboratory Personnel Report, completed for Buffalo on the first day of the survey, lists only two employees: Petitioner and Joe Pierce. HCFA Ex. 1, Attachment A, at 1. The form lists Petitioner as Director and Clinical Consultant of Buffalo. Id. Petitioner's signature appears at the bottom of that form. Id.

At the conclusion of the survey, the State Agency concluded that Buffalo was out of compliance with CLIA conditions of participation. The State Agency transmitted to HCFA a copy of the HCFA Form 2567, Statement of Deficiencies, containing its findings regarding Buffalo. After reviewing the Statement of Deficiencies, HCFA determined that sanctions should be imposed against Buffalo. Accordingly, in letters dated February 9, 1998 and February 17, 1998, HCFA notified Buffalo that the sanctions of suspension of the lab's CLIA certificate, cancellation of its approval to receive Medicare payments, and, ultimately, revocation of the lab's CLIA certificate would be imposed. HCFA Ex. 3, Attachment A.

Both the February 9 and February 17 letters contain the following explanation of the consequences if Buffalo's CLIA certificate were revoked:

Under revocation, the laboratory will be required to cease all operations. In addition, 42 CFR 493.1840(a)(8), will prohibit the present owner and operator from owning or operating a laboratory for two years from the date of revocation. Since Dr. Shaneyfelt is the operator (director) of Buffalo Island, this regulation would cause Dr. Shaneyfelt's other laboratory certificate, (CLIA # 04D0468059) to be revoked.

Id. at 2, 7. The letters were addressed to both Petitioner and Joe Pierce. The return receipt for the February 9 letter appears to have been signed by Joe Pierce on February 11, 1998. Id. at 5. The return receipt for the February 17 letter appears to have been signed by an individual named Judy Burks on February 17, 1998. Id. at 10.

By letter dated February 6, 1998, Joe Pierce stated that Buffalo was ceasing operations as of that date. HCFA Ex. 3, Attachment B. HCFA received that letter on February 18, 1998. HCFA Ex. 3, ¶ 9. Neither Joe Pierce nor Petitioner filed a request for a hearing to contest the revocation of Buffalo's CLIA certificate. Id. at ¶ 10.

By letter dated May 21, 1998, HCFA notified Petitioner that the CLIA certificate of waiver for his in-office lab would be revoked and its approval to receive Medicare payments would be cancelled. Petitioner timely requested a hearing, and the case was assigned to me for a hearing and decision. The parties agreed that the case could be decided on the basis of written submissions without the need for an in-person hearing.

Applicable Law and Regulations

The applicable regulations define the term "operator" as follows:

Operator means 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.

Additionally, 42 C.F.R. § 493.1840(a)(8)(e), provides:

HCFA may initiate adverse action to suspend, limit or revoke any CLIA certificate if HCFA finds that a laboratory's owner or operator . . .

Within the preceding two-year period, owned or operated a laboratory that had its CLIA certificate revoked . . . .

The regulations also provide that "HCFA does not revoke any type of CLIA certificate until after an ALJ hearing that upholds revocation." 42 C.F.R. § 493.1840(e)(1).

The regulations provide that if a laboratory requests a hearing before an administrative law judge, the revocation will not be implemented unless and until the judge issues a decision upholding HCFA's determination. On the other hand, if the lab does not request a hearing, HCFA's determination becomes final.

Petitioner's Arguments

Petitioner does not dispute that Buffalo's CLIA certificate was revoked. Nor does he dispute that he was the director of Buffalo. He does state that he did not operate the lab, but that he "allowed the lab's owner to use [his] name for director." In essence, it appears Petitioner is arguing that he should not be subject to the two-year ban on owning or operating a lab because he was not an "operator" of Buffalo, as that term is defined in the regulations. Petitioner also asserts that neither he nor Joe Pierce received any warnings of the impending sanctions.

1. Effective April 11, 1998, HCFA revoked the CLIA certificate of Buffalo Island Lab.

2. Petitioner was the director of Buffalo Island Lab.

3. Petitioner failed to contest HCFA's determination that, as director of Buffalo Island Lab, he was an "operator," subject to the two-year ban on owning or operating a CLIA laboratory required by 42 U.S.C. § 263a(i)(3) and 42 C.F.R. § 493.1840(a)(8).

4. HCFA's determination that Petitioner was an "operator" of Buffalo Island Lab is final and no longer subject to review.

5. Even if HCFA's determination that Petitioner was an "operator" of Buffalo Island Lab remained open to challenge in this proceeding, I would conclude that HCFA proved by the preponderance of the evidence that Petitioner was an "operator".

6. Pursuant to 42 U.S.C. § 263a(i)(3) and 42 C.F.R. § 493.1840(a)(8), Petitioner is prohibited from owning or operating a clinical laboratory for a period of two years from the revocation of Buffalo Island Lab's CLIA certificate.

7. HCFA was authorized to revoke the CLIA certificate of waiver for Petitioner's office laboratory.

DISCUSSION

There is really no dispute that Petitioner was the director of Buffalo Island Lab, a lab whose CLIA certificate was revoked. Thus, it would appear that the two-year prohibition against owning or operating a lab found at 42 C.F.R. § 493.1840(a)(8) applies to him. In the present proceeding, Petitioner argues that he was director of Buffalo in name only, i.e., he did not have any operational authority at Buffalo. However, the nature of Petitioner's relationship to Buffalo is no longer open to challenge in this proceeding.

If Petitioner wished to assert that he was not the director of Buffalo or that, even if he was the director, he did not meet the regulatory definition of an "operator", he should have requested a hearing to contest HCFA's imposition of sanctions against Buffalo. HCFA made plain in its February 1998 notice letters that it viewed Petitioner as an "operator" of Buffalo and that, if Buffalo's CLIA certificate were revoked, HCFA would seek revocation of the CLIA certificate for Petitioner's in-office lab. I have held in Eugene R. Pocock, M.D., DAB CR527 (1998), that a laboratory director is an affected party who has a right to request a hearing, pursuant to 42 C.F.R. § 498.40, to contest HCFA's determination to revoke the CLIA certificate of the laboratory which he or she directs. Because Petitioner did not challenge HCFA's revocation of Buffalo's CLIA certificate, that determination became final. Petitioner has waived his right to challenge HCFA's conclusion that he was an "operator" of Buffalo by failing to appeal from HCFA's determination revoking Buffalo's CLIA certificate.

I do not find credible Petitioner's assertion that neither he nor Joe Pierce received notice of HCFA's determination revoking Buffalo's CLIA certificate or of their right to appeal that determination. HCFA has produced copies of the return receipt cards for the February 9 and February 17, 1998 notice letters. One of the receipt cards appears to have been signed by Joe Pierce. The other appears to have been signed by Judy Burks. The record does not reveal the relationship of Judy Burks to Buffalo. However, Petitioner has offered no proof that Ms. Burks is unknown to him or was otherwise unauthorized to receive mail on behalf of Buffalo. I conclude that the documents offered by HCFA prove that it is more likely than not that the notice letters were received. Petitioner has offered no evidence that would rebut HCFA's showing. The notice letters explicitly stated that revocation of Buffalo's CLIA certificate would lead to revocation of the CLIA certificate of waiver for Petitioner's in-office lab. The notice letters also provided clear instructions on how to file a request for a hearing before an ALJ. For these reasons, I conclude that Petitioner had ample notice of the consequences of his failure to request a hearing to contest HCFA's determination as to Buffalo. I therefore find no unfairness in holding that Petititioner waived his right to contest HCFA's determination that he was an "operator" of Buffalo Island Lab.

However, even if Petitioner's right to contest HCFA's finding that he was an "operator" of Buffalo were not foreclosed in this proceeding, I would conclude that HCFA has proved that Petitioner was an "operator" of Buffalo. HCFA has introduced documents from Buffalo which appear to have been signed by Petitioner. Petitioner has not denied that the signature on these documents is his.

In particular, the HCFA Form 209, Laboratory Personnel Report, completed for Buffalo lists Petitioner as Director and Clinical Consultant of Buffalo. HCFA Ex. 1, Attachment A, at 1. It appears that the signature on the Personnel Report is Petitioner's. Further, Ms. Treadwell, one of the State Agency surveyors who conducted the survey at Buffalo, states in her affidavit that Petitioner introduced himself as Buffalo's director, and that he signed the Personnel Report. HCFA Ex. 1, ¶ 4. Petitioner has introduced no evidence that would rebut Ms. Treadwell's affidavit.

In addition, other documents contained in Attachment A to Ms. Treadwell's affidavit appear to be operating records of Buffalo which also contain Petitioner's signature. Significantly, Petitioner appears to have signed a certification in connection with Buffalo's proficiency testing in which he attests that the proficiency testing samples were tested in the same manner as patient samples. HCFA Ex. 1, Attachment A, at 6. Petitioner also appears to have signed and initialed "Monthly Consultation Checklists" dated March 16, 1997 and May 20, 1997. Id. at 3, 4. The checklists indicate that Petitioner performed such tasks as "Review of Quality Control," "Review of Maintenance Records," and "Review of Proficiency Test Results." Petitioner neither objected to the authenticity of these documents nor offered any proof to contradict them.

HCFA has offered an affidavit supported by documentary evidence as proof that Petitioner was an "operator" of Buffalo Island Lab. Petitioner has offered nothing more than a broadly worded denial, which is not even in the form of an affidavit. The parties agreed that I should decide this case on the basis of the written record, without an in-person hearing. The standard of proof is a preponderance of the evidence. I conclude that HCFA's evidence is more credible than that of Petitioner. The documentary evidence produced by HCFA supports HCFA's contention that Petitioner, as laboratory director of Buffalo, exercised sufficient operational authority to qualify as an "operator." In light of the evidence adduced by HCFA, Petitioner's denial of responsibility appears self-serving and lacks credibility.

I conclude that HCFA was authorized to revoke the CLIA certificate of waiver for Petitioner's in-office lab because Petitioner was an "operator" of Buffalo Island Lab, whose CLIA certificate was revoked. I reach this conclusion primarily because Petitioner failed to contest the revocation of Buffalo's CLIA certificate and thus the issue of Petitioner's status as an "operator" is foreclosed in this proceeding. However, even if I were to make a de novo determination as to whether Petitioner was an "operator" of Buffalo, I would conclude that HCFA had proved, by a preponderance of the evidence, that Petitioner was such an "operator."

1. The CLIA provisions are codified at 42 U.S.C. § 263a.

2. In addition to Buffalo, Petitioner maintained a small in-office lab for performing routine tests.

3. HCFA offered three exhibits (HCFA Exs. 1 - 3). Petitioner did not object to the admission of these exhibits. I have received in evidence HCFA Exs. 1 - 3. HCFA Exs. 1 and 3 include attachments. Attachment A to HCFA Ex. 1 is not separately paginated. I have paginated HCFA Ex. 1, Attachment A, which includes pages 1 - 7. Similarly, Attachment A to HCFA Ex. 3 is not separately paginated. I have paginated HCFA Ex. 3, Attachment A, which includes pages 1 - 10. Petitioner did not offer any exhibits.