SUBJECT:

Garden City Medical Clinic,

Petitioner,

Health Care Financing Administration

I enter summary judgment in favor of the Health Care Financing Administration (HCFA) sustaining its determination to impose remedies against Petitioner, Garden City Medical Clinic, under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). HCFA properly revoked Petitioner's CLIA certificate for a period of one year. HCFA also properly canceled Petitioner's approval to receive Medicare/Medicaid payment for its services, effective September 11, 1999.

I. Applicable Law and Regulations

CLIA was designed to promote accurate medical tests by clinical laboratories. Congress' goal was to establish a single set of standards applicable to all laboratory services, including those provided to Medicare beneficiaries. See H.R. Rep. No. 899, 100^th Cong., 2^nd Sess. 8 (1988), reprinted in 1998 U.S.C.C.A.N. 3828.

Under CLIA, the Secretary of the United States Department of Health and Human Services (Secretary) is authorized to inspect clinical laboratories and, in effect, license them to perform tests. The Social Security Act (Act) prohibits a clinical laboratory from soliciting or accepting specimens for testing unless it has first received from the Secretary a certificate authorizing it to perform the specific category of tests which the laboratory intends to perform. 42 U.S.C. 263a(b). The Act directs the Secretary to establish standards to assure that clinical laboratories certified by the Secretary perform tests that are valid and reliable. 42 U.S.C. 263a(f)(1).

The standards for the operation of clinical laboratories promulgated by the Secretary pursuant to the enabling legislation are found at 42 C.F.R. Part 493. 42 C.F.R. § 493.801 sets forth requirements for performance of proficiency tests. A clinical laboratory must enroll in an approved (PT) program. It must notify the Department of Health and Human Services (DHHS) of each program or programs in which it chooses to participate to meet proficiency testing standards. HCFA approves certain companies to administer proficiency tests under CLIA. Sections 931 and 933 of Title 42 of the Code of Federal Regulations require that for routine chemistry and endocrinology, three times each year at approximately equal intervals, these approved testing companies send out proficiency test samples to be analyzed by each laboratory. A minimum set of five samples are sent for each testing event. The participating laboratories then perform the tests and submit their results on forms provided by the testing services. The testing services grade the results and report them to HCFA. To determine the accuracy of a laboratory's response for qualitative and quantitative chemistry tests or analytes, the program must compare the laboratory's response for each analyte with the response that reflects agreement of either 90 per cent of 10 or more referee laboratories or 90 per cent or more of all participating laboratories.⁽¹⁾ A laboratory is required to examine or test each PT sample that it receives in the same manner that it tests patient specimens. 42 C.F.R. § 493.801(b).

Any laboratory that the Secretary determines intentionally refers its PT samples to another laboratory for analysis shall have its certificate revoked for at least one year. 42 U.S.C. 263a(I)(4), 42 C.F.R. § 493.801(b)(4). Additionally, the regulations provide that when HCFA revokes a laboratory's CLIA certificate, it will also cancel that laboratory's approval to receive Medicare reimbursement for services rendered. 42 C.F.R. § 493.1842(a).

A participating laboratory is required to test PT samples in the same manner as patient specimens, as well as appoint a director who provides overall management and direction in accordance with 42 C.F.R. §§ 493.801, 493.1441, and 493.1445. A laboratory that does not treat PT samples in the same manner as patient samples or whose director fails to provide overall management and direction may have its certificate of accreditation revoked. 42 C.F.R. §§ 493.61(b)(1) and 493.61(c)(3).

It is also a violation of the regulations to engage in any inter-laboratory communications pertaining to the results of proficiency testing samples until after the date by which the facility must report PT results to the proficiency testing service. 42 C.F.R. § 493.801(b)(3).

The CLIA condition of participation at 42 C.F.R. § 493.803(a), requires that a laboratory performing tests of moderate and/or high complexity must successfully participate in a proficiency testing program.

Reagents, solutions, culture media, control materials, calibration materials, and other supplies must be prepared, stored, and handled in a manner to ensure that they are not used beyond their expiration date, have not deteriorated, nor are of substandard quality. 42 C.F.R. § 493.1205(e)(1).

42 C.F.R. Part 493, Subpart E, requires HCFA or its agent to conduct, on a representative sample basis or in response to substantial allegations of non-compliance, surveys of an accredited laboratory as a means of validating its performance.

The regulations set forth "conditions" as well as "standards" for participation under CLIA. While conditions are expressed as broad, general requirements, standards are set forth as more specific requirements of participation. A participating laboratory's failure to comply with one or more standards may be so egregious as to constitute a failure to comply with a condition of participation. If HCFA determines that a facility has not complied with a condition of participation, it may impose principal sanctions which include revocation and/or suspension of the laboratory's CLIA certificate. 42 C.F.R. § 493.1806(a), (b). In lieu of, or in addition to, principal sanctions HCFA may impose alternative sanctions. HCFA may allow a non-compliant laboratory the opportunity to remove alternative sanctions, but the regulations do not provide a laboratory the same opportunity for removing principal sanctions.

A laboratory that is not satisfied with the imposition of remedies by HCFA may request a hearing before an administrative law judge. 42 C.F.R. § 493.1844.

II. Background

HCFA filed a motion and memorandum of law accompanied by documentation and written declarations in support of its motion for summary judgment on January 12, 2000. Petitioner countered with an opposing memorandum on February 21, 2000. It offered no supporting affidavits or other documentation. HCFA submitted a reply brief on March 9, 2000. I admit into evidence HCFA's Exhibits 1-18 (HCFA Exs. 1-18) which accompanied its brief dated January 12, 2000. On June 27, 2000, Petitioner filed a supplemental brief and four proposed exhibits. These have been admitted into evidence as Petitioner's Exhibits 1-4 (P. Exs. 1-4).

Petitioner is a physician office laboratory located in Garden City, Michigan, that holds a CLIA certificate of accreditation. (Identification Number 23D0367601.) HCFA Ex. 6. The laboratory engages in high-complexity testing for routine chemistry. HCFA Ex. 7. Nazar Sarafa, M.D. is Petitioner's laboratory director. HCFA Ex. 7. Deborah Sabo was part of the testing personnel of Garden City's laboratory as well as other laboratories in the Detroit Metro area. HCFA Ex. 7. She performed high complexity routine chemistry testing for Petitioner as well as proficiency testing. HCFA Exs. 7-10.

Garden City Medical Clinic (Nazar Sarafa, M.D.); Oakland (also known as Moretsky/Trager/Flor); John Dunn, M.D.; Mark Hertzberg, M.D.; Rochester Rd. Clinic; Liptawat Family PC; Lakeland Medical; Ecorse Med Center; and Stanley Boykansky, M.D. are some of the laboratories in the Detroit Metro area participating in a PT program operated by the American Association of Bioanalysts (AAB). HCFA Ex. 2. As participants in this program, AAB would mail each laboratory for PT the same group of five specimens three times a year. The laboratories were required to test these specimens for analytes for which they did patient testing and mail their results to AAB by a date certain, approximately 10 days after receiving the samples. Testing samples for Garden City, among others, included cholesterol, HDL cholesterol, triglycerides, glucose, thyroid-stimulating hormone (TSH), total thyroxine (T4), triiodothyronine (T3), and free thyroxine (FT4).

By letter dated January 4, 1999, Dennis W. Jay, Ph.D., Technical Director of the Proficiency Testing Service of the AAB sent the Michigan Department of Consumer and Industry Services (MDCIS) some proficiency testing results for a group of Detroit area laboratories that he deemed to be suspect. HCFA Ex. 1 at 3-8. Specifically, the cover letter suggested that the same PT results were being submitted by several laboratories. There where five facilities that submitted identical PT results for cholesterol, HDL cholesterol, triglycerides, and glucose with respect to five different specimens.⁽²⁾ The five facilities were: (1) Oakland Medical Group (ID 23D036505); 2) John Dunn, M.D. (23D0367266); 3) Mark Hertzberg (23D0671668); 4) Rochester Road Clinic (23D0363051); and 5) Nazar Sarafa, M.D. (23D0367601).

On January14, 1999, AAB notified MDCIS that they had discovered another four facilities reporting duplicate results and included their 1998 third quarter summaries and attestation sheets.⁽³⁾ These four facilities were: (1) Liptawat Family, P.C. (23D0363230); 2) Lakeland Medical (23D0371925); 3) Ecorse Med Center (23D06733353); and 4) Stanley Boykansky, M.D. (23D0372207).

On March 2, 1999, Ms. Lucy Estes, Laboratory Evaluation Specialist, MDCIS, performed a complaint survey of Petitioner's facilities. Based on her review of the testing records she received from Petitioner, and information from AAB concerning the similarity of PT results between Petitioner and others in the Detroit area, Ms. Estes found that Petitioner was not in compliance with the CLIA requirements under 42 C.F.R. § 493.801(b)(1), Testing Proficiency Samples; 42 C.F.R. § 493.1205(e)(1), and 42 C. F. R. § 493.1451(b)(4), Technical Supervisor Responsibilities. She completed and submitted HCFA Form 2567 to her supervisor, Richard J. Benson, along with the aforementioned documents. See HCFA Ex 3 at 6-10.

By letter dated July 9, 1999, HCFA served notice of cancellation, suspension, and revocation of CLIA certificate of accreditation to Petitioner, pursuant to MDCIS referral of its case for imposition of enforcement action. Specifically, it was found that Petitioner was not in compliance with the following CLIA statutory and regulatory requirements: (1) The laboratory must not send PT samples or portions of samples to another laboratory for any analysis which it is certified to perform in its own laboratory. 42 C.F.R. § 493.801(b)(4). (2) The laboratory agrees to treat proficiency testing samples in the same manner as it treats materials derived from the human body referred to it for laboratory examinations or other procedures. 42 U.S.C. § 263a(d)(E); 42 C.F.R. § 493.61(b)(1); 42 C.F.R. § 493.801.(b)(1), (2), (3).

Because of the improper referral of laboratory and PT samples to another laboratory for analysis and other serious deficient test practices found during the survey, HCFA imposed the principal sanctions of cancellation of Petitioner's approval to receive Medicare payment for its laboratory services and revocation of Petitioner's CLIA certificate of accreditation. HCFA Ex. 3.

A final and more complete notice of adverse action was served on Petitioner by letter dated October 15, 1999. HCFA Ex. 3. The letter addressed to Petitioner's director, Dr. Nazar N. Sarafa, where pertinent here, states as follows:

[a]s set forth on the HCFA Form 2567 that was enclosed with our letter to you of July 9, 1999, the surveyors determined that with respect to the first three events of 1998, your laboratory's proficiency testing (PT) was not performed with the laboratory's regular workload using the laboratory's routine methods, in violation of the standard at 42 C.F.R. § 493.801(b)(1). We also stated that the evidence revealed that your laboratory referred certain PT samples to another laboratory for analysis in violation of the standard at 42 C.F.R. § 493.801(b)(4). The evidence strongly suggests that the results of proficiency testing reported by your laboratory during the first, second, and third events of 1998 were obtained by improper referral and/or collaboration. Inter-laboratory communications pertaining to the results of proficiency testing samples, prior to the testing event reporting due date, are prohibited by the standard at 42 C.F.R. § 493.801(b)(3).

The evidence on which we based these determinations, in addition to the survey findings, is abstracted in the enclosed chart. The chart compares proficiency testing results reported to AAB by your laboratory and eight other laboratories in Michigan. We believe that the identity of the results reported by these nine laboratories, especially in the third quarter of 1998, is strong evidence of improper referral, or collaboration, or both.

In addition, the standard at 42 C.F.R. § 493.801(b)(5) requires that a laboratory must document the handling, preparation, processing, examination, and each step in the testing and reporting of results for all proficiency testing samples . . .

. . . based on a review of the 1998 proficiency test records and patient sheets during the survey, it was determined that PT samples were not examined or tested with the laboratory's regular patient workload. Since the survey findings reveal that integration did not occur, this violates the standard at 42 C.F.R. § 493.801(b)(5).

The findings from the survey also reveal that you, as laboratory director, have not fulfilled your responsibility to assure that PT samples are tested as required under 42 CFR Part 493, Subpart H. It was determined that the laboratory's personnel were not testing and reporting proficiency test results using the laboratory's routine methods; that you failed to assure that reagents and control materials were not stored beyond their expiration dates; determine whether quality control results were within the expected range of the manufacturer. The presence of the deficiencies cited in this letter and on the HCFA-2567 demonstrates that you have failed to take responsibility for the overall operation and administration of your laboratory. Therefore, the laboratory is out of compliance with the condition level requirement for a laboratory director at 42 C.F.R. § 493.1441. Because your laboratory did not treat PT samples in the same manner as patient samples, it is in violation of the CLIA requirements at 42 C.F.R. § 493.61 and 42 U.S.C. § 263a(d)(1)(E) and does not meet the requirements for a certificate of accreditation . . .

Because of your laboratory's failure to meet the conditions of Proficiency Testing and Laboratory Director, and because of your intentional referral of your laboratory's PT samples for the 3^rd. Testing event of 1998 to another laboratory for analysis, as set forth in our letter of July 9, 1998, we have imposed the following principal sanctions against your laboratory:

42 C.F.R. § 493.1808(a) and 42 C.F.R. § 493.1842(a)(1) - Principal Sanction: Cancellation of your laboratory's approval to receive Medicare payment for its services. This sanction will become effective on October 1, 1999, and will remain in effect until a hearing decision is rendered, or the end of the revocation period . . .

42 C.F.R. § 493.263a(I)(4), 42 C.F.R. §§ 493.1814(a) and 493.1840(b) - Principal sanction: Revocation of your laboratory's CLIA certificate . . .

By letter dated August 18, 1999, Petitioner requested a hearing before an administrative law judge. The case was assigned to me for hearing and decision.

Petitioner argues that an evidentiary hearing is essential to explore certain factual issues in dispute. I disagree. For the reasons set forth below, I find that summary judgment is appropriate. There are no material issues of fact in dispute that require an evidentiary hearing. Based on the documentary evidence, written declarations, arguments of the parties, and applicable law and regulations, I find that there are no genuine issues of fact in dispute, and HCFA is entitled to judgment as a matter of law. I further find that Petitioner failed to meet the CLIA conditions of PT under 42 C.F.R. Part 493, Subpart H, generally. Specifically, Petitioner did not satisfy the conditions for testing of samples pursuant to 42 C.F.R. §§ 493.801 and 493.803 and for laboratory director under 42 C.F.R. § 493.1441. Petitioner also failed to satisfy the standard for test methods under 42 C.F.R. § 493.1205(e)(1). Pursuant to 42 C.F.R. § 493.61, Petitioner failed to satisfy the requirements for a certificate of accreditation. Thus, I order the revocation of Petitioner's certification under the Clinical Laboratory Improvement Act of 1988, 42 U.S.C. § 263a, for a period of one year as proposed by HCFA. I also direct cancellation of approval to receive Medicare payment for services.

Summary judgment is appropriate when there is no genuine issue as to any material fact and the proponent is entitled to judgement as a matter of law. If the moving party meets this burden, the onus shifts to the opposing party to establish that a genuine issue does exist. The opposing party will have shown that genuine issues of fact are present "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 249 (1986). To accomplish this, the opposing party must go beyond mere allegations, and come forward with actual evidence that creates a genuine issue of material fact. All reasonable inferences are to be drawn in the opposing party's favor. Pollock v. American Telephone & Telegraph Long Lines, 794 F.2d 860, 864 (3^rd Cir. 1986). I have considered all the evidence set forth in the papers submitted and conclude that all inferences drawn from such evidence, casts no doubt as to the propriety of granting HCFA's motion for summary judgment inasmuch as there is no issue of material fact to be tried. HCFA's motion is properly supported by affidavits and documentary evidence. Petitioner has relied on mere allegations and denials, thus falling short of showing that there is a genuine issue for hearing. More significantly, the facts upon which summary judgment rests are facts conceded or not disputed by Petitioner.

III. HCFA's Contentions

HCFA contends that the documentary evidence from Petitioner's own records and the PT results submitted to AAB for the three testing events in 1998 leave no doubt that Oakland's PT results were obtained either in collaboration with, or referral to, other Michigan laboratories in violation of 42 U.S.C. § 263a(i)(4), 42 C.F.R. § 493.61 and 42 C.F.R. Part 493, Subpart H. HCFA also argues that Petitioner failed to test PT samples with patient regular workload and that it was in violation of the condition for laboratory director and standard for test methods. HCFA further argues that summary judgment is appropriate as a matter of law given the absence of a genuine or material issue of fact and the overwhelming evidence that Petitioner did not meet the requirements of the statute, particularly the CLIA conditions for PT and the laboratory director. Accordingly, HCFA asks that I sustain the revocation of Petitioner's CLIA certificate for one year and withdrawal of approval to receive Medicare payment for laboratory services.

IV. Petitioner's Contentions

In opposition to HCFA's motion for summary judgment, Petitioner advances the following arguments: (1) there was no intentional referral of proficiency samples; (2) the laboratory acted in good faith by terminating the employee who created the problem; (3) the Government has not shown that the proficiency testing was not performed in the ordinary course of business; and (4) the statistical analysis offered by HCFA is not statistically significant.

V. Issues

1. Whether Petitioner intentionally submitted PT samples to a reference laboratory in violation of applicable law and regulations? 42 C.F.R. § 493.801.

2. Whether Petitioner engaged in inter-laboratory communications and collaboration in violation of 42 C.F.R. § 493.801(b)(3)?

3. Whether Petitioner failed to examine PT samples with its regular patient workload using the laboratory's routine methods in violation of 42 C.F.R. § 801(b)(1)?

4. Whether Petitioner met the condition for laboratory director pursuant to 42 C.F.R. §§ 1441 and 1445?

5. Whether Petitioner met the CLIA standard regarding test methods under 42 C.F.R. § 493.1205(E)(1)?

6. Whether Petitioner's actions justify revocation of its CLIA certificate and cancellation of approval to receive Medicare reimbursement?

VI. Findings of Fact and Conclusions of law

I hereby make the following findings of fact and conclusions of law:

1. Petitioner is a laboratory located in Garden City, Michigan, engaging in high complexity testing for routine chemistry and endocrinology and operating by virtue of a certificate of accreditation under CLIA. HCFA Ex. 6.

2. Nazar Sarafa, M.D. is Petitioner's laboratory director. HCFA Ex. 7.

3. Deborah Sabo performed high routine chemistry and endocrinology and PT for Petitioner and for other laboratories in the Detroit Metro area. HCFA Exs. 7, 11-13.

4. Some of the laboratories in the Detroit metro area participating in a PT program operated by AAB are: Garden City Medical Clinic; Oakland Medical Group; John Dunn, M.D.; Mark Hertzberg, M.D.; Rochester Rd. Clinic; Liptawat Family, PC; Lakeland Medical; Ecorse Med. Center; and Stanley Boykansky, M.D. HCFA Ex. 2.

5. AAB mails each laboratory participating in the PT program the same group of five specimens three times per year. The laboratories are required to test these specimens for analytes for which they did patient testing and mail their results to the AAB.

6. Testing samples for Petitioner included cholesterol, HDL cholesterol, triglycerides, glucose, TSH, T4, T3, FT4.

7. The affidavits and documentary evidence submitted by HCFA in support of its motion for summary judgment show that Petitioner reported PT results to the AAB in 1998 that were identical to the results of eight other Detroit area laboratories for cholesterol, HDL cholesterol, triglycerides, and glucose with respect to five different specimens.

8. From the multitude of identical results, as well as Petitioner's own admission, I find that Petitioner engaged in collaboration and inter-laboratory communications with other Detroit Metro area facilities in violation of 42 C.F.R. § 493.801(b)(3).

9. Petitioner did not arrive at identical results to that of eight other laboratories through human error or coincidence but by manipulation of PT results.

10. The PT scores reported by Petitioner to AAB in the testing events for 1998 were not obtained through onsite testing of specimens.

11. Petitioner did not treat PT samples in the routine manner in which it treated patient specimens. 42 C.F.R. § 493.801(b)(1).

12. Petitioner did not successfully participate in a PT program. 42 C.F.R. § 493.803.

13. Dr. Nazar Sarafa, as laboratory director, was responsible for Petitioner's overall operation and administration. His responsibilities included the employment of competent personnel to perform test procedures, record and report test results promptly, accurately and proficiently, and assuring compliance with applicable regulations.

14. Petitioner was in violation of the condition for laboratory director in failing to provide proper overall management and direction to the facility.

15. Petitioner did not meet the CLIA standards for test methods pursuant to 42 C.F.R. § 493.1205(e)(1).

16. Petitioner has submitted no affidavits or other documentary evidence that if taken as true would create a genuine issue of material fact that would require a hearing.

17. Pursuant to 42 U.S.C. § 263a(f), the Secretary is directed to ensure that certified clinical laboratories perform tests that are valid and reliable.

18. A laboratory that is issued a certificate of accreditation under CLIA must enroll in a PT program and comply with the requirements of 42 C.F.R. Part 493, Subpart H.

19. The facts on which I base this summary judgment are either not in dispute or uncontroverted. Thus, summary judgment is appropriate as a matter of law.

20. HCFA is authorized to revoke Petitioner's CLIA certificate for at least one year and cancel its approval to receive Medicare payment for its services.

VII. Discussion

A. Petitioner's PT test results for the three testing events in 1998 were not obtained through referral to other laboratories.

Petitioner contends that a finding of intentional referral is not appropriate inasmuch as HCFA made its finding based on a mere inference of collaboration. In this respect, it claims that no finding of referral is possible in the absence of evidence of a physical transfer from one laboratory to another. HCFA, on the other hand, contends that an inference of referral may be drawn from Petitioner's submission to AAB of proficiency testing results that demonstrably were not arrived at through testing samples on site. I need not determine here, however, whether evidence of physical transport is essential for a finding of referral in light of HCFA's own uncontradicted showing that referral did not occur.

The documentary evidence submitted by HCFA establishes that through an investigation conducted by Petitioner it was determined that an employee of Garden City Medical Clinic, whom also did testing for various other laboratories in the Detroit Metro area, used the data from tests done at one of the laboratories for all of her employers' proficiency examinations. See HCFA Ex. 17 at 2; HCFA Ex. 18 at 11-13.

There is no dispute that nine laboratories in the Detroit Metro area submitted identical or near identical PT results to AAB in the three testing events for 1998. HCFA Ex. 16, Attachment C. From the facts of this case, I am unable to determine which of the nine facilities provided the results that the others followed. The affidavit of Richard A. Benson, nonetheless, clearly demonstrates that the PT results obtained by Petitioner were at variance with the results reported to AAB. See HCFA Ex. 16. See also HCFA Ex. 3 at 7. Thus, Petitioner's claim that it did not refer PT samples to another laboratory, but rather, that Ms. Sabo relied on the testing performed at one of the other laboratories is credible.

B. Petitioner engaged in inter-laboratory communications in violation of 42 C.F.R. § 493.801(b)(3).

Although there is no evidence of referral of PT samples, the facts, as presented by Petitioner do establish collaboration with other participating laboratories in the Detroit Metro area. An affidavit prepared by William E. Robertson, an investigator hired by Petitioner (HCFA Ex. 18), states that Deborah Sabo worked at approximately 11 laboratories and had the responsibility of performing PT at each of these. Furthermore, in a letter addressed to HCFA on July 22, 1999, counsel for Petitioner stated the following:

[t]his case is most unusual in that one employee worked for a number of unaffiliated laboratories. This employee, acting on her own, without the knowledge of her employer allegedly used the data from tests done at one of the laboratories for all her employer's proficiency examinations. . .

Dr. Sarafa has taken the corrective action of scheduling the termination of this employee and has requested an independent proficiency examination from the American Association of Bioanalysts (AAB). HCFA Ex. 17 at 2, 4.

This manipulation of PT results by Petitioner's employee explains the identical and near identical scores produced by at least nine participating laboratories in the Detroit, Michigan area during the 1998 testing events.⁽⁴⁾ Such actions by Petitioner are plainly collaboration within the meaning of 42 C.F.R. § 493.801(b)(3).

Richard J. Benson, Chief, Laboratory Improvement Section, MDCIS, compiled a spread sheet from the PT testing results reported by nine laboratories for the three testing events in 1998 in the Detroit Metro area. See HCFA Ex. 16 at 23-25. Mr. Benson highlighted in bold the reported scores for those laboratories where Ms. Sabo was entrusted with the PT. The identical results in the reported analytes is inescapable. Moreover, the identical results reported by Petitioner and other laboratories where Ms. Sabo was not the person in charge of proficiency testing further magnifies the collusion with other participating facilities. These scores were reported to AAB even where they were known to be at variance from the results of local testing, and thus, incorrect. Again, the unequivocal conclusion is that Petitioner engaged in collaboration within the meaning of 42 C.F.R. § 493.801(b)(3).

The affidavit of Dr. Dennis W. Jay (HCFA Ex. 15), lends additional support for the finding of improper collaboration in light of the lack of variability in results submitted for triglycerides and total cholesterol. This was particularly unusual, stated Dr. Jay, because these assays typically show poor reproducibility from laboratory to laboratory when manually performed, as opposed to automated testing methods. Based upon his education and experience, given the imprecision on manual testing methodology and the range of acceptable results, Dr. Jay expected to see variations in results on the order of 10-20 percent for cholesterol and triglycerides. Instead identical values were reported by Petitioner and eight other Detroit area laboratories. Dr. Jay further opined that the chances of nine laboratories independently arriving at the same values by happenstance for all five specimens for even two different tests are close to nil. See HCFA Ex. 15 at 3-4.

Dr. Jay's opinion is based not only on his expertise, but also on his personal examination and analysis of the data obtained from Petitioner's own records. Although some of his findings may be laced with statistical implications, the thrust of his declaration is more associated with the manner in which certain chemical properties will behave given specific testing conditions.

C. Petitioner failed to examine PT samples with its regular patient workload using the laboratory's routine methods.

Deviation from the standard practice of routine testing, handling and reporting of PT samples is a violation of the requirements at 42 C.F.R. § 403.801(b)(1) and (5). Petitioner concedes that its employee manipulated PT scores to agree with those obtained at another facility, and the results reported to the PT facility were not the product of testing performed at Garden City Medical Clinic. Consequently, the results of PT samples reported to AAB were not obtained through testing performed with the laboratory's regular patient workload.

Petitioner does not deny that Ms. Sabo engaged in improprieties in the handling and reporting of PT results. It claims, however, that she acted on her own, without the knowledge of her employer. Additionally, Petitioner alleges to have taken corrective action by terminating Ms. Sabo's employment and requesting an independent examination by AAB. This defense is not acceptable.

42 C.F.R. §§ 493.1840(a) and 493.1840(a)(3) clearly establish that HCFA may initiate adverse action to suspend, limit or revoke any CLIA certificate if HCFA finds that a laboratory owner or operator or one of its employees has failed to comply with the certificate requirements and performance standards. Neither the law nor the regulations allow room for exceptions in situations where the owner or operator is unaware of improprieties attributable to employees. Thus, even if for purposes of this summary judgment, I were to accept as true the operator's claim that he was unaware of Ms. Sabo's improprieties, and that he took corrective action as previously stated, that would not serve as a valid defense against the remedies imposed. See Melvin C. Murphy, M.D., P.C., DAB CR590 (1999). See also Southfield Medical Clinic, DAB CR667 (2000).

D. Petitioner did not meet the condition for laboratory director.

A participating laboratory must have a director who provides overall direction and proper management for a laboratory pursuant to 42 C.F.R. §§ 493.1441 and 1445. The evidence of record, and Petitioner's own admissions, confirm that proficiency samples were not processed using the laboratory's regular testing procedures. In this regard, it is noted that the PT results reported to AAB, the PT agency, were not obtained through onsite testing, following the facility's routine methods. Dr. Sarafa's failure to ensure that the PT scores reported to AAB were the result of onsite testing, and not those obtained through testing at other participating laboratories are a clear indication that he was out of touch with the everyday operations of his laboratory. It was his ultimate responsibility to ascertain that proficiency testing and reporting was carried out in accordance with the requirements set forth at 42 C.F.R. § 493.801. It is noteworthy that Dr. Sarafa signed attestation sheets for the three testing events of 1998, documenting that the PT samples were tested in the same manner as patient specimens, without the necessary corroboration in order to ascertain that the reported results were consistent with onsite testing that complied with CLIA requirements. This is a clear violation of 42 C.F.R. § 493.801(b)(5).

It is also the laboratory director's duty to ensure that stored controls and reagents do not exceed their expiration dates. As will be more particularly discussed in the following section, a review of records from 1997 to 1999 by the surveyor on March 3, 1999 revealed that Petitioner continued to store reagents and control materials beyond their expiration date. HCFA Ex. at 8.

Petitioner did not have a technical supervisor. It was, therefore, incumbent upon the laboratory director to establish a quality control program. Dr. Sarafa failed to do this. Such is evident from the surveyor's finding that the accuracy of testing could not be confirmed because the control materials were not available for review. See HCFA Ex. 3 at 9. Petitioner argues that these control materials were present and could have been shown to the surveyor had she asked for them. It fails to explain, however, why the surveyor was unable to find them or why assistance was not made available without the asking. Be that as it may, if the materials in question were in fact present at the time of the survey, the cooperative presence of the laboratory director would have made them available for review. Petitioner's argument at this juncture appears to be concoction in the aftermath. Needless to say, even without this additional deficiency, Dr. Sarafa did not meet the condition for laboratory director.

The regulations promulgated by the Secretary make the laboratory director responsible for assuring that a laboratory satisfies CLIA requirements. Petitioner's failure to meet those requirements points to the laboratory director's failure to properly discharge his duties. Moreover, Petitioner's laboratory director failed to meet his obligations under the standard at 42 C.F.R. § 493.1445 to such an extent that it constitutes a failure on the part of Petitioner to comply with the condition for laboratory director.

E. Petitioner met did not meet the CLIA standard for test methods.

42 C.F.R. § 493.1205(e)(1) requires that solutions, culture media, control materials, calibration materials and other supplies must be stored and handled in a manner to ensure that they are not used when they have exceeded their expiration date, have deteriorated, or are of substandard quality. Based on a review of 1997 to 1999 records and observations, the surveyor (Lucy Estes) found that Petitioner continued to store three controls and reagents that had exceeded their expiration date.

Petitioner concedes the deficiency under the standard for test methods but downplays the nature of the violation by labeling it a "lesser problem" that has been corrected. See HCFA Ex. 17. It may be a lesser problem for Petitioner, but not for patients who rely on accurate laboratory testing for diagnosis and treatment of their medical conditions. One of the controls had expired in December 1998, yet the laboratory director had not exercised supervisory oversight to detect the deficiency.

F. Petitioner's actions justify revocation of its CLIA certificate and cancellation of approval to receive Medicare reimbursement.

Petitioner contends that the sanctions imposed and proposed are not appropriate according to the enforcement procedures set forth in the CLIA regulations. It points out that the deficiencies alleged on the HCFA 2567 Statement of Deficiencies are not condition level. Consequently, Petitioner suggests that revocation of its CLIA certificate is not the proper remedy, but the requirement that it submit a plan of correction acceptable to HCFA. See HCFA Ex. 17.

The uncontroverted facts of this case leave no room for doubt that Petitioner failed to comply with the conditions of participation at 42 C.F.R. § 493.61(b), 42 C.F.R. Part 493, Subpart H, and 42 C.F.R. § 1441. HCFA relied on 42 C.F.R. § 493.61(b) to establish that by not treating proficiency samples in the same manner as patient samples, Petitioner could be subject to suspension or revocation of its certificate of accreditation or other alternative sanctions. By relying on, and reporting to AAB, PT results that were not obtained through the integration of proficiency specimens with its regular patient workload, Petitioner was in violation of the requirement for a certificate of accreditation.

Petitioner's failure to satisfy the requirements under 42 C.F.R. § 493.801(b)(1), (3), and (5) is so egregious that it amounts to a violation of the condition for treatment of PT specimens and the condition requiring successful participation in an approved PT program under 42 C.F.R. § 493.803.

The failure to meet the condition regarding laboratory director is of such magnitude that this violation alone would suffice to support revocation of Petitioner's certificate for one year. Petitioner does not perceive the enormity of the deficiencies and thus suggests that a minor remedy, that includes a plan of correction, would be more appropriate. The thrust of Petitioner's argument is rooted in the lack of evidence pointing to referral of PT samples. However, even absent a finding that referral took place, there is a more than ample basis for revocation of its certificate of accreditation. Thus, HCFA has properly exercised its authority to impose principal sanctions, and Petitioner has no standing to claim that imposition of alternative sanctions is the appropriate remedy in this case.

VIII. Conclusion

Petitioner failed to comply with more than one laboratory condition of participation under CLIA. The presence of at least one condition level deficiency in Petitioner's operations authorizes HCFA to impose the remedies of suspension and revocation of Petitioner's CLIA certificate for at least one year, and cancel its approval to receive Medicare payment for its services, effective September 11, 1999. I hereby grant HCFA's motion for summary judgment.

Jose A. Anglada

Administrative Law Judge

1. The score for a sample in routine chemistry is the score determined under either paragraph (c)(2) or (c)(3) of 42 C.F.R. § 493.931. The score for endocrinology is determined under paragraph (c)(2) or (c)(3) of 42 C.F.R. § 493.933.

2. These results were for the third quarter PT for 1998.

3. HCFA Ex. 2.

4. The identity of the PT scores cannot be explained by a mere unorthodox practice of rounding. This is exemplified by the illustration at HCFA Ex. 3 at 7.