Laboratorio Concordia Lugaro, DAB No. 3029 (2021)

REMAND OF ADMINISTRATIVE LAW JUDGE DECISION

Laboratorio Concordia Lugaro (Petitioner or the Lab), a clinical laboratory, appeals the April 16, 2020 Administrative Law Judge decision, Laboratorio Concordia Lugaro, DAB CR5589 (2020) (ALJ Decision), granting summary judgment in favor of the Centers for Medicare & Medicaid Services (CMS).  The ALJ concluded, as a matter of law, that CMS properly imposed the following remedies against Petitioner:  (i) revocation of Petitioner’s CLIA certificate; (ii) cancellation of Petitioner’s approval to receive Medicare payments; and (iii) a civil money penalty of $2,000 for each of eight alleged instances in which Petitioner intentionally referred proficiency testing samples to another laboratory.

On appeal, Petitioner contends the entry of summary judgment was improper.  We have reviewed the record and find there are genuine disputes of material fact as to whether Petitioner referred eight proficiency testing samples to another laboratory in violation of federal certification requirements.  Accordingly, we conclude that the entry of summary judgment was improper, vacate the ALJ Decision, and remand this matter for further proceedings.    

Legal Background

The Clinical Laboratory Improvement Amendments of 1988 (CLIA) authorizes the Secretary of the Department of Health and Human Services (Secretary) to establish and enforce 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.  The Secretary’s enforcement authority includes the ability to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more certification requirements.  CLIA requirements are intended to ensure the accuracy and reliability of laboratory tests and, therefore, the health and safety of those tested.  See H.R. Rep. No. 899, 100th Cong. 2d Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829.

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A laboratory that is not CLIA-exempt must have a CLIA certificate meeting the requirements of 42 C.F.R. Part 493.  Part 493 sets forth the regulatory conditions that laboratories must meet to be certified to perform testing on human specimens.  42 C.F.R. § 493.1.  The type of CLIA certificate a laboratory is required to have depends on the category of examinations or procedures performed by the laboratory.  42 U.S.C. § 263a(f)(1), (2); 42 C.F.R. §§ 493.3, 493.5.  A laboratory performing only simple examinations and procedures may operate under a certificate of waiver if it meets the requirements of Part 493, Subpart B.  See 42 C.F.R. § 493.15.  A laboratory performing tests of high or moderate complexity must meet additional conditions and obtain a certificate authorizing the performance of those tests.  See id. §§ 493.20, 493.25.

Each laboratory holding a CLIA certificate allowing it to perform tests of moderate or high complexity must, among other things, enroll and participate in a proficiency testing program approved by CMS as outlined in Part 493, Subpart H.  See 42 U.S.C. § 263a(f)(1)(D), (f)(3); 42 C.F.R. §§ 493.20(b), 493.25(b), 493.803.  The laboratory must participate in a proficiency testing program “for each specialty, subspecialty, and analyte or test in which the laboratory is certified under CLIA.”  42 C.F.R. § 493.803(a).  Proficiency testing programs are administered by private nonprofit organizations, federal or state agencies, or entities designated as agents of the state.  Id. § 493.901.  

To successfully participate in a proficiency testing program, a laboratory must satisfy the requirements of Part 493, Subpart H, including among other requirements, the following:  a participating laboratory must test samples it receives from the proficiency testing program in the same manner as it tests patient specimens (42 C.F.R. § 493.801(b)(1)); must not communicate the results of its tests to other laboratories before the reporting deadline (id. § 493.801(b)(3)); must not refer samples to another laboratory for analysis (id. § 493.801(b)(4)); and must maintain documentation of the handling, preparation, processing, examination, and each step in the testing and reporting of results for all samples (id. § 493.801(b)(5)).

A laboratory’s failure to comply with even a single condition in an area of testing may be grounds for suspension or revocation of the laboratory’s CLIA certificate.  White Lake Family Med., P.C., DAB No. 1951, at 5 (2004) (citing Ward Gen. Prac. Clinic, DAB No. 1624, at 2 (1997)).  As a principal sanction, CMS may suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions.  42 C.F.R. § 493.1806(b).  In addition to or instead of imposing principal sanctions, CMS may impose alternative sanctions, such as a directed plan of correction, onsite monitoring by the state, or civil money penalties.  Id. § 493.1806(c).  CMS bases its choice of sanctions on the consideration of various regulatory factors, including but not limited to the nature, incidence, severity and duration of deficiencies and whether the same condition level deficiencies have been identified repeatedly.  Id. § 493.1804(d).  Similar factors are considered by CMS in determining the amount of any civil money penalty.  Id. § 493.1834(d).

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Any laboratory that CMS determines intentionally referred its proficiency testing samples to another laboratory for analysis may 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 payments.  42 C.F.R. § 493.1842(a).  A laboratory without a CLIA certificate would also have no right to receive payments under a state Medicaid program.  See Social Security Act § 1902(a)(9)(C); 42 C.F.R. § 493.1809.

A participating laboratory is required to have a director who provides overall management and direction in accordance with 42 C.F.R. §§ 493.1403, 493.1441, 493.1443, and 493.1445.  And, a laboratory that does not treat proficiency testing samples in the same manner as patient specimens may have its certificate of accreditation revoked.  Id. §§ 493.61(b)(1), 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.  Id. § 493.1844(a)(2), (b)(1).  The imposition of alternative sanctions may be appealed, but not the determination by CMS as to which alternative sanctions to impose, or the amount of civil money penalties imposed per day or per violation.  Id. § 493.1844(b)(3), (c)(4), (c)(7).  A laboratory may request review of the ALJ’s decision by the Departmental Appeals Board.  Id. § 493.1844(a)(3).  The CLIA regulations at § 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.

Case Background

The Lab is a clinical laboratory located in Puerto Rico subject to the certification requirements under CLIA.  On March 21, 2019, a surveyor from the Puerto Rico Department of Health (PRDOH) completed an on-site survey of the Lab and documented his findings in a statement of deficiencies.  CMS Ex. 1.  The surveyor reported that the Lab was enrolled in the Puerto Rico Proficiency Testing Program (PRPTP) for syphilis serology, endocrinology, occult blood and urinalysis and participated in testing events in 2018 and 2019.  Id. at 3.  According to the surveyor, the Lab improperly referred “all proficiency samples for year 2018” and “the first testing event of 2019” to another lab (Laboratorio Clinico Central I) and “reported the test results as its own.”  Id. at 1-2.  According to the surveyor, this information was disclosed to him by the Lab director during an interview at the time of the survey.  Id. at 3.

By letter dated July 1, 2019, CMS notified the Lab that based on the results of the survey, the Lab was out of compliance with the following three CLIA conditions:

D2000: 42 C.F.R. § 493.801 Enrollment and Testing of [Proficiency Testing] Samples;

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D6000: 42 C.F.R. § 493.1403 Laboratories performing moderate complexity testing; laboratory director; and
D3000: 42 C.F.R. § 493.1100 Facility Administration.

CMS Ex. 4, at 2.  CMS alleged that in eight separate instances, the Lab improperly referred proficiency testing samples to another laboratory and reported the test results as its own.  Id. at 1-2.  As a result, CMS proposed to impose as a principal sanction the revocation of Petitioner’s CLIA certificate and, as an alternative sanction, a civil money penalty (CMP) of $2,000 for each of the eight improper referrals.  Id. at 2 (calculating a total CMP of $16,000).  CMS explained that “[i]n determining the amount of the penalty, CMS has taken into account that [the Lab] was found to have engaged in improper proficiency testing referral activities in eight (8) separate events resulting in the determination by CMS that [the Lab] was out of compliance with three (3) Condition-level requirements of CLIA.”  Id. at 3.  CMS further proposed the cancellation of the Lab’s approval to receive Medicare and Medicaid payments.  Id.  The Lab was given ten days to submit evidence or information as to why the proposed sanctions should not be imposed.  Id. at 4.

CMS received the Lab’s plan of correction (dated July 9, 2019) in response to the statement of deficiencies on July 16, 2019.  CMS Ex. 2 (plan of correction); CMS Ex. 5 at 1.1   In the plan of correction, which was signed by the Lab director,2 the Lab repeatedly stated that it did not refer all proficiency testing samples to another laboratory as alleged by the surveyor, but processed all proficiency testing samples (with one exception) in its own facilities.  CMS Ex. 2, passim.  In response to the surveyor’s conclusion that the Lab violated 42 C.F.R. § 493.801(b)(4) by referring proficiency testing samples to Laboratorio Clinico Central I, the Lab wrote:

The conclusion of facts is erroneous.  Is completely false that the laboratory director stated and accepted that all the proficiency samples were referred to Laboratorio Clinico Central I since the first event of 2018.  The Laboratorio Concordia Lugaro process[ed] the proficiency events of the 2018 and 2019 [years] in its own facilities.  During the inspection in March 2019 carr[ied] out by [the surveyor] the laboratory director asserted that the only proficiency event referred to Laboratorio Clinico Central I was the syphilis serology event on May 2018.  The reason for [that] referral was the

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absence of electric energy prevailing in [the] premises of [the Lab] since the pass of Hurricane Maria in [Puerto Rico].  Electric power was restore[d] on May 2018.  Those facts were explained to the inspector.  Never [did] the laboratory director inform during the process of inspection other facts than those here stated. 

CMS Ex. 2, at 2-3.  In the same document, the Lab reiterated:  “Only the May 2018 events for proficiency [testing] for syphilis serology were referred to Laboratorio Clinico Central I.  The rest of the proficiency [testing] events [were] performed in Laboratorio Clinico Concordia Lugaro.”  Id. at 3-4.

With respect to the May 2018 proficiency testing event, the Lab further explained that the PRPTP had approved that referral in the aftermath of Hurricane Maria:

The proficiency event on May 2018 was process[ed] in Laboratorio Clinico Central I after a call to the proficiency program office of Puerto Rico indicated that since Hurricane Maria there [is] not electric power in the laboratory.  The personal [sic] of the office of Proficiency Testing Program approved the referral of that event based on the fact that [Laboratorio Clinico Central I] [has] the same owner and is not considered as a reference laboratory.  All the additional events since May 2018 [were] process[ed] in Laboratorio Clinico Concordia Lugaro. 

CMS Ex. 2, at 15.

In addition, in a letter dated July 10, 2019, directed to representatives of the PRDOH and CMS, and signed by the Lab director, the Lab explained that only the proficiency testing event of May 2018 was processed at Laboratorio Clinico Central I, and that was done only after consulting with and obtaining the approval of the PRDOH.  CMS Ex. 21, at 25.3   The Lab explained:  “I want to emphasize that it was only that [May 2018] event that was carried out at the [Laboratorio Clinico Central I].  The rest of the proficiencies events for the year 2018 and the year 2019 were processed at the [Laboratorio Concordia Lugaro].  It is for this reason that I understand that the report submitted by [the surveyor] is not correct or faithful to the facts occurred . . . .”  Id.

By email dated August 2, 2019, a representative of the PRDOH communicated to CMS its analysis of the plan of correction and of additional materials submitted by the Lab.  CMS Ex. 3.  Soon after, by letter dated August 21, 2019, CMS acknowledged receipt of

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the Lab’s plan of correction dated July 9, 2019, and determined the submission had “no effect on our sanction determination.”  CMS Ex. 5, at 1.  CMS explained that the basis for its sanction determination “is the improper referral of [the Lab’s] proficiency testing samples to another laboratory for analysis.”  Id.  CMS noted that the Lab’s “referral . . . of proficiency testing samples alone, with or without the direct communication of the other laboratory’s test result to your laboratory,” requires CMS to impose the proposed sanctions.  Id.4   CMS found the Lab’s submission “does not show” that the Lab did not engage in improper referrals and concluded that two condition-level deficiencies remain:

D2000: 42 C.F.R. § 493.801 Enrollment and Testing of [Proficiency Testing] Samples; and
D6000: 42 C.F.R. § 493.1403 Laboratories performing moderate complexity testing; laboratory director.

CMS Ex. 5, at 1-2.5

As a result, CMS imposed the sanctions proposed in its July 1, 2019 letter, including the revocation of the Lab’s CLIA certificate, imposition of a CMP in the amount of $16,000 ($2,000 per occurrence for each of eight improper referrals), and cancellation of the Lab’s approval to receive Medicare and Medicaid payments.  Id. at 2.  CMS advised the Lab of its right to file an appeal on or before September 9, 2019 – 60 days after the Lab’s receipt of the sanction proposal notice.  Id.      

ALJ Proceedings and Decision

The Lab timely requested an ALJ hearing, challenging the imposition of sanctions and specifically denying that it improperly referred eight proficiency testing samples to another laboratory.  The ALJ entered an Acknowledgment and Pre-Hearing Order (Pre-Hearing Order), requiring each party to file a pre-hearing exchange, including a brief, supporting exhibits, exhibit list, witness list, and the written direct testimony of each proposed witness.  Pre-Hearing Order ¶¶ 3, 7.  The Pre-Hearing order noted that objections to any of the proposed exhibits or witnesses must be submitted in writing within specified time frames.  Id. ¶ 6.  The Pre-Hearing Order advised that a party may file a motion for summary disposition and that such a motion will be decided “according to the principles of Rule 56 of the Federal Rules of Civil Procedure and applicable case law.”  Id. ¶ 4.a.  The Pre-Hearing Order further advised that the “[p]arties should not use

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written direct testimony to simply reiterate or repeat as testimony statements that are contained in other exhibits offered as evidence.”  Id. ¶ 7 (emphasis added). 

CMS filed a Pre-Hearing Brief and Motion for Summary Judgment (SJ Br.), along with twenty-four exhibits, an exhibit list, and witness list.  CMS included among its exhibits a declaration by the surveyor who reported the Lab director’s alleged admission.  CMS Ex. 23.  CMS argued that its evidence and arguments “amply demonstrate” that the Lab “intentionally referred” proficiency testing samples to another laboratory for analysis and testing in violation of CLIA.  SJ Br. at 1.  Pointing to the survey completed by the PRDOH, including the Lab director’s alleged admission at the time of the inspection, CMS argued that it is “readily apparent” that the Lab sent all proficiency samples in 2018 and the first event of 2019 to Laboratorio Clinico Central I.  Id. at 2.  According to CMS, summary judgment was appropriate because “there can be no dispute that [the Lab] intentionally referred its proficiency testing samples to another laboratory for analysis and testing and then reported the results as its own.”  Id. at 8.      

The Lab filed a response to CMS’s motion for summary judgment (SJ Opp’n), along with a report pertaining to the May 2018 proficiency testing sample it says it referred to Laboratorio Clinico Central I with the permission of the PRPTP.  SJ Opp’n at 1.6   The Lab argued that summary judgment was inappropriate because CMS’s own exhibits, specifically CMS Ex. 2 (plan of correction), show a “real controversy” exists as to whether the Lab referred all proficiency testing samples to another laboratory.  Id.  The Lab noted that its director repeatedly denied the statements attributed to her by the surveyor, and that the surveyor’s allegations are not supported by “a single relevant paper.”  Id. at 2.  According to the Lab, the surveyor’s allegations and the Lab director’s repeated denials “remain a matter of controversy to be judged in a hearing,” including the question “as to who is telling the truth.”  Id.7

Additionally, the Lab filed a pre-hearing brief, exhibit list, and witness list, along with two exhibits – another copy of the May 2018 proficiency testing report (in Spanish and English) (Petitioner Ex. 1) and a copy of the Lab’s plan of correction (Petitioner Ex. 2).  In its pre-hearing brief, the Lab again denied that all proficiency testing samples were referred to another laboratory, denied that its director told the surveyor that all proficiency testing was referred to another laboratory, and pointed out that the surveyor’s

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contemporaneous notes (CMS Ex. 22) do not specify any period of time for the alleged improper referrals.  Pet. Pre-Hearing Br. at 1-2.  The Lab further wrote:  “As our Exhibits show,” the Lab director “denied from the beginning of this process” that she told the surveyor that all proficiency samples were referred to another laboratory.  Id. at 3.  The Lab further argued that the surveyor appears to have made assumptions about referrals that did not occur based on incorrectly labeled forms.  Id. (discussing CMS Ex. 8, at 10-11). 

On April 16, 2020, the ALJ issued a decision granting summary judgment in favor of CMS.  ALJ Decision at 1.  The ALJ recognized that CMS’s case rested “squarely” on the Lab director’s admission, as reported by the surveyor, that the Lab referred proficiency testing samples to another laboratory in 2018 and 2019.  Id. at 3-4, 6.  The ALJ found that the Lab’s factual contentions (i.e., that it did not improperly refer eight proficiency testing events to another lab) were “merely speculative, without any support in the documents offered by the parties,” and that the Lab “offered no evidence to refute” the surveyor’s “sworn declaration” documenting the alleged admission.  Id. at 4 (“Petitioner has not identified any admissible evidence that supports its contentions of fact.”).8   Having found no material facts in dispute, the ALJ entered summary judgment against the Lab and sustained (i) the revocation of its CLIA certificate, (ii) cancellation of its approval to receive Medicare payments, and (iii) a CMP of $16,000 ($2,000 for each of eight improper referrals of proficiency testing samples).  Id. at 1, 7-8. 

Board Proceedings

The Lab timely filed a request for review (RR) of the ALJ Decision, challenging the entry of summary judgment.  The Lab argued, among other things, that the ALJ failed to consider the plan of correction (CMS Ex. 2), in which the Lab contested, “since the beginning,” the allegations made by the surveyor.  RR at ¶ 5 (“Instead of giving to our papers the same weight as to those of CMS, the ALJ discarded them lightly.”).  The Lab also pointed to the declaration of the surveyor’s supervisor (CMS Ex. 24) and the surveyor’s contemporaneous notes (CMS Ex. 22) as evidence raising a dispute of material fact as to whether the Lab’s proficiency testing samples were referred to another laboratory.  Id. at ¶¶ 3-4.  The Lab further argued that there was no “intentional” referral within the context of the law, that use of the summary judgment procedure was improper, and that the imposition of the CMP “constitutes a gross abuse of discretion.”  Id. at ¶¶ 1, 2, 6. 

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CMS filed a brief in opposition, acknowledging that it predicated its assertion that the Lab intentionally referred proficiency testing samples to another laboratory on the sworn declaration of the surveyor, specifically the surveyor’s contention that the Lab director admitted to him that all proficiency samples were referred to Laboratorio Clinico Central I since the first event of 2018.  CMS Br. at 1-2, 7-8.  CMS argued that summary judgment was appropriate because the Lab “did not identify any admissible evidence” that rebuts the Lab director’s admission or supports its factual contentions, noting that the Lab never offered a sworn declaration from its director.  Id. at 2, 8.  The Lab filed a short reply, again asserting a statutory right to a hearing, challenging the imposition of the CMP, and claiming a “controversy of facts” exists as to where the Lab performed its proficiency testing.

Standard of Review

Whether summary judgment is appropriate is a legal issue that we address de novo.  1866ICPayday.com, L.L.C., DAB No. 2289, at 2 (2009) (citing Lebanon Nursing & Rehab. Ctr., DAB No. 1918 (2004)).  Summary judgment is appropriate when the record shows that there is no genuine dispute of fact material to the result.  Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)).  If we determine that summary judgment is not appropriate, based on our analysis of the law and the undisputed facts, we remand the case to the ALJ for further proceedings.  See 42 C.F.R. § 498.88; Illinois Knights Templar Home, DAB No. 2274, at 1-2 (2009) (vacating summary judgment decision and remanding for further proceedings).

Analysis

1.        Summary judgment does not contravene the right to a hearing, but it is only appropriate in matters where there is no genuine dispute of material fact.

As an initial matter, we reject Petitioner’s contention that an ALJ cannot resolve an appeal under 42 C.F.R. § 493.1844(a)(2) on summary judgment.  Although Part 498 procedures do not specifically provide for summary judgment, the Board has long held that the right to an oral hearing is not contravened by resolution of an appeal by summary judgment if there is no genuine issue of material fact.  See White Lake Family Med., P.C., DAB No. 1951, at 1, 10-12 (2004) (affirming summary judgment where undisputed facts established that laboratory failed to meet CLIA conditions for participating in proficiency testing program).  In this case, the ALJ plainly notified the parties that the matter could be resolved on summary judgment “according to the principles of Rule 56 of the Federal Rules of Civil Procedure and applicable case law.”  Pre-Hearing Order ¶ 4.a.9

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Under Rule 56, summary judgment is appropriate when the record shows “there is no genuine dispute as to any material fact” and the moving party “is entitled to judgment as a matter of law.”  Fed. R. Civ. P. 56(a); see also Kingsville Nursing & Rehab. Ctr., DAB No. 2234, at 3 (2009); Illinois Knights at 3-4.  In evaluating a summary judgment motion, the “tribunal must view the entire record in the light most favorable to the nonmoving party, drawing all reasonable inferences from the evidence in that party’s favor.”  Pepper Hill Nursing & Rehab. Ctr., LLC, DAB No. 2395, at 4 (2011) (citing Madison Health Care, Inc., DAB No. 1927, at 3-7 (2004)).  Moreover, in deciding a motion for summary judgment, the tribunal must not “make credibility determinations, weigh the evidence, or decide which inferences to draw from the facts,” but instead, should “construe the record in the light most favorable to the nonmovant and avoid the temptation to decide which party’s version of the facts is more likely true.”  White Lake at 13 (quoting Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003)). 

A party may demonstrate the absence of a genuine dispute by presenting specific evidence on a particular issue or by pointing out “an absence of evidence to support the non-moving party’s case.”  Celotex, 477 U.S. at 323, 325.  A party opposing summary judgment must come forward with specific facts showing that there is a genuine issue for trial.  Illinois Knights at 4 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986)).  To overcome an adequately supported motion for summary judgment, the “non-moving party may not rely on the denials in its pleadings or briefs, but must furnish evidence of a dispute concerning a material fact – a fact that, if proven, would affect the outcome of the case under governing law.”  Kingsville at 3 (citing Celotex, 477 U.S. at 322).

In terms of what is required to establish a genuine dispute of fact, Rule 56 provides in pertinent part:

A party asserting that a fact . . . is genuinely disputed must support the assertion by:  citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.

Fed. R. Civ. P. 56(c)(1)(A) (emphasis added).  There is no requirement that a party opposing a summary judgment motion submit a written declaration under oath or sworn statement to establish a genuine dispute of material fact.  See id.  Other forms of evidence, such as documents, may demonstrate the existence of a fact that, if proven, would affect the outcome of the case.

Moreover, a party opposing summary judgment need not submit its evidence in a form that would be admissible at trial provided that the proffered evidence could be presented in an admissible form.  See Bryant v. Farmers Ins. Exch., 432 F.3d 1114, 1122 (10th Cir.

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2005) (“At the summary judgment stage, the parties need not submit evidence in a form admissible at trial; however, the content or the substance of the evidence must be admissible.”); Gleklen v. Democratic Cong. Campaign Comm., Inc., 199 F.3d 1365, 1369 (D.C. Cir. 2000) (“While a nonmovant is not required to produce evidence in a form that would be admissible at trial, the evidence still must be capable of being converted into admissible evidence.”); O-So Detroit, Inc. v. Home Ins. Co., 973 F.2d 498, 505 (6th Cir. 1992) (“A nonmoving party need not produce evidence in a form that would be admissible at trial in order to avoid summary judgment.  Instead, the relevant inquiry is whether the nonmoving party has designated specific facts showing that there is a genuine issue for trial.” (citations omitted)); Parker Waichman LLP v. Salas LC, 320 F. Supp. 3d 327, 332 (D.P.R. 2018) (“[A] district court may consider hearsay evidence submitted in an inadmissible form at the summary judgment stage where the content of the evidence proffered could later be provided in an admissible form at trial.” (internal quotation marks omitted)).  Neither party in this case objected to the admissibility of any of the proposed exhibits filed in this matter or argued, pursuant to Fed. R. Civ. P. 56(c)(2), that any “material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.”

We note that the ALJ decided not to “receive” any of the parties’ exhibits into evidence because he found “no disputed issues of material fact,” but would refer to certain exhibits to “illustrate” facts not in dispute or to “explain” why the exhibits did not support “allegations of disputed issues of material fact.”  ALJ Decision at 1.  It is unclear what the ALJ meant by not receiving the parties’ exhibits into evidence.  Although an ALJ need not rule on the admissibility of exhibits to resolve a motion for summary judgment, proposed exhibits are “properly treated as an offer of proof, that may be evaluated if necessary to determine whether a genuine issue of material fact exists.”  Illinois Knights at 6 (citation omitted).  Thus, “an ALJ is required to review all proposed exhibits submitted in support of or in opposition to a motion for summary judgment in order to determine whether there is a material dispute of fact precluding summary judgment . . . .”  Univ. of Tex. MD Anderson Cancer Ctr., DAB No. 2927, at 18 (2019), vacated on other grounds and remanded, No. 19-60226 (5th Cir. Jan. 14, 2021); see also Illinois Knights at 6 (“[A]n ALJ’s ruling on a summary judgment motion for which evidence was proffered in support or in opposition without considering all the evidence in determining whether a genuine dispute of material facts exists would in itself constitute grounds for reversal.” (emphasis in original)). 

We vacate the entry of summary judgment in this case because, as explained below, the ALJ did not adequately consider exhibits submitted by the parties, and erroneously concluded there was no genuine dispute of material fact as to whether the Lab intentionally referred, in eight separate instances, proficiency testing samples to another laboratory.  We express no opinion about the relative weight of the parties’ evidence, and conclude only that summary judgment in favor of CMS was inappropriate given the existence of a genuine dispute of material fact.

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2.       The evidence proffered by the parties, including CMS’s exhibits, establishes genuine issues of material fact as to whether the Lab referred eight proficiency testing samples to another laboratory for analysis.

CMS predicated its assertion that the Lab intentionally referred proficiency tests to another laboratory for analysis on the sworn declaration of the surveyor, specifically the surveyor’s averment that the Lab director admitted during a survey interview that all proficiency test samples (a total of eight) were referred to another laboratory beginning in 2018.  ALJ Decision at 3 (analyzing surveyor’s declaration), 6 (“CMS rests its case squarely on [the Lab director’s] admission.”); CMS Br. at 1-2, 7.  Apart from the Lab director’s purported admission, as documented in the statement of deficiencies and the surveyor’s declaration, no other evidence in the record shows the Lab referred all proficiency testing samples to another laboratory beginning with the first testing event of 2018. 

According to the ALJ, the Lab failed to identify any admissible evidence to support its contentions and “offered no evidence to refute” the surveyor’s sworn declaration.  ALJ Decision at 4.  The ALJ found the Lab’s factual contentions (i.e., that it did not refer eight proficiency testing samples to another laboratory) “are merely speculative, without any support in the documents offered by the parties.”  Id.  We do not agree that the Lab’s factual contentions have no support in the documents offered by the parties, and find the ALJ erred when he concluded that the Lab director’s alleged admission was undisputed.

Although the statement of deficiencies (CMS Ex. 1) and the surveyor’s declaration (CMS Ex. 23) certainly support CMS’s position, the ALJ failed to adequately consider other exhibits proffered by CMS and the Lab that directly refute the Lab director’s alleged admission that all proficiency testing samples were referred to another laboratory in 2018 through the first testing event of 2019.  The Lab’s plan of correction, filed by both parties and signed by the Lab director, explicitly refutes the surveyor’s assertion concerning this alleged admission.  See CMS Ex. 2, at 2, 14, 15 (“Is completely false that the laboratory director stated and accepted that all the proficiency samples were referred to Laboratorio Clinico Central I since the first event of 2018.”); Pet. Ex. 2 (same).  Contrary to the ALJ’s statement that the Lab never identified which exhibits refute the surveyor’s declaration, ALJ Decision at 5, the Lab specifically cited CMS Ex. 2 (plan of correction) in its opposition to the motion for summary judgment.  See SJ Opp’n at 1. 

No objection was made to the plan of correction (CMS Ex. 2) or any of the Lab’s statements contained therein.  In fact, CMS cited to and relied on portions of the plan of correction in its motion for summary judgment.  SJ Br. at 10.  The ALJ did not find that

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the plan of correction was inadmissible or that any of the Lab’s statements in the plan of correction were inadmissible.10

Moreover, the ALJ discussed the plan of correction in rejecting the Lab’s excuse for referring the May 2018 syphilis serology sample to a different laboratory due to a power failure.  ALJ Decision at 5.  The ALJ found the Lab’s reason for the May 2018 referral, even if true, would not constitute a valid defense because even one intentional referral violates CLIA and because a power failure, for which there was no corroborating evidence, provides no justification for an intentional referral.  Id.11   The problem with the ALJ’s analysis is that CMS’s decision to revoke the Lab’s certificate and impose a $16,000 CMP was not based on one intentional referral, but on eight separate instances, which CMS says the Lab director admitted.  The plan of correction, however, makes clear that the Lab director denies making such an admission.  This evidence cannot be disregarded simply because it was not presented in the form of a sworn statement.

Still further, the ALJ erroneously found the collection of materials provided to CMS by the Lab with its plan of correction (CMS Ex. 21) was “irrelevant to the issue of intentional referral of proficiency testing samples.”  ALJ Decision at 5.  In fact, correspondence from the Lab director to the PRDOH and CMS, made part of CMS Ex. 21, contradicted the surveyor’s allegations about the Lab director’s alleged admission.  CMS Ex. 21, at 25.  In that letter, the Lab director reiterated:  “I want to emphasize that it was only that [May 2018] event that was carried out at the [Laboratorio Clinico Central I].  The rest of the proficiencies events for the year 2018 and the year 2019 were processed at the [Laboratorio Concordia Lugaro]. . . . [T]he report submitted by [the surveyor] is not correct or faithful to the facts . . . .”  Id.  Such evidence is not irrelevant, but plainly contradicts the ALJ’s conclusion that it is undisputed the Lab intentionally referred proficiency testing samples to another laboratory in eight separate instances.

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Notwithstanding this evidence, the ALJ faulted the Lab for not submitting a written declaration, under oath, to refute the surveyor’s declaration despite having the opportunity to do so.  ALJ Decision at 4.  The ALJ concluded that, absent a sworn statement, the Lab’s assertion that its director denied making admissions to the surveyor is “pure speculation and not admissible evidence.”  Id. at 4-5.  This conclusion is legally erroneous for two reasons.  First, the Pre-Hearing Order directed the parties not to file written direct testimony that reiterates or repeats “statements that are contained in other exhibits offered as evidence.”  Pre-Hearing Order ¶ 7.  At least two exhibits offered into evidence by CMS with its motion for summary judgment included statements by the Lab director denying the admissions attributed to her by the surveyor.  See CMS Ex. 2, passim; CMS Ex. 21, at 24-25.  Thus, based on the ALJ’s Pre-Hearing Order, the Lab was encouraged not to submit a declaration to reiterate statements already made in these CMS exhibits offered into evidence.12   The Lab identified this issue in opposition to CMS’s summary judgment motion, when it noted genuine issues of material fact existed based on “CMS’s own exhibits,” including CMS Ex. 2.  SJ Opp’n at 1.

Second, Rule 56 does not require a sworn statement to generate a genuine dispute of material fact.  As explained above, a genuine dispute of material fact may be established by documents and other materials in the record that are admissible or could be presented in an admissible form.  See supra at 10-11.  Without expressly saying so, the ALJ appears to have rejected the Lab’s statements in the plan of correction and accompanying correspondence as not credible or not sufficiently corroborated.  Summary judgment, however, “is not the proper stage for determination of credibility or to weigh a party’s evidence.”  Vandalia Park, DAB No. 1939, at 11 (2004); see also E.E.O.C. v. Warfield-Rohr Casket Co., 364 F.3d 160, 164 (4th Cir. 2004) (“Lack of corroboration relates only to the credibility and weight of the evidence . . . .” (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986))).  The documentary evidence in this case, including CMS Ex. 2 and CMS Ex. 21, is sufficient to create a genuine dispute of material fact as to the Lab director’s alleged admission and, therefore, summary judgment is not appropriate. 

The ALJ further found that the surveyor’s hand-written notes (CMS Ex. 22) made at the time of the inspection “corroborate” his testimony and “in no way contradict it.”  ALJ Decision at 5.  Whether this is true or not is unclear because the surveyor’s notes are written in Spanish and the record contains no certified English translation.  In his declaration, the surveyor avers that his notes contain the following statement (translated to English):  “Pt samples were done at L.C. Central I Humacao (as per director).”  CMS Ex. 23, at ¶ 5.  Although this single notation does not contradict the surveyor’s testimony,

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it does not fully corroborate it either.  The notation does not specify which proficiency testing events were performed at Laboratorio Clinico Central I, nor does it establish that the Lab director told the surveyor that “all” proficiency testing samples were referred to Laboratorio Clinico Central I since 2018.  To draw an inference favorable to CMS based on this equivocal notation is inconsistent with the well-settled principle that in evaluating a motion for summary judgment, “the reviewer must view the evidence in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.”  Illinois Knights at 4. 

We do not disagree with the ALJ’s conclusion that the declaration of the surveyor’s supervisor (CMS Ex. 24), who did not participate in the March 2019 survey, adds no direct evidence and essentially summarizes the surveyor’s testimony and paraphrases certain CMS exhibits.  ALJ Decision at 5.  The supervisor’s declaration is nevertheless noteworthy in that it acknowledges there is a dispute of fact based on the Lab’s plan of correction.  CMS Ex. 24 ¶ 18.  The Lab’s statements in the plan of correction cannot be dismissed simply because they differ from what the surveyor says he was told.  See Anderson v. Liberty Lobby, 477 U.S. at 255 (“The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [its] favor.”).  Whatever the cause for the discrepancy, the evidence in this case demonstrates a genuine dispute of material fact that cannot be resolved by summary judgment.

Viewing the evidence in the light most favorable to the Lab, including the plan of correction and accompanying correspondence, a rational trier of fact could find that the Lab director did not make the admission attributed to her by the surveyor and that a hearing is necessary to resolve the conflicting accounts about what the Lab director reported at the time of the survey.  Because CMS’s case rests squarely on the Lab director’s alleged admission, we conclude that the conflicting accounts of the Lab director’s representations during the survey create a genuine dispute of material fact about whether the Lab intentionally referred proficiency testing samples to another laboratory in eight separate instances.

There is yet another unresolved question, which goes to an issue raised by CMS that the ALJ did not discuss.  CMS Br. at 9; SJ Br. at 11.  According to CMS, the October 2018 proficiency testing samples were never sent to the Lab and yet the Lab reported results relating to this testing event.  CMS Br. at 9 (citing CMS Ex. 20 at 1-3; CMS Ex. 24 ¶ 19).  Section 493.801(b)(4) provides that a “laboratory must not send proficiency testing samples . . . to another laboratory for any analysis for which it is certified to perform in its own laboratory.”  42 C.F.R. § 493.801(b)(4).  CMS does not explain how the Lab could have possibly violated this regulation if it was not the recipient of the October 2018 proficiency testing samples in the first place.  If anything, this evidence calls into question how the Lab was found to have violated section 493.801(b)(4) for making an improper referral of proficiency testing samples that it was never sent and was never required to analyze.  None of this was addressed in the ALJ Decision, but it raises

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questions to be resolved on remand as to whether the Lab made any improper referral in connection with the October 2018 proficiency testing event.13

3.       The other regulatory violations and determinations sustained by the ALJ must be vacated in light of the other holdings in this matter.

In the proceedings before the ALJ, CMS raised several other allegations of CLIA noncompliance against the Lab.  ALJ Decision at 6; SJ Br. at 13-15; CMS Br. at 11.  The ALJ found these additional allegations were undisputed and sustained them.  ALJ Decision at 6-7.  The only condition-level deficiency in this list of other alleged violations that was cited as supporting the sanctions imposed against the Lab was the alleged noncompliance with CLIA laboratory director requirements (42 C.F.R. § 493.1403).  See CMS Ex. 4 at 2 (proposed sanctions notice); CMS Ex. 5 at 2 (notice of sanctions); see also SJ Br. at 16.  The factual underpinning for this alleged noncompliance, however, was the disputed allegation that the Lab intentionally referred proficiency testing samples to another laboratory in violation of Subpart H.  ALJ Decision at 6 (citing 42 C.F.R. § 493.1407(e)(4)(i)); SJ Br. at 16.  Accordingly, this derivative noncompliance finding (section 493.1403) must be vacated because there is a genuine dispute of material fact as to whether the Lab intentionally referred proficiency testing samples to another laboratory in eight separate instances.

It is unclear how the other alleged violations (apart from section 493.1403) were relevant to the ALJ proceedings as they were not the basis for the principal or alternative sanctions imposed by CMS.  See CMS Ex. 4 at 2 (proposed sanctions notice); CMS Ex. 5 at 2 (notice of sanctions).  The Lab sought review of that initial determination by CMS, which imposed principal and alternative sanctions based on the alleged intentional referral of proficiency testing samples.  CMS did not argue in its summary judgment motion (or in this appeal), and the ALJ did not find, that the other alleged violations were sufficient to support the sanctions imposed against the Lab.  Indeed, the ALJ sustained the revocation of the Lab’s CLIA certificate, cancellation of the Lab’s approval to receive Medicare payments, and imposition of a CMP in the amount of $16,000 based on the eight intentional referrals of proficiency testing samples.  ALJ Decision at 7 (“[T]hese remedies are explicitly authorized to address intentional referrals by a laboratory of proficiency testing samples, and I sustain CMS’s determination to impose them.”).  Thus, even if these other alleged violations were undisputed, we cannot sustain the ALJ Decision based on them because there was no showing that they were sufficient, by

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themselves, to support the sanctions imposed against the Lab as a matter of law.14

Moreover, the Lab was never put on notice that these other alleged violations (apart from § 493.1403) would be used to support the full range of principal and alternative sanctions imposed by CMS.  Accordingly, we vacate the ALJ’s summary judgment decision with respect to these other alleged violations because:  (i) they were not the basis for the principal or alternative sanctions imposed by CMS; and (ii) no notice was given that these other alleged violations would be used to sustain the sanctions imposed by CMS against the Lab. 

Finally, the Lab challenges the CMP imposed by CMS and sustained by the ALJ as a “gross abuse of discretion.”  RR ¶ 6.  We do not reach this issue for two reasons.  First, neither the ALJ nor the Board has jurisdiction to review the amount of a CMP imposed per day or per violation.  42 C.F.R. § 493.1844(c)(4), (7).15   Second, the decision to impose a CMP and the amount of the CMP was directly tied to CMS’s determination that the Lab intentionally referred proficiency testing samples to another laboratory on eight separate occasions.  CMS Ex. 4, at 2-3.  Because there is a genuine dispute of material fact as to whether the Lab, in eight separate instances, intentionally referred proficiency testing samples to another lab, it cannot be determined whether the sanctions were lawfully imposed.  If, on remand, it were determined that the Lab did not intentionally refer proficiency testing samples to another lab on eight occasions, then CMS would need to reconsider its choice of sanctions, if any, including the amount of any CMP based on the applicable regulatory factors.  See 42 C.F.R. §§ 493.1804(d) (factors for determining choice of sanctions); 493.1834(d) (factors for determining CMP amount).

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Conclusion

For all of the foregoing reasons, we vacate the ALJ Decision granting summary judgment in favor of CMS and remand this matter for further proceedings.

1. Both parties submitted to the ALJ copies of the Lab’s plan of correction as part of their respective exhibits.  The copy submitted by the Lab is part of the record as Petitioner’s Exhibit 2.  To avoid duplicative citations, we will primarily cite the plan of correction (CMS Ex. 2) filed with CMS’s Pre-Hearing Brief and Motion for Summary Judgment.
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2. Neither party disputes that the signature on the plan of correction is the Lab director’s signature.  CMS Ex. 2 at 1.
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3. This cite refers to the English translation of the Spanish-language letter appearing on the previous page of the exhibit.  See CMS Ex. 21, at 24.  There appear to be spelling errors in the English translation, and we note that none of the translations in the record were certified by a translator.  We accept the substance of the translation because neither party objected to the accuracy of the translation or its admissibility before the ALJ.
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4. CMS appears to acknowledge here the absence of any direct evidence showing that Laboratorio Clinico Central I communicated any proficiency test results that it conducted to Petitioner.
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5. The third condition-level deficiency previously identified by CMS, “D3000: 42 C.F.R. § 493.1100 Facility Administration,” was omitted from the sanctions letter.  Cf. CMS Ex. 4.
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6. The May 2018 proficiency testing report was filed as two exhibits, both identified as Exhibit 1, consisting of a Spanish-language version and an uncertified English translation.  CMS did not object to this or any other exhibit filed by the Lab.
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7. The Lab also filed a motion to disqualify CMS’s counsel, which the ALJ denied.  ALJ Decision at 8-9.  The Lab did not challenge the denial of its motion in this appeal, and we find no error in the decision denying the motion to disqualify counsel.
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8. The surveyor’s declaration was an unsworn declaration made under penalty of perjury pursuant to 28 U.S.C. § 1746.  CMS Ex. 23 at 1, 7.  It has the same force and effect as a sworn declaration.
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9. An ALJ is not bound to follow the Federal Rules of Civil Procedure, but may choose to apply relevant parts of the federal rules, including the summary judgment procedures under Rule 56.  If an ALJ decides to apply the summary judgment procedures under Rule 56, the ALJ must first notify the parties.  Cf. White Lake at 12.
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10. Although statements made by the Lab in the plan of correction may be hearsay, hearsay is admissible in these administrative proceedings.  See, e.g., Britthaven, Inc., DAB No. 2018, at 3 (2006) (citing 42 C.F.R. § 498.61).  Even if the Federal Rules of Evidence applied to this proceeding, the statements made in the plan of correction would likely fall under the hearsay exception for records of a regularly conducted activity.  See Fed. R. Evid. 803(6).  In any event, CMS never argued, and the ALJ never found, that any of the Lab’s statements in the plan of correction were inadmissible hearsay or inadmissible for any other reason.
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11. Because this matter must be remanded for further proceedings, we express no opinion as to whether the Lab “intentionally referred” the May 2018 proficiency testing sample to another laboratory within the meaning of section 493.801(b)(4).  It is not clear that the May 2018 referral (apparently relating to the first (April 2018) testing event) was a basis for the imposition of sanctions.  The May 2018 referral does not appear to be one of the eight referrals for which CMS levied the $2,000-per-violation CMP.  See CMS Ex. 4, at 2; CMS Ex. 1, at 3.  Moreover, the PRPTP’s approval of the May 2018 referral, if true, raises questions about the administration of the testing program and whether the PRPTP expected the Lab to analyze the May 2018 proficiency testing sample in the first place.  Such questions, however, would be appropriately resolved by the ALJ on remand.
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12. Given the centrality of the factual dispute concerning the Lab director’s alleged admission, the ALJ should consider on remand whether this language in the Pre-Hearing Order is appropriate in this case and whether the Lab should be permitted leave to amend its pre-hearing submissions to include written direct testimony from the Lab director and perhaps others.
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13. Whether the Lab may have violated a different regulation by reporting proficiency testing results in connection with samples that it did not refer to another laboratory was not the subject of any final decision by CMS.
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14. It appears the factual basis for some of the other alleged violations was disputed.  For example, the ALJ found there was no dispute that the Lab failed to document final results of syphilis serology tests from May 20, 2018 to February 28, 2019.  ALJ Decision at 6.  The record, however, appears to include at least the final results for the syphilis serology tests of May 20, 2018, which the Lab provided after the survey.  Compare CMS Ex. 21, at 40 with CMS Ex. 17, at 1; see also CMS Ex. 24 ¶ 17; CMS Ex. 23 ¶ 16.
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15. The amount of the CMP assessed per day or for each violation of federal requirements is not an initial determination subject to review on appeal.  42 C.F.R. § 493.1844(c)(7).  The Board may review CMS’s decision to impose alternative sanctions; but, the determination as to which alternative sanction or sanctions to impose, including the amount of a CMP to impose per day or per violation, is not subject to review.  Id. § 493.1844(b)(1), (b)(3), (c)(4).
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