SUBJECT:

St. Charles Health Care,

Petitioner,

Centers for Medicare & Medicaid Services

DECISION

In this proceeding St. Charles Health Care (Petitioner) challenges the Centers for Medicare & Medicaid Services' (CMS) ⁽¹⁾ determination to suspend the certificate it was issued under the Clinical Laboratory Improvement Amendments of 1988, 42 U.S.C. § 263a et seq. (CLIA) and to cancel its approval to receive Medicare payments for its services. I sustain CMS's determination to suspend Petitioner's CLIA certificate and to cancel Petitioner's approval to receive Medicare payments for its services, because no genuine issues of material fact exist in this case.

I. Background

Petitioner is a clinical laboratory located in Waldorf, Maryland. On November 23, 1998, the Maryland Department of Health and Mental Hygiene (DHMH) conducted a survey of Petitioner's laboratory to determine whether it met the conditions required for continued eligibility of its CLIA certificate. The survey revealed unsatisfactory proficiency test (PT) scores and deficiencies at the standard level in the laboratory's gram stain testing. By letter dated January 29, 1999, DHMH provided Petitioner with a statement of deficiencies (HCFA Form 2567) and requested that the laboratory provide a plan of correction. CMS Exhibit 1 (Ex.); Petitioner's Exhibit (P. Ex.) 1. On February 4, 1999, Petitioner submitted its plan of correction, stating, in part, that "[W]hen in doubt, our manual clearly states that samples will be sent to a reference lab after notifying the physician." P. Ex. 2, at 2. By letter dated March 2, 1999, however, DHMH notified Petitioner that its plan of correction was insufficient and, therefore, it was deemed unacceptable. CMS Ex. 3; P. Ex. 3. In that letter, DHMH also advised Petitioner that its failure to submit an acceptable plan of correction would result in a recommendation to CMS that its CLIA certificate be limited, suspended or revoked.

On February 23, 1999, a federal monitoring survey was conducted, and the standard level deficiencies were again identified. By letter dated March 25, 1999, the federal surveyor requested that Petitioner submit a plan of correction for the cited deficiencies. CMS Ex. 4. On June 12, 2000, Petitioner was notified, by letter, to again provide a plan of correction. P. Ex. 5; CMS Ex. 7. In that letter Petitioner was told that "[y]our plan of correction is to be entered on the right hand column of each form [HCFA-2567] with the date by which correction will be completed. Your plans must specifically address each deficiency cited and provide appropriate and realistic means to actually resolve the problems that may be caused by the deficiencies." The letter stated, further, that failure to submit a credible plan of correction could result in a recommendation to impose the principal sanction of suspending or revoking Petitioner's CLIA certificate, as specified in 42 C.F.R. § 493.1806.

By letter dated June 15, 2000, Petitioner stated that "all gram stains will be handled directly by the interested physician, and proficiency testing will be done also by the physician. Failing this we will stop performing gram stains." P. Ex. 6. By letter dated August 18, 2000, CMS notified Petitioner that it proposed to suspend the laboratory's CLIA certificate and cancel the laboratory's approval to receive Medicare payments. P. Ex. 8; CMS Ex. 10. CMS explained, further, that as a result of the federal survey and a review of the laboratory's PT results by DHMH, it found that the laboratory had unsatisfactory test scores for hematology and gram stains (bacteriology) in 1997, 1998, 1999, and 2000. As a result of these repeated unsuccessful PT performances, CMS stated that it had determined that the laboratory was not in compliance with 42 C.F.R. § 493.803. ⁽²⁾ CMS also determined that:

The laboratory has failed to submit a plan of correction that is acceptable to HCFA in content and in time frames (42 C.F.R. § 493.1816(a)).

The laboratory has failed to correct it standard-level deficiencies within 12 months after the last day of inspection (42 C.F.R. § 493.1816(b)).

You have failed to comply with the certificate requirements and performance standards (42 C.F.R. § 493.1840(a)(3)).

You have failed to comply with reasonable request for information (i.e. an acceptable plan of correction) (42 C.F.R. § 493.1840(a)(4)).

In a letter dated August 25, 2000, Petitioner responded that "we decided to stop doing any gram stains in our office." P. Ex. 10; CMS Ex. 11. In a letter dated October 6, 2000, CMS notified Petitioner that opting out of the gram stain testing was an unacceptable remedy, and that the laboratory's CLIA certificate and its right to receive Medicare payments were thereby suspended. CMS Ex. 12, at 2. On October 18, 2000, Petitioner requested a hearing in this matter. P. Ex. 11. CMS has filed a motion for summary judgment arguing that: (1) Petitioner's request for a hearing does not comport with the applicable regulations; and (2) even if it does, no genuine issues of material fact exist in this case. Petitioner has filed a brief in opposition to CMS's motion, arguing that its request for a hearing is sufficient for the purposes of 42 C.F.R. § 498.40(b), and that genuine issues of material fact do exist. Petitioner has submitted 11 exhibits which I accept into evidence as P. Ex. 1-11. CMS has submitted 17 exhibits which I accept into evidence as CMS Ex. 1-17.

II. Applicable law

A. CLIA

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 section 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.

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

The 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 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 the authority to inspect and sanction laboratories that fail to comply with the regulatory requirements. Pursuant to CLIA, the Secretary delegated to CMS the authority to suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and to impose alternative sanctions, such as a directed plan of correction or monitoring by a state. 42 C.F.R. § 493.1806.

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

As a condition of participation a clinical laboratory is required to enroll in an approved PT program for each of the specialities and subspecialities for which it is certified. 42 C.F.R. § 493.801. A clinical laboratory must successfully perform PT in each speciality or subspeciality for which it is certified. 42 C.F.R. § 493.803. Failure to achieve an overall test event score of 80% in PT for gram stains (which is part of the bacteriology speciality) is unsatisfactory performance. 42 C.F.R. § 493.823. The appropriate action required by the regulations for any unsatisfactory PT performance is appropriate training and employment of the technical assistance necessary to correct problems associated with the PT failure. 42 C.F.R. § 493.823(d)(1).

B. Summary judgment

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 the 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 Medical Center, DAB No. 1763 (2001); 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). To accomplish this, the opposing party must go beyond mere allegations, and come forward with factual 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 Tel. & Tel. Long Lines, 794 F.2d. 860, 864 (3rd Cir. 1986).

It will be noted that CMS has advanced two very distinct positions in its motion for summary judgment. The first argues that Petitioner's hearing request is inadequate, and the relief CMS seeks as a consequence is the dismissal of this action without discussion or adjudication of its merits. Although I consider and reject this position below, I note that conceptually it might be better understood as a motion to dismiss. CMS' second position addresses the merits of the appeal, and argues that since no material facts are in dispute, and since the undisputed material facts support its legal position, it is entitled to summary judgment on the merits. As will be seen, I believe that CMS is correct in this second position.

III. Issues, findings of fact, and conclusions of law

A. Issues

The issues in this case are whether:

1. Petitioner's hearing request met the content requirement pursuant to 42 C.F.R. § 498.40(b); and

2. If Petitioner's hearing request was adequate to preserve its right to appellate review, whether summary disposition is appropriate on the merits of this case; and

3. Whether the laboratory was in compliance with the federal regulation regarding proficiency testing with regard to gram stains; and

4. If not, whether the laboratory failed to submit an acceptable plan of correction.

B. Findings of fact and conclusions of law

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

1. Petitioner's hearing request was legally sufficient.

The CLIA regulations set forth the conditions that all laboratories must meet in order to perform clinical testing. The regulations also set forth enforcement procedures and hearings and appeals procedures for those laboratories that are found to be noncompliant with CLIA requirements. A laboratory that is dissatisfied with a determination by CMS to impose sanctions against it may request a hearing before an administrative law judge (ALJ) to contest CMS's determination. 42 C.F.R. § 493.1844. The CLIA regulations at 42 C.F.R. § 493.1844(a)(2) and (3) incorporate by reference the hearing procedures and the request for review provisions in 42 C.F.R. Part 498, Subparts D and E.

The regulations at 42 C.F.R. § 498.40 specify that a request for a hearing must -

(1) Identify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees; and

(2) Specify the basis for contending that the findings and conclusions are incorrect.

42 C.F.R. § 498.40(b).

An ALJ must examine the contents of the document which requested a hearing in order to determine whether a right to a hearing has accrued with respect to all, some, or none of the issues stated in the document. Consequently, the fact that an affected party has filed a document containing the words "request a hearing" within the 60-day filing period does not mean that the document satisfies the applicable regulatory requirements. See Birchwood Manor Nursing Center, DAB No. 1669 (1998), aff'd, Birchwood Manor Nursing Center v. Dep't of Health and Human Servs., No. 98-60695 (5^th Cir. June 29, 1999); Regency Manor Healthcare Center, et al., DAB No. 1672 (1998); Care Inn of Gladewater, DAB No. 1680 (1999).

However, as appellate panels of the Board have emphasized, this tribunal should not lightly conclude that a petitioner has, contrary to clear requirements, failed to take advantage of its opportunity for hearing. See Fairview Nursing Plaza, Inc., DAB No. 1715, at 5 (2000). In Alden-Princeton Rehabilitation and Health Care Center, Inc., DAB No. 1709 (1999) and Fairview, appellate panels of the Departmental Appeals Board set forth the process for assessing the sufficiency of a hearing request and the suitability of dismissal for failure to satisfy regulatory requirements. First, I must determine whether the language of Petitioner's hearing request, when read in the context of CMS's notice, meets the requirements set forth in the plain language of 42 C.F.R. § 498.40(b). If it fails to meet one or both of the regulatory requirements, I should consider whether to exercise my discretion not to dismiss the case pursuant to 42 C.F.R. § 498.70.

From the wording of Petitioner's hearing request, it is evident that Petitioner challenges the sanctions imposed by CMS. In particular, Petitioner states that "we take issue with all the findings and all conclusions relative to the sanctions imposed by [CMS]." P. Ex. 11, at 2. Based on my reading of Alden-Princeton and Fairview, I conclude that the language of Petitioner's hearing request, when read in the context of CMS's notice, meets the requirements set forth in the plain language of 42 C.F.R. § 498.40(b). Therefore, I must reject CMS' challenge to the adequacy of Petitioner's hearing request. Insofar as that challenge takes the form of a motion for summary judgment on the adequacy of the hearing request, that motion is denied.

2. Petitioner failed to submit an acceptable plan of correction, therefore, summary disposition is appropriate in this case.

Although Petitioner was cited for deficiencies at the standard level in gram stain testing, it did not challenge the DHMH or CMS finding in its brief. Failing those proficiency tests is tantamount to a failure to comply with CLIA certification requirements. Such noncompliance satisfies the regulatory basis for an adverse action, such as the suspension of a petitioner's CLIA certificate. While Petitioner does not challenge the deficiency findings made by CMS, Petitioner asserts that there is a factual dispute over whether it submitted a plan of correction. I see no dispute, however, as to whether Petitioner submitted a plan or plans of correction. "On the contrary, St Charles Health Care indeed submitted plans of correction, twice according to the format designated by Respondent, and twice by letter." Petitioner's Brief at 3. Petitioner's version of the plan of correction included referring doubtful test to an outside laboratory and opting out of PT testing. Petitioner argues further that, while finding their plan of correction unacceptable, CMS never explained why or what would constitute an acceptable plan of correction.

In its request for a hearing, Petitioner's counsel writes:

"It is not clear now, and has never been clear, what substantive corrections has been required for hematology that has not been met, or what would be required of any plan of correction that would offer assurance of quality performance beyond the actual performance itself."

Petitioner's hearing request at 2.

Petitioner's argument is without merit. On December 14, 2000, CMS, Petitioner and Petitioner's counsel participated in a conference call. CMS's Brief at 10; CMS Ex. 14. Counsel for Petitioner acknowledged that the conference call was "for the purpose of reviewing and completing the Form HCFA-2567, which was previously provided in this case." Id. During that conference call, representatives of CMS explained precisely what elements would constitute an acceptable plan of correction. CMS's Brief at 11. Before the conference call was terminated, Petitioner agreed to provide CMS with an acceptable plan of correction. Id. Petitioner never submitted an acceptable plan of correction.

Finally, Petitioner argues that "[t]here are a range of lesser sanctions available to [CMS], aside from th principal sanctions imposed here (suspension)." See, e.g., 42 C.F.R. §§ 493.803(c) (CMS may direct the laboratory to undertake training of its personnel or to obtain technical assistance); 493.1814(3) (in the case of unsuccessful participation in proficiency testing, CMS may impose the training and technical assistance requirement set forth at section 493.1838 in lieu of, or in addition to, one or more of the alternative sanctions.); 493.1838 (CMS may require the laboratory to undertake training of its personnel, or to obtain necessary technical assistance, or both, in order to meet the proficiency testing program); and I would even include section 493.1832 (CMS may impose a directed plan of correction as an alternative sanction for any laboratory that has condition level deficiencies).

Although CMS has at its disposal several alternative sanctions they are all discretionary. I am without authority to direct CMS as to which sanction it must impose. Furthermore, pursuant to 42 C.F.R. § 493.1816, if a laboratory has deficiencies that are not at the condition level, the following rule applies: the laboratory must submit a plan of correction that is acceptable to CMS in content and time frames. In this instance, Petitioner never submitted an acceptable plan of correction. Opting out of PT testing does not constitute an acceptable plan of correction. Everyone agrees that Petitioner made some form of response to each request for a plan of correction. It is the legal sufficiency of each response, however, that must be decided. No factual questions remain. Because no genuine issues of material fact exist, I find summary disposition to be appropriate here.

IV. Conclusion

I find that Petitioner's hearing request did comply with the content requirement set forth in 42 C.F.R. § 498.40(b). Therefore, CMS's motion for summary judgment based on the adequacy of Petitioner's hearing request is denied. However, I will grant CMS's motion for summary judgment and sustain its determination to suspend Petitioner's CLIA certificate and to cancel Petitioner's approval to receive Medicare payments for its services, because no genuine issues of material fact exist in this case.

Richard J. Smith

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Financing Administration was renamed the Centers for Medicare & Medicaid Services. 66 Fed. Reg. 35,437 (2001).

2. Unsuccessful PT performance is defined under CLIA as the failure to attain a minimum satisfactory test score of 80% in two consecutive or two out of three PT events for the same specialty, subspecialty, analyte, or test.