Medicos Para La Familia, DAB CR5400 (2019)

DECISION

Petitioner, Medicos Para La Familia, is a Tennessee clinical laboratory, certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 42 U.S.C. § 263a. The Centers for Medicare and Medicaid Services (CMS) determined that Petitioner Medicos intentionally referred its March 2015 proficiency testing (PT) samples to another laboratory for analysis. Based on this and other findings, CMS revoked the lab’s CLIA certificate, canceled its approval to receive Medicare payments, and imposed a civil money penalty (CMP).

For the reasons set forth below, I find that Petitioner Medicos violated the Medicare proficiency testing requirements set forth in the statute, 42 U.S.C. §§ 263a(d)(1)(E) and 263a(f)(3), and regulations, 42 C.F.R. §§ 493.801 and 493.1403. CMS may therefore revoke its CLIA certificate and impose the alternative sanction. 42 U.S.C. §§ 263a(h)(2), 263a(i)(4); 42 C.F.R. §§ 493.801(b)(4), 493.1840(b)(1)(B).

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Background

In order to ensure the accuracy and reliability of laboratory tests and thus the health and safety of those tested, CLIA creates a federal certification process for laboratories that perform clinical diagnostic tests on human specimens. Public Law No. 100-578, amending section 353 of the Public Health Service Act, codified at 42 U.S.C. § 263a; see H.R. Rep. No. 100-899, at 8, reprinted in 1988 U.S.C.C.A.N. 3828, 3829. To be certified, a laboratory must meet the conditions of certification set out in the statute and regulations. 42 U.S.C. § 263a(f); 42 C.F.R. Part 493. A condition represents a major division of laboratory services or required environmental protections; each condition is broken down into more detailed standards that laboratories must meet to be compliant with the overall condition. White Lake Family Medicine, P.C., DAB No. 1951 at 2-3 (2004); RNA Labs., Inc., & Ter-Zakarian Medical Clinic, DAB No. 1820 at 3 (2002).

A laboratory that holds a CLIA certificate may perform moderate and high complexity tests, but must participate in a PT program, as outlined in 42 C.F.R. Part 493, Subpart H.  Part 493 mandates that each laboratory enroll in an approved PT program that meets the specific criteria set out at Subpart I of Part 493.  42 C.F.R. § 493.801. A laboratory performing “nonwaived” testing (which includes the moderate complexity test that Petitioner performed) “must successfully participate” in an approved PT program for each “specialty, subspecialty, and analyte or test in which [it] is certified under CLIA.” 42 C.F.R. § 493.803(a).

The statute gives the Secretary of Health and Human Services broad enforcement authority, which the Secretary has delegated to CMS. CMS or its designee conducts periodic inspections to determine a laboratory’s compliance with CLIA requirements. 42 C.F.R. § 493.1777.  If it determines that a lab has “intentionally referred” its PT samples to another lab for analysis, CMS may revoke the lab’s CLIA certification or impose alternative sanctions (directed plan of correction, state monitoring, civil money penalty). 42 U.S.C. §§ 263a(h)(2), 263a(i)(4); 42 C.F.R. §§ 493.801(b)(4), 493.1840(b)(1)(B); see White Lake Family Medicine, P.C., DAB No. 1951 at 5.

Here, based on a February 2016 investigation by the Tennessee Department of Health (state agency), CMS determined that Petitioner violated two CLIA conditions of certification: 42 C.F.R. § 493.801, which governs the enrollment and testing of PT samples; and 42 C.F.R. § 493.1403, which sets forth requirements for the lab director for labs performing moderate complexity testing. CMS Exs. 1-2. Based on these findings, CMS revoked Petitioner’s CLIA certificate, canceled the laboratory’s approval to receive Medicare payments for its services, and imposed a CMP of $3,000 for each instance of an improper referral (25 referrals for a total of $75,000).  CMS Ex. 1 at 2.

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Petitioner appeals. CMS has moved for summary judgment, which Petitioner opposes. Nevertheless, the parties agree that this matter should be decided based on the written record, without an in-person hearing. CMS MSJ at 2 n.1; P. Response at 1 n.3. I therefore decline to enter summary judgment and, instead, decide this case based on the written record. With its motion and brief (CMS MSJ), CMS submits twelve exhibits (CMS Exs. 1-12). With its response brief (P. Response), Petitioner submits three exhibits (P. Exs. 1-3). In the absence of any objections, I admit into evidence CMS Exs. 1-12 and P. Exs. 1-3.

Issues

The sole issue before me is: Did Petitioner violate CLIA and its implementing regulations by “intentionally referring” PT samples to another laboratory?

I have no authority to review which alternative sanction CMS imposed or the amount of the CMP assessed. 42 C.F.R. § 493.1844(c)(4) and (7).

Discussion

Petitioner violated the statute, 42 U.S.C. § 263a(i)(4), and was not in substantial compliance with two conditions of certification, 42 C.F.R. §§ 493.801 and 493.1403, because:  1) the lab intentionally referred its PT samples to a second laboratory for analysis; and 2) the lab director did not assure that the lab complied with PT requirements.1

Regulatory requirements. As noted above, a laboratory performing “nonwaived” testing “must successfully participate” in an approved PT program for each “specialty, subspecialty, and analyte or test in which [it] is certified under CLIA.” 42 C.F.R. § 493.803(a). It must treat and analyze PT samples in the same manner as patient samples, except it may not refer a testing sample to another laboratory for analysis. 42 U.S.C. § 263a(d)(1)(E); 42 C.F.R. §§ 493.801(b), 493.61(b)(1). The PT samples must be integrated with the laboratory’s regular patient workload, and the tests must be performed by the same personnel who routinely do the testing, using the laboratory’s routine testing methods. The integration of PT samples must be attested to by the laboratory director and the individual who performs the testing.  42 C.F.R. § 493.801(b)(1). PT samples must be tested the same number of times as routine patient samples. 42 C.F.R. § 493.801(b)(2). Records documenting each step taken in the testing of PT samples are required. 42 C.F.R. § 493.801(b)(5).

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A laboratory must not engage in inter-laboratory communications pertaining to PT results until after the due date by which the laboratory must report its results to the PT program. 42 C.F.R. § 493.801(b)(3). It must not refer PT samples or portions of PT samples to another laboratory for any analysis that it is certified to perform in its own laboratory. 42 U.S.C. § 263a(i); 42 C.F.R. § 493.801(b)(4).

A laboratory must also have a qualified director (see 42 C.F.R. § 493.1405) who provides overall management and direction in accordance with 42 C.F.R. § 493.1407.  42 C.F.R. § 493.1403. Among the director’s specific responsibilities, he/she must ensure that the laboratory is enrolled in an approved PT program, that the PT samples are tested as required, and that PT results are reviewed in order to identify problems. 42 C.F.R. § 493.1407.

Petitioner’s intentional PT sample referrals. The parties agree on the basic facts here. Petitioner Medicos is a clinical laboratory. Although it performs waived tests, it also performs at least one non-waived test and must comply with CLIA requirements. CMS Ex. 3 at 3; P. Ex. 1 at 3 (Rodney Decl. ¶ 8).

Petitioner Medicos is owned and operated by Dr. William M. Rodney, who, at the time of the referrals, served as its lab director. The lab occupied space on the first floor of a Memphis office building, located at 3030 Covington Pike, Memphis. CMS Ex. 3 at 1, 4; P. Ex. 1 at 1-3 (Rodney Decl. ¶¶ 2, 5. 9); P. Response at 4.

Lab Director Rodney also founded and incorporated, as a not-for-profit corporation, a second lab, La Clinica Camellia, which occupied space on the second floor of the building located at 3030 Covington Pike. CMS Ex. 10 at 1; P. Ex. 1 at 2 (Rodney Decl. ¶¶ 4, 5); P. Response at 4-5. The labs were connected by a stairwell and routinely shared staff. CMS Ex. 6 at 1; CMS Ex. 12 at 3 (Hathcoat Decl. ¶¶ 13, 17); P. Response at 5.

To meet their proficiency testing obligations, both labs were enrolled in testing programs offered by the American Academy of Family Physicians. P. Response at 5; see CMS Ex. 6 at 1; CMS Ex. 9 at 1; CMS Ex. 10 at 1. On March 2, 2015, the American Academy sent PT sample kits for the 2015-A PT event to both labs, which the labs received on March 3.  CMS Ex. 7; P. Ex. 3 at 3 (Carson Decl. ¶ 11); P. Response at 5. La Clinica Camellia completed its testing on March 14. P. Ex. 3 at 5 (Carson Decl. ¶ 17). Petitioner Medicos completed its testing on March 20. CMS Exs. 8, 10; P. Ex. 3 at 5 (Carson Decl. ¶ 18); P. Response at 5.

The PT samples were formulated to run on a specific testing instrument – a Beckman-Coulter. Each lab had its own Beckman-Coulter testing instrument. CMS Ex. 12 at 3 (Hathcoat Decl. ¶ 12); CMS MSJ at 4 n.2; P. Ex. 3 at 2 (Carson Decl. ¶ 7); P. Response at 5 n.4. Each testing instrument was set up so that its test-result print-out would identify the lab performing the test. The parties agree that Petitioner Medicos’s 2015-A PT print-

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out shows that the testing was performed on the testing instrument owned by La Clinica Camellia and that Petitioner Medicos reported those results to the American Academy. CMS Ex. 9 at 6-10; P. Ex. 3 at 5-6 (Carson Decl. ¶¶ 18, 22); P. Response at 6. I find this compelling evidence that Petitioner Medicos referred its PT samples to another lab for testing, in violation of the statute (42 U.S.C. § 263a(i)(4)) and conditions of certification (42 C.F.R. § 493.801).

Petitioner has admitted that it “referred” the samples, but denies “intentionally” referring.  CMS Ex. 6 at 1, 3, 6. In a letter to Medicos’s accrediting agency, Lab Director Rodney conceded that all of the testing was performed on the same instrument, but argued that “the submission of the PT sample to our sister lab was not deliberate or intentional.” CMS Ex. 6 at 8; see P. Response at 12. 

Petitioner now denies that all tests were performed on the same instrument, claiming that Lab Director Rodney’s response was “based on limited information.” P. Response at 12. As lab director, his “information” should not have been so “limited.” His admitted ignorance supports CMS’s finding that the facility violated section 493.1403: because he was not aware of the way the testing was performed, he was not ensuring that the samples were tested as required. See 42 C.F.R. §§ 493.1403, 493.1407. 

In any event, as the following discussion shows, whether or not it tested all samples on the same instrument, Petitioner Medicos impermissibly referred its PT samples.

Petitioner maintains that the laboratory supervisor who performed the proficiency testing (Garth Carson) “honestly and legitimately believed that he was testing PT samples on behalf of Medicos on a machine owned and operated by Medicos.” P. Response at 1. In Petitioner’s view, that means his referral was not intentional. Petitioner misconstrues the meaning of “intentional.” Where laboratory staff knowingly and voluntarily refer PT samples for analysis, they violate CLIA requirements, even if they do not understand that their actions violate the statute or regulations. Victor Valley Cmty. Hosp./Clinical Lab.& Tomasz Pawlowski, M.D., DAB No. 2340 at 7-8, 13 (2010); Wade Pediatrics, DAB No. 2153 (2008), aff’d, 567 F.3d 1202 (10th Cir. 2009); Lackawanna Medical Group Lab., DAB No. 1870 (2003).2

Moreover, in defending the labs’ actions, Petitioner Medicos unwittingly admits that it violated the statute and regulations. Petitioner Medicos explains that, by March 20, it had

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purchased a new testing instrument, a Sysmex XP-300, to replace its Beckman-Coulter machine. P. Ex. 1 at 5 (Rodney Decl. ¶¶ 16, 17). According to Medicos Lab Director Rodney, he transferred the Medicos Beckman-Coulter machine to La Clinica Camellia and instructed Medicos personnel to reprogram it so that its testing print-outs would reflect La Clinica Camellia’s name, address, and phone number. P. Ex. 1 at 5-6 (Rodney Decl. ¶¶ 18, 19).  Nevertheless, he and Medicos’s (then) laboratory supervisor, Garth Carson, claim that the machine remained on the first floor, sitting next to the Sysmex machine. P. Ex. 1 at 6 (Rodney Decl. ¶ 22); see P. Ex. 3 at 2 (Carson Decl. ¶ 9); P. Response at 9-10. According to Lab Supervisor Carson, Medicos began using the Sysmex machine on March 10, although staff continued to use the Beckman-Coulter machine as well, albeit infrequently. P. Ex. 3 at 2 (Carson Decl. ¶ 9); P. Response at 10-11.

Lab Supervisor Carson maintains that the PT samples sent to La Clinica Camellia were tested on March 14, and that he personally tested two of the five samples, using the Beckman-Coulter testing instrument located in the La Clinica Camellia lab, on the second floor of the building. He initialed the results. P. Ex. 3 at 3 (Carson Decl. ¶ 12); see CMS Ex. 10 at 4, 8. A second employee of La Clinica Camellia – whose last name he could not remember – tested two samples and initialed the results. P. Ex. 3 at 3-4 (Carson Decl. ¶ 13); CMS Ex. 10 at 5-6. Lab Supervisor Carson did not know who tested the remaining sample and could not recognize the initials. P. Ex. 3 at 3-4 (Carson Decl. ¶ 13). He did not observe anyone (other than himself) testing samples, but had “no knowledge, nor any reason to believe” that the testing was not performed using the second floor’s testing instrument. P. Ex. 3 at 4 (Carson Decl.¶ 13).3

On March 14, Lab Supervisor Carson submitted, to the American Academy, La Clinica Camellia’s PT results. P. Ex. 3 at 5 (Carson Decl. ¶ 17).

Here is the fatal problem with Petitioner’s defense: Lab Supervisor Carson also tested three PT samples for Petitioner Medicos. P. Ex. 3 at 4 (Carson Decl. ¶ 14); see CMS Ex. 9 at 6, 8, 9). Again, he claims that he does not know who tested the other two samples, does not recognize the initials on the print-outs, but has no reason to believe that the employee did not use the first floor Beckman-Coulter testing device. P. Ex. 3 at 4-5 (Carson Decl. ¶ 15). That Lab Director Rodney does not identify the other employees who tested the samples is suspicious inasmuch as their signatures are on the attestation page of the lab’s submission to the American Academy. CMS Ex. 8. Moreover, he

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claims that “to [his] knowledge” Lab Supervisor Carson tested PT samples for both labs. P. Ex. 1 at 6 (Rodney Decl. ¶¶ 23, 24). This is a problem for him because it shows that he really didn’t know who performed all of the testing, and, worse, he knew that the same person performed at least some of the testing for both labs, an unacceptable practice. These failings further support the finding that he did not ensure that the lab complied with PT requirements, as required by section 493.1403.

On March 20, Lab Supervisor Carson submitted, to the American Academy, Petitioner Medicos’s PT results. P. Ex. 3 at 5 (Carson Decl. ¶ 18).

Section 493.801(b)(3) forbids “any inter-laboratory communications pertaining to the results of proficiency testing sample(s) until after the date by which the laboratory must report” the results. (Emphasis added). Laboratories with multiple testing sites or separate locations must not participate “in any communications or discussions across sites/locations” concerning PT testing “until after the date by which the laboratory must report” the results. (Emphasis added). Thus, lab staff may not have even casual conversations with staff working in other labs. Allowing the same person to test and report PT results of two different labs violates section 493.801.

Thus, Petitioner Medicos violated both sections 493.801 and 493.1403. Facility staff impermissibly – and intentionally – referred PT samples to another lab, and the lab director failed to protect the integrity of the PT samples and the testing process.

Conclusion

Petitioner Medicos violated the Medicare proficiency testing requirements, 42 U.S.C. §§ 263a(d)(1)(E) and 263a(f)(3); 42 C.F.R. §§ 493.801 and 493.1403. CMS may therefore revoke its CLIA certificate and impose alternative sanctions. 42 U.S.C. §§ 263a(h)(2), 263a(i)(4); 42 C.F.R. §§ 493.801(b)(4), 493.1840(b)(1)(B).

• 1. My findings of fact and conclusions of law are set forth, in bold and italics, as captions in the discussion sections of this decision.
• 2. In Wade, the Departmental Appeals Board observed that a lab’s motives for sending PT samples to another lab are “not wholly irrelevant” and offered examples of referrals that would not be considered “intentional”: where, at the end of a testing event, and pursuant to an existing agreement, the lab sends its PT samples to another lab for disposal; or where the second lab was not certified to perform the particular type of analysis for which it referred the samples. DAB No. 2153 at 14-15.
• 3. Petitioner cannot or will not identify which employees, other than Lab Supervisor Carson, tested the samples for La Clinica Camellia. This is peculiar, inasmuch as an attestation on the first page of that lab’s submission to the American Academy includes signatures for the testing personnel. CMS Ex. 10 at 1. However, I am not reviewing the problems with La Clinica Camellia’s procedures.