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

Petitioner,

Centers for Medicare & Medicaid Services

FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Alaa Ahmed, M.Sc., Ph.D., appealed an August 30, 2002 decision by Administrative Law Judge (ALJ) Jose A. Anglada. Alaa Ahmed, M.Sc., Ph.D. (Global Esoteric Reference Labs, Inc.), DAB CR946 (2002) (ALJ Decision). ⁽¹⁾ The ALJ Decision upheld a determination by the Centers for Medicare & Medicaid Services (CMS) revoking Petitioner's certificate under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) for a period of at least one year and cancelling Petitioner's approval to receive Medicare payments for its services on or after December 23, 2001.

The ALJ determined that Petitioner was not in compliance with the CLIA condition involving the improper referral of proficiency testing (PT) samples, as well as "other condition-level and standard-level CLIA requirements." ALJ Decision at 3.

The ALJ Decision was based on 18 findings of fact and conclusions of law (FFCLs). Petitioner, who appeared pro se both before the ALJ and here, filed exceptions to some specific FFCLs and raised other subsidiary arguments, in effect appealing each of the ALJ's FFCLs.

Based on the analysis below, we sustain the ALJ Decision, affirming and adopting each of the ALJ's underlying FFCLs.

Applicable law and regulations

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 (PHS Act), codified at 42 U.S.C. � 263a et seq. ⁽²⁾ CLIA further grants the Secretary of the Department of Health and Human Services (Secretary) 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 a certificate. CLIA requirements are designed to ensure the accuracy and reliability of laboratory tests, and hence the health and safety of those tested. See H.R. Rep. No. 899, 100^th Cong. 2d Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829.

A laboratory's CLIA certification is dependent upon whether the laboratory meets the conditions of certification set out in the statute and regulations. 42 U.S.C. � 263a(f)(1)(E); 42 C.F.R. � 493.1 et seq. Each condition represents a major division of laboratory services to be offered by the laboratory or required environmental protections at the laboratory. The regulations also set forth standards, the specific components of the conditions of laboratory certification, that a laboratory must meet as part of achieving compliance with applicable conditions.

Under CLIA, the Secretary is authorized to inspect clinical laboratories and, in effect, license them to perform tests. The PHS 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 PHS 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).

A key component of the statutory and regulatory program to assure that laboratories holding CLIA certificates are competent to perform tests of moderate and high complexity is the requirement for participation in a PT program that is approved by CMS, as outlined in 42 C.F.R. Part 493, Subpart H. Among the requirements of that subpart are the following: a participating laboratory must test PT samples it receives in the same manner as it tests patient samples (42 C.F.R. � 493.801(b)(1)); must not communicate the results of its tests to other laboratories prior to the deadline for reporting results (42 C.F.R. � 493.801(b)(3)); must not refer PT samples to another laboratory for analysis (42 C.F.R. � 493.801(b)(4)); and must document and maintain documentation for 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)).

The regulation at 42 C.F.R. � 493.911 requires that approved testing companies send out, three times each year at approximately equal intervals, PT samples to be analyzed by each laboratory for microbiology. Participating laboratories then test the samples 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's failure to comply with even a single condition in an area of testing offered by that laboratory may be grounds for suspension or revocation of a laboratory's CLIA certificate. Ward General Practice Clinic, DAB No. 1624, at 2 (1997). CMS may 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.

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). 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. Social Security Act

� 1902(a)(9)(C); 42 C.F.R. �� 440.2(b), 440.30(c), 493.1809 and 493.1842(a).

A participating laboratory is required to have a director who provides overall management and direction in accordance with 42 C.F.R. �� 493.801, 493.1441, 493.1443 and 493.1445. Additionally, a laboratory that does not treat PT samples in the same manner as patient samples may have its certificate of accreditation revoked. 42 C.F.R. �� 493.61(b)(1) and 493.61(c)(3).

A laboratory is entitled to a hearing before an ALJ to contest the imposition of CLIA remedies, including the suspension, limitation, or revocation of the laboratory's CLIA certificate, and may request review of the ALJ's decision by the Departmental Appeals Board. 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.

Procedural Background

On September 12, 2000, GERL was surveyed by the California Department of Health Services, Laboratory Services (State Agency). On December 5, 2000, CMS notified Petitioner that it was proposing to impose sanctions against Petitioner due to improper PT referral. Specifically, CMS found Petitioner not in compliance with the following CLIA conditions of participation:

• D2000: 42 C.F.R. � 493.801 Enrollment and testing of PT samples; and,



• D6076: 42 C.F.R. � 493.1441 Laboratory director, high complexity testing.

Further, CMS alleged that Petitioner had engaged in improper PT referral by reporting PT results obtained from another laboratory, in violation of 42 C.F.R. � 493.801(4). CMS also cited Petitioner's failure to meet other standard-level requirements. Based on these findings, CMS imposed 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.

Petitioner's Request to Submit Supplemental Evidence

As part of its appeal of the ALJ Decision, Petitioner submitted a reply brief accompanied by nine additional exhibits. CMS asked the Board to strike these new exhibits. CMS asserted that these exhibits were neither relevant nor material to Petitioner's case. Additionally, CMS argued, the submission of these exhibits at this late date precluded both the ALJ and CMS from fully responding to Petitioner's arguments.

As provided in the Board's CLIA Guidelines, generally, the Board will admit evidence into the record only if it considers the additional evidence to be relevant and material to an issue before it and if the proponent demonstrates good cause for not having produced the evidence during proceedings before the ALJ. See Guidelines - Appellate Review of Decisions of Administrative Law Judges in Cases Under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and Related Statutes (http://www.hhs.gov/dab/guidelines/clia.html); see also 42 C.F.R. � 498.68(a).

This evidence will be admitted since it is both relevant and material to the issues before us and since Petitioner was pro se before the ALJ and may not have been fully aware of the significance of these exhibits to the proceedings below. While these exhibits do not cause us to change any of the ALJ's findings, they nevertheless assist the Board in its understanding of the issues. Although CMS objected to these exhibits, CMS is not here prejudiced by their admission since CMS was given an opportunity to comment on the exhibits in a supplemental brief, and since, by CMS's own admission, the exhibits largely aid in buttressing CMS's case rather than Petitioner's. Accordingly, the exhibits accompanying Petitioner's Reply Brief are admitted into the record as Petitioner Supplementary Exhibits 1-9.

The ALJ Decision

The ALJ Decision was based on the following FFCLs:

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 [College of American Pathology] 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. ALJ Decision at 5-7.

Applicable Legal Standards

The standard of proof employed at a hearing concerning a CMS determination that a laboratory is not in compliance with CLIA conditions is preponderance of the evidence. CMS has the burden of coming forward with sufficient evidence to establish a prima facie case that the laboratory is not complying with one or more CLIA conditions. The laboratory has the ultimate burden of rebutting, by a preponderance of the evidence, any prima facie case of noncompliance established by CMS. Edison Medical Laboratories, Inc., DAB No. 1713 (1999), aff'd, Edison Medical Laboratories, Inc., v. Thompson, 250 F.3d 735 (3^rd Cir. 2001); see also Hillman Rehabilitation Center, DAB No. 1611 (1997), aff'd, Hillman Rehabilitation Center v. United States, No. 98-3789 (GEB) (D.N.J. May 13, 1999).

Our standard of review of an ALJ decision on a disputed issue of law is whether the ALJ decision is erroneous. Our standard of review on a disputed issue of fact is whether the ALJ decision as to that fact is supported by substantial evidence in the record. See CLIA Guidelines; US Bio-Chem Medical Laboratories, Inc., DAB No. 1731 (2000).

Petitioner initially filed specific exceptions to FFCLs 1, 8, 9 and 11-14 and disputed "the facts, statements and conclusions . . . made by the ALJ in the discussion section." Petitioner Br. at 1-2. The "discussion section" was the ALJ's entire nine-section analysis supporting his FFCLs. See ALJ Decision at 7-17. Additionally, Petitioner excepted to the ALJ's characterization of certain documentary and testimonial evidence as redundant or not warranting discussion. Finally, Petitioner excepted to the ALJ's determination that CMS had established a prima facie case. Petitioner Br. at 3. In its reply brief, Petitioner generally alleged that each of the ALJ's FFCLs was "not supported by substantial evidence or is erroneous" and raised new exceptions to FFCLs 2, 3 and 10. Petitioner Reply Br. at 5, 7 and 10.

Given the broad-based nature of Petitioner's arguments, we address Petitioner's appeal by examining each section of the ALJ's discussion, identified below by the section headings used in the ALJ Decision.

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

The ALJ Decision stated:

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.

ALJ Decision at 7-8.

On appeal, Petitioner disputed the ALJ's conclusion that Petitioner was subject to CLIA requirements. Petitioner alleged that in May 2000 it had applied to the State of California for a license, as GERL, but that the State had issued the license under the name of its predecessor, Global Esoteric Laboratories (GEL). Petitioner further maintained that at all relevant times GERL had not actually been performing patient testing. Petitioner asserted that, given these facts, it was not subject to CLIA requirements. Petitioner Br. at 3-4.

CLIA applies to all laboratories certified to perform testing on human specimens. 42 C.F.R. � 493.801.

Petitioner did not dispute that it had a CLIA Certificate of Registration that certified it to perform testing on human specimens. ⁽⁴⁾ Petitioner itself submitted a copy of GERL's Certificate of Registration, which provides that GERL "may accept human specimens for the purposes of performing laboratory experiments." Petitioner Supplementary Ex. 3.

Moreover, the mistaken reference to GEL on the California license for GERL is not a basis for finding that Petitioner was not subject to CLIA requirements. Although Alaa Ahmed originally established the GEL corporation with another individual, he admitted that GEL "never went in business" and was finally dissolved in March 2000. Petitioner Reply Br. at 4, 6. Alaa Ahmed then became the sole owner of the very same laboratory facility with the same address and the same laboratory director, but under the name of GERL. GERL received a CLIA Certificate of Registration dated February 25, 2000 with CLIA ID Number 05D0970824. Petitioner Supplementary Ex. 3. GERL filed an amended application for a California laboratory license and a license dated August 3, 2000 was issued on behalf of the laboratory under GERL's CLIA ID number and with Alaa Ahmed listed as the owner. Petitioner Supplementary Ex. 6. Although the license was issued under the corporate name GEL, rather than GERL, the obviously intended recipient of the license was GERL in view of the prior dissolution of GEL, the license's reference to Alaa Ahmed alone as owner, the license's reference to GERL's CLIA ID number, and the fact that the state licensing authority had been notified in an amended application and in subsequent correspondence of the modification in corporate name and structure. Petitioner Reply Br. at 4. In correspondence dated December 13, 2000, Petitioner recognized that the license issued on August 3, 2000 pertained to GERL. Petitioner Ex. 6. Moreover, Mr. Yamamoto testified without credible rebuttal at the hearing that GERL was both certified under CLIA to perform tests and licensed by the State of California at the time that GERL participated in the PT program just prior to the survey in question. Tr. at 329.

Further, contrary to Petitioner's assertion that it performed no patient testing, the surveyors testified that when they entered GERL in September 2000, the laboratory personnel were conducting patient testing. Tr. at 44-46 and 225. Petitioner did not point to any contrary evidence in the record, nor did it offer any reason why this testimony was not credible. In any event, the ALJ concluded, and we agree, that it was irrelevant whether GERL was routinely performing tests for patients at the time of the PT program as long as it was authorized to perform tests by virtue of its CLIA Certificate of Registration.

We therefore conclude that the ALJ correctly determined that Petitioner was subject to CLIA's PT requirements.

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

The ALJ relied, in large part, on the testimony by two State Agency surveyors regarding the evidence discovered prior to the survey and their interview with Ms. Flores, during the survey, in which she allegedly admitted testing at least two PT samples (D4-09 and D4-07) at the other facility where she worked, Dynamic Medical Laboratories (DML). ⁽⁵⁾ According to this testimony, on the evening before the State Agency's September 12, 2000 survey, one surveyor was examining a trash bin behind GERL for information which might assist the survey team's investigation of GERL. The surveyor discovered a two-page PT worksheet for a microbiology specimen identified as D4-09. (CLIA laboratories must maintain PT worksheets to document how they arrive at their test results. See 42 C.F.R. � 493.801(b)(5)). The name Dynamic Medical Laboratories appeared on the heading of the worksheet. The worksheet contained notations indicating that the D4-09 specimen had been tested using an Enterotube which GERL did not possess. Rather, GERL used a device known as a Micro Scan Walk Away (Walk Away). ALJ Decision at 9-10.

Additionally, the surveyors testified that, on the first day of the GERL survey, they confronted Ms. Flores with the DML worksheet for D4-09 found in the GERL trash bin. According to the surveyors, Ms. Flores admitted having tested the D4-09 at DML because she did not trust the Walk Away testing device. Ms. Flores also admitted that she had tested another specimen, identified as D4-07, at DML because she could not identify it with the Walk Away, the testing device used by GERL. ALJ Decision at 12. Rather, Ms. Flores used a bacitracin disk, not available at GERL, to obtain her results. The ALJ also noted that Petitioner suspended Ms. Flores for two weeks based upon her reporting of mixed PT results (i.e., from two different laboratories) to CAP. ALJ Decision at 10-11.

In her testimony before the ALJ, Ms. Flores effectively changed her story regarding the D4-09 sample, stating that she tested that sample at DML out of curiosity and after GERL had reported its PT results to CAP. However, she admitted that the DML worksheet for D4-09 contained no date to support her assertion that she tested the D4-09 after GERL sent its PT results to CAP. Moreover, Ms. Flores also testified that she had no prior testing experience using the Walk Away. ALJ Decision at 10-11.

The ALJ determined that Ms. Flores' testimony was not credible. Specifically, the ALJ found Ms. Flores' explanation of why she tested the D4-09 at DML, as recounted by the surveyors, to be more reliable than her subsequent testimony on that topic. The ALJ reasoned that, had the events occurred as Ms. Flores testified, Petitioner would have raised them earlier in its defense; Ms. Flores would not have reasonably accepted a two-week suspension of employment for actions she later denied committing; and, in all likelihood, Petitioner would not have suspended her without factual justification. ALJ Decision at 11-12. The ALJ also concluded that CMS had made a prima facie case that Petitioner had improperly referred the D4-07 sample and Petitioner had not rebutted that showing. Id. at 12.

On appeal, Petitioner argued that while --

CMS showed physical evidence that Petitioner may have tested PT sample D4-09 only at Dynamic Lab. . . . No evidence was produced to support the allegation that specimen D4-07 was also tested at Dynamic Lab.

Petitioner Br. at 5.

In regard to specimen D4-07, the ALJ reasoned:

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. 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.

ALJ Decision at 12 (footnote omitted).

Petitioner implicitly challenged the ALJ's credibility determination in regard to Ms. Flores. Petitioner intimated that Ms. Flores was coerced into making statements damaging to Petitioner by the surveyors, that the surveyors' investigation of Ms. Flores' activities was unprofessional and inadequate, and that Petitioner's explanation of the perceived discrepancies between Ms. Flores' testimony and her statements regarding her activities was enough to remove doubts as to her credibility. Petitioner Br. at 5-11.

In general, as an appellate body, we do not disturb an ALJ's assessment about the credibility of testimony by witnesses who appear in person at the hearing absent a compelling reason to do so. Thus, the Board has held that --

A reviewing panel does not have the opportunity to evaluate the credibility of a witness by listening in person to the witness's testimony or observing the witness's demeanor. The evaluation of the credibility of a witness is properly left to the hearing officer. . . .  

South Valley Health Care Center, DAB No. 1691, at 22 (1999).

Petitioner identified no compelling reason not to defer to the ALJ's assessment of the credibility of Ms. Flores' hearing testimony, nor did it identify any persuasive evidence in support of its arguments before us concerning why we should discount the ALJ's assessment that what she told the surveyors was more credible than what she said on the stand.

Both here and before the ALJ, Petitioner offered no evidence, other than Ms. Flores' testimony, to rebut the prima facie case established by CMS on this deficiency. Even if substantial evidence did not exist to show that Petitioner tested D4-07 at DML (which it does), Petitioner did not deny that the D4-09 was tested at DML and, as discussed below, did not present any evidence, other than Ms. Flores' discredited testimony, that this testing occurred after GERL submitted its PT results. Failure to comply with even a single testing condition is a ground for suspension or revocation of a laboratory's CLIA certificate. Ward, at 2.

Finally, Petitioner generally challenged the testimony presented, on behalf of CMS, by the two State Agency surveyors, Donald Newbold and Victor Escovedo. Petitioner contended that CMS failed to establish the time frame for the alleged testing at DML, that the surveyors were biased, that the surveyors failed to verify the accuracy of Ms. Flores' statements to them, and that the ALJ erred by relying on the surveyors' "unfounded and untrue" inferences and conclusions, rather than the evidence. Petitioner Br. at 5-11.

Petitioner's arguments are meritless and completely unsupported by evidence in the record. Throughout his decision, the ALJ recounted the evidence and specific testimony underlying his reasoning. In spite of Petitioner's general arguments challenging the testimony of the CMS witnesses, we conclude that all of the ALJ's findings are supported by substantial evidence.

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

The ALJ found that "Petitioner's PT samples, for the second testing event of 2000 . . . 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." ALJ Decision at 6. In reaching this determination, the ALJ relied on Ms. Flores' admission that she tested PT samples at DML and her acceptance of the disciplinary action taken against her for reporting mixed laboratory results. The ALJ reiterated that he did not find Ms. Flores' testimony credible, specifically, her testimony that she had accepted the disciplinary action unthinkingly and that she had tested specimens at DML only after submitting her CAP report. ALJ Decision at 13.

As discussed above, we defer to the ALJ's finding that Ms. Flores was not a credible witness. Thus, Petitioner's arguments regarding the ALJ's reliance on Ms. Flores' admission and her acceptance of disciplinary action are unavailing.

The evidence supports the ALJ's finding that Petitioner referred PT specimens to DML for testing in violation of 42 C.F.R. � 493.801(b)(4). As the ALJ noted, there is no dispute that at least one PT sample was tested at DML. Moreover, Petitioner offered no evidence, at any point in its appeal, to prove its assertion that the testing at DML occurred after Petitioner had reported its PT results to CAP. As we have noted elsewhere, the plain wording of 42 C.F.R. � 493.801(b)(1) provides that,

personnel who routinely perform testing "in the laboratory" are required to integrate PT samples into "the laboratory's regular patient workload," "using the laboratory's routine methods." Nothing in that section requires that, merely because some patient specimens are routinely sent to a different laboratory, PT samples must also be sent to the different laboratory. The routine methods referred to are the methods used in the [the Petitioner's] laboratory . . . by the laboratory's personnel for analysis or testing of patient specimens.

Lackawanna Medical Group Lab, DAB No. 1870 at 10 (2003) (footnote omitted).

There is no dispute that at least one PT sample was treated differently than Petitioner's "regular patient workload." Moreover, as discussed in the next section of our analysis, there is no evidence that Petitioner provided the required attestation that PT samples were tested in the same manner as patient samples. See 42 C.F.R. � 493.801(b)(5). Thus, the ALJ did not err in concluding that Petitioner failed to examine PT samples with its regular patient workload in violation of section 493.801(b)(1).

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

Here, the ALJ relied upon the evidence and testimony of Dr. Rudolf Ulirsch, GERL's laboratory director during the period in issue. ⁽⁶⁾ The ALJ determined that Dr. 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.

ALJ Decision at 13.

Consequently, the ALJ found that there was no responsible individual at GERL permitted by the regulations to ensure compliance with PT requirements. Id.

On appeal, Petitioner insisted that since GERL was not subject to CLIA regulations, it should not be accountable for the regulatory requirements for a laboratory director's qualifications and responsibilities. Petitioner Reply Br. at 7.

As discussed earlier in this decision, the ALJ did not err in finding that Petitioner was subject to CLIA requirements. Accordingly, Petitioner has presented no basis for reversing the ALJ's conclusion that GERL's laboratory director failed to ensure that PT samples were tested in the same manner as patient samples, as required by 42 C.F.R. � 493.1445(e)(4)(i).

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

The regulation at 42 C.F.R. � 493.1205(e)(1) requires that reagents, solutions, culture media, control materials, calibration materials and other supplies 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. The ALJ concluded that CMS had made a prima facie case that Petitioner did not meet the standard at 42 C.F.R. � 493.1205(e)(1) for test methods, and that Petitioner presented no evidence to refute CMS's prima facie case.

The ALJ relied on the testimony of a State Agency surveyor who indicated that, based on his observations and interviews with GERL staff, the laboratory was actively engaged in patient specimen testing during the survey and that the laboratory had reagents and culture media that had exceeded their expiration date. Further, the surveyor testified that the majority of the culture media in the laboratory's refrigerator had expired months before the inspection visit. The surveyor noted that even if GERL 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. The ALJ also relied on the testimony of another surveyor that an antigen suspension which GERL used in testing for syphilis had expired. This second surveyor added that testing samples with expired reagents posed a risk for patient harm. ALJ Decision at 13-14, citing Tr. at 91-93 and 224-225; see also CMS Ex. 1, at 10.

On appeal, Petitioner argued that it was not responsible for these regulatory requirements since it was not subject to CLIA regulations. Petitioner Reply Br. at 10.

As discussed above, the ALJ did not err in finding that Petitioner was subject to CLIA requirements. Accordingly, Petitioner has presented no basis for reversing the ALJ's conclusion that Petitioner did not meet the standard at 42 C.F.R. � 493.1205(e)(1) for test methods.

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

The regulation at 42 C.F.R. � 493.1202(c)(1) requires that a laboratory follow a manufacturer's instructions for instrument or test system operation and test performance. The ALJ found that CMS had established a prima facie case that GERL failed to follow the manufacturer's instructions for test systems operation and/or test performance and that Petitioner had failed to produce evidence rebutting CMS's showing. The ALJ relied on the results of the State Agency surveyor's examination of supplies and materials stored in a refrigerator located in GERL's bacteriology laboratory. The surveyor found numerous reagents stored at incorrect temperature, contrary to the manufacturer's direction. The improper storage compromised the reagents' effectiveness and could have adversely affected patient testing by leading to incorrect test results. ALJ Decision at 14-15.

On appeal, Petitioner presented no arguments relating to the ALJ's conclusion that Petitioner did not meet the standard at 42 C.F.R. � 493.1202(c)(1) for moderate and/or high complexity testing.

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

The CLIA standard established by this regulation requires a laboratory director to specify, in writing, the responsibilities and duties of each person engaged in the performance of pre-analytic, analytic, and post-analytic phases of testing that identifies which examinations and procedures each individual is authorized to perform. The ALJ found that CMS had made a prima facie case that the GERL laboratory director failed to specify such duties and responsibilities, in writing. The ALJ relied on the testimony of a State Agency surveyor who observed a non-licensed individual performing patient HIV1/HIV2 testing. The surveyor testified that the individual performing HIV testing was not listed on the laboratory's personnel form as someone authorized to perform such testing. Further, the surveyor found nothing in writing by the laboratory director specifying the duties and responsibilities of every person working in the facility. The ALJ noted that the surveyor's finding was significant because HIV1/HIV2 testing is high complexity testing, yet no licensing credentials were made available for the person performing such tests. The ALJ noted that Petitioner presented no evidence to rebut CMS's prima facie case regarding this deficiency. ALJ Decision at 15, citing Tr. at 227-228; see also Tr. at 318.

On appeal, Petitioner presented no arguments relating to the ALJ's conclusion that Petitioner did not meet the standard at 42 C.F.R. � 493.1407(e)(14) for laboratory director responsibilities.

H. Petitioner did not meet the condition at 42 C.F.R. � 493.1441 for laboratory director.

The CLIA condition established by 42 C.F.R. � 493.1441 requires a laboratory to have a director who meets the qualification requirements of 42 C.F.R. � 493.1443 and provides overall direction and proper management for the laboratory pursuant to 42 C.F.R. � 493.1445. As discussed above, the ALJ found that PT samples were not processed using the laboratory's regular testing procedures. Based on that finding as well as testimony that Dr. Ulirsch made only sporadic visits to the laboratory, the ALJ found that Petitioner's laboratory director did not fulfill his ultimate responsibility to ascertain that proficiency testing and reporting were carried out in accordance with the requirements set forth at 42 C.F.R. � 493.801. Further, the ALJ noted that, in clear violation of 42 C.F.R. � 493.801(b)(5), the laboratory director 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. The ALJ also recounted GERL's failure to properly store reagents, which he stated was the laboratory director's duty to ensure, and the laboratory director's failure to specify, in writing, the duties and responsibilities for each person engaged in the performance of the analytic phases of testing. ALJ Decision at 15-16.

The ALJ noted that the program regulations made the laboratory director responsible for assuring that a laboratory satisfies CLIA requirements. The ALJ considered these findings as evidence of the laboratory director's failure 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.

On appeal, Petitioner admitted that Dr. Ulirsch was a Medical Director and technical consultant to GERL. However, Petitioner again asserted that GERL was not subject to CLIA requirements. Thus, Petitioner argued, "[Dr. Ulirsch] should not be expected to fulfill the applicable regulations" at 42 C.F.R. �� 493.1443 and 493.1445. Petitioner Reply Br. at 7 and 10.

As discussed above, the ALJ did not err in finding that Petitioner was subject to CLIA requirements. Accordingly, Petitioner has presented no basis for reversing the ALJ's conclusion that Petitioner did not meet the standard at condition at 42 C.F.R. � 493.1441 for laboratory director.

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

In making this determination, the ALJ discussed 42 C.F.R. � 493.801 which, he stated, unequivocally established that a laboratory must not intentionally send PT samples or portions of samples to another laboratory for any analysis which it is certified to perform in its own laboratory. Inherent in the regulation, the ALJ noted, was 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. See 42 C.F.R. � 493.801(b)(4). The ALJ then examined CLIA's legislative history, recognizing that it reflected the significance Congress attached to the accuracy and reliability of laboratory testing. Specifically, the ALJ stated that the legislators determined that PT 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. ALJ Decision at 16-17.

The ALJ concluded that Petitioner's violation of 42 C.F.R. � 493.801 justified the revocation of its CLIA certificate and revocation of its right to receive Medicare payments for services. Petitioner presented no arguments on appeal to show that the ALJ's conclusion was erroneous.

Conclusion

Based on the foregoing analysis, we find that the ALJ's findings of fact are supported by substantial evidence in the record and his conclusions of law are not erroneous. Consequently, we sustain the ALJ Decision in its entirety. In so doing, we affirm and adopt each of the FFCLs upon which the ALJ Decision is based.

Judith A. Ballard

Cecilia Sparks Ford

Donald F. Garrett
Presiding Board Member

1. Dr. Ahmed was the owner and operator of Global Esoteric Reference Labs, Inc. (GERL or the laboratory). Both GERL and Dr. Ahmed constituted "Petitioner" in this case. Hearing Transcript (Tr.) at 549.

2. CMS may deem a laboratory to meet all applicable CLIA program requirements if the laboratory obtains a certificate of accreditation, as required in 42 C.F.R. Part 493, Subpart D, and meets the other requirements listed in 42 C.F.R. � 493.551(b).

3. Although particular issues may not be discussed in detail in this decision, we have nevertheless considered all of the points in the parties' briefs in reaching the conclusions set forth here.

4. A registration certificate is required for all laboratories seeking a certificate of accreditation, unless the laboratory has a certificate of compliance. 42 C.F.R. � 493.57. A laboratory with a certificate of accreditation is deemed to meet the criteria of the CLIA requirements. See 42 C.F.R. Part 493, Subpart D. Both a laboratory requesting accreditation and one that has been issued a certificate of accreditation may be subject to a complaint investigation. 42 C.F.R. � 493.1780(b). A finding of non-compliance with one or more condition-level deficiencies may then lead to a full review, in accordance with 42 C.F.R. Part 493, Subpart E to see if CLIA requirements are met. 42 C.F.R. � 493.1780(a).

5. DML was registered for proficiency testing with the American Association of Bioanalysts (AAB), not CAP. Tr. at 41; ALJ Decision at 10, n.9.

6. Dr. Ulirsch resigned as GERL Laboratory Director on November 20, 2000. CMS Ex. 14. CLIA sanctions were also imposed against Dr. Ulirsch and his appeal of those sanctions was initially scheduled to be heard along with Petitioner's. However, Dr. Ulirsch settled his appeal.