SUBJECT:

Lackawanna Medical Group Laboratory,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

Lackawanna Medical Group Laboratory's (Petitioner's) certificate to operate as a clinical laboratory under the Clinical Laboratory Improvement Amendments of 1988 (CLIA)⁽¹⁾ is revoked for a period of one year effective the date of this decision. The Centers for Medicare & Medicaid Services (CMS) ⁽²⁾ motion for summary judgment is granted as there are no material issues of fact in dispute and the only issues may be resolved by application of the law to the undisputed facts.

I. Procedural History

Petitioner was surveyed by the Pennsylvania Department of Health (the State agency) on July 18 and August 7, 2000. By letter dated November 13, 2000, Respondent advised Petitioner that it proposed to revoke Petitioner's CLIA certificate and to cancel Petitioner's authorization to receive Medicare payment for its services pursuant to 42 U.S.C. § 263a. CMS cites as grounds for the proposed action, the survey by the State agency on July 18, 2000, which allegedly showed that Petitioner intentionally referred its proficiency test samples to another laboratory and proficiency test samples were not treated the same as regular patient workload. Petitioner filed a request for hearing by letter dated November 21, 2000.

On December 13, 2000, this case was assigned to Judge Carolyn Hughes for hearing and decision. The case was subsequently reassigned to me for hearing and decision on October 11, 2001.

On February 26, 2001, CMS notified Petitioner that it "reopened" the proposed revocation of Petitioner's CLIA certificate based on receipt of a revised statement of deficiencies. CMS advised Petitioner that it proposed to revoke Petitioner's CLIA certificate and the authority to receive payment by Medicare, based on both the July 18 and August 7, 2000 surveys and the allegations that: (1) Petitioner intentionally referred its proficiency test samples to another laboratory for analysis; (2) Petitioner did not treat its proficiency test samples the same as regular patient workload and the samples were taken to another laboratory for testing prior to reporting results to the proficiency test program; and (3) Petitioner failed to maintain all required records. Petitioner amended its request for hearing by "Consented Motion for Leave to File Additional Responses and/or to Consolidate Matters, and Responses to February 26, 2001 Re-Opening of Proposed Revocation." filed on April 30, 2001.

On August 2, 2001, CMS filed its motion for summary judgment with two exhibits, CMS Exhibit (CMS Ex.) 1 and 2. Petitioner filed its brief in opposition on September 4, 2001 with five exhibits, Petitioner's Exhibit (P. Ex.) 1 through 5. All exhibits submitted with the motion and opposition are admitted for purposes of this decision.

II. Findings of fact and conclusions of law

A. Findings of fact

The following findings of fact are based upon the pleadings and exhibits submitted related to the motion for summary judgment, considering the facts and all inferences drawn therefrom in a light most favorable to the nonmovant, the Petitioner. ⁽³⁾

1. Petitioner possessed a valid CLIA certificate and was authorized to receive Medicare payments at all relevant times.

2. Petitioner's laboratory was surveyed by the State agency on July 18 and August 7, 2000.

3. CMS proposed to revoke Petitioner's CLIA certificate and authorization to receive Medicare payments based on deficiencies allegedly found during the surveys of July 18 and August 7, 2000.

4. Petitioner had a quality control program.

5. Petitioner's quality control policy states that when it sends its samples for parallel testing at another laboratory, it includes proficiency test samples with its regular patient workload.

6. Petitioner tested proficiency test samples with its regular patient workload, using its regular staff and the regular protocol within its laboratory.

7. Petitioner only reported the results of its own testing of proficiency test samples to the proficiency program and not the results of parallel testing by another laboratory.

8. By sending proficiency test samples with regular patient test samples for parallel testing, Petitioner intended to comply with the requirement of 42 C.F.R. § 493.801(b)(1) which requires that proficiency test samples be treated the same as those of regular patient workload.

9. Petitioner's practice of sending out proficiency test samples with its regular patient workload was reviewed in the past but no deficiency was cited

10. Petitioner intended to send proficiency test samples to another laboratory.

11. Petitioner sent proficiency test samples to another laboratory.

B. Conclusions of Law

1. A laboratory must not send proficiency test samples or portions of samples to another laboratory, intentionally or unintentionally, for analysis which it is certified to perform in its own laboratory, or for any other reason. 42 C.F.R. § 493.801(b)(4).

2. The motives of the laboratory that sends proficiency test samples to another laboratory for analysis that the sending laboratory is certified to perform, are irrelevant and not a defense to violation of 42 C.F.R. § 493.801(b)(4).

3. The fact that the laboratory that sends proficiency test samples to another laboratory for analysis that the sending laboratory is certified to perform, never reports the analysis of the proficiency samples to the proficiency program is irrelevant and not a defense to a violation of 42 C.F.R. § 493.801(b)(4).

4. There is no conflict between 42 C.F.R. § 493.801(b)(1) which requires that proficiency test samples be tested in the laboratory, with regular patient workload, using regular laboratory personnel and procedures, and 42 C.F.R. § 493.801(b)(4) which establishes an absolute ban on sending out proficiency test samples to another laboratory.

5. CMS is not bound or estopped by prior agency action when that action was based on an erroneous interpretation and application of the statute and regulations.

6. There are no material facts in dispute and issues that require resolution are questions of law, therefore summary judgment is appropriate.

7. Petitioner violated 42 C.F.R. § 493.801(b)(4) by admittedly sending proficiency test samples to another laboratory.

8. CMS is required to revoke Petitioner's CLIA certificate for a period of not less than one year for sending proficiency test samples to another laboratory. 42 U.S.C. § 263a(i)(4); 42 C.F.R. §§ 493.801(b)(4) and 493.1840(b).

9. CMS must cancel Petitioner's approval to receive Medicare payments when its CLIA certificate is revoked. 42 C.F.R. § 493.1842(a).

10. The violation of 42 C.F.R. § 493.801(b)(4) triggers a mandatory one-year revocation of Petitioner's CLIA certificate which requires cessation of entitlement to Medicare payments, therefore it is unnecessary to consider other alleged violations.

11. Revocation of Petitioner's CLIA certificate is effective the date of this decision. 42 C.F.R. §493.1844(d)(2).

III. Discussion

A. Issue

Whether there is a basis for CMS's revocation of Petitioner's CLIA certificate.

B. Applicable law

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories. Pub. L. No. 100-578, amending § 353 of the Public Health Service Act, codified at 42 U.S.C. § 263a et seq. The purpose of CLIA is to ensure the accuracy and reliability of laboratory tests, and hence the public health of all Americans. See H.R. Rep. No. 899, 100^th Cong. 2d Sess. 8, 18 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3839. CMS certification of a laboratory under CLIA is dependent upon whether the laboratory meets the conditions for certification set out in the statute and regulations. 42 U.S.C. § 263a(f)(1)(E); 42 C.F.R. § 493.1 et seq. Pursuant to CLIA, the Secretary of Health and Human Services (the Secretary) has broad enforcement authority, including the ability to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more requirements for certification.

The Secretary has exercised his authority under 42 U.S.C. 263a(f) and issued regulations implementing CLIA. See 42 C.F.R. Part 493. The regulations specify standards and the specific conditions of certification that a laboratory must meet to achieve compliance. The regulations confer broad authority on CMS to ensure that laboratories perform as Congress intended, including authority to inspect and sanction laboratories that fail to comply with the regulatory requirements. CMS has the delegated authority to suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and may also impose alternative sanctions such as a directed plan of correction or monitoring by the state. 42 C.F.R. § 493.1806.

The regulations provide as a condition for participation that a laboratory conducting moderate or high complexity testing, as was Petitioner, must enroll in an approved proficiency testing program or programs that cover all the specialties and sub-specialties for which the laboratory seeks certification. The laboratory is required to test proficiency test samples in the same manner as its regular patients' specimens. 42 C.F.R. § 493.801. Standards established to satisfy this condition level requirement are set forth at 42 C.F.R. § 493.801(b)(1) through (6). The standards pertinent to this case are:

1. Proficiency test samples must be examined or tested with the regular client workload, by the same laboratory personnel, and with the laboratory's regular or routine method;

2. Proficiency test samples must be tested the same number of times as regular patient samples.

3. Inter-laboratory communications about the results of testing proficiency test samples is prohibited until after the date for reporting test results to the proficiency testing program.

4. A laboratory must not send proficiency test samples or portions thereof to another laboratory for any analysis that it is certified to perform and if it intentionally does so, CMS must revoke its CLIA certificate for a year.

CMS must revoke a laboratory's CLIA certificate for one year if CMS determines that the laboratory has intentionally referred its proficiency testing samples to another laboratory for analysis. 42 U.S.C. § 263a(i)(4); 42 C.F.R. §§ 493.801(b)(4) and 493.1840(b). CMS must also cancel a laboratory's approval to receive Medicare payments when CMS suspends or revokes the laboratory's CLIA certificate. 42 C.F.R. § 493.1842(a). CLIA provides at 42 U.S.C. § 263a(i)(1) that a laboratory's certificate may be suspended, revoked, or limited only after reasonable notice and opportunity for hearing to "the owner or operator of the laboratory. . . ." The Secretary's regulations provide that a laboratory or prospective laboratory dissatisfied with an initial determination listed in 42 C.F.R. § 493.1844(b) is entitled to a hearing before an administrative law judge (ALJ). 42 C.F.R. § 493.1844(a). The hearing procedures found in subpart D of Part 498 are incorporated by reference. 42 C.F.R. § 493.1844. The "suspension, limitation or revocation of the laboratory's CLIA certificate ... because of noncompliance. . . ." is the first listed initial determination subject to hearing before an ALJ. 42 C.F.R. § 493.1844(b)(1). Generally when a hearing is requested, suspension or revocation of a CLIA certificate is not effective until after a hearing decision is issued by the administrative law judge. 42 C.F.R. § 493.1844(d)(2). Pursuant to 42 C.F.R. § 1844(f) it is presumed that Petitioner has a right to a hearing in this case. See Garden City Medical Clinic, DAB No. 1763 (2001), citing 42 U.S.C. § 263a(i)(1) and 42 C.F.R. § 493.1844(a). However, summary judgment is appropriate and no hearing is required where either: there are no disputed issues of material fact and the only questions that must be decided involve application of law to the undisputed facts; or, the moving party must prevail as a matter of law even if all disputed facts are resolved in favor of the party against whom the motion is made. A party opposing summary judgment must allege facts which, if true, would refute the facts relied upon by the moving party. See e.g., Fed. R. Civ. P. 56(c); Garden City, supra, Everett Rehabilitation and Medical Center, DAB No. 1628, at 3 (1977) (in-person hearing required where non-movant shows there are material facts in dispute that require testimony). In opposing Respondent's motion for summary judgment, Petitioner bears the burden of showing that there are material facts that are disputed. Everett Rehabilitation. It is not sufficient for Petitioner to rely upon mere allegations or denials to defeat the motion and proceed to hearing. Petitioner must, by affidavits or other evidence which set forth specific facts, show that there is a genuine issue for trial. If Petitioner cannot show by some credible evidence that there exists some genuine issue for trial, then summary judgment is appropriate and Respondent must prevail as a matter of law. Furthermore, if CMS establishes a prima facie case that Petitioner violated 42 C.F.R. § 801(b)(4) by intentionally referring proficiency test samples to another laboratory and Petitioner raises no defense, a one-year revocation of Petitioner's CLIA certificate is mandatory with the attendant termination of Medicare payments, and there is no issue related to the reasonableness of these remedies.

IV. Conclusion

For the foregoing reasons, CMS's motion for summary judgment is granted. Petitioner's CLIA certificate is revoked for a period of one year effective the date of this decision and Petitioner's approval to receive Medicare payments is cancelled.

CMS alleges three regulatory violations in this case, intentional referral of proficiency test samples to another laboratory, failure to treat proficiency samples the same as regular patient workload and failure to maintain required records, violations of 42 C.F.R. §§ 493.801(1), (2) and (4). Petitioner correctly notes that CMS also alleged in both its November 13, 2000-notice and its February 26, 2001-notice that Petitioner sent the proficiency test program the results of testing of proficiency test samples from another laboratory. Whether or not Petitioner submitted the results of testing by another laboratory as its own, kept all required records, or failed to treat proficiency test samples the same as its regular patient workload, are fact issues that would require further evidentiary development through a hearing. However, Petitioner admits that it did send proficiency test samples to another laboratory for testing. Because I find that the act of sending proficiency test samples to another laboratory constitutes a violation that triggers a mandatory one-year revocation of Petitioner's CLIA certificate, there is no need to consider further the unresolved questions of fact and no need for a hearing. This case can be fully resolved by application of the law to the undisputed facts.

It is undisputed that Petitioner sent proficiency test samples to another laboratory for testing. Petitioner's director, Frank A. Milani, M.D., provided an affidavit in which he states that Petitioner always intended to comply with 42 C.F.R. § 493.801(b)(1) which requires that proficiency test samples be treated the same as regular patient test samples. Therefore, in accordance with its written policy, Petitioner periodically sent proficiency samples to another laboratory for "parallel testing" with its regular patient workload. P. Ex. 1. Petitioner's employee, Cathy Pratt, also provided an affidavit in which she confirmed the testimony of Dr. Milani, that proficiency test samples were sent to another laboratory for testing with regular patient workload as required by Petitioner's policy. Consistent with Dr. Milani's affidavit, Ms. Pratt states that she actually conducted the testing at both Petitioner and the other laboratory. Ms. Pratt further states that she did not report results from the other laboratory to the proficiency test program. P. Ex. 2.

PT (proficiency test) samples WERE tested in the POL with the laboratories (sic) regular patient workload using the laboratories (sic) routine methods and none other.

Our in-house QC (quality control) Program clearly states . . . that the physician's office lab (POL) will submit patient samples to Med Science at regular intervals for parallel studies. Therefore, since this is how we handle our routine patients by adding an extra QC step, it is also necessary (by regulation) to run PT samples for parallel checks for our internal use even though we only report PT samples from our in-house (POL) runs. This practice has been reviewed on previous inspections and no citations were made.

P. Ex. 3 (emphasis in original).

For purposes of the motion for summary judgment, I accept the affidavit of Dr. Milani, Ms. Pratt, and Dr. Milani's statements in the letter of November 21, 2000 as true. Therefore, I accept as undisputed fact that:

1. Petitioner had a quality control program.

2. Petitioner's quality control program required that when it sent samples for parallel testing at another laboratory, it included proficiency test samples with its regular patient workload.

3. Petitioner tested proficiency test samples with its regular patient workload, using its regular staff and regular protocol within its laboratory.

4. Petitioner only reported the results of its own testing of proficiency test samples to the proficiency program and not the results of parallel testing in another laboratory.

5. By sending proficiency test samples with regular patient test samples for parallel testing, Petitioner intended to comply with the requirement of 42 C.F.R. § 493.801(b)(1) which requires that proficiency test samples be treated the same as those of regular patient workload.

The question then is whether, in light of these undisputed facts, Petitioner violated 42 C.F.R. § 493.801(b)(4) by sending proficiency test samples to another laboratory. I conclude, as a matter of law, that the admitted conduct constitutes a violation and that CMS is required to revoke Petitioner's CLIA certificate for a period of not less than one year. 42 U.S.C. § 263a(i)(4); 42 C.F.R. §§ 493.801(b)(4) and 493.1840(b). CMS must also cancel the laboratory's approval to receive Medicare payments. 42 C.F.R. § 493.1842(a).

The language of 42 C.F.R. § 493.801(b)(4) is clear that a "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." The plain language is that a proficiency test sample may not be sent to another laboratory, either intentionally or unintentionally. The regulation further provides that if a sample is "intentionally" sent, then the laboratory's CLIA certificate must be revoked for at least a year. The regulation establishes an absolute bar to sending proficiency test samples to another laboratory for testing if the sending laboratory is certified to do the same testing. The language of the statute is equally clear: "(a)ny laboratory that the Secretary determines intentionally refers its proficiency testing samples to another laboratory for analysis shall have its certificate revoked for at least one year. . ." 42 U.S.C. § 263a(i)(4). See also 42 C.F.R. § 493.1840(b) which implements the statute. The statute and regulations allow for no exceptions to the prohibition. Thus, the motives of the laboratory that sends proficiency test samples to another laboratory for analysis that the sending laboratory is certified to perform, are irrelevant. The fact that the sending laboratory never reports the analysis of the proficiency samples to the proficiency program is not mentioned by the statutes or regulations as an exception or defense to the prohibition, and is also irrelevant. The act prohibited is the sending of proficiency test samples to another laboratory for analysis when the sending laboratory is certified to do the analysis. Other judges who have considered this issue have reached the same strict construction. See Primary Care Medical Group, DAB CR439 (1996) (includes a lengthy discussion of Congressional intent related to the prohibition that I will not restate here); Long Medical Laboratory, DAB CR334 (1994).

I reject Petitioner's argument based on Oakland Medical Group, P.C., DAB No. 1755 (2000) and Primary Care Medical Group, DAB CR439 (1996) that sending proficiency test samples to another laboratory for testing is not a violation unless it is also shown that Petitioner submitted the test results to the proficiency test program or that Petitioner failed to treat proficiency test samples like its regular workload. In both Oakland and Primary Care, the facts required consideration of additional violations, but neither case holds that the act of referring proficiency test samples to another laboratory is not a violation.

Petitioner argues that a strict construction of 42 C.F.R. § 493.801(b)(4) creates a conflict between that regulation and the requirement of 42 C.F.R. § 493.801(b)(1) that proficiency test samples be treated the same as regular patient workload. Petitioner asserts as its defense that it was complying with the requirements of 42 C.F.R. § 493.801(b)(1) and that 42 C.F.R. § 493.801(b)(4) ought to be construed consistently. My review of the two regulatory provisions reveals no challenge of regulatory construction. Section 493.801(b)(1) is clear: "(t)he samples must be examined or tested with the laboratory's regular patient workload by personnel who routinely perform the testing in the laboratory, using the laboratory's routine methods (emphasis added)." The subsection goes on to require that the laboratory director must certify that the proficiency test samples were integrated into the regular patient workload and tested using the laboratory's routine methods. Subsection 493.801(b)(1) mentions testing within the laboratory using the laboratory's routine methods, there is no mention of the possibility of sending out samples for analysis. The silence of section 493.801(b)(1) regarding sending out samples for analysis is consistent with the absolute ban on sending out samples provided by section 493.801(b)(4). Petitioner cites no legal authority that has recognized any conflict between the two subsections. In its November 21, 2000-letter (P. Ex. 4), Petitioner mentions that its practice of sending out proficiency test samples with its regular patient workload had been reviewed in the past but no deficiency was cited. Again, for purposes of summary judgment, I accept this assertion as true. Petitioner implies that either the State agency or CMS previously surveyed Petitioner's laboratory, considered the practice of sending out proficiency test samples and did not cite Petitioner for any deficiency. Petitioner seeks to have the inference drawn that because no deficiency was cited, the practice was approved by either the State agency or CMS. Even if I accept the inference, I cannot find CMS bound or estopped by the prior agency action as that action would have been based on an erroneous interpretation and application of the statute and regulations as discussed above. Furthermore, the decisions of the United States Supreme Court in Office of Personnel Management v. Richmond, 496 U.S. 414, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990) and Heckler v. Community Health Services of Crawford County, Inc., 467 U.S. 51, 104 S.Ct. 2218, 81 L.Ed.2d 42, 5 Soc.Sec.Rep.Ser. 29 (1984) make clear that estoppel will generally not lie against the government in cases involving benefits to be paid from the Treasury, particularly in the complicated area of Medicare. ⁽⁴⁾

In this case, Petitioner has not attempted to show material facts in dispute regarding sending proficiency test samples to another laboratory, which is consistent with my conclusion that there are no material issues of fact in dispute related to the practice. ⁽⁵⁾ Rather, Petitioner sets forth its legal defenses in its responsive brief. I do not find Petitioner's defenses persuasive. Furthermore, the absence of material fact and the presence of only questions of law, allows for resolution of this case as a matter of law and summary judgment is appropriate. The violation triggers a mandatory one-year revocation of Petitioner's CLIA certificate. Hence, it is unnecessary to consider other alleged violations.

Keith W. Sickendick

Administrative Law Judge

1. Pub. L. 100-578, codified at 42 U.S.C. § 263a.

2. The Centers for Medicare & Medicaid Services was known as the Health Care Financing Administration until July 5, 2001. 66 Fed. Reg. 35,437 (2001).

3. In findings 6 through 9, I accept as true Petitioner's allegations of fact only for purposes of deciding this motion for summary judgment.

4. It has been consistently held that administrative law judges do not have the authority to hear and decide claims of estoppel against CMS or the Secretary related to alleged dilatory processing of applications. GranCare Home Health Service & Hospice, DAB CR464 (1997); The Rivers Health Care Resources, Inc., DAB CR446 (1996); SRA, Inc. D/B/A St. Mary Parish Dialysis Center, DAB CR341 (1994); T.L.C. Mental Health Center, DAB CR636 (1999); Therapeutic Rehabilitation Centers, Inc., DAB CR531 (1998). However, I find no similar limit to my jurisdiction where Petitioner asserts estoppel as a defense in an enforcement action. Accord Stacy Ann Battle, D.D.S., DAB No. 1843 (2002).

5. This case is readily distinguished from Garden City Medical Clinic, DAB No. 1763 and Southfield Medical Clinic, DAB CR677, as those cases did not involve an admission by the Petitioner that proficiency test samples were sent to another laboratory for testing.