Laboratorio Concordia Lugaro, DAB CR5589 (2020)

DECISION

I grant summary judgment in favor of the Centers for Medicare & Medicaid Services (CMS) against Petitioner, Laboratorio Concordia Lugaro, a clinical laboratory.  I sustain imposition of remedies against Petitioner including:  revocation of Petitioner's CLIA certificate; cancellation of its approval to receive Medicare payments; and a civil money penalty of $2,000 for each of the eight instances in which Petitioner improperly referred proficiency testing samples to another laboratory.1

I also deny Petitioner's motion to disqualify CMS's counsel from participating in this case.

Each party filed exhibits.  I do not receive these exhibits into evidence inasmuch as I find no disputed issues of material fact.  However, I refer to some of these exhibits, either to illustrate facts that are not in dispute or to explain why they do not support allegations of disputed issues of material fact.

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Issues, Findings of Fact and Conclusions of Law

A. Issues

The issues are whether undisputed material facts establish that Petitioner violated CLIA or implementing regulations and whether the remedies that CMS determined to impose are authorized and reasonable.

B. Findings of Fact and Conclusions of Law

CMS rests its case principally on its allegation that Petitioner intentionally referred proficiency testing samples to another laboratory for testing, a violation of CLIA and the regulations.  It makes additional allegations that Petitioner violated CLIA requirements in other respects.

I take notice that laboratories participating in CLIA are from time to time required to test proficiency testing samples as a way of determining their competence and the accuracy of their tests.  CLIA makes it absolutely clear that each certified laboratory must perform its own tests without assistance from, or referral of testing samples to, another laboratory:

[T]he laboratory agrees to treat proficiency testing samples in the same manner as it treats materials derived from the human body referred to it for laboratory examinations or other procedures in the ordinary course of business, except that no proficiency testing sample shall be referred to another laboratory for analysis . . . .

42 U.S.C. § 263a(d)(1)(E).  CMS may revoke a laboratory's CLIA certificate for one year if that laboratory intentionally refers proficiency testing samples to another laboratory for analysis.  42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4).  Cancellation of authority to receive Medicare payments operates as a concomitant remedy.  CMS may additionally impose a civil money penalty for each instance in which a laboratory makes an improper proficiency testing referral.2

Neither the statute nor implementing regulations define what is an intentional referral of a proficiency test.  The common and ordinary meaning of "intentional" is an act that is knowing and willful or deliberate as opposed to something that is accidental.  Merriam-webster.com; Victor Valley Cmty. Hosp./Clinical Lab. & Tomasz Pawlowski, M.D., DAB No. 2340 at 7-8 (2010); Wade Pediatrics, DAB No. 2153 at 13-14 (2008), aff'd, Wade Pediatrics v. Dep't of Health & Human Servs., 567 F.3d 1202 (10th Cir. 2009).  An intentional referral of a proficiency test occurs whenever a laboratory knowingly refers a test to another laboratory for testing. Specific intent to violate CLIA or its regulations is not an element of an intentional referral.

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CMS predicates its assertion that Petitioner intentionally referred proficiency tests to another laboratory for testing on the sworn declaration of Carlos Rivera.  CMS Ex. 23.  Mr. Rivera is a medical technologist employed by the Puerto Rico Department of Health, whose duties include inspecting clinical laboratories for CLIA compliance.  On March 21, 2019, Mr. Rivera conducted an inspection of Petitioner's premises.  Id. at 1.

Mr. Rivera avers that, on the date of the inspection, he interviewed Petitioner's laboratory director.  The director, Ms. Helen Del Toro, is the wife of Petitioner's owner.  She advised Mr. Rivera that Petitioner was enrolled in the Puerto Rico Proficiency Testing Program for several specific clinical tests.  CMS Ex. 23 at 2.

Mr. Rivera asserts that Ms. Del Toro told him that Petitioner referred all proficiency test samples (a total of eight) beginning in 2018 to another laboratory, Laboratorio Clinico Central, for testing.  CMS Ex. 23 at 3.  He avers that Ms. Del Toro admitted that Petitioner reported those testing results as its own results.  Id.  According to Mr. Rivera, Ms. Del Toro contended that Petitioner did so because the Puerto Rico Proficiency Testing Program told her that the tests should be run at Laboratorio Clinico Central "because it was like an internal procedure" due to the fact that both Petitioner and the other laboratory had common ownership and laboratory directors (Ms. Del Toro).  Id.

These facts, if undisputed, establish that Petitioner violated CLIA proficiency testing requirements.  Ms. Del Toro – who, as laboratory director and wife of Petitioner's owner, would be in a position to know the facts – admitted intentionally referring proficiency testing samples from Petitioner to another laboratory for testing by that laboratory.

It does not matter that Ms. Del Toro may have incorrectly concluded that a laboratory that shared common ownership and direction with Petitioner could perform proficiency testing on Petitioner's behalf.  Petitioner's motive in referring proficiency tests to another laboratory for testing is not relevant. What matters here is that Petitioner knowingly referred the test samples to another laboratory.  That satisfies that statutory definition of an intentional referral of proficiency testing samples.

Moreover, the referrals in this case were not harmless errors.  Even if Ms. Del Toro honestly believed that she could refer testing samples to another laboratory, her decision to do so masked potentially poor performance by Petitioner and endangered the health and safety of individuals whose specimens Petitioner tested.

When a laboratory refers its proficiency testing samples to another laboratory, it defeats the purpose of proficiency testing.  A principal purpose of CLIA is to assure that a specific laboratory conducts clinical tests in a way that satisfies standards of care for laboratories.  When another laboratory performs proficiency testing on a laboratory's behalf, the results say nothing about the performance of the referring laboratory.  Referred test results can mask poor performance by the referring laboratory.  Improperly

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performed tests by a laboratory can have a deleterious effect on the health and safety of the individual whose samples are being tested.  An error by a laboratory can result in a life-threatening misdiagnosis.

Are the material facts asserted by CMS undisputed?  I find that they are.  In reaching this conclusion I evaluate the supporting evidence cited by CMS as well as Petitioner's allegations of fact.  In this case, admissible evidence clearly supports CMS's assertions.  Petitioner has not identified any admissible evidence that supports its contentions of fact.  Its contentions are merely speculative, without any support in the documents offered by the parties.

In deciding whether to grant a motion for summary judgment I evaluate the parties' assertions and arguments using the criteria for granting and denying motions for summary judgment established by Rule 56 of the Federal Rules of Civil Procedure.  The rule is clear.  Only admissible evidence may be used to support or oppose a motion for summary judgment.  Fed. R. Civ. P. 56(c)(1)(A), (B).  A party may neither establish grounds for summary judgment nor successfully oppose a summary judgment motion by averring unsupported facts.

The key phrase to use in evaluating parties' contentions is the phrase "admissible evidence."  Naked assertions of fact, unsupported by anything, far-fetched contentions, and speculation, do not constitute admissible evidence and I must reject them.

Ms. Del Toro's admission that she referred proficiency test samples to another laboratory for testing is admissible evidence even under the strict standards of the Federal Rules of Evidence.  CMS Ex. 23; Fed. R. Evid. 801(d)(2)(D).  By contrast, Petitioner's assertions fail to establish a genuine fact dispute because they are speculation not supported by admissible evidence.

First, Petitioner asserts that "Mrs. Del Toro never admitted to . . . [referring] those proficiencies exercises to Laboratorio Clinico Central."  Petitioner's pre-hearing brief at 2.  Petitioner asserts, additionally, that:  "As our Exhibits show, Mrs. Del Toro denied from the beginning of this process [t]he supposed admissions."  Id. at 3.  Petitioner's contentions notwithstanding, Mr. Rivera's sworn declaration explicitly documents Ms. Del Toro's admission that she referred proficiency test samples to another laboratory.  Petitioner offered no evidence to refute that.

Ms. Del Toro, Petitioner's laboratory director and the wife of Petitioner's owner, certainly would be in a position to refute Mr. Rivera's testimony and establish a fact dispute if she possessed facts that created an actual dispute.  I afforded Petitioner the opportunity to provide written declarations, under oath, from any potential witnesses.  Petitioner did not offer a sworn statement from Ms. Del Toro.  Consequently, Petitioner's assertion that Ms. Del Toro denies having made admissions is pure speculation and not

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admissible evidence.  Furthermore, although Petitioner asserts that its exhibits contain information that refutes Mr. Rivera's testimony it has identified nothing in any documents that it has produced that raises a fact dispute.  Rather, it merely avers the existence of "exhibits" without identifying which exhibits or which exhibit contents it refers to.

Second, Petitioner contends that Mr. Rivera's notes, which he made during the inspection of Petitioner's facility, do little to support Mr. Rivera's testimony or CMS's contentions.  Petitioner's pre-hearing brief at 2; CMS Ex. 22.  In fact, these notes corroborate Mr. Rivera's testimony and in no way contradict it.  CMS Ex. 22 at 1; CMS Ex. 23 at 3.  Petitioner identified nothing in Mr. Rivera's notes that create a disputed issue of material fact.

Third, Petitioner argues that:  "Maybe the best evidence against CMS is the testimony of Mrs. Vanessa Segarra [sic] . . . which, in the relevant . . . [part] says that they were unable to corroborate that the proficiencies exercises involved here [were] done at . . . [Petitioner's laboratory]."  Petitioner's pre-hearing brief at 2; CMS Ex. 24.  Ms. Vanessa Sárraga is a supervisor and assistant to the medical director in the laboratory division of the Puerto Rico Department of Health.  She did not participate in the March 21, 2019 inspection of Petitioner's laboratory.  Her testimony consists essentially of summarizing and repeating Mr. Rivera's testimony or paraphrasing documents that CMS has listed as its exhibits.  Her testimony adds no direct evidence to CMS's contentions, and it is highly unlikely that I would afford it much, if any, probative value if I were to conduct a hearing in this case.  That said, there is nothing in Ms. Sárraga's declaration that contradicts Mr. Rivera's testimony.  Indeed, I find nothing in Ms. Sárraga's declaration that creates a fact dispute about Ms. Del Toro's admissions.

Fourth, Petitioner asserts in a plan of correction that it submitted in response to findings that it had violated CLIA, that it had submitted only one sample to Laboratorio Clinico Central for testing.  Request for hearing; CMS Ex. 2 at 1.  Petitioner avers that this was a syphilis serology specimen and that it only referred this sample because it lacked electricity due to the effects of Hurricane Maria.  Id.  This would not constitute a valid defense even if true.  The intentional referral of even one proficiency testing sample violates CLIA.  A power failure affecting Petitioner's facility is no justification for an intentional referral.  Moreover, Petitioner has offered no admissible evidence to support its contention.

I note that Petitioner filed numerous documents as addenda to its plan of correction.  See CMS Ex. 21.  Petitioner has not explained how any of these documents, or their contents, refute Ms. Del Toro's admission, and I find them to be irrelevant to the issue of intentional referral of proficiency testing samples.

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Finally, Petitioner contends, without explanation, that:  "it's more probable that Mr. Rivera confused the periods of time involved in the inspection and assumed and concluded, as CMS's Exhibit 8 shows, that the use of labeled forms of Laboratorio Central at the premises of  [Petitioner] implied referrals not really done."  Petitioner's pre-hearing brief at 3.  I gather from this assertion that Petitioner contends that Mr. Rivera found some documents on Petitioner's premises under Laboratorio Clinico Central's letterhead and jumped to the erroneous conclusion from these documents that Petitioner referred proficiency testing samples to that laboratory.

However, CMS does not rely on any documents from Laboratorio Clinico Central to make its case that Petitioner intentionally referred proficiency testing samples to that laboratory.  As I have explained, CMS rests its case squarely on Ms. Del Toro's admission.  Furthermore, Petitioner has not identified anything in CMS Ex. 8 that refutes Ms. Del Toro's admission, and I find nothing in that exhibit that does.

Petitioner's intentional referral of proficiency testing samples to another laboratory comprises sufficient grounds for CMS to impose remedies, including revocation of Petitioner's CLIA certificate and additional remedies.  I would sustain the noncompliance findings and CMS's remedy determinations even if there existed no facts showing additional CLIA noncompliance by Petitioner.  That said, CMS made numerous other allegations regarding Petitioner's noncompliance with CLIA participation requirements.  These additional allegations include failures by Petitioner to:

• Maintain copies of proficiency testing event records.  CMS Ex. 23 at 4, 42 C.F.R. § 493.801(b)(5) and (6);
• Take corrective action for unsatisfactory proficiency testing results.  CMS Ex. 8 at 6, CMS Ex. 23 at 4-5, 42 C.F.R. § 493.843(e);
• Comply with the CLIA requirements for laboratory administration and record retention by failing to keep proficiency testing records and copies of laboratory test results.  42 C.F.R. §§ 493.1100, 493.1105(a)(6);
• Comply with the CLIA requirements for documenting test results.  Petitioner's failure included failing to document final test results of 13 syphilis serology tests during a period running from May 20, 2018 to February 28, 2019.  CMS Ex. 1 at 9-10, CMS Ex. 23 at 6, CMS Ex. 17 at 1-4, 42 C.F.R. § 493.1283(a);
• Comply with the CLIA laboratory director requirements.  CMS Ex. 1 at 12-15, 42 C.F.R. §§ 493.1403, 493.1407(e)(4)(i), and 493.1407(e)(4)(iv).

Petitioner offered no admissible evidence to dispute these allegations.  It did not produce all proficiency test results for the period beginning February 2017 through February

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2019.  Nor did it offer records showing that it had documented syphilis serology test results.  Consequently, CMS's additional noncompliance allegations stand unrebutted and I sustain them for that reason.

CMS imposed three remedies against Petitioner for its noncompliance.  First, it revoked Petitioner's CLIA certificate.  Second, it cancelled Petitioner's approval to receive Medicare payments for its tests.  As I have explained above, these remedies are explicitly authorized to address intentional referrals by a laboratory of proficiency testing samples, and I sustain CMS's determination to impose them.

CMS additionally imposed, as an alternative remedy, a civil money penalty of $2000 for each of the eight documented intentional referrals by Petitioner of proficiency testing samples.  In its brief CMS claimed that it had authority to impose these penalties and it seemed to suggest that a $2000 penalty for each instance of an improper referral is specified by CLIA or an implementing regulation.

CMS cited neither a provision of CLIA nor a regulation to support its contention.  The notice that CMS sent to Petitioner advising it of, among other things, the imposition of civil money penalties, cites a series of regulations as justification for the $2000 per referral civil money penalties.  CMS Ex. 4 at 2.  These regulations are:  42 C.F.R. §§ 493.1804(b)(2), 493.1806(c)(3), 493.1834, and 493.1840(b).  However, while these regulations do authorize imposition of civil money penalties against a laboratory that intentionally refers proficiency testing samples to another laboratory, and while they also specify that civil money penalties may be imposed in addition to the principal sanctions of revocation of a laboratory's CLIA certificate and cancellation of approval to receive Medicare payments, none of them provide specifically for a civil money penalty of $2000 per improper referral.  CMS's choice of alternative sanctions, including the amount of a CMP to impose per day or per violation, is not an initial determination reviewable in this forum.  42 C.F.R. § 493.1844(c)(4).

CMS may impose a civil money penalty for each violation of a CLIA requirement by a laboratory.  42 C.F.R. § 493.1834(e)(1)(ii)(B).  Thus, CMS may impose a civil money penalty against Petitioner for each improper referral of proficiency testing samples, because each improper referral constitutes a separate violation of CLIA requirements, providing grounds for imposition of remedies.

The regulations specify two ranges of permissible civil money penalties to remedy CLIA condition-level noncompliance that is determined either to be immediate jeopardy level noncompliance or noncompliance that does not cause immediate jeopardy.  42 C.F.R. § 493.1834(d)(2)(i) and (ii).  CMS did not allege immediate jeopardy level noncompliance in this case, so any penalties that CMS may impose must fall within the lower range of civil money penalties.

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The $2000 penalty that CMS determined to impose for each event of improper proficiency testing referral (8 events in total) falls squarely within the lower range.  I find that the seriousness of Petitioner's noncompliance comprises sufficient grounds to sustain those penalties.  As I have discussed, when a laboratory intentionally refers proficiency testing samples to another laboratory for testing, it defeats one of the principal purposes of CLIA, which is to assure that each laboratory meets competency standards.  The consequence of a laboratory's failure to perform tests that meet standards may be life-threatening in the case of an individual patient, if that patient's medical condition is misdiagnosed as the result of an improperly performed test.  By intentionally referring proficiency testing samples to another laboratory, Petitioner potentially may have obscured testing problems at its own laboratory.

Lastly, I deny Petitioner's motion to disqualify CMS's counsel.  Petitioner premises its motion on a convoluted argument.  It contends that it had negotiated a sale of its facility on March 9, 2019, to a laboratory owned by Ms. Roseanne Amado.  According to Petitioner, the purchasing entity asked CMS to issue a new CLIA certificate so that the newly purchased laboratory could be operated under a new name and CLIA number.  Petitioner asserts that CMS's counsel intervened by instructing CMS not to issue the requested certificate.  Consequently, Ms. Amado refused to consummate the agreement to purchase the laboratory and Petitioner's owner now is involved in civil litigation with her.  Petitioner seems to argue that Ms. Amado would have been an essential and favorable witness for Petitioner and appears to contend that she would have testified on Petitioner's behalf but for CMS's counsel's allegedly improper intervention.

I deny this motion for three reasons.  First, Petitioner cites to no authority that would allow me to disqualify an attorney from representing a party and I know of no such authority.

Second, I would not find grounds to disqualify CMS's counsel even if such authority existed.  CMS's counsel's advice to his client – assuming he issued such advice – is something that falls within the range of his duties within the attorney-client relationship.  Petitioner has not made any showing that advising CMS to withhold issuance of a CLIA certificate would be inconsistent with counsel's duty to advise his client.

Finally, Petitioner has made no showing whatsoever that Ms. Amado possesses information that would have any effect on the outcome of this case.  It has not shown, for example, that Ms. Amado could offer any admissible evidence showing that Petitioner did not intentionally refer proficiency testing samples to another laboratory.  Speculating

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that Ms. Amado might offer some unspecified allegedly valuable evidence provides no proof whatsoever that Petitioner has been affected adversely by any legal advice given by CMS's counsel.

• 1. Throughout this decision I use the acronym "CLIA" to refer to the Clinical Laboratory Improvement Amendments of 1988, 42 U.S.C. § 263a et seq.  There are implementing regulations at 42 C.F.R. Part 493.
• 2. I discuss the authority for imposition of a civil money penalty in more detail, below.