SUBJECT:

Stanley Boykansky, M.D.,

Petitioner,

Health Care Financing Administration

I. Background

A. Background facts

Petitioner is a clinical laboratory that is located in Farmington Hills, Michigan. Petitioner is owned and operated by Stanley Boykansky, M.D. Dr. Boykansky serves as Petitioner's laboratory director. On February 25, 1999, surveyors employed by the Michigan Department of Consumer and Industry Services (Michigan State survey agency) conducted a complaint investigation of Petitioner to determine whether Petitioner was complying with CLIA requirements. The surveyors made findings which were referred to HCFA. On May 13, 1999, HCFA notified Petitioner that it had been found to be deficient in complying with CLIA requirements. HCFA advised Petitioner
that it had determined to impose remedies against Petitioner which included cancellation of Petitioner's approval to receive Medicare payment for its services and revocation of Petitioner's CLIA certificate.

HCFA followed its May 13, 1999 notice with a second notice that is dated June 23, 1999. In this second notice, HCFA advised Petitioner that it had based its determination to impose remedies on its finding that Petitioner had referred proficiency test samples to another laboratory for testing or had improperly collaborated with another laboratory in the testing of proficiency test samples.

Petitioner requested a hearing on July 15, 1999, and the case was assigned to me for a hearing and a decision. Attached to Petitioner's hearing request were several evidentiary documents. I am marking Petitioner's hearing request and accompanying documents as P. Ex. 1. After Petitioner had requested a hearing, HCFA sent a third notice to Petitioner, dated August 27, 1999. In this notice HCFA reiterated and amplified its findings that Petitioner either had referred proficiency test samples to another laboratory for testing or had collaborated with another laboratory in the testing of proficiency test samples. In the August 27, 1999 notice HCFA identified two specific CLIA conditions with which it asserted Petitioner had not complied. These conditions are stated at 42 §§ 493.801 (proficiency testing) and 493.1441 (laboratory director).

HCFA moved for summary disposition. HCFA's motion was accompanied by 15 exhibits marked as HCFA Ex. 1 - HCFA Ex. 15. Petitioner simultaneously filed a brief and a request for an in-person hearing. Attached to Petitioner's brief were five documents labeled Exhibit A - Exhibit E. I identify these documents as P. Ex. 2 - P. Ex. 6. Petitioner also submitted five exhibits numbered 1 through 5. I identify these documents as P. Ex. 7 - P. Ex. 11. The parties also simultaneously submitted response briefs. Attached to Petitioner's response brief was a document labeled as Exhibit A. I identify this as P. Ex. 12. Petitioner asserted that it possessed relevant evidence which it needed to present at an in-person hearing. I decided that there existed disputed issues of material fact and I scheduled an in-person hearing in order that Petitioner could present evidence.

On April 12, 2000, I held an in-person hearing in Detroit, Michigan. At this hearing, I heard the testimony of Ms. Deborah Joy Sabo, whom Petitioner called to testify. I also admitted into evidence the 15 exhibits that HCFA had submitted in connection with its motion for summary disposition (HCFA Ex. 1 - HCFA Ex. 15). I reserved judgment on whether I would receive into evidence exhibits that Petitioner had submitted in connection with its prehearing submissions.

I gave the parties leave to file post-hearing briefs. Each party filed a brief. Petitioner filed seven additional proposed exhibits with its brief labeled as P. Ex. 1 - P. Ex. 7. I identify these as P. Ex. 13 - P. Ex. 19. I note that several of these exhibits duplicate other exhibits that are in evidence or are excerpts from the transcript of the April 12, 2000 hearing.

HCFA also filed a supplemental submission in which it submitted two additional documents. I identify these as HCFA Ex. 16 - HCFA Ex. 17. Petitioner objected to including these documents into the record. By letter dated June 5, 2000, I informed the parties that I overruled Petitioner's objection. I receive into evidence HCFA Ex. 16 - 17. In addition, I receive into evidence P. Ex. 1 - P. Ex. 19. In receiving these exhibits into evidence, I overrule any objection HCFA has made to making them part of the record. Additionally, I am receiving into evidence P. Ex. 1 - P. Ex.19 even though, as I note above, some of these exhibits duplicate aspects of the record that already are in evidence.

B. Governing law

CLIA requires, among other things, that the Secretary of the United States Department of Health and Human Services (Secretary) establish certification requirements for any laboratory that performs tests on human specimens and certify, through the issuance of a certificate, that a laboratory meets certification requirements. 42 U.S.C. § 263a. The Secretary published regulations designed to implement the requirements of CLIA. These regulations are contained in 42 C.F.R. Part 493. The CLIA regulations set forth the conditions that all laboratories must meet in order to perform clinical testing. The regulations also set forth enforcement procedures and hearings and appeals procedures for those laboratories that are found to be noncompliant with CLIA requirements.

The regulations establish both conditions and standards for participation under CLIA. Conditions of participation are set forth as broadly stated general requirements which must be met in order for a laboratory to qualify under CLIA. Standards of participation are set forth as specific quality requirements which must be met by a laboratory in order to meet the more general requirements of conditions of participation. Standards are subparts of the more broadly stated conditions. A failure by a laboratory to comply with one or more standards may be so serious as to constitute failure to comply with the condition of which the standards are subparts.

The CLIA regulations authorize HCFA or its designee (such as the Michigan State survey agency) 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 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 as remedies principal sanctions against the laboratory which may include suspension and/or revocation of the laboratory's CLIA certificate. 42 C.F.R. § 493.1806(a), (b). HCFA may also impose alternative sanctions against a noncompliant laboratory in lieu of or in addition to principal sanctions. 42 C.F.R. § 493.1806(c). 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).

The regulations provide a noncompliant laboratory with the opportunity to correct its deficiencies so that HCFA may remove alternative sanctions that have been imposed against that laboratory. 42 C.F.R. §493.1810(e). However, the regulations do not afford a laboratory the same opportunity to have principal, as opposed to alternative, sanctions lifted.

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. The standard of proof that is employed at a hearing concerning HCFA's determination that a laboratory is not in compliance with CLIA conditions is preponderance of the evidence. HCFA has the burden of coming forward with sufficient evidence to prove a prima facie case that the laboratory is not complying with one or more CLIA conditions. The laboratory has the ultimate burden of rebutting, by a preponderance of the evidence, any prima facie case of noncompliance that is established by HCFA. Edison Medical Laboratories, Inc., DAB No. 1713 (1999); Hillman Rehabilitation Center, DAB No. 1611 (1997).

II. Issue, findings of fact and conclusions of law

A. Issue

The issue in this case is whether Petitioner failed to comply with one or more CLIA conditions of participation, thereby giving HCFA the authority to impose remedies against Petitioner, including canceling Petitioner's approval to receive Medicare payments and revoking Petitioner's CLIA certificate.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading. I discuss each Finding in detail.

1. HCFA gave Petitioner adequate notice of the basis for its determination to impose remedies.

Petitioner asserts that HCFA failed to give it adequate notice of the basis for its determination to impose remedies. Petitioner asserts that HCFA notified Petitioner only of standard level deficiencies and not of any condition level deficiencies. Petitioner argues that, consequently, HCFA is without authority to impose principal sanctions against Petitioner.

I am not persuaded that HCFA failed to give Petitioner adequate notice of its determinations. By or shortly after August 27, 1999, Petitioner was on notice that HCFA had determined that Petitioner had failed to comply with two specific CLIA conditions of participation. And, Petitioner also knew that the principal basis for these determinations was HCFA's conclusion that Petitioner had either referred proficiency test samples to another laboratory for testing or had collaborated with another laboratory in the performance of proficiency testing.

It is true, as Petitioner contends, that the report of the February 25, 1999 survey identifies only standard level deficiencies in Petitioner's operations. HCFA Ex. 4 at 6 - 15. The notice letters which HCFA sent to Petitioner after February 25, 1999, contain somewhat shifting rationales for HCFA's determination to impose principal sanctions against Petitioner. HCFA Ex. 4; HCFA Ex. 5; HCFA Ex. 6. However, it is evident from the notices that, by August 27, 1999, HCFA had settled on a determination that Petitioner had failed to comply with two CLIA conditions of participation. HCFA plainly and clearly communicated this determination to Petitioner.

The three notice letters that HCFA sent to Petitioner all state that HCFA concluded that Petitioner had failed to comply with CLIA requirements, either by referring proficiency test samples to another laboratory for testing or by collaborating with another laboratory in the performance of proficiency testing. The notice letter of May 13, 1999 does not explicitly state that Petitioner's alleged referrals or collaboration were the basis for a determination of condition level deficiencies. HCFA Ex. 4. However, the notice letter of August 27, 1999 explicitly advises Petitioner that HCFA had determined that Petitioner failed to comply with CLIA conditions of participation that are stated at 42 C.F.R. §§ 493.801 (proficiency testing) and 493.1441 (laboratory director). HCFA Ex. 6. This letter makes it plain that HCFA premised these findings of condition level deficiencies on Petitioner's asserted referral of test samples to another laboratory or collaboration in the performance of proficiency testing.

I have considered whether HCFA's August 27, 1999 notice is an improper amendment of HCFA's May 13, 1999 notice. I conclude that it was not made improperly. In particular, I conclude that Petitioner suffered no prejudice from HCFA's amendment to its notice.

The regulations which govern a hearing in a case involving an alleged failure by a clinical laboratory to comply with CLIA requirements do not prohibit HCFA from amending or superseding a notice of an initial determination. The regulations which govern CLIA enforcement are silent as to the question of whether a notice may be amended or superseded. See 42 C.F.R. Part 493, Subpart R. A case involving an alleged failure to comply with CLIA requirements is heard and decided pursuant to the regulations contained in 42 C.F.R. Part 498, Subpart D. 42 C.F.R. § 493.1844(a)(2). These regulations also are silent as to the question of whether a notice may be amended or superseded.

Parties in cases involving HCFA have been permitted to amend notices and hearing requests. Traditional due process considerations govern the circumstances under which amendment is permitted. Particularly important is the issue of whether an amendment - either to a notice or a hearing request - may be made without prejudice to the opposing party.

Petitioner has not been prejudiced by HCFA's August 27, 1999 notice. HCFA issued its August 27, 1999 notice very early in the case. Petitioner submitted its hearing request on July 15, 1999. HCFA issued its August 27, 1999 notice only slightly more than one month after Petitioner submitted its hearing request and before any substantive development of the record had occurred in this case. Petitioner has not alleged or shown that it experienced any prejudice as a consequence of HCFA's amended notice. Indeed, Petitioner did not even raise a question as to whether HCFA's August 27, 1999 notice was proper until it submitted its final brief in the case on May 15, 2000.

2. HCFA is authorized to make independent determinations about the nature and severity of Petitioner's alleged noncompliance with CLIA requirements.

Petitioner seems to be arguing that HCFA lacks the authority to make findings which differ from those which its agents make in conducting CLIA compliance surveys by asserting that HCFA's determination that Petitioner manifested condition level deficiencies in its operations exceeded the findings that were made at the February 25, 1999 survey. From this, Petitioner appears to argue that HCFA's determinations in this case are invalid inasmuch as they differ from the findings of noncompliance that were made by the Michigan State survey agency surveyors.

The fact that HCFA chose to make findings which are different than those stated in the report of the February 25, 1999 compliance survey provides no basis to disqualify those findings. It is evident from the notices that HCFA sent to Petitioner that HCFA evaluated independently the evidence that the surveyors obtained and reached independently its own conclusions as to what that evidence meant. That is entirely appropriate and consistent with the regulations which govern enforcement under CLIA.

The regulations which establish enforcement procedures under CLIA vest in HCFA the authority to determine independently whether noncompliance with CLIA exists and the extent of that noncompliance. The regulations make it clear that HCFA is not bound by the findings that are made by a State survey agency's surveyors. HCFA is free to accept or reject those findings and to modify them as it determines to be appropriate.

That is made clear by 42 C.F.R. § 493.1804(b)(1), which states:

HCFA's decision to impose sanctions is based on one or more of the following:

(i) Deficiencies found by HCFA or its agents in the conduct of inspections to certify or validate compliance with Federal requirements . . .

(ii) Unsuccessful participation in proficiency testing...

(emphasis added). The plain meaning of this section is that HCFA has the final say on determining whether or not to impose sanctions against a laboratory. It is HCFA's decision and not that of the State survey agency which controls. Moreover, the language of the regulation is equally plain in stating that HCFA may determine independently whether a laboratory is not complying with CLIA requirements and the extent of that noncompliance. Under the regulation, HCFA finds the presence of deficiencies based on the results of inspections.

3. During 1998, Petitioner colluded with other clinical laboratories in the performance of proficiency testing.

Petitioner colluded with other laboratories during 1998 in the performance of proficiency testing. The evidence in this case provides overwhelming support for this conclusion. Petitioner did not rebut the evidence of collusion, either with its exhibits, or with the testimony of Ms. Sabo.

The condition of participation that is stated at 42 C.F.R. § 493.801 requires that a clinical laboratory must enroll in a proficiency testing program that meets defined criteria and which is approved by the United States Department of Health and Human Services. Petitioner enrolled in an approved proficiency testing program that is operated by the American Association of Bioanalysts (AAB) Proficiency Testing Service. See HCFA Ex. 1 at 1. Petitioner received a group of proficiency testing samples from the AAB at regular intervals each year. See Id. Other clinical laboratories who were enrolled in the AAB proficiency testing program received the same samples at the same time as did Petitioner. I take notice of the fact that the AAB refers to each mailing of samples to laboratories for proficiency testing as an "event."

The object of the proficiency testing exercise is for each participating laboratory to test its samples independently as if they are patient specimens and to report the results of its tests to the AAB Proficiency Testing Service. The AAB scores the results for the tests that are performed for each event and rates each laboratory's testing competency for that event based on the scores that the laboratory obtains.

There was no such thing as a single "correct" score on many of the proficiency tests that Petitioner and other laboratories were asked to perform in 1998. HCFA Ex. 14 at 4. The AAB accepts as "correct" for many tests scores that fall within a range of possible scores because of the wide range of variables that are involved in the testing process. Id. Indeed, it is highly unlikely that two laboratories performing proficiency tests would obtain identical test results on multiple samples, given the wide range of variables that are involved in the testing process. Id. at 3.

For example, the third testing event of 1998 included testing of triglyceride samples. HCFA Ex. 14 at 4, 13. For the first sample of that event, a laboratory would receive a passing score if it identified a triglyceride level which fell anywhere in a range of values of between 140 to 223. Id. For the fourth sample, acceptable values ranged between 96 to 160. Id.

During 1998, Petitioner and eight other laboratories located in the Detroit, Michigan area submitted proficiency test results that were virtually identical. HCFA Ex. 2. Indeed, on numerous tests, Petitioner and the other eight laboratories submitted scores that were precisely identical. Id. The inescapable inference that arises from Petitioner and eight other laboratories submitting virtually identical proficiency testing results for numerous samples in three testing events during a single year - especially given the variable factors that were at play - is that Petitioner and the other laboratories colluded with each other to produce those results. There is no reasonable likelihood that nine laboratories independently would produce nearly identical results on numerous proficiency tests for three events in a single year. HCFA Ex. 13 at 3; HCFA Ex. 14 at 4, 6; HCFA Ex. 15 at 4 - 5.

The likelihood of more than one laboratory arriving at the same value for a proficiency test result is low due to the variables that are involved in the testing process. For example, testing results for triglycerides and total cholesterol normally would vary from 10 to 20 percent from one laboratory to another. HCFA Ex. 13 at 3. Yet, in 1998, Petitioner and eight other laboratories reported the exact same values for triglyceride and total cholesterol proficiency tests. Id.

The evidence which supports my conclusion that Petitioner and eight other laboratories colluded with each other to produce nearly identical proficiency testing results in 1998 includes the opinions of three experts whose declarations were supplied as evidence by HCFA. HCFA Ex. 13; HCFA Ex. 14; HCFA Ex. 15. These experts include Dennis W. Jay, Ph.D., DABCC, Technical Director of the AAB Proficiency Testing Service. HCFA Ex. 13. They include also Elizabeth Clay, a certified medical technologist who is employed by HCFA. HCFA Ex. 14. And, they include Richard J. Benson, CLS, MT, who is employed as Chief, Laboratory Improvement Section, Bureau of Health Systems, of the Michigan State survey agency. HCFA Ex. 15. I find these experts to be well-qualified and their opinions to be persuasive.

Petitioner challenges these experts' opinions on the ground that none of these experts have demonstrated any background or training in statistics sufficient to enable them to opine as to the probability of different laboratories attaining identical proficiency testing results. I do not find Petitioner's argument to be persuasive. None of these experts performed statistical analyses to obtain their conclusions. Rather, their conclusions were based on their training in their respective fields, their experience in those fields, and on the evidence which pertained to the specific proficiency tests that are at issue in this case. Thus, for example, Dr. Jay concluded that the nine laboratories, including Petitioner, could not have independently reached identical results for cholesterol and triglyceride proficiency testing, because of the poor reproducibility of such tests. HCFA Ex. 13 at 2 - 3. Dr. Jay plainly based that conclusion on his training and expertise and not on a statistical analysis of test results.

I find reinforcement for my conclusion that there existed no reasonable probability that the nine laboratories would independently arrive at identical proficiency testing results on multiple occasions by the existence of differences in testing conditions among the laboratories which would have affected the test results produced by each laboratory. Although some of the laboratories had the same model spectrometer - a device that was used to perform proficiency testing - others had different models. Tr. at 77. All of the spectrometers were calibrated separately. Id. at 77 - 78. Each of the nine laboratories had its own supply of controls and reagents. Id. at 76 - 77. Room temperature varied from laboratory to laboratory. Id. at 78.

The evidence which I have discussed so far, in and of itself, is sufficient to support the conclusion that Petitioner and the other eight laboratories colluded in 1998 to produce nearly identical proficiency testing results. However, there exists additional evidence which supports this conclusion.

That additional evidence consists in part of evidence showing that the proficiency testing results that Petitioner submitted were not consistent with Petitioner's own records of its proficiency tests. Such evidence strongly supports a conclusion that Petitioner manipulated its proficiency testing results in order to submit results that conformed to those which were submitted by the other eight laboratories. The evidence shows that Petitioner rounded proficiency testing values in a manner that is inconsistent with accepted practice in order to produce results that conformed with the results obtained by the other eight laboratories. HCFA Ex. 15 at 5 - 8. Thus, for example, Petitioner rounded a value for a triglyceride proficiency test down from 129.8 to 129, thereby submitting a result that is consistent with that which was submitted for other laboratories, even though accepted practice would have been to round the test value up to 130. Id. at 8. On another occasion, Petitioner rounded a value for an HDL cholesterol proficiency test up from 51.4 to 52 when accepted practice would have been to round the test value down to 51. Id.

Moreover, on another occasion, Petitioner reported a proficiency test value which was not supported by Petitioner's testing data but which was identical to the value that other laboratories submitted for the same test. For the third AAB specimen for triglycerides that Petitioner tested on October 21, 1998, the value that Petitioner should have reported based on its testing data was 196. HCFA Ex. 15 at 9. However, Petitioner reported a value of 96 for the test, which was the identical value that the eight other laboratories reported for the same test. Id.

Finally, the evidence establishes that the opportunity for collusion existed. All nine of the laboratories submitting identical proficiency testing results employed as testing personnel one of two individuals, Ms. Sabo and Ms. Rene Wheatley. Tr. at 78; see HCFA Ex. 1 at 1 - 2. During 1998, Petitioner employed Ms. Sabo. Tr. at 40 - 41. Ms. Sabo and Ms. Wheatley are well-acquainted. Id. at 42.

Ms. Sabo denied colluding with other laboratories or individuals. Tr. at 21. She asserted that she performed each proficiency test for Petitioner in the same manner that she performed tests on patients' specimens and that she integrated her proficiency testing into her routine specimen testing. Id. at 18 - 19, 20. Ms Sabo averred that discrepancies between proficiency testing data and the results that she reported for proficiency testing could be explained as simple errors on her part. Id. at 30 - 39.

I find that Ms. Sabo's denials of complicity in collusion are not credible. If anything, Ms. Sabo's testimony confirms my conclusion that collusion is the only reasonable explanation for the nearly identical proficiency test results that were produced by the nine laboratories. Ms. Sabo's testimony consisted, essentially, of unsupported denials of wrongdoing. Moreover, it failed to explain the overwhelming evidence that collusion occurred. Ms. Sabo was unable to provide any credible explanation how nine laboratories could produce identical proficiency testing results on many tests over a lengthy period of time.

Ms. Sabo acknowledged that the testing she performed was subject to a large number of variables that would be likely to produce different results at different laboratories assuming that samples were tested individually at these laboratories. Tr. at 74 - 80. She admitted that, given these variable factors, it would be surprising if identical test results were produced at different laboratories. Id. She offered no explanation for the virtually identical proficiency testing scores produced by the nine laboratories given the acknowledged variables in the testing process. See Id. at 76 - 80.

4. During 1998, Petitioner did not test proficiency test samples in the same manner as it tested patients' specimens. Also during 1998, Petitioner engaged in inter-laboratory communications pertaining to the results of proficiency tests.

A primary requirement of the CLIA condition of participation that is stated at 42 C.F.R. § 493.801 is that a clinical laboratory must test proficiency test samples in the same manner as it tests patients' specimens. An additional requirement of this condition is that a clinical laboratory not engage in inter-laboratory communications pertaining to the results of proficiency testing. 42 C.F.R. § 493.801(b)(3).

Petitioner did not comply with these principal requirements during 1998. The manner in which Petitioner performed proficiency testing - by colluding with other laboratories to obtain a collectively determined result - clearly was a departure from standard procedures for testing patients' specimens. Finding 3. Moreover, as I have found above, Petitioner communicated with other laboratories about proficiency testing in order to report scores for proficiency tests that were identical with those that were reported by the other laboratories. This also was a departure from standard testing procedures.

5. Petitioner failed to comply with the CLIA condition of participation that is stated at 42 C.F.R. § 493.801.

I conclude that, during 1998, Petitioner did not comply with the condition of participation that is stated at 42 C.F.R. § 493.801. Petitioner's collusion in the performance of proficiency testing was a deliberate effort to frustrate the purpose of proficiency testing, which is, to assure that a clinical laboratory establishes its competence through an impartial proficiency testing process. Petitioner's participation in proficiency testing was pointless, given its collusion. Petitioner's collusion made its enrollment in a proficiency testing program meaningless. Furthermore, as I discuss above, at Findings 3 and 4, such collusion by Petitioner meant that Petitioner was not performing its proficiency tests in the manner that it normally tested patients' specimens and it was not integrating its proficiency testing with the testing of patients' specimens.

HCFA argues that Petitioner explicitly violated the prohibitions in 42 U.S.C. § 263a(i)(4) against referring proficiency test samples to another laboratory for testing. According to HCFA, collusion in the performance of proficiency testing is at law functionally equivalent to referral of test samples to another laboratory. As support for its argument, HCFA cites to an administrative law judge's decision in Balding Urgent Care Center Laboratory, DAB CR438 (1996).

I disagree with HCFA's assertion and I disagree with the Balding decision to the extent that it supports the proposition that an unlawful "referral" of a testing sample to another laboratory may occur without an actual physical transport of the sample from one laboratory to another. As I explained in Southfield Medical Clinic, DAB CR667 at 11 (2000), collusion and referral of testing samples are not the same thing. The law distinguishes between the physical transport of proficiency testing samples from one laboratory to another for testing and collusion between two laboratories. See 42 C.F.R. §§ 493.801(b)(3) and (4).

In some instances, it may be important to distinguish between collusion and referral. The distinction is not academic in some cases because, under CLIA and implementing regulations, revocation of a laboratory's CLIA certificate is mandatory where that laboratory deliberately refers proficiency testing samples to another laboratory for testing. By contrast, collusion in the performance of proficiency testing, absent referral of test samples, does not require revocation of a CLIA certificate. Arguably, there may be instances where collaboration is so minimal as not to warrant the imposition of a principal sanction.

However, that distinction is not important here. Petitioner's collusion was so egregious as to constitute a failure to comply with the CLIA condition that is stated at 42 C.F.R. § 493.801. And, as I explain below at Finding 7, Petitioner's failure to comply with the condition gives HCFA the authority to impose principal sanctions against Petitioner which include revocation of Petitioner's CLIA certificate. Moreover, in this case, the effect of Petitioner's collusion on the performance of its proficiency testing was indistinguishable from the effect resulting from other forms of cheating on proficiency testing, including referral of samples to another laboratory for testing. The effect here was to invalidate completely Petitioner's proficiency testing. That consequence of Petitioner's collusion is indistinguishable from what would have been the consequence of unlawful referrals by Petitioner of testing samples.

HCFA asserts that, in addition to colluding with other laboratories in the performance of proficiency testing, Petitioner failed to comply with standards of participation that are stated at 42 C.F.R. § 493.801. The alleged standard level noncompliance by Petitioner includes engaging in inter-laboratory communications about proficiency testing in violation of the standard that is stated at 42 C.F.R. § 493.801(b)(3). It includes failing to perform proficiency testing as part of Petitioner's regular workload using Petitioner's routine testing methods in violation of the standard that is contained at 42 C.F.R. § 493.801(b)(1). And, it includes a failure by Petitioner's owner and laboratory director to sign required attestation statements that were submitted as part of the first three proficiency testing events in 1998 in violation of the standard that is stated at 42 C.F.R. § 493.801(b)(5). That standard requires that a clinical laboratory's laboratory director must sign proficiency testing attestations. HCFA asserts that Ms. Sabo, who was employed by Petitioner as its testing personnel and not as Petitioner's laboratory director, signed the statements.

Petitioner did not comply with these standards. Petitioner's collusion with other laboratories in the performance of proficiency testing meant that Petitioner was not performing its proficiency tests as part of its regular workload using its normal testing procedures. It plainly engaged in prohibited inter-laboratory communications about proficiency testing. Petitioner did not rebut the allegation that its laboratory director failed to sign proficiency testing attestation statements.

At the in-person hearing, Petitioner's counsel asked Ms. Sabo if she had served as Petitioner's "technical supervisor." Tr. at 26. Apparently, counsel was trying to elicit testimony from Ms. Sabo to the effect that she served as the functional equivalent of Petitioner's laboratory director. However, counsel's question did not address the issue of who was Petitioner's laboratory director. Petitioner laid no foundation to show that a "technical supervisor" at Petitioner's laboratory performed the functions of a laboratory director. I note that regulations which define the role of laboratory director state that a laboratory director may function as a laboratory's technical supervisor as part of his or her broader responsibilities. 42 C.F.R. § 493.1445(a). But, this regulation does not suggest that a laboratory director and a technical supervisor have interchangeable roles. To the contrary, the regulation suggests that a technical supervisor's duties are, at most, a component of a laboratory director's responsibilities. Furthermore, Ms. Sabo answered the question equivocally, by asserting first that she was the "testing personnel" for the laboratory and then, by saying that she might have at times been referred to as "technical supervisor" because of her degree. Tr. at 26.

Standing by themselves, Petitioner's noncompliance with various standards under 42 C.F.R. § 493.801 might arguably not be a basis for concluding that Petitioner failed to comply with the broader condition of participation. However, if standard level deficiencies are sufficiently egregious, they can constitute a failure by a laboratory to comply with the overall condition of which the standards are subparts. That is certainly the case here. Petitioner's violation of the standards of 42 C.F.R. § 493.801 are elements of Petitioner's collusion in the performance of proficiency testing. And, as I discuss above, Petitioner's collusion was so egregious as to make its participation in proficiency testing meaningless.

6. Petitioner failed to comply with the condition of participation that is stated at 42 C.F.R. § 493.1441.

HCFA alleges that Petitioner failed to have a laboratory director who provided overall management and direction of Petitioner as is required by the CLIA condition of participation that is stated at 42 C.F.R. § 493.1441 (which incorporates by reference 42 C.F.R. § 493.1445). HCFA made a number of assertions about the alleged failures of Dr. Boykansky to provide the direction that is required under 42 C.F.R. § 493.1445. Foremost among these allegations is that Dr. Boykansky failed to assure that Petitioner tested proficiency test samples in accordance with the requirements of CLIA.

The evidence in this case sustains HCFA's allegations. The evidence shows that, in 1998, Dr. Boykansky abdicated the supervisory authority that he had as Petitioner's laboratory director. This abdication of authority was so serious as to comprise a failure to comply with the laboratory director condition of participation under CLIA. The failure to supervise Ms. Sabo enabled her to collaborate with other laboratories in the performance of proficiency testing. Had Dr. Boykansky been more vigilant in supervising Ms. Sabo, the collusion that transpired between Petitioner and other laboratories might not have happened.

I do not find that Dr. Boykansky was involved personally in the collusion between Petitioner and other laboratories concerning proficiency testing that was performed in 1998. There is no evidence to establish that Dr. Boykansky was aware of the collusion. But, there is ample evidence to show that he was remiss in supervising Ms. Sabo and that this lax supervision facilitated collusion between Petitioner and other laboratories.

The collusion between Petitioner and other laboratories transpired over a period of approximately one year. During this period Ms. Sabo manipulated the proficiency testing data generated by nine different clinical laboratories so as to assure that these nine laboratories produced virtually identical proficiency testing results. During this entire period there is no evidence that Dr. Boykansky, acting as laboratory director of Petitioner and Ms. Sabo's supervisor, exercised any supervision of Ms. Sabo that would have exposed her actions. The inference I draw from his failure to intervene was that Dr. Boykansky was not providing required oversight of Ms. Sabo's work. My conclusion that Dr. Boykansky was not supervising Ms. Sabo is buttressed by Dr. Boykansky's failure to sign proficiency testing attestation statements. Rather, he permitted Ms. Sabo to sign these statements.

7. HCFA is authorized to impose principal sanctions against Petitioner as remedies for Petitioner's noncompliance with CLIA conditions of participation.

As I discuss above at Part I.B. of this decision, HCFA is authorized to impose principal sanctions including revocation of a laboratory's CLIA certificate as remedies for that laboratory's failure to comply with one or more CLIA conditions. 42 C.F.R. § 493.1806(a), (b). HCFA may impose the additional remedy of cancellation of a laboratory's approval to receive Medicare payment for its services where the laboratory has not complied with one or more CLIA conditions. 42 C.F.R. § 493.1807.

HCFA is authorized to impose principal sanctions against Petitioner along with cancellation of Petitioner's approval to receive Medicare payment for its services. The sanctions HCFA may impose include revocation of Petitioner's CLIA certificate. Additionally, HCFA may cancel Petitioner's approval to receive Medicare payment for its services. The evidence in this case establishes that Petitioner failed to comply with two CLIA conditions of participation. HCFA would be authorized to impose principal sanctions and cancellation of Petitioner's approval to receive Medicare payment for its services if Petitioner had failed to comply with only one CLIA condition of participation.

Petitioner argues that, even if some deficiencies may have existed in its operation, it filed a plan of correction on May 28, 1999, which addressed these deficiencies. According to Petitioner, all of its deficiencies - which it characterizes as being standard level deficiencies - have long since been corrected by Petitioner. Petitioner asserts that HCFA lacks authority to impose principal sanctions against it inasmuch as there exist no outstanding failures by Petitioner to comply with CLIA participation requirements.

I do not agree with Petitioner's argument. As I have discussed at length in this decision, Petitioner's deficiencies were not merely standard level failures by Petitioner to comply with CLIA participation requirements. It is true that the report of the February 25, 1999 survey of Petitioner characterized Petitioner's noncompliance as failures to comply with CLIA standards. But it is also true that, as of August 27, 1999, HCFA had made it plain to Petitioner that HCFA had determined that Petitioner's noncompliance with CLIA requirements was at a condition level of seriousness. As I discuss above, at Part I.B., HCFA is under no obligation to accept a plan of correction from a laboratory where that laboratory has failed to comply with CLIA conditions of participation. See 42 C.F.R. § 493.1810(e).

Steven T. Kessel

Administrative Law Judge