Department of Health and Human Services DEPARTMENTAL APPEALS BOARD Civil Remedies Division |
|
IN THE CASE OF | |
Sol Teitelbaum, M.D., |
DATE: January 28, 2002 |
- v - |
|
Centers for Medicare & Medicaid
Services
|
Docket No.C-01-204
Decision No. CR863 |
DECISION | |
DECISION Summary judgment is entered affirming the determination
of Respondent, the Centers for Medicare & Medicaid Services (CMS)(1)
revoking the certificate of Physicians Independent Laboratory, the only
appealable issue in this case. By operation of law, and therefore not
subject to appeal, Sol Teitelbaum, M.D. (Petitioner) is prohibited from
owning, operating or directing a laboratory for two years pursuant to
42 U.S.C. � 263a(i)(3) due to the revocation of the certification of the
Physician Independent Laboratory (PIL) of which he was the laboratory
director. The two-year prohibition runs from the date of the revocation
of the laboratory's certificate pursuant to 42 U.S.C. � 263a(i)(3) and
not from the date of this decision as CMS indicated in its notices to
Petitioner. Summary judgment is appropriate as there are no genuine issues
of material fact in dispute and the controlling issues may be resolved
as a matter of law.
PROCEDURAL HISTORY AND UNDISPUTED FACTS Petitioner was the laboratory director of PIL from July
21, 1999 to July 20, 2000. Petitioner's Reply Brief Re: Jurisdiction,
p. 5. The California Laboratory Field Services initiated a survey of PIL
on August 17, 1999. Affidavit of Edd E. Epstein, MS, Petitioner's Reply
Brief Re: Jurisdiction, Ex. R. PIL appealed the CMS notice of deficiencies
arising from the survey, but subsequently withdrew its request for hearing,
the case was dismissed, and CMS revoked PIL's CLIA(2)
certificate effective January 23, 2001. CMS Brief on Jurisdictional Issues,
p. 2, fn. 1 and Attachment A. CMS advised Petitioner of the revocation
of PIL's CLIA certificate by letter dated April 6, 2001. CMS Brief on
Jurisdictional Issues, Attachment B. CMS further advised Petitioner that
as laboratory director for PIL he was subject to a two-year bar from owning,
operating or directing any laboratory, but, because his November 15, 2000
request for hearing was pending before the Departmental Appeals Board,
the bar would not be effective until an Administrative Law Judge upheld
the CMS action. Id. Petitioner filed his request for hearing on November 15,
2000. Petitioner alleged that CMS's failure to accept the PIL Plan of
Correction was an abuse of discretion; that the Statement of Deficiencies
was procedurally and substantively defective; that the noted deficiencies
did not occur during his tenure as laboratory director; that he was an
employee of PIL as laboratory director and not subject to sanction as
an owner or operator; that he is entitled to a hearing; and that CMS's
actions were in retaliation for his actions in the Sentinel case.(3) The procedure related to and substance of CMS's Statement
of Deficiencies for PIL are no longer disputed by Petitioner. "Petitioner
is not seeking a hearing to contest whether or not [CMS] has the
authority to impose sanctions upon an owner of a laboratory who has allegedly
violated [CMS] regulations or if there is any truth to the condition level
deficiencies which it alleges were present at the laboratory." Petitioner's
Reply Brief Re: Jurisdiction, p. 10 (emphasis in original). Therefore
it is unnecessary to discuss facts related to the Statement of Deficiencies
for PIL that gave rise to the sanction of Petitioner. GOVERNING LAW CLIA establishes requirements for all laboratories that
perform clinical diagnostic tests on human specimens and provides for
federal certification of such laboratories. Pub. L. No. 100-578, amending
� 353 of the Public Health Service Act, codified at 42 U.S.C.
� 263a et seq. The purpose of CLIA is to ensure the
accuracy and reliability of laboratory tests, and hence the public health
of all Americans. See H.R. Rep. No. 899, 100th Cong.
2d Sess. 8, 18 (1988), reprinted in 1988 U.S.C.C.A.N.
3828, 3839. CMS certification of a laboratory under CLIA is dependent
upon whether the laboratory meets the conditions for certification set
out in the statute and regulations. 42 U.S.C. � 263a(f)(1)(E); 42 C.F.R.
� 493.1 et seq. Pursuant to CLIA, the Secretary of HHS
has broad enforcement authority, including the ability to suspend, limit,
or revoke the certificate of a laboratory that is out of compliance with
one or more requirements for certification. The Secretary has exercised his authority under 42 U.S.C.
263a(f) and issued regulations implementing CLIA. See 42 C.F.R.
Part 493. The regulations specify standards and the specific conditions
of certification that a laboratory must meet to achieve compliance. The
regulations confer broad authority on CMS to ensure that laboratories
perform as Congress intended, including authority to inspect and sanction
laboratories that fail to comply with the regulatory requirements. CMS
has the delegated authority to suspend, limit, or revoke the CLIA certificate
of a laboratory that is out of compliance with one or more CLIA conditions,
and may also impose alternative sanctions such as a directed plan of correction
or monitoring by the state. 42 C.F.R. � 493.1806. CLIA provides the following with respect to the owners and operators of non-compliant laboratories in addition to sanctions which may be imposed directly against a laboratory:
42 U.S.C. � 263a(i)(3). The Secretary's regulations specify that a "laboratory director" is considered an "operator" of a laboratory:
42 C.F.R. � 493.2 (emphasis in
original). This definition of "operator" was part of the final regulations that became effective September 1, 1992. The source of the provision that a "laboratory director" is an operator is reflected at 57 Fed. Reg. 7226 (1992) in the discussion of the public comments related to the proposed regulation:
The regulations also require that any laboratory conducting
moderate or high complexity testing, as was PIL, have a laboratory director
who meets specific qualifications and has clear and specific responsibilities.
42 C.F.R. �� 1403, 1405, 1407. The regulations specify that:
42 C.F.R. � 493.1407. The director's responsibilities also include ensuring
that appropriate test methodologies are used, that verification procedures
are followed, that proficiency testing is complied with, that appropriate
corrective actions are taken as necessary, that the laboratory follows
quality control and quality assurance programs, and that several other
specified requirements are met. Id. Any laboratory that has as
its owner or operator (which includes laboratory director) an individual
who owned or operated a laboratory that had its CLIA certificate revoked
within the previous two years is subject to adverse action including suspension
and/or revocation pursuant to 42 C.F.R. � 493.1840(a)(8). CLIA provides at 42 U.S.C. � 263a(i)(1) that a laboratory's
certificate may be suspended, revoked, or limited only after reasonable
notice and opportunity for hearing to "the owner or operator of the laboratory
. . . ." The Secretary's regulations provide that a laboratory or prospective
laboratory dissatisfied with an initial determination listed in 42 C.F.R.
� 493.1844(b) is entitled to a hearing before an ALJ. 42 C.F.R. � 493.1844(a).
The hearing procedures found in subpart D of Part 498 are incorporated
by reference. 42 C.F.R. � 493.1844. The "suspension, limitation or revocation
of the laboratory's CLIA certificate . . . because of noncompliance .
. . ." is the first listed initial determination subject to hearing before
an ALJ. 42 C.F.R. � 493.1844(b)(1). ISSUES, FINDINGS OF FACT, CONCLUSIONS
OF LAW AND ANALYSIS The threshold issue in this case is:
If Petitioner has a right to appeal, the issues are:
It is unnecessary to explore the legal theories Petitioner
advances for why he has the right to request a hearing because the Departmental
Appeals Board has made clear in prior cases that the right exists in cases
such as this. See Sentinel Medical Laboratories, Inc., DAB
CR679, DAB No. 1762 (2001), fn. 6. Section 493.1844(a) of 42 C.F.R. only
specifically lists laboratories and prospective laboratories as having
the right to appeal adverse initial determinations by CMS. However, the
regulation may not be construed without reference to CLIA which specifically
requires notice to the owners and operators of a laboratory and the right
to a hearing prior to suspension, revocation or limitation of a laboratories
certification. 42 U.S.C. � 263a(i)(1). Under the Secretary's definition,
"laboratory directors" are "operators." 42 C.F.R. � 493.2. Because they
are by the Secretary's definition operators, laboratory directors have
the right to file an appeal under CLIA. Given the plain language of the statute and regulations,
CMS cannot argue on one hand that Petitioner has no right to appeal as
laboratory director, but he is subject to sanction as an operator. Similarly
unpersuasive is Petitioner's argument that he has the right to an appeal
as laboratory director, but he is not subject to being sanctioned because
he is a mere employee and not an operator. Petitioner, as the former "laboratory director" for PIL and himself subject to sanction, has the right to request a hearing.(5) The statute and regulations do not specify that only one request for hearing may be filed on behalf of a laboratory or its owners and operators. The fact that the owners or other operators of PIL also filed requests for hearing, but subsequently withdrew them, does not affect Petitioner's right to maintain this appeal. Therefore, I have jurisdiction to resolve this case.
Petitioner has conceded that he was laboratory director
of PIL from July 21, 1999 to July 20, 2000. Petitioner has also waived
any alleged errors in the CMS findings of deficiencies at PIL either arising
or existing during his tenure as laboratory director. Thus, no material
facts are in dispute. Petitioner argues that he was an "employee" of PIL while
he held the position of laboratory director and that as an "employee"
he was not an "operator" and, thus, not subject to CMS sanctions.(6)
The lynch pin for Petitioner's argument(7)
appears to be the definition of operator found at 42 C.F.R. � 493.2:
Petitioner specifically argues that as an employee laboratory
director for PIL, he was not responsible for "all facets" of the laboratory
operations and, thus, he was not a director who met the "stated criteria"
to be an operator. It is not clear from the language of the quoted section
whether the reference to "stated criteria" is to the definition of operator
established by that section or to 42 C.F.R. �� 493.1405 and 493.1407 which
establish the qualifications and responsibilities for a laboratory director.
However, it is important to note that the definition for operator clearly
contemplates that the term may apply to an individual or a group of individuals
- indicating that the responsibilities for safety and reliability may
be shared and not necessarily "all" vested in a single laboratory director. It is also significant that in order for PIL to maintain
its certification for performing moderate complexity testing it had to
have a laboratory director who provided "overall management and direction"
of the laboratory in accordance with 42 C.F.R. � 493.1407 and who met
the qualification requirements of 42 C.F.R. � 493.1405. These regulations
draw no distinctions regarding a laboratory director who has status as
an employee as opposed to being a contractor, an owner entitled to an
equity share, a volunteer, or one who serves in some other status. The purpose of CLIA is to ensure the accuracy and reliability
of laboratory tests, and hence, the public health of all Americans.
See H.R. Rep. No. 899, 100th Cong. 2d Sess. 8, 18 (1988),
reprinted in 1988 U.S.C.C.A.N. 3828, 3839. The Secretary's
purpose in treating a laboratory director of a laboratory which has its
CLIA certificate revoked as an operator for purposes of the two-year ban
on owning or operating another laboratory is consistent with the legislative
purpose of CLIA. 57 Fed. Reg. 7226 (1992). Petitioner's construction of the regulations in a way that would shield him from his responsibilities as a laboratory director and the sanctions contemplated by the statutes and regulations is unreasonable and inconsistent with the purposes of CLIA. My conclusion is that by accepting the title of "laboratory director" of a laboratory that has or is seeking a CLIA certificate, the director accepts all the specified regulatory responsibilities and is subject to the authority of CMS and any sanctions specified by law, regardless of the actual employment status of the director. (8)
Petitioner has conceded that he was laboratory director
of PIL from July 21, 1999 to July 20, 2000. Petitioner has also waived
any alleged errors in the CMS findings of deficiencies at PIL either arising
or existing during his tenure as laboratory director. PIL's CLIA certification
was revoked subsequent to dismissal of its request for a hearing. No material
facts are in dispute. The revocation of PIL's certification triggers 42 U.S.C. � 263a(i)(3), which is applicable to Petitioner for the reasons already discussed. Section 263a(i)(3) provides that "(n)o person who has owned or operated a laboratory which has had its certificate revoked may, within 2 years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this section." Section 493.1840(a) of 42 C.F.R. is also triggered, which requires CMS to initiate adverse action to suspend, limit or revoke the CLIA certificate of any laboratory if it is found that an owner or operator owned or operated a laboratory that had its CLIA certificate revoked within the last two years. CMS has no discretion and, in fact, takes no action under 42 U.S.C. � 263a(i)(3); the two-year ban on owning and operating is automatic. Similarly, CMS has little discretion under 42 C.F.R. � 493.1840(a)(8) as it must initiate action against the offending laboratory.
PIL appealed the CMS notice of deficiencies arising from
the survey, but subsequently withdrew its request for hearing, the case
was dismissed, and CMS revoked PIL's CLIA certificate effective January
23, 2001. CMS Brief on Jurisdictional Issues, p. 2, fn. 1 and Attachment
A. CMS advised Petitioner of the revocation of PIL's CLIA certificate
by letter dated April 6, 2001. CMS Brief on Jurisdictional Issues, Attachment
B. CMS further advised Petitioner that as laboratory director for PIL
he was subject to a two-year bar from owning, operating or directing any
laboratory, but, because his November 15, 2000 request for hearing was
pending before the Departmental Appeals Board, the bar would not be effective
until an Administrative Law Judge upheld the CMS action. Id. The CMS advice regarding the effective date of the two-year
ban is in error in this case. Unlike the case in Sentinel, CMS
effected the revocation of PIL's certificate based upon the ALJ's dismissal
of the PIL request for hearing and did not await my decision. The language
of 42 U.S.C. � 263a(i)(3) is clear: "(n)o person who has owned or operated
a laboratory which has had its certificate revoked may, within 2 years
of the revocation of the certificate, own or operate a laboratory...."
(Emphasis added.) Therefore, the 2-year ban against Petitioner runs from
January 23, 2001, the date of revocation of PIL's certificate, and expires,
January 22, 2003. CONCLUSION For the foregoing reasons, summary judgment is entered affirming the determination of CMS revoking the certificate of PIL, the only appealable issue in this case. By operation of law, and therefore not subject to appeal, Petitioner is prohibited from owning, operating or directing a laboratory for two years pursuant to 42 U.S.C. � 263a(i)(3) due to the revocation of the certification of PIL of which he was the laboratory director. The two-year prohibition runs from January 23, 2001 through January 22, 2003. |
|
JUDGE | |
Keith W. Sickendick |
|
FOOTNOTES | |
1. Effective July 5, 2001, the Health Care Finance Administration was renamed the Centers for Medicare and Medicaid Services (CMS). 66 Fed. Reg. 35437. 2. Clinical Laboratory Improvement Amendments of 1988. 3. The reference is to the case of Sentinel Medical Laboratories, Inc., DAB CR679, aff'd DAB No. 1762 (2001) in which Dr. Teitelbaum was also a Petitioner as Laboratory Director. In that case, Dr. Teitelbaum pursued similar issues after Sentinel withdrew its request for hearing. Dr. Teitelbaum was unsuccessful before the ALJ and the Departmental Appeals Board. Petitioner was subject to a two-year ban on owning, operating or directing a laboratory under CLIA, effective June 27, 2000, the date of the ALJ decision in Sentinel. 4. Petitioner casts his issues in general terms as challenges to the validity of the regulations. See Petitioner's Reply Brief Re: Jurisdiction, p.10. However, Petitioner never clearly specifies grounds for why the Secretary's regulations are unlawfully promulgated. Petitioner has asserted that similar challenges to the regulations are currently pending before the Ninth Circuit Court of Appeals. Indeed, Petitioner requested that this decision be delayed pending a decision by the Ninth Circuit. Delay is not warranted. If the Ninth Circuit rules completely in favor of Petitioner, the ban I am affirming and the ban affirmed by the ALJ in Sentinel will be declared invalid anyway. If the Ninth Circuit upholds the regulations, then my presumption that they were validly promulgated and are legally binding will be vindicated. The only issues properly before me relate to the specific facts of this case and whether the regulations have been properly applied to Petitioner. A general discussion of the validity of the regulations would constitute nothing more than dicta. I note however that the presumption I make is not without legal foundation to the extent that it is clear that the Secretary was granted authority to promulgate regulations to implement CLIA, those regulations appear to have been promulgated in accordance with the requirements of the Administrative Procedure Act, and Petitioner has offered no evidence to the contrary. 5. However, a distinction needs to be drawn in this case. The appealable issues in the usual case relate to whether the laboratory is appropriately sanctioned and not whether the owner or operator should be or is properly barred from operating another laboratory. This is true because the clear language of 42 U.S.C. � 263a(3) is that the two-year ban on owning or operating is automatic upon revocation of a laboratories CLIA certificate. The Secretary and CMS are granted no discretion under the statute regarding the two-year ban. There is no procedure for imposing the ban; it is automatic as a matter of law. No administrative appeal rights are provided related to the two-year ban as no administrative decision is made to be challenged. The only administrative decision subject to challenge is the limitation, suspension, or revocation of the CLIA certificate. Thus, Petitioner correctly states in the face of his concessions, that the only issue is whether as laboratory director he is subject to the two-year ban. 6. Petitioner appears to have wisely abandoned his "respondeat superior" argument. While application of this common-law tort doctrine might have the effect of extending liability for Petitioner's actions to the other "owners and operators" of PIL, it does nothing to relieve Petitioner of responsibility for his acts or his obligations under the regulations. See Sentinel. 7. See Petitioner's Initial Jurisdiction Brief, p. 8; Petitioner's Reply Brief Re: Jurisdiction, pp. 4-5. 8. Petitioner's argument that CMS has no authority over him because he is not the "licensee" under CLIA, is not persuasive. Petitioner presumably knew the law to which he was subject when he accepted the position of laboratory director at PIL. Indeed, given Petitioner's involvement in Sentinel there can be little doubt he knew of CMS regulation of laboratories under CLIA and voluntarily submitted thereto by accepting the position of laboratory director. | |