SUBJECT:

HRT Laboratory, Inc.,

Petitioner,

Centers for Medicare & Medicaid Services.

DECISION

The Petitioner in this case, HRT Laboratory, Inc. (Petitioner or lab), was a California clinical laboratory certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 42 U.S.C. � 263a et seq. ⁽¹⁾ Petitioner files this appeal following the Centers for Medicare & Medicaid Services' (CMS's) decision to revoke its CLIA certificate, cancel its approval to receive Medicare payments, and impose a substantial civil money penalty (CMP).

CMS has filed motions to dismiss or, alternatively, for summary judgment. Because Petitioner limits its appeal to issues that are not reviewable in this forum, I grant CMS's motion to dismiss.

Background

In order to ensure the accuracy and reliability of laboratory tests, and thus the health and safety of those tested, CLIA creates a federal certification process for laboratories that perform clinical diagnostic tests on human specimens. Pub. L. No. 100-578, amending section 353 of the Public Health Service Act, codified at 42 U.S.C. � 263a et seq.; see H.R. Rep. No. 100-899, at 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829. To be certified, a laboratory must meet the conditions of certification set out in the statute and regulations. 42 U.S.C. � 263(a)(f)(1)(E); 42 C.F.R. � 493.1 et seq. Each condition represents a major division of laboratory services or required environmental protections, and standards are specific components of the conditions. RNA Laboratories, DAB No. 1820, at 3 (2002).

The statute gives the Secretary of Health and Human Services (Secretary) broad enforcement authority, which the Secretary has delegated to CMS. CMS or its designee conducts periodic inspections to determine a laboratory's compliance with CLIA requirements. 42 C.F.R. � 493.1777. CMS may suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and may also impose alternative sanctions such as a directed plan of correction or state monitoring. 42 C.F.R. � 493.1806; RNA Laboratories, DAB No. 1820, at 3; Ward General Practice Clinic, DAB No. 1624, at 2 (1997).

Here, following a recertification survey that apparently commenced on January 28, 2005, and was completed on March 8, 2005, the California Department of Health Services, Laboratory Field Services (State Agency) determined that the lab was out of compliance with various standard-level requirements and the following four CLIA conditions: 42 C.F.R. �� 493.803 (successful participation in proficiency testing); 493.1230 (general laboratory systems); 493.1250 (analytic systems); and 493.1403 (laboratory director). CMS Exhibits (Exs.) 1 and 2; see also CMS Exs. 9, 10.

In correspondence dated June 20, 2005, the State Agency instructed the lab to submit, within ten days, a credible allegation of compliance and acceptable evidence of correction. CMS Ex. 9, at 1-2. The letter warned that, if the lab failed to correct its deficiencies, the State Agency would recommend that CMS impose sanctions, including revocation of the lab's CLIA certificate. Id. at 3. Petitioner submitted a plan of correction, dated July 8, 2005, but, by letter dated August 12, 2005, the State Agency advised Petitioner that its plan was unacceptable. The State Agency nevertheless gave Petitioner another opportunity to submit an acceptable plan, again warning that it would recommend sanctions if the lab failed to submit an acceptable plan of correction or failed to correct its deficiencies. Id. at 4-5. In a letter dated October 5, 2005, the State Agency advised Petitioner that its second allegation of compliance was not credible and the evidence submitted was not acceptable, so the State Agency was recommending that CMS impose sanctions. Id. at 9-10.

CMS agreed with the State Agency's findings and recommendations, and, after allowing the lab an additional opportunity to show why sanctions should not be imposed, imposed the following sanctions: 1) revocation of the lab's CLIA certificate; 2) a $3,000 per day CMP for each day of non-compliance, effective November 18, 2005; 3) a directed plan of correction, directing the lab to submit to CMS a list of the names and addresses of clients who had used the lab's services since July 2002 (so that CMS could inform them of the lab's noncompliance); and 4) cancellation of the lab's approval to receive Medicare payments for any services performed on or after November 18, 2005. CMS Exs. 10, 11.

In a letter dated November 22, 2005, Petitioner "formally appeal[ed] the proposed sanctions and any and all actions proposed by [the Department of Health and Human Services] in your letters dated November 3, 2005, and November 16, 2005, and any other proposed sanctions which may have been imposed or recommended." P. Hearing Request (November 22, 2005).

CMS now files its motion to dismiss or, in the alternative, motion for summary judgment (CMS Br.). With its motion, CMS submits 30 proposed exhibits, CMS Exs. 1-30. Petitioner responds with an opposition brief (P. Br.) accompanied by two exhibits, P. Exs. A and B. Under separate cover, Petitioner submitted nine additional exhibits, P. Exs. 1-9. In the absence of any objection, and for the purpose of resolving CMS's motions, I admit CMS Exs. 1-30 and P. Exs. A and B and P. Exs. 1-9.

Discussion ⁽²⁾

1. Petitioner has not appealed CMS's determination that the lab failed to meet federal conditions of certification - 42 C.F.R. �� 493.803, 493.1230, 493.1250, and 493.1403 - and those determinations are therefore final and binding.

Petitioner's hearing rights are established by regulation. A laboratory dissatisfied with an initial determination - which includes revocation of a CLIA certificate, the imposition of alternative sanctions, and the cancellation of a lab's approval to receive Medicare payments - may request a hearing, and hearings are conducted in accordance with procedures set forth in 42 C.F.R. Part 498, Subpart D. 42 C.F.R. � 493.1844. The Part 498 regulations dictate that CMS mail notice of an initial determination to the affected party, setting forth the basis for and effect of the determination, and the party's right to hearing. 42 C.F.R. �� 498.20(a)(1); 498.3; 498.5. The affected party may then challenge the determination by filing an appropriate hearing request within sixty days of its receiving the notice. 42 C.F.R. � 498.40. An initial determination is final and binding unless reversed or modified by a hearing decision, or under other circumstances not applicable here. 42 C.F.R. � 498.20(b).

Here, in its November 16, 2005 notice letter, CMS advised Petitioner of its appeal rights. The letter cites the regulations governing review, and, quoting the language of 42 C.F.R. � 498.40(b), sets out the content requirements for hearing requests:

The request for hearing must contain a statement as to the specific issues and findings of fact and conclusions of law in this determination with which the laboratory disagrees and the basis for the laboratory's contention that the specific issues and/or findings and conclusions are incorrect.

CMS Ex. 11, at 2.

Notwithstanding the regulatory requirement and the unambiguous language of CMS's notice, Petitioner's hearing request provides no clue as to the issues or findings challenged or the bases for that challenge. It simply challenges the sanctions and "all of the actions proposed." CMS is therefore correct that Petitioner's hearing request fails to meet the requirements of 42 C.F.R. � 498.40(b). However, notwithstanding the language of 42 C.F.R. � 498.40(b), the Departmental Appeals Board has instructed ALJs to "exercise [their] discretion" to accept "as adequate to preserve a right to hearing" requests that fail to "identify the specific issues and findings of fact and conclusions of law with which the affected party disagrees," and fail to "specify the basis for contending the findings and conclusions are incorrect." Carlton at the Lake, DAB No. 1829 (2002); Alden Nursing Center - Morrow, DAB No. 1825 (2002). So the inadequacy of Petitioner's hearing request, by itself, probably does not justify dismissal.

But a petitioner must eventually articulate the bases for its appeal. Here, in its opposition brief, Petitioner does not challenge CMS's determination that it was not in substantial compliance with four condition-level deficiencies. It contests only CMS's rejection of its plan of correction, arguing that its submissions were "comprehensive and appropriate, and would have brought [it] into compliance." P. Br. at 6.

Because Petitioner did not contest them, CMS's determination on the four condition-level deficiencies is final and binding. 42 C.F.R. � 498.20(b). Petitioner was therefore not in compliance with four conditions of certification.

2. Because the lab was out of compliance with one or more conditions, CMS is authorized to impose sanctions.

Because Petitioner had at least one condition-level deficiency, CMS may impose sanctions. 42 C.F.R. � 493.1804(b). As noted above, CMS may suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and may also impose alternative sanctions such as a directed plan of correction or state monitoring. 42 C.F.R. � 493.1806; RNA Laboratories, DAB No. 1820, at 3; Ward General Practice Clinic, DAB No. 1624, at 2. CMS's choice of alternative sanctions, including the amount of a CMP, is not an initial determination reviewable in this forum. 42 C.F.R. � 493.1844(c)(4).

3. CMS's rejection of Petitioner's plan of correction is not an "initial determination" reviewable in this forum.

Finally, I consider the sole issue raised in Petitioner's appeal - CMS's (and the State Agency's) determinations that Petitioner's plans of correction were not acceptable. As noted above, only initial determinations are appealable. The regulation lists actions that are initial determinations, and thus subject to appeal. 42 C.F.R. � 493.1844(b). The determination to reject a laboratory's plan of correction is not listed as an initial determination and is therefore not reviewable in this forum. 42 C.F.R. � 493.1844.

Conclusion

For all of these reasons, I dismiss Petitioner's hearing request.

Carolyn Cozad Hughes

Administrative Law Judge

1. The lab ceased operations in November 2005. Petitioner Brief (P. Br.), at 4; P. Exhibit (Ex.) 9.

2. I make findings of fact and conclusions of law to support my decision. I set forth each finding in bold and italics as a separately numbered heading.