Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
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IN THE CASE OF | |
Carlos A. Cervera, M.D., |
DATE: August 1, 2002 |
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Centers for Medicare & Medicaid
Services
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Docket No.C-99-797
Decision No. CR939 |
DECISION | |
DECISION I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to prohibit Carlos A. Cervera, M.D. (Petitioner) from owning or operating a laboratory for at least two years. I find that Petitioner was a "laboratory director" of the San Fernando Diagnostic Laboratory, Inc. (San Fernando), whose Clinical Laboratory Improvement Amendments of 1988 (CLIA) certificate was revoked. CMS is therefore authorized to prohibit Petitioner's ownership or directorship of any CLIA laboratory for a period of two years from the issuance date of this decision. I. Background
This case emanates from
sanction determinations that CMS (formerly known as the Health Care Financing
Administration or "HCFA") made against San Fernando. The sanctions that
CMS imposed against San Fernando include revocation of San Fernando's
CLIA certificate.
San Fernando has not requested a hearing to contest those sanctions. Petitioner
requested a hearing in order to challenge CMS's determination that, as
a consequence of being San Fernando's laboratory director, he was precluded
from owning, operating, or directing a clinical laboratory for at least
two years. San Fernando was a clinical
laboratory seeking certification to perform clinical testing under CLIA.
On January 8, 1999, San Fernando filed with the Laboratory Field Services,
State of California Department of Health Services (LFS): 1) an application
for a clinical laboratory license; 2) a laboratory testing declaration;
3) a laboratory personnel report form; and 4) a clinical laboratory application
(CLIA application). HCFA Exs. 1, 2, 3, 4. The Application for Clinical
Laboratory License and Laboratory Testing Declaration (HCFA Exs. 1, 2)
were signed by Petitioner as "Laboratory Director." Furthermore, the Laboratory
Personnel Report Form and the Clinical Laboratory Application both list
Petitioner as San Fernando's "laboratory directory." HCFA Exs. 3, 4. San
Fernando's CLIA application was approved and became effective as of April
23, 1999. The CLIA certificate was issued to Petitioner on May 18, 1999.
HCFA Ex. 13; Hearing Transcript (Tr.) at 56-57. In the latter part of May
1999, upon review of Petitioner's State license and CLIA applications
by LFS, CMS was informed of a discrepancy between the total annual test
volume in San Fernando's State licensing application and that provided
in the CLIA application. Id., at 52-53. By letter dated June
17, 1999, CMS advised Petitioner of inconsistencies. Specifically, Petitioner
was advised that the CLIA application contained the testing volume total
(45,000) which was lower than the State application total (485,000), and
that it was the lower estimation which established the fee assessment
amount to be charged and paid by San Fernando. CMS informed Petitioner
that sanctions would be imposed, which included revocation of San Fernando's
CLIA certificate for one year, cancellation of San Fernando's approval
to receive Medicare and Medicaid payments, and prohibition of the owner
and operator (laboratory director) from owning, operating, or directing
a laboratory for at least two years from the date of revocation. HCFA
Ex. 5. Petitioner requested a hearing
to contest CMS's findings and remedy determinations. This matter was assigned
to me for a hearing and decision. I held an in-person hearing in Los Angeles,
California on August 28, 2000. The parties each called witnesses to testify.
CMS offered, and I accepted, into evidence exhibits identified as HCFA
Exhibits (HCFA Exs.) 1-13. (1) Petitioner
offered, and I accepted, into evidence exhibits identified as Petitioner's
Exhibits (P. Exs.) 1-15. II.
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 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, 100th 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 (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. CLIA provides the
following with respect to the owners and operators of non-compliant laboratories
in addition to sanctions which may be imposed directly against a laboratory:
42 U.S.C. � 263a(i)(3). The Secretary's regulations specify that a "laboratory director" is considered an "operator" of a laboratory:
42 C.F.R. � 493.2. The regulations also require that any laboratory conducting moderate or high complexity testing have a laboratory director who meets specific qualifications and has clear and specific responsibilities. 42 C.F.R. �� 1403, 1405, 1407. The regulations specify that:
42 C.F.R. � 493.1407. The applicable law
and regulations provide that adverse actions may be taken against a laboratory's
owner, operator, or one of its employees where such individual is guilty
of misrepresentations in obtaining a CLIA certificate. See 42
U.S.C. � 263a(i)(1); 42 C.F.R. � 493.1840(a)(1). Such adverse actions
include suspension, limitation, or revocation of the party's CLIA certificate.
Id. Any laboratory that
has, as its owner or operator (which includes laboratory director), an
individual who owned or operated a laboratory that had its CLIA certificate
revoked within the previous two years is subject to adverse action, including
suspension and/or revocation pursuant to 42 C.F.R. � 493.1840(a)(8). CLIA further 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, as delineated at 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). Where a party requests a hearing, before an ALJ, of CMS's initial determination, the two-year prohibition will not commence until the issuance of a decision by the ALJ. 42 C.F.R. � 493.1844(d)(2) (. . . suspension, limitation, or revocation of a CLIA certificate is not effective until after a hearing decision by an ALJ is issued.). III. IssuesThe threshold issue
in this matter is whether Petitioner has an appeal right as to CMS's actions.
Prior Departmental Appeals Board (DAB) case law has determined that laboratory
directors in such cases as this one do have a right to appeal. See
RNA Laboratories, Inc., and Ter-Zakarian Medical Clinic, DAB CR829
(2001); Eugene R. Pocock, M.D., DAB CR527 (1998); Sentinal
Medical Laboratories, Inc., DAB No. 1762 (2001). Since the threshold
issue is answered in the affirmative, then the subsequent issues are:
IV.
Findings,
Conclusions and Analysis I make findings of fact and conclusions of law (Findings) to support my decision in this case. I set forth each Finding below as a separate heading. I discuss each Finding in detail.
The basis for the
actions taken by CMS against San Fernando, and collaterally against Petitioner,
was the discrepancy in the test volume estimates contained in both the
California State licensing application (State application) and the CLIA
application. HCFA Ex. 5, at 1. The estimations are essential for the assessment
of fees to be paid by the applicant prior to the issuance of a CLIA registration
certificate. See 42 C.F.R. �
493.643(c). The estimates in the CLIA application were substantially lower
than those reported in the State application. Tr. at 52-53; HCFA Exs.
2, 4. Had the higher estimation been provided in the CLIA application,
San Fernando would have fallen into a different capacity category, which
would have resulted in a higher fee assessment. Tr. at 68-69. Petitioner argues that, since the regulations do not specifically define the term "misrepresentation," CMS has applied an inaccurate definition to the term and, therefore, has applied an incorrect interpretation to 42 C.F.R. Part 493. Petitioner's Post-Hearing Brief (P. Br.) at 6. Petitioner further asserts that CMS has failed to meet "the legal requirements and conditions necessary to support a charge of "misrepresentation . . . " Id., at 10. Petitioner argues that the regulation's omission in providing a definition for "misrepresentation" leaves the term subject to interpretation. On this point, I am in agreement with Petitioner. However, I do not agree with Petitioner's particular interpretation on this subject. Petitioner's elucidation suggests that the appropriate definition in this instance would result in "misrepresentation" being synonymous with the term "fraud." Petitioner suggests that Black's Law Dictionary, as published by the Lawbook Exchange, provides the appropriate definition. In essence, Petitioner's reference source states the following:
Id., at
6. However viable a definition this may be, it is not one I would use in this case. Upon review of another Black's Law Dictionary, Centennial Edition, I find a somewhat broader definition of "misrepresentation." The Centennial Black's defines "misrepresentation" as:
Black's
Law Dictionary, Abridged Sixth Edition, 692 (1991). I agree with CMS's argument that neither the statute nor the regulations require specific intent for the misrepresentation. Clearly, 42 U.S.C. � 263a(i)(1)(A) prescribes:
Nowhere in this provision does it indicate that the misrepresentation must be deliberate or intentional. If I were to follow Petitioner's particular line of thinking, I would be forced to conclude that by "misrepresentation," the regulations are applicable only to intentional efforts to provide misinformation. I do not comprehend the regulations to be so narrow. In that the term "misrepresentation" is extremely broad and subject to numerous interpretation, I believe that it was Congress' intent to be broad and to mean any inaccurate information contained in an application for certification which, if relied upon by a state or federal agency, would result in certification issuance. Clearly, the misrepresentation could be unintentional or intentionally fraudulent. Based upon the evidence before me, it is clear that CMS has not argued nor attempted to prove that Petitioner intentionally provided misinformation on the State and CLIA applications. However, CMS has more than substantiated that there was a misrepresentation of information provided in both applications, albeit arguably unintentional.
Once the question
as to whether there has been a misrepresentation has been answered in
the affirmative, the next issue to be addressed is whether Petitioner
is one of the individuals delineated in the statute and regulations. Specifically,
was Petitioner an owner, operator, or an employee of the laboratory when
the misrepresentation occurred. Petitioner challenges CMS's allegation that he was the laboratory director of San Fernando at the time of execution of the State and CLIA applications. Petitioner also accuses CMS of violating "the well-established legal principle of form over substance" in the alleged attempt to make 'laboratory director' and 'owner/operator,' as delineated at 42 U.S.C. � 263a synonymous. P. Br. at 22. The regulations at 42 C.F.R. � 493.2 define "operator" as:
It is clear on its
face that at the signing of the State application form, Petitioner held
himself out to be the laboratory director for San Fernando. Without Petitioner's
affirmation that he was serving in such a capacity, San Fernando's application
would not have been processed by the State agency. Tr. at 82. Furthermore,
this was not Petitioner's first encounter with clinical laboratories or
with the functions associated with being a laboratory director. According
to evidence and testimony, Petitioner had been a director of, at least,
two known laboratory facilities prior to his involvement with San Fernando.
See HCFA Ex. 4, at 4. Therefore logic would dictate that Petitioner
would have some knowledge of the intricacies of being a laboratory director. However, Petitioner contends that at the time of the signing and submission of the State application forms, he was not qualified to act as a laboratory director. P. Br. at 19. The regulations prescribe the standard by which an individual is qualified to serve as a laboratory director. The regulations delineate, among other things:
42 C.F.R. � 493.1405(a),
(b)(1), (b)(2)(i), (b)(2)(ii)(A). Neither party has argued nor presented evidence which would question whether Petitioner did or did not meet the educational/professional qualifications stipulated in section 493.1405. However, the testimony of Alyce Brydon, Section Chief, LFS, substantiates Petitioner's eligibility to serve as a laboratory director pursuant to 42 C.F.R. � 493.1405. Tr. at 203-204. It is not the initial qualifications that Petitioner disputes. But rather, he argues that his disqualification to serve as a laboratory director is the result of an internal investigation by LFS of Petitioner's prior involvement with two other laboratories. Petitioner particularly asserts that:
P. Br. at 19. Petitioner contends that, because of an ongoing investigation by Ms. Bryden's office six months prior to the submission of the State and CLIA applications, it was known well in advance that Petitioner was not eligible to serve as the laboratory director of San Fernando. Petitioner's argument would have merit had there been an ultimate determination made during the six months prior as to Petitioner's ineligibility to serve as San Fernando's laboratory director. On cross examination, Ms. Bryden testified that the investigation in essence was the result of her office's repeated attempts to acquire records from Petitioner relating to the two other facilities in which he was the laboratory director. Ms. Bryden stated:
Tr. at 225-226. It is clear from
the testimony of Ms. Bryden that no adverse determination against Petitioner
resulted from the investigation. And even if I were to find that LFS's
determination did in fact result in a determination that Petitioner was
ineligible to be a laboratory director, such information was never conveyed
to CMS for consideration. As Ms. Bryden testified, the matter under investigation
dealt was a state licensure issue and such information would have never
been relayed to CMS. Tr. at 227. Therefore, Petitioner's argument
that an individual under investigation for "any alleged or actual wrong
doing" is unacceptable as a laboratory director is without merit. Therefore,
I find that as of January 8, 1999, the date of the signing of the applications,
Petitioner was the laboratory director of San Fernando. Even if I concluded that Petitioner was not the laboratory director subsequent to January 8, 1999, he was the laboratory director at the time of execution of the four application documents and submission to LFS. See Edward Ming-Che Lai, M.D., DAB CR848 at 7 (2001). In Ming-Che Lai, there was a question of whether the petitioner was a laboratory director eight months after submission of the initial application documentation, which included the CLIA application. The ALJ in that case concluded that it was clear from the executed documents that the petitioner was functioning as the laboratory director as of the date of the documents; However, rebuttal evidence supported the argument that petitioner was not serving as the laboratory director as of May 2000, eight months after the execution date. Such an analogy is applicable to the facts of the present case. Petitioner has not presented any compelling evidence to support his contention that he was not serving, nor had he agreed to serve, as the laboratory director as of January 8, 1999 when the application forms were executed and filed with LFS.
Petitioner next
asserts that, even though he may have been considered a laboratory director
for San Fernando, he was an "employee of the organization and as such
cannot be held liable for the actions of the employer." P. Br. at 24.
Petitioner also suggests that he would have been an employee of San Fernando
only if the facility had
opened for business. Id. Petitioner sums up his argument by concluding
that, since 42 C.F.R. � 1840(A)(8) "singles out one employee to be punished"
and is not applicable to all employees, then the regulatory provision
is unconstitutional. Id. It is significant
that, in order for San Fernando to acquire and maintain certification
for performing moderate complexity testing, it had to have a laboratory
director who provided "overall management and direction" of the laboratory,
in accordance with 42 C.F.R. � 493.1407, and who met the qualification
requirements of 42 C.F.R. � 493.1405. These regulations draw no distinctions
regarding a laboratory director who has status as an employee, as opposed
to being a contractor, an owner entitled to an equity share, a volunteer,
or one who serves in some other status. The purpose of CLIA
is to ensure the accuracy and reliability of laboratory tests, and thus,
the public health of all Americans. See H.R. Rep. No. 899, 100th
Cong. 2d Sess. 8, 18 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829.
The Secretary's purpose in treating a laboratory director of a laboratory
which has its CLIA certificate revoked as an operator for purposes of
the two-year ban on owning or operating another laboratory is consistent
with the legislative intent of CLIA. 57 Fed. Reg. 7226 (1992). Petitioner's unique interpretation of the regulations, whereby he is shielded from his responsibilities as a laboratory director and the sanctions contemplated by the statutes and regulations, is unreasonable and inconsistent with the purposes of CLIA. I have concluded that, by accepting the title of "laboratory director" of a laboratory having or seeking a CLIA certificate, the director accepts all of the specified regulatory responsibilities and is subject to the authority of CMS and any sanctions specified by law, regardless of the actual employment status of the director.
San Fernando did not contest the sanctions imposed by CMS and, therefore, its certification was revoked effective August 16, 1999. The revocation of San Fernando's certification triggers 42 U.S.C. � 263a(i)(3), which is applicable to Petitioner for the reasons previously discussed. Section 263a(i)(3) provides that "[n]o person who has owned or operated a laboratory which has had its certificate revoked may, within two years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this under this section. Section 493.1840(a) of 42 C.F.R. is also triggered, which requires CMS to initiate adverse actions to suspend, limit or revoke the CLIA certificate of any laboratory if it is found that an owner or operator owned or operated a laboratory that had its CLIA certificate revoked within the last two years. CMS has no discretion and, in fact, takes no action under 42 U.S.C. � 263a(i)(3); the two-year ban on owning and operating is automatic. Similarly, CMS has little discretion under 42 C.F.R. � 493.1840(a)(8) as it must initiate action against the offending laboratory.
Even if I had entertained
Petitioner's constitutional arguments as they relate to 42 C.F.R. � 1840(a)(8),
I would be unable to utilize them in my deliberations on this matter.
I do not have the authority to decide
these issues. Administrative law judges have no statutory or regulatory
authority to find invalid or refuse to follow federal statutes or regulations.
Wayne E. Imber, M.D., DAB CR661, aff'd, DAB No. 1740
(2000); Richard A. Fishman, D.O., DAB CR100 (1990) (administrative
law judges do not have authority to declare federal statutes unconstitutional);
Sentinel Medical Laboratories, Inc., DAB No. 1762 (2001) ([i]t
is well established that administrative forums, such as this Board and
the Department's ALJs, do not have the authority to ignore unambiguous
statutes or regulations on the basis that they are unconstitutional). As a result of these explicit jurisdictional prohibitions, Departmental Appeals Board ALJs lack authority to review the constitutionality of statutes. Petitioner may not use this administrative appeals process to obtain redress for both his alleged constitutional harms. See Serban I. Cocioba, M.D., DAB CR654 (2000) (finding no jurisdiction to rule on constitutional claims); Morton Markoff, D.O., DAB CR538 (1998) (administrative law judges lack authority to decide constitutional claims). V. Conclusion
Based upon the foregoing, I affirm CMS's determination and conclude that Petitioner is prohibited from owning, operating or directing a laboratory for two years pursuant to 42 U.S.C. � 263a(i)(3), due to the revocation of San Fernando's CLIA certification of which he served as laboratory director during the relevant period of time. The two-year prohibition will commence to run from the issuance date of this decision. |
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JUDGE | |
Alfonso J. Montano Administrative Law Judge |
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FOOTNOTES | |
1. CMS's exhibits were identified with the acronym "HCFA" and, therefore, I will refer to them by that acronym in order to avoid confusion. | |