SUBJECT:

Alaa Ahmed, M.Sc., Ph.D., (Global Esoteric Reference Labs, Inc.),

Petitioner,

Center for Medicare & Medicaid Services

DECISION

• D2000: 42 C.F.R. § 493.801 Enrollment and testing of [proficiency testing] samples; and,
• D6076: 42 C.F.R. § 493.1441 Laboratory director, high complexity testing.

The notice further stated that the condition regarding proficiency testing (PT) was specifically supported by deficiency D2013 at 42 C.F.R. § 493.801(b)(4), which alleged that Petitioner engaged in improper PT referral by reporting PT results obtained from another laboratory. Other standard-level requirements were also found not to be met.

CMS concurred with the State agency findings and recommendations and determined to impose the following sanctions:

•Revocation of the laboratory's CLIA certificate, effective February 8, 2001,in the absence of a request for hearing by the laboratory.

•Cancellation of the laboratory's approval to receive Medicare payments for its services performed on or after December 23, 2000.

•Cancellation of payments under the Medicaid program for services performed on or after December 23, 2000.

CMS Ex. 2.

By letter dated February 5, 2001, Petitioner requested a hearing. The case was assigned to me for hearing and decision. I held a hearing in Pasadena, California, on February 28 and March 1, 2002. CMS offered 24 exhibits, after withdrawing its proposed exhibits 4 and 6. I admitted CMS Exs. 1 - 3, 5, and 7 - 26 into evidence. ⁽²⁾ Petitioner offered nine exhibits (P. Exs. 1 - 9), which I admitted into evidence without objection. Both parties submitted post-hearing briefs (CMS Br. and P. Br.) and responses (CMS R. Br. and P. R. Br.). ⁽³⁾. Based on the testimony offered at the hearing, the documentary evidence, the arguments of the parties, and the applicable law and regulations, I find that Petitioner was not in compliance with one condition under CLIA involving the improper referral of PT samples, as well as with one other condition-level and standard-level CLIA requirements. The consequence of Petitioner's noncompliance is that Petitioner's CLIA certificate must be revoked for at least one year. Therefore, CMS was authorized to revoke Petitioner's CLIA certificate and cancel its approval to receive Medicare and Medicaid payment for its services.

II. 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. 899, 100^th Cong., 2^nd Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828.

Under CLIA, the Secretary of Health and Human Services (Secretary) is authorized to inspect clinical laboratories and, in effect, license them to perform tests. The 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).

The standards for operation of clinical laboratories promulgated by the Secretary pursuant to the enabling legislation are found at 42 C.F.R. Part 493. Regulations governing the performance of proficiency tests by clinical laboratories are found at 42 C.F.R. § 493.801 et seq. A clinical laboratory must enroll in an approved PT program. It must notify the Department of Health and Human Services of each program or programs in which it chooses to participate to meet PT standards. CMS approves certain companies to administer PT under CLIA. The regulation at 42 C.F.R. § 493.911 requires that these approved testing companies send out, three times each year at approximately equal intervals, proficiency test samples to be analyzed by each laboratory for microbiology (in this case involving the subspecialty of microbiology, bacteriology). 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 CMS. 42 C.F.R. § 493.903. 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). The regulation emphatically prohibits sending PT samples to another laboratory for analysis which it is certified to perform itself. 42 C.F.R. § 493.801(b)(4). The laboratory must document the handling, preparation, processing, examination, and each step in the testing and reporting of results for all PT samples. 42 C.F.R. § 493.801(b)(5).

Any laboratory that the Secretary determines intentionally refers its PT samples to another laboratory for analysis shall have its CLIA certificate revoked for at least one year. 42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4). The regulations further provide that when CMS revokes a laboratory's CLIA certificate, it will also cancel that laboratory's approval to receive Medicare and Medicaid reimbursement for services rendered. 42 C.F.R. § 493.1842(a); Social Security Act (Act) section 1902(a)(9)(C); 42 C.F.R. § § 440.2(b), 440.30(c); 42 C.F.R. § 493.1809.

Additionally, a participating laboratory is required to have a director who provides overall management and direction in accordance with 42 C.F.R. §§ 493.801 et seq.; 42 C.F.R. § § 493.1441, 1443, 1445. A technical supervisor must conform to 42 C.F.R. §§ 493.1449, 1451. A laboratory that does not treat PT testing samples in the same manner as patient samples may have its certificate of accreditation revoked. 42 C.F.R. §§ 493.61(b)(1), (c)(3).

III. Issues

The issues in this case involve whether CMS's determination to revoke Petitioner's CLIA certificate and to cancel its approval to receive Medicare and Medicaid payment for its services was authorized under the applicable law at 42 U.S.C. § 263a and 42 C.F.R. § 493. Whether such determinations were authorized is dependent upon whether or not, based on deficiencies identified during the September 2000 survey, Petitioner improperly referred PT samples to another laboratory and on whether Petitioner failed to comply with the CLIA condition-level deficiencies for PT and for laboratory director.

IV. CMS's contentions

CMS contends that Petitioner failed to comply with the CLIA condition at 42 C.F.R. § 493.801 due to improper referral of PT samples. Based on State agency interviews and review of PT records for the second CAP PT ⁽⁴⁾ event of 2000, CMS determined that the medical technologist employed by Petitioner to do bacteriology testing tested samples in PT module D4 at another laboratory where she was employed in order to compare results, a violation of 42 C.F.R. § 493.801(b)(4). CMS also contends that Petitioner's laboratory director failed to attest to the routine integration of PT samples into patient workload using the laboratory's routine methods, and did not follow the manufacturer's instructions for test system operation and/or test performance. The latter violation of the standard for moderate and/or high complexity testing refers to the storing of reagents at improper temperature levels and storing testing materials that had exceeded their expiration date.

Accordingly, CMS asks that I: (1) sustain the revocation of Petitioner's CLIA certificate for one year, due to the intentional referral of PT by Petitioner to another laboratory; (2) find Petitioner out of compliance with the conditions for enrollment and testing of PT samples and laboratory director, separately authorizing revocation of Petitioner's CLIA certificate under 42 C.F.R. § 493.1840; and (3) prohibit Dr. Ahmed, Petitioner's owner and operator, from owning, operating, or directing any laboratory for at least two years pursuant to 42 U.S.C. § 263(a)(i)(3).

V. Petitioner's contentions

Petitioner contends that the Statement of Deficiencies is inaccurate and fraught with discrepancies. Pertinent to this is Petitioner's claim that CMS made an incorrect inference that there was a referral of PT samples to an outside laboratory. Petitioner goes on to allege that all PT testing was done utilizing the laboratory's own equipment and that no intentional referral of PT samples occurred. The methods and results of the PT samples reported to CAP, says Petitioner, were obtained from its own methods and results. Furthermore, Petitioner argues that any samples tested at another laboratory by its PT technician would not be in violation of CLIA, because they were tested at the other laboratory after the report to CAP from Petitioner's testing was mailed. Petitioner either generally denies the other allegations raised in the Statement of Deficiencies or offers argument in support of its contentions.

VI. Findings of Fact and Conclusions of Law

1. At all relevant times, Petitioner was an independent clinical laboratory, located in Woodland Hills, California, engaged in testing for, among other things, bacteriology, mycobacteriology, mycology, parasitology, virology, serology, general immunology, toxicology, and hematology. CMS Exs. 10 - 12.

2. Alaa Ahmed, M.Sc., Ph.D., was at all relevant times the owner and operator of GERL. See CMS Ex. 10, at 1.

3. Rudolph Ulirsch, M.D., was GERL's laboratory director and clinical consultant. Tr. at 490, 506; CMS Exs. 10, at 2; 13, at 1. As laboratory director, he was responsible for Petitioner's overall operation and administration. His responsibilities included employing personnel who were competent to perform test procedures, ensuring that test results were promptly, accurately, and proficiently recorded and reported, and assuring Petitioner's compliance with applicable regulations. 42 C.F.R. § § 493.1443, 1445.

4. Helen Flores was a licensed clinical laboratory scientist and medical technologist (Tr. at 437) employed by Petitioner at all relevant times as a technical supervisor and as one of Petitioner's testing personnel. CMS Ex. 13, at 1.

5. At all relevant times, Ms. Flores was employed to perform testing by both Petitioner and Dynamic Medical Laboratories. See Tr. at 417 - 419, 437, 440 - 441.

6. The CAP generally mails to laboratories participating in its PT program a group of five specimens three times per year. The laboratories are required to test these specimens as they would specimens for which they did patient testing and to mail their results to the CAP. Tr. at 32 - 34.

7. Testing samples sent to Petitioner by the CAP included samples for bacteriology and antibiotic sensitivity. Tr. at 38.

8. The testimonial and documentary evidence submitted by CMS shows that Petitioner reported PT results to the CAP for the second testing event of 2000 for bacteriology that were obtained through referral of PT specimens by Ms. Flores to another laboratory (Dynamic Medical Laboratories, the other laboratory where Ms. Flores was employed) for corroboration, in violation of the condition-level requirement set forth at 42 C.F.R. § 493.801.

9. Petitioner's PT samples, for the second testing event of 2000, thus were not examined with the laboratory's regular patient workload, in violation of the condition-level requirement set forth at 42 C.F.R. § 493.801.

10. The laboratory director failed to ensure that PT samples were tested in the same manner as patient samples, in violation of the condition-level requirement set forth at 42 C.F.R. § 493.1441. See 42 C.F.R. § 493.1445.

11. Petitioner did not meet the standard at 42 C.F.R. § 493.1205(e)(1) for test methods.

12. Petitioner did not meet the standard at 42 C.F.R. § 493.1202(c)(1) for moderate and/or high complexity testing.

13. Petitioner did not meet the standard at 42 C.F.R. § 493.1407(e)(14) for laboratory director responsibilities.

14. Petitioner was in violation of the condition at 42 C.F.R. § 493.1441 for laboratory director in failing to provide proper overall management and direction to the facility.

15. 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.

16. Petitioner's intentional referral of PT samples constitutes a violation of CLIA conditions requiring a mandatory revocation of its CLIA certificate for at least one year. 42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4).

17. Petitioner's violations of CLIA conditions and standards authorize CMS to revoke its CLIA certificate and cancel its approval to receive Medicare and Medicaid reimbursement for its laboratory services. 42 C.F.R. § § 493.1806 - 1809.

18. The revocation of Petitioner's CLIA certificate for a period of at least one year is both required by law and not unreasonable in light of Petitioner's failure to satisfy the condition-level requirements found above.

VII. Discussion

A. Petitioner was subject to CLIA requirements in September 2000.

Petitioner implies that it was not subject to CLIA requirements at the time of the survey in September 2000. P. R. Br. at 2. Petitioner reasons that since it only possessed a CLIA Certificate of Registration and no California Department of Health Services' license was ever issued to the facility, it was not qualified to engage in any patient testing. Petitioner's reasoning is without merit and inaccurate. GERL was certified to perform testing pursuant to a CLIA Certificate of Registration for a Certificate of Accreditation. That certificate was issued based on Petitioner's pending accreditation with CAP. Consequently, Petitioner was subject to compliance requirements under CLIA, as mandated by 42 C.F.R. Part 493, Subpart E. CMS Ex. 2. Moreover, Mr. Yamamoto, who is employed by CMS as a laboratory consultant with the CLIA program (Tr. at 308), testified that Petitioner was not only certified under CLIA to perform tests, but was also licensed by the State of California. Tr. at 329. Thus, as CMS notes, the fact that Petitioner might have been performing little or no actual patient testing at the time of the survey has no bearing on its burden to meet CLIA requirements. Id.; CMS R. Br. at 9.

B. Petitioner sent PT samples to another laboratory for analysis which it was certified to perform in its own laboratory.

Petitioner presents several arguments in its defense against the charge that it improperly referred PT samples to another laboratory. Some of those arguments are redundant while others warrant no discussion. Though none have merit, I will discuss the more substantive ones. ⁽⁵⁾ These are the following:

• CMS did not introduce any evidence that the testing performed by Petitioner's medical technologist at her other place of employment occurred during the 10 working days allotted to the facility to test the PT specimens and return the results to CAP. P. Br. at 4, § 5.
• The PT results reported to CAP were obtained by Petitioner using its own methods and equipment. P. Br. at 5, § 10.
• CMS's position regarding specimens D4-07 and D4-08 is not supported by the medical technologist's indication that the specimen was being referred for ID and that identification was performed using a bacitracin disk. P. Br. at 5, § 11.

Donald Newbold testified that at the time of the complaint survey giving rise to this action, he was acting (at State agency request) as an examiner for the State agency. ⁽⁶⁾ Tr. at 25 - 26. As an examiner, Mr. Newbold's duties included the inspection of clinical laboratories to assure their compliance with CLIA and State law. Tr. at 26. In this case, Mr. Newbold testified that the State agency asked him to lead an investigation of Petitioner based on a complaint it had received alleging that Petitioner had taken data from other labs to validate instruments. Tr. at 27. Mr. Newbold made an initial visit to Petitioner's location on September 11, 2000, in the company of Victor Escovedo, who is also a State agency examiner. Tr. at 27 - 28, 198. They did not enter the facility, but examined the trash bin behind the laboratory in order to determine if there might be information that could be helpful in their investigation. ⁽⁷⁾ Tr. at 28 - 29.

Mr. Newbold testified that in their search of the laboratory's trash bin, they found a microbiology worksheet with the name "Dynamic Medical Laboratories" on the heading. See CMS Ex. 15; Tr. at 29. He stated that the document is the type that laboratories are required to maintain to substantiate how they arrive at testing results for bacteriology and sensitivities. ⁽⁸⁾ Tr. at 30. The document Mr. Newbold found was labeled "D409" in the upper left hand corner, and, under the name, it was identified as "CAP." He added that D409 is a typical designation throughout the laboratory industry to identify PT for a specific specimen. In this particular case, it referred to proteus mirabilis, a bacteria. CAP referred to College of American Pathologists, which is one of the PT agencies approved by CMS. ⁽⁹⁾ Tr. at 30 - 36. With respect to this particular specimen, Petitioner was required to test for bacteria as well as sensitivity. Tr. at 38.

On September 12, 2000, Mr. Newbold and Mr. Escovedo entered the laboratory and observed that patient testing was being performed at the time. After they were introduced to Dr. Ahmed by one of the several employees present, the examiners were given a tour of the facility. Tr. at 44 - 45.

Following the tour, Mr. Newbold and Mr. Escovedo went to the bacteriology testing room and reviewed PT documents until the bacteriologist, Ms. Flores, arrived. Tr. at 45. Mr. Newbold testified that upon her arrival he asked Ms. Flores if she had been performing PT at any other place, and she said no. However, when confronted with CMS Ex. 15, the document which they found in the trash bin, she responded that she had tested the specimen at her other place of employment because she did not trust the MicroScan Walk Away. ⁽¹⁰⁾ Tr. at 46 - 47. Pertinent to this is the fact that Ms. Flores had no prior testing experience on the MicroScan Walk Away, the equipment in use at GERL to do the testing in question. Tr. at 445 - 446. The worksheet that the examiners found in the trash bin indicated that the specimen was tested using an Enterotube, which Petitioner did not have at its facility. Tr. at 47.

With respect to specimen D4-07, Ms. Flores reported that she was unable to identify the specimen (hemolytic strep) with the MicroScan Walk Away. CMS Ex. 20, at 3. Instead, she made use of a bacitracin disk. However, Petitioner did not use such disks at its facility. Mr. Escovedo testified that when he inquired regarding this specimen, Ms. Flores admitted having performed the test at "Dynamic." Tr. at 210, 244.

On September 14, 2000, Ms. Flores was disciplined by her supervisor because she: (1) performed parallel testing of the microbiology samples of the CAP 2000 survey for the second testing event at Petitioner's facility using the MicroScan Walk Away as well as the testing instruments at her other place of employment; and (2) reported to CAP a mix of GERL's results and those obtained at another laboratory. CMS Ex. 16. Ms. Flores accepted the disciplinary action, stating that she was unaware of the regulations. Id.

In her testimony, Ms. Flores stated that she took the D4-09 sample to test at her other place of employment, and that she did it only after the CAP report was submitted. Tr. at 418 - 419. However, she admitted that the worksheet (CMS Ex. 15) contained no date to support her claim that she performed the test at Dynamic only after sending the proficiency test results to CAP. Tr. at 455. Ms. Flores was also inconsistent in her explanation as to why she tested specimen D4-09 at her other place of employment. Whereas she told the examiners that she repeated the proficiency test at Dynamic Laboratories because she did not trust the MicroScan Walk Away, she testified at the hearing that she did it out of mere curiosity. Tr. at 51, 418. I am persuaded that Ms. Flores' first explanation to the examiners is the more logical of the two versions. I find that inasmuch as she did not trust the MicroScan Walk Away, Ms. Flores sought corroboration in order to ascertain that the results being reported to CAP were correct. ⁽¹¹⁾

Additionally, if Ms. Flores was aware that she had done nothing wrong, she would not have accepted responsibility for improper referral to another laboratory or for reporting results obtained through such referral to CAP. I am not persuaded that Ms. Flores accepted a two week suspension from her employment, and did not dispute the serious allegations leveled against her, without giving the matter much thought. Tr. at 483 - 484. Ms. Flores' testimony that she told Dr. Ahmed that she only tested PT samples at Dynamic after the results were sent to CAP is not credible. If that were so, Petitioner would have raised that defense earlier in this proceeding and would not have waited until the hearing. Petitioner has introduced no evidence to show that it corrected the disciplinary action reflected at CMS Ex. 16. If Dr. Ahmed believed Ms. Flores' account to be true, I would expect to see a record of the action taken by the facility to correct the disciplinary action, at least in regard to the allegation of improper referral. ⁽¹²⁾ Finally, Ms. Flores offered no explanation as to why she would accept responsibility for the actions noted in CMS Ex. 16, only to later tell Dr. Ahmed that she had incurred no violation by testing PT samples at Dynamic after the results were sent to CAP.

Although Petitioner argues that Ms. Flores did testing of GERL PT samples at her other place of employment after the results were sent to CAP, I am not persuaded as to her veracity. The manner in which Ms. Flores kept matters shrouded in secrecy raises doubt as to her testimony regarding when the GERL PT samples were sent to CAP, and leads to a conclusion that they were referred to Dynamic prior to the results being sent to CAP. This is because, if Ms. Flores had in fact removed the samples for testing at Dynamic merely to satisfy her curiosity as to the accuracy of the MicroScan Walk Away, she would have freely shared the results with her co-workers so all might benefit from her findings. In the absence of the intent to hide her actions, she would not have been so secretive. In fact, when first approached by the examiners regarding CMS Ex.15, she would not have tried to conceal her actions. Petitioner itself contends that "Miss. Flores was a dishonest technician who kept her actions to her self," and that she is the one who should be held responsible for all the deficiencies. P. R. Br. at 7.

Regarding specimen D4-07, and CMS's contention that D4-07 testing was performed at Dynamic because no bacitracin disks were available at GERL (CMS Ex. 1, at 5 - 6), Petitioner argues that it is normal terminology in bacteriology to refer a specimen for identification by more advanced methodology, such as the bacitracin disk or bacitracin methodology. P. Br. at 5. ⁽¹³⁾ Petitioner appears to suggest that Ms. Flores identified the specimen using bacitracin methodology. I infer from Petitioner's argument that this method did not require the use of bacitracin disks and could have been performed at GERL. Petitioner has not, however, produced any evidence to rebut CMS's prima facie case that Ms. Flores tested the sample at Dynamic. I note that Ms. Flores had no confidence in her ability to operate the MicroScan Walk Away, and that she specifically stated at CMS Ex. 20, at 3, that she used a "bacitracin disc" for identification. See also CMS Ex. 1, at 5 - 6. Furthermore, the worksheet for D4-07 states that the organism was "not identified by Walk-away" and that it was identified as "hemolytic strep," "Bacitracin disc - Resistant." CMS Ex. 20, at 3. I therefore agree with CMS that the evidence shows that Ms. Flores tested samples other than D4-09 or, at least, "confirmed results" at another laboratory. CMS R. Br. at 3, n.1.

In view of the foregoing, it is my finding that CMS established a prima facie case that Petitioner engaged in improper referral of its PT to another laboratory for testing in violation of 42 C.F.R. § 493.801. Petitioner has presented no persuasive evidence to rebut CMS's showing.

Petitioner requests that I not hold it responsible for the actions of Ms. Flores, because she acted secretly and on her own, and the facility had no way of preventing the referral. However, the regulations allow no such avenue of escape. Dr. Ahmed, as owner and operator of GERL, bears the primary responsibility for the reliability of the results of all specimen testing performed in the laboratory. See 42 C.F.R. § 493.2.

C. Petitioner failed to examine PT samples with its regular patient workload.

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. § 493.801(b)(1) and (5). Ms. Flores admitted that she tested PT samples at her other place of employment. In the written disciplinary action, Petitioner charged her with reporting to CAP a mix of Petitioner's PT results and those of a second laboratory. Ms. Flores accepted the disciplinary action, asserting that she was unaware of the regulations. CMS Ex. 16. As stated earlier, I do not find credible her testimony that she accepted the discipline unthinkingly, and that she did testing of PT samples at her other place of employment after sending the PT results to CAP. Consequently, the results of PT samples reported to CAP were not obtained through testing performed in the manner in which the laboratory would handle its regular workload.

D. The laboratory director failed to ensure that PT samples were tested in the same manner as patient samples.

The laboratory director, Dr. Rudolf Ulirsch, failed to ensure that PT samples were handled in the same manner as patient samples. The record is devoid of any supervision exercised by Dr. Ulirsch in the processing of PT samples for the second testing event of 2000. In fact, Dr. Ulirsch admitted that he had no recollection of ever signing, as required by 42 C.F.R. § 493.801(b)(5), the attestation statement provided by the PT program documenting that the PT samples were tested in the same manner as patient specimens. Tr. at 524. Additionally, Dr. Ahmed testified that Dr. Ulirsch was not involved at all in PT activities for the second testing event of 2000. Tr. at 577.

Although Dr. Ahmed stated that he signed the microbiology PT attestation statement for GERL, the examiners found no formal delegation of authority by the laboratory director allowing him to do so. Tr. at 582. Aside from the fact that the attestation form sent to CAP had no laboratory director or designee signature on it, Dr. Ahmed was not permitted to sign the forms by delegation from the director because he lacked the required California clinical laboratory scientist license. Tr. at 205 - 206, 574; CMS. Ex. 20, at 2. I find, therefore, that there was no responsible individual at GERL permitted by the regulations to ensure compliance with PT requirements.

E. Petitioner did not meet the standard at 42 C.F.R. § 493.1205(e)(1) for test methods.

42 C.F.R. § 493.1205(e)(1) requires that reagents, 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 the State agency examiner's observation of the stored supplies and materials and the statements of testing personnel interviewed on September 13, 2000, CMS determined that the laboratory had, available for use, reagents and culture media that had exceeded their expiration date. CMS Ex. 1, at 10; Tr. at 224. Mr. Escovedo testified that the majority of the culture media in the refrigerator had expired months before the inspection visit. He added that even if the laboratory was not performing patient testing on the date of the survey, it was required to replace the expired reagents with new unexpired ones, since the facility was licensed and certified to conduct patient testing. ⁽¹⁴⁾ Tr. at 224 - 225. Additionally, Mr. Newbold testified that an antigen suspension used in testing for syphilis had expired. He added that the testing of samples with expired reagents poses a risk for patient harm. Tr. at 91 - 93. Here, CMS has made a prima facie case that Petitioner did not meet the standard pursuant to 42 C.F.R. § 493.1205(e)(1) for test methods. Petitioner presented no evidence to refute this charge.

F. Petitioner did not meet the standard at 42 C.F.R. § 493.1202(c)(1) for moderate and/or high complexity testing.

Based on the State agency examiner's observation on September 13, 2000, of the stored supplies and materials in a refrigerator located in the bacteriology laboratory, it was determined that the laboratory failed to follow the manufacturer's instructions for test systems operation and/or test performance. The State agency examiner specifically found that the refrigerator labeled F-1, which was located in the bacteriology laboratory, contained several reagents stored at 2 - 8 degrees C when the manufacturer specified on the reagent label to store at 15 - 30 degrees C. CMS Ex. 1, at 7 - 8. Mr. Newbold testified that he personally observed that the various reagents listed on CMS Ex. 1, at 8, were stored at incorrect temperatures. ⁽¹⁵⁾ The manufacturer had instructed that they should be stored at room temperature, but the laboratory placed them in the refrigerator. Tr. at 90. Mr. Newbold pointed out that improperly stored reagents could deteriorate and adversely affect patient testing by leading to incorrect patient testing results. Tr. at 91. Here, CMS has presented sufficient evidence to establish a prima facie case regarding this deficiency. Petitioner offered no evidence to rebut CMS's showing.

G. Petitioner did not meet the standard at 42 C.F.R. § 493.1407(e)(14) for laboratory director responsibilities.

The laboratory director must specify, in writing, the responsibilities and duties of each person engaged in the performance of preanalytic, analytic, and postanalytic phases of testing that identifies which examinations and procedures each individual is authorized to perform. CMS found that the laboratory director failed to specify, in writing, the duties and responsibilities for each person engaged in the performance of the analytic phases of testing. Specifically, a non-licensed individual was observed in the performance of patient HIV1/HIV2 testing. CMS Ex.1, at 12 - 13. Mr. Escovedo testified that the individual performing HIV testing was not listed on the laboratory's personnel form as someone authorized to perform such testing. Mr. Escovedo stated that he found nothing in writing by the laboratory director specifying the duties and responsibilities of every person working in the facility. Tr. at 227 - 228. This finding, or lack of it, was significant, because HIV1/HIV2 testing is high complexity testing, yet no licensing credentials were made available for the person performing such tests. In the absence of evidence to the contrary, I infer that the individual observed performing HIV testing was not licensed to do so. Petitioner presented no evidence to rebut CMS's prima facie case regarding this deficiency.

H. Petitioner did not meet the condition at 42 C.F.R. § 493.1441 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 the admissions of Petitioner's own agents, 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 CAP were not obtained solely through onsite testing following the facility's routine methods. Dr. Ulirsch's failure to ensure that the PT scores reported to CAP were solely the result of onsite testing, and not those obtained through referral and corroboration at other participating laboratories, are a clear indication that he was out of touch with the day to day operations of his laboratory. Pertinent to this is his testimony to the effect that he made only sporadic visits to the laboratory. Tr. at 526. It is obvious that Dr. Ulirsch did not fulfill 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 should be noted that Dr. Ulirsch failed to sign the attestation sheets for the second testing event of 2000, documenting that the PT samples were tested in the same manner as patient specimens. 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 controls and reagents do not exceed their expiration dates, and are stored in keeping with the manufacturer's instructions. Dr. Ulirsch failed to do this. The preceding discussion establishes that Petitioner stored reagents and control materials beyond their expiration dates, and also kept reagents at improper temperatures.

The laboratory director failed to specify, in writing, the duties and responsibilities for each person engaged in the performance of the analytic phases of testing. Specifically, a non-licensed individual was permitted to perform patient HIV1/HIV2 testing.

The regulations promulgated by the Secretary make the laboratory director responsible for assuring that a laboratory satisfies CLIA requirements. Here, Petitioner's failure to meet these 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.

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

The regulation at 42 C.F.R. § 493.801 unequivocally establishes that a laboratory must not intentionally send PT samples or portions of samples to another laboratory for any analysis for which it is certified to perform in its own laboratory. This includes a prohibition against engaging in any inter-laboratory communications or corroboration pertaining to the results of PT samples until after the date by which the laboratory must report PT results to the program for the testing event in which the samples were sent. 42 C.F.R. § 493.801(b)(4). Intentional here means not inadvertent or not through mere oversight. Long Medical Laboratory, DAB CR334, at 6 - 9 (1994).

When PT results are not obtained through independent testing of samples in the same manner as patient samples are tested, the integrity of the entire proficiency testing program is undermined.

The legislative history of CLIA not only reflects the significance attached by the legislators to the accuracy and reliability of laboratory testing, but also their concern that laboratories would seek questionable ways to undercut the intent of Congress.

As stated by the Administrative Law Judge in Long Medical Laboratory, DAB CR334, at 4:

It is apparent, both from the Act itself and its legislative history, that Congress considers proficiency testing conducted pursuant to standards developed by the Secretary to be an important factor in assuring that clinical laboratories conduct tests accurately and reliably. The Act directs the Secretary to develop standards for proficiency testing. 42 U.S.C. § 263a(f)(3). The House of Representatives committee report which supported the Act provides that:

To maintain its certification under the bill, a laboratory would have to participate successfully in a proficiency testing program that met standards established by the Secretary. The Committee believes that proficiency testing should be the central element in determining a laboratory's competence, since it purports to measure actual test outcomes rather than merely gauging the potential for accurate outcomes.

1988 U.S.C.C.A.N. 3849.

Petitioner raises several contentions in defense of the revocation and cancellation actions undertaken by CMS. These are all inconsequential, ranging from the inadequacy of the evidence adduced by CMS to its claim that its facility was not actively engaged in the performance of patient testing. Thus, none of Petitioner's arguments suffice to create any doubt that Petitioner failed to comply with the conditions for participation noticed by CMS.

VIII. Conclusion

In September 2000, for the second CAP testing event in 2000, Petitioner had condition-level deficiencies regarding its treatment of PT samples and also its laboratory director's improper direction and management of laboratory operations. Accordingly, CMS had a basis to revoke Petitioner's CLIA certificate and to cancel its approval to receive Medicare and Medicaid payment for its services. Moreover, CMS was required to take this action with regard to Petitioner's referral of proficiency testing samples.

Jose A. Anglada

Administrative Law Judge

1. The Health Care Financing Administration (HCFA) has been renamed the Centers for Medicare & Medicaid Services (CMS). Reference to either shall apply to both names.

2. I admitted CMS Ex. 24 over Petitioner's objection. See Tr. at 8 - 17.

3. Petitioner referred to its response brief as its "Closing - Post Hearing Brief".

4. Petitioner was enrolled in the College of American Pathologists (CAP) PT program at all relevant times. CMS Ex. 2, at 1; P. R. Br. at 1; see Tr. at 31 - 36.

5. I note, however, Petitioner's argument that the statement of deficiencies is inaccurate and fraught with discrepancies. One of the "mistaken statements" in the Statement of Deficiencies alluded to by Petitioner refers to an erroneous identification of PT sample D4-09. Tr. at 23. However, Donald Newbold, a State agency examiner and CMS witness, clarified that after drafting the Statement of Deficiencies, he discovered a typographical error in the citation to the proficiency sample which Ms. Flores admitted testing at the other laboratory where she was employed. On page 5 of CMS Ex. 1, §§ "b" and "c" should refer to CAP PT sample D4-09, rather than D4-07. CMS corrected the error in a letter to Petitioner dated February 22, 2002, which I admitted over Petitioner's objection as CMS Ex. 24. Thus, Petitioner was timely made aware of the error and its correction. Additionally, Petitioner has not shown that it was prejudiced in any way by the error and its correction. The other discrepancies noted by Petitioner are inconsequential. P. Br. at 2, § 1.

6. Mr. Newbold is currently an attorney with the State of California, Department of Health Services, and was so employed at the time of the survey in question. Tr. at 25. He is also a licensed clinical laboratory scientist. Tr. at 26. Prior to his employment as an attorney, Mr. Newbold was employed as a State agency examiner. Id.

7. During the time he worked as an examiner, Mr. Newbold operated a special investigation section within the State agency. The section instituted the practice of inspecting trash bins seeking data and records that had been thrown out by laboratories it was investigating. Tr. at 28 - 29.

8. Sensitivity testing is the procedure by which a laboratory determines the antibiotics to which the bacteria being tested is sensitive. Tr. at 37 - 38.

9. One indicator that the testing did not pertain to Dynamic Medical Laboratories was that Dynamic was enrolled in a PT program with the American Association of Bioanalysts (AAB) and not with CAP. Tr. at 41.

10. The MicroScan Walk Away System (CMS Ex. 1, at 5) is variously referred to in the record before me as the Microscan, Microscan Walkaway, or Walk Away. In this decision, I use the term "MicroScan Walk Away" to refer to the equipment in question.

11. From the tenor of Ms. Flores' testimony, it appears that her distrust of the MicroScan Walk Away was in reality a distrust of her own ability and lack of experience in the operation of the MicroScan Walk Away. Tr. at 446 - 448. This is evident from her belief that the MicroScan Walk Away was a superior testing instrument. Tr. at 431 - 432. However, although the MicroScan Walk Away is a computer based, sophisticated testing instrument, Ms. Flores did not appear to be computer literate. Tr. at 576.

12. I defer for later discussion the matter of the other deficiencies for which Ms. Flores admitted responsibility.

13. Petitioner also references specimen D4-08. However, I make no findings regarding specimen D4-08.

14. Mr. Escovedo testified that the laboratory was actively engaged in patient specimen testing during his survey visit. Tr. at 225.

15. The reagents Mr. Newbold asserts were stored at incorrect temperatures include: 0.8% sulfanilic acid, (NITI), Kovac's reagent, (IND), 40% KOH (VPI), 0.5% N, N-dimenthylalphanaphtylamine (NIT2), and 10% ferric chloride, (TDA). CMS Ex. 1, at 8.