Ellington Behavioral Health, DAB CR6031 (2022)

DECISION

The Centers for Medicare & Medicaid Services (CMS) proposed to revoke the certificate of Petitioner, Ellington Behavioral Health, to operate as a clinical laboratory under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).  As discussed below, I find that CMS established a prima facie case for noncompliance and that Petitioner neither expressly disputed nor presented sufficient evidence to rebut CMS’s determination that a condition-level deficiency (42 C.F.R. § 493.1250) existed when the Connecticut Department of Health, Facilities Licensing and Investigations Unit (state agency) surveyed Petitioner’s laboratory.  Therefore, I conclude that CMS had a legitimate basis to revoke Petitioner’s CLIA certificate and to impose other sanctions on Petitioner as identified in CMS’s initial determination.  Petitioner’s CLIA certificate is revoked effective the date of this decision.  42 C.F.R. § 493.1840(e)(1).

I.  Legal Framework

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories.  42 U.S.C. § 263a.  The purpose of CLIA is “to strengthen federal oversight of clinical laboratories to ensure that [laboratory] tests are accurate and reliable.”  H.R. Rep. No. 100-899 at 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828-29.  The Secretary for

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Health and Human Services (Secretary) certifies laboratories under CLIA when those laboratories meet the conditions for certification set out in the statute and regulations that the Secretary promulgates.  42 U.S.C. § 263a(d), (f).  The Secretary may approve private nonprofit organizations to serve as accrediting bodies to accredit laboratories under CLIA.  42 U.S.C. § 263a(e).

Under CLIA, the Secretary 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 of the conditions for certification and/or the standards for laboratories required by the statute or established by the Secretary.  42 U.S.C. § 263a(i).  Such sanctions may be imposed after providing the laboratory with notice and an opportunity for a hearing.  42 U.S.C. § 263a(i)(1).  The Secretary may also impose intermediate sanctions, such as a CMP or directed plan of correction.  42 U.S.C. § 263a(h).  Intermediate sanctions can be imposed after providing the laboratory with notice and an opportunity to respond.  42 U.S.C. § 263a(h)(3).

The Secretary exercised the authority granted by 42 U.S.C. § 263a(f) and issued regulations implementing CLIA that are codified at 42 C.F.R. pt. 493.  The Secretary explained in regulations that CLIA’s enforcement mechanisms are intended to “protect all individuals served by laboratories against substandard testing of specimens,” “safeguard the general public against health and safety hazards that might result from laboratory activities,” and “motivate laboratories to comply with CLIA requirements so that they can provide accurate and reliable test results.”  42 C.F.R. § 493.1804(a).

The regulations require that each laboratory must be either CLIA-exempt or have a CLIA certificate, including a “certificate of accreditation.”  42 C.F.R. § 493.5(c)(5); 42 C.F.R. § 493.2 (definition of CLIA certificate).  The regulations further specify conditions and standards for certification that a laboratory must meet and maintain to be certified to test human specimens and participate in the Medicare program.  The regulations confer broad authority on CMS to ensure that laboratories perform as Congress intended, including the authority to inspect and sanction laboratories that fail to comply with the regulatory requirements.  The Secretary delegated to CMS the authority to suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and CMS may also impose alternative sanctions, such as a directed plan of correction, monitoring by the state, and a CMP.  42 C.F.R. §§ 493.1806‑493.1844.  Cancellation of Medicare payments is also authorized as a principal sanction when condition-level deficiencies are found (42 C.F.R. §§ 493.1807(a), 493.1842(a)(2)) and required when CMS suspends or revokes a laboratory’s certificate.  42 C.F.R. § 493.1842(a)(1).  Under the regulations, a single condition-level deficiency is an adequate basis for principal and alternative sanctions.  42 C.F.R. § 493.1806(a); White Lake Family Med., P.C., DAB No. 1951 at 2 (2004).

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The Secretary’s regulations provide that a laboratory or prospective laboratory dissatisfied with an initial determination to impose sanctions (listed in 42 C.F.R. § 493.1844(b)) is entitled to a hearing before an administrative law judge (ALJ).  42 C.F.R. § 493.1844(a), (f).  The hearing procedures of 42 C.F.R. pt. 498, subpt. D apply pursuant to 42 C.F.R. § 493.1844(a)(2).  “The suspension, limitation or revocation of the laboratory’s CLIA certificate . . . because of noncompliance” is an initial determination that triggers a right to a hearing before an ALJ.  42 C.F.R. § 493.1844(b)(1).  Further, the cancellation of a laboratory’s approval to receive Medicare payments is an initial determination.  42 C.F.R. § 493.1844(b)(4).  In addition, the imposition of an alternative sanction, such as a CMP, is also an initial determination that is subject to review.  42 C.F.R. § 493.1844(b)(3), (f)(1).

A CMS determination to impose a particular alternative sanction, including the amount of a per-day or per-violation CMP and that deficiencies pose immediate jeopardy, is not subject to ALJ review.  42 C.F.R. § 493.1844(c)(4), (6), (7).  Generally, when a hearing is requested, revocation of a CLIA certificate is not effective until after a decision is issued by the ALJ.  42 C.F.R. §§ 493.1840(d)(1), (e), 493.1844(d)(2)(i).  This decision is final unless a party requests and receives review by the Departmental Appeals Board (DAB).  42 C.F.R. § 493.1844(d)(4)(i).

The allocation of the burden of proof in an appeal of CMS’s sanctions is discussed in Hillman Rehab. Ctr., DAB No. 1611 (1997), aff’d, Hillman Rehab. Ctr. v. Dep’t of Health & Human Servs., No. 98-3789 (GEB), slip op. (D.N.J. 1999); Edison Med. Labs., Inc., DAB No. 1713 (1999) (applying Hillman burden of proof to CLIA appeals), aff’d, Edison Med. Lab., Inc. v. Health Care Financing Admin., 250 F.3d 735 (Table) (3rd Cir. 2001).  CMS has the burden of presenting sufficient evidence to prove a prima facie case of noncompliance with one or more CLIA conditions.  The petitioner then has the ultimate burden of showing by a preponderance of the evidence (i.e., more likely than not) that it was in compliance with CLIA conditions.  Regarding the imposition of sanctions, the issue to be resolved by the ALJ is not whether CMS properly exercised discretion in imposing either principal or alternative sanctions, but rather whether a basis existed for the imposition of sanctions under governing statutory and regulatory authorities, based upon the evidence before the ALJ.  The ALJ resolves these issues de novo.  Rustom Ali, Jahan Ferdous, & Scottsdale Medical Laboratory, DAB No. 2016 at 21 (2006) (citing Emerald Oaks, DAB No. 1800 at 16 (2001)).

II.  Background and Procedural History

Petitioner is a clinical laboratory located in Ellington, Connecticut.  CMS Ex. 2 at 1-2.  Petitioner had a CLIA Certificate of Accreditation to perform toxicology, urinalysis, and routine chemistry laboratory tests (P. Ex. 4 at 1) and, as relevant here, tested various

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analytes1 on the Sciex 4000 Liquid Chromatography Mass Spectrometry (LC/MS/MS) instrument.2   CMS Ex. 2 at 4-10.  Petitioner is accredited by the Commission on Office Laboratory Accreditation (COLA), which is an independent federal regulatory accreditation organization that assesses laboratory compliance with CLIA and COLA federal regulatory requirements.  CMS Ex. 4 at 1 ¶ 4 (Rymut Decl.); CMS Ex. 4 at 4 ¶ 4 (Olm Decl.).  Petitioner began confirmatory testing in June 2016 and, in July 2017, began LC/MS/MS testing, which changed Petitioner’s scope of testing from screening laboratory to confirmation laboratory with highly specialized and complex testing.3   CMS Ex. 3 at 17; CMS Ex. 4 at 2 ¶ 8 (Rymut Decl.); CMS Ex. 4 at 5 ¶ 8 (Olm Decl.).  Effective July 9, 2017, Petitioner’s laboratory director was “Dr. Lee.”  CMS Ex. 4 at 1 ¶ 4 (Rymut Decl.); CMS Ex. 4 at 4 ¶ 4 (Olm Decl.).  Dr. Lee resigned as of June 28, 2018.  CMS Ex.  3 at 1.4

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COLA conducted a survey at Petitioner’s facility from October 31, 2017, through November 2, 2017, and found deficiencies.  By letter dated December 1, 2017, COLA directed Petitioner to cease all testing on the LC/MS/MS analyzer “due to incomplete validation and other systematic issues.”  CMS Ex. 4 at 1-2 ¶ 5 (Rymut Decl.); CMS Ex. 4 at 5 ¶ 6-7 (Olm Decl.).  As of January 22, 2018, COLA authorized Petitioner “to resume patient testing for all analytes on the LC/MS/MS with the exception of THC, gabapentin, Noroxycodone, N-desmethyltramadol and Oxazepam.”  P. Ex. 1; CMS Ex. 3 at 17; CMS Ex. 4 at 2 ¶ 6 (Rymut Decl.); CMS Ex. 4 at 5 ¶ 7 (Olm Decl.).

On June 26, 2018, state agency surveyors conducted a license renewal inspection of Petitioner’s facility and found multiple state licensing and CLIA deficiencies.  CMS Ex. 4 at 1-2 ¶¶ 2, 7-9 (Rymut Decl.); CMS Ex. 4 at 4-5 ¶¶ 2, 8-9 (Olm Decl.).  As a result, the surveyors contacted the CMS Regional Office and requested permission to initiate a full “CLIA complaint survey,” which CMS authorized.  CMS Ex. 4 at 2 ¶ 9 (Rymut Decl.); CMS Ex. 4 at 5 ¶ 9 (Olm Decl.).  The CLIA complaint survey was completed on June 26, 2018.  CMS Ex. 2 at 2.  The state agency completed a Statement of Deficiencies (SOD) in which it determined that Petitioner was out of compliance with two conditions required for CLIA certification and Medicare coverage of its services:  42 C.F.R. § 493.1250 (Analytic Systems, Tag D5400) and 42 C.F.R. § 493.1441 (Laboratory Director, Tag D6076).  CMS Ex. 2 at 2-24.

By letter dated July 25, 2018, CMS advised Petitioner of its noncompliance with the two CLIA conditions and requested that Petitioner submit a credible allegation of compliance and evidence of correction for cited deficiencies.  CMS Ex. 1 at 1-2.  Petitioner submitted a plan of correction, signed by its laboratory director and dated August 21, 2018, in which it alleged that it would correct all of the cited deficiencies on or before August 31, 2018.  CMS Ex. 2 at 2‑24.  Petitioner subsequently submitted another plan of correction, signed by its laboratory director and dated September 4, 2018, in which it alleged that it would correct all of the cited deficiencies by September 30, 2018.  CMS Ex. 2 at 25-47.  CMS received Petitioner’s responses on August 22, 2018, and September 4, 2018, respectively.  CMS Ex. 1 at 5.

By letter dated October 12, 2018, CMS found Petitioner’s allegations of compliance not credible and evidence of correction unacceptable and gave Petitioner another opportunity to submit a credible allegation of compliance with evidence of correction for Condition D5400 (Analytic Systems, 42 C.F.R. § 493.1250) and Condition D6076 (Laboratory Director, 42 C.F.R. § 493.1441).  CMS Ex. 1 at 4-6; P. Ex. 2 at 1-4.  Petitioner filed a third plan of correction, signed by the laboratory director and dated October 21, 2018, in which Petitioner alleged that it would correct all of the cited deficiencies by October 29, 2018.  P. Ex. 2 at 5-49.

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In a November 19, 2018 letter, CMS advised Petitioner that its allegation of compliance and evidence of correction received on October 31, 2018, were not credible or acceptable, respectively, and that Petitioner remained out of compliance with two CLIA condition‑level requirements cited in the June 6, 2018 survey.  CMS Ex. 1 at 8‑9.  CMS also advised that it proposed to impose several sanctions based on this noncompliance.  CMS Ex. 1 at 10-11.  Finally, CMS gave Petitioner an opportunity to submit evidence or information as to why the proposed sanctions should not be imposed.  CMS Ex. 1 at 12.

On November 28, 2018, Petitioner faxed letters to CMS and the state agency in response to the proposed sanctions.  CMS Ex. 3 at 7-10.  In the letters, Petitioner’s owner stated that the laboratory ceased all testing on June 4, 2018 and, therefore, the proposed sanctions were not applicable to the laboratory because they were based on a survey conducted on June 26, 2018.  CMS Ex. 3 at 8-9.

By letter dated December 7, 2018, CMS issued an initial determination in which it informed Petitioner that it received Petitioner’s submission on November 28, 2018, and determined that the allegation of compliance and evidence of correction were not credible or acceptable, respectively, and that Petitioner, therefore, remained out of compliance with the two CLIA condition-level deficiencies cited in the June 26, 2018 survey.  CMS also informed Petitioner that it was imposing the following sanctions on Petitioner: 

• Revocation of Petitioner’s CLIA certificate (Principal Sanction);
• Cancellation of Petitioner’s approval to receive Medicare payments (Principal Sanction);
• Directed Portion of a Plan of Correction (Alternative Sanction); and
• CMP of $1,000 per day (Alternative Sanction).

CMS Ex. 1 at 15‑16.

In a December 13, 2018 letter, Petitioner again told CMS that the laboratory had ceased all laboratory testing on June 4, 2018.  Petitioner wanted to avoid sanctions, stated that Petitioner “has no future plans to resume laboratory testing,” and indicated that Petitioner would request a hearing if that would prevent monetary sanctions.  P. Ex. 3 at 6.

Petitioner, through its owner, timely requested a hearing before an ALJ.  P. Ex. 3 at 8-10; 42 U.S.C. § 263a(i); 42 C.F.R. § 493.1844(f)(1).  The Civil Remedies Division assigned this case to me for hearing and decision.  On December 20, 2018, I issued an Acknowledgment and Pre-Hearing Order (Pre-Hearing Order) directing the parties to file their respective pre‑hearing exchanges.

CMS filed CMS’ Motion to Dismiss or, in the Alternative, Motion for Summary Judgment with Incorporated Memorandum of Law (CMS Br.) and 4 exhibits (CMS Exs. 1-4).  On April 26, 2019, I issued an Order to Show Cause why Petitioner’s request for

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hearing should not be dismissed for abandonment, because Petitioner had not submitted its pre-hearing exchange by the April 25, 2019 deadline.  On May 3, 2019, Petitioner, through its owner, timely submitted a letter brief (P. Br.) and four exhibits (P. Exs. 1-4). 

III.  Rulings

I issued an Order to Show Cause why I should not dismiss Petitioner’s hearing request for abandonment.  Further, CMS moved for dismissal of Petitioner’s hearing request because it did not sufficiently state a factual and legal basis for the appeal and, in the alternative, for summary judgment.

Petitioner timely responded to my Order to Show Cause by filing its prehearing exchange.  Petitioner did not state any good cause for failing to file the prehearing exchange by the deadline in the Pre-Hearing Order.  I decline to dismiss the hearing request for abandonment because Petitioner has plainly not abandoned the hearing request, even if Petitioner did not fully comply with the Order to Show Cause.  I also deny CMS’s motion to dismiss the hearing request.  CMS argues that Petitioner’s request for hearing should be dismissed because Petitioner does not argue that it was in substantial compliance with CLIA requirements at the time of the survey on June 26, 2018.  P. Br. at 11.  Instead, according to CMS, Petitioner argues that sanctions should not be imposed because Petitioner, among other things, took “post‑survey corrective actions,” ceased all testing in June 2018, has no plans to resume testing, and “offers, for the first time, to voluntarily surrender its CLIA certificate.”  CMS Br. at 10‑19.  CMS thus argues that Petitioner has no right to a hearing because Petitioner has not adequately challenged the surveyors’ findings and conclusions with respect to noncompliance.  CMS Br. at 19 (citing 42 C.F.R. § 498.70(b); Associated Internists, P.C., DAB CR2005 (2009), aff’d, DAB No. 2298 (2010)). 

A CLIA-certified laboratory may request a hearing to challenge an “initial determination.”  42 C.F.R. § 493.1844(a)(2), (b), (f).  Initial determinations include revocation of the lab’s CLIA certificate, imposition of alternative sanctions (including CMPs), and cancellation of the lab’s approval to receive Medicare payments.  42 C.F.R. § 493.1844(b).  CMS mails notice of an initial determination to the affected party, setting forth the basis for and the effect of its determination and the party’s right to a hearing.  42 C.F.R. §§ 498.20(a)(1).

The affected party may challenge the initial determination by filing a hearing request within 60 days of receiving the notice.  42 C.F.R. § 498.40(a).  The request for hearing must identify the specific issues and the findings of fact and conclusions of law with which the affected party disagrees and must specify the bases for contending that the findings and conclusions are incorrect.  42 C.F.R. § 498.40(b).

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Notwithstanding the language of the regulation, the DAB has decided that ALJs should “exercise [their] discretion” to accept as “adequate to preserve a right to hearing” requests that fail to “[i]dentify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees” and fail to “[s]pecify the basis for contending that the findings and conclusions are incorrect.”  The Carlton at the Lake, DAB No. 1829 (2002); Alden Nursing Ctr. – Morrow, DAB No. 1825 (2002).  The specificity missing from a party’s initial hearing request may be supplied through subsequent record development.

Here, Petitioner’s hearing request and subsequent submissions challenge CMS’s initial determinations to revoke Petitioner’s CLIA license, impose a CMP, and direct a portion of the plan of correction.  P. Ex. 3 at 9-10; P. Br. at 6.  While Petitioner, at length, discusses its multiple post-survey plans of correction and efforts (P. Ex. 3 at 8-10), I have no authority to consider whether Petitioner corrected any deficiencies.  The determination to reject a plan of correction is not listed as an initial determination and is thus not reviewable.  42 C.F.R. §§ 498.3(b), 498.5; HRT Lab., Inc.,  DAB No. 2118 at 11 (2007); Hermina Traeye Mem. Nursing Home, DAB No. 1810 at 13 (2002) (affirming the termination of a provider, the “ALJ properly concluded that he lacked authority to adjudicate the question of whether [CMS] abused its discretion in deciding to reject the [plan of correction].”).

Nonetheless, Petitioner asserts that it hired a Technical Supervisor due to the COLA survey on October 30, 2017, who then worked in laboratory operations under two laboratory directors, Drs. Lee and Saksena.  P. Ex. 3 at 8-9; P. Br. at 1-2.  Petitioner also asserts that “[a]ll regular laboratory procedures were continued . . . from January 21, 2018 - June 4, 2018,” indicating that Petitioner had complied with CLIA requirements after the COLA survey until shortly before the survey at issue.  P. Ex. 3 at 9.  Petitioner then states that it “suspended all patient testing on June 4, 2018 due to other unforeseen office developments.”  P. Ex. 3 at 8; P. Br. at 2.5   Petitioner concludes by stating that the laboratory director, technical supervisor, and laboratory personnel were discharged several months after the CLIA survey due to insufficient revenue and that the laboratory ceased operations.  P. Ex. 3 at 10; P. Br. at 7.

There is no doubt that Petitioner’s contentions are under-developed, and Petitioner submits little, if any, admissible evidence to support its challenges.  Such is reflected in the discussion of the merits of this case below.  However, in an abundance of caution to

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preserve Petitioner’s appeal rights, I conclude that Petitioner’s contentions sufficiently challenge the condition‑level deficiencies concerning Analytic Testing (42 C.F.R. § 493.1250, Tag D5400) and Laboratory Director (42 C.F.R. § 495.1441, Tag D6076) found by the state agency at the time of the survey on June 26, 2018, to avoid dismissal.

As discussed below, I issue this decision based on the written record.  Therefore, I deny CMS’s summary judgment motion as moot.

IV.  Admission of Evidence

Each party was to file written objections to any proposed exhibits that the party did not want included into the record.  Pre-Hearing Order ¶ 7; Civil Remedies Division Procedures (CRDP) § 14(e).  Neither party filed objections.  In the absence of objections, I admit CMS Exhibits 1 through 4 and Petitioner Exhibits 1 through 4 into the record.

V.  Decision on the Written Record

I required the parties to submit written direct testimony for each of its witnesses in the form of an affidavit or declaration made under penalty of perjury.  Pre-Hearing Order ¶ 8; Civil Remedies Division Procedures (CRDP) § 16(b).  Further, I informed the parties that if a party submitted the written testimony for one or more witnesses, I would only hold a hearing if the opposing party filed a request to cross-examine the witness or witnesses.  Pre-Hearing Order ¶¶ 9-10; CRDP § 19(b).

Petitioner neither proposed any witnesses nor submitted any written direct testimony for witnesses.  CMS submitted the written direct testimony for two witnesses (CMS Ex. 4), but Petitioner did not request cross-examination of those witnesses.  Therefore, I issue this decision based on the written record without an evidentiary hearing.  Pre-Hearing Order ¶ 13; CRDP § 19(d).

VI.  Issue

Whether, at the time of the June 26, 2018 survey, Petitioner complied with all CLIA condition-level requirements.

VII.  Findings of Fact, Conclusions of Law, and Analysis6

1. The SOD for the survey completed on June 26, 2018, provided detailed and specific factual findings based on the observations of the surveyors.  The SOD, along with the testimony of the surveyors, provides prima facie evidence that

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1. Petitioner was not in compliance with six of the standards under the Analytic Systems Condition level requirement to maintain a CLIA certificate. Petitioner presented no evidence to show that it was in compliance with the identified standards under 42 C.F.R. § 1250 (Analytic Systems, Tag D5400) at the time of the June 26, 2018 survey.  Therefore, I conclude that Petitioner was not in compliance with the standards under 42 C.F.R. §§ 493.1251(a), 493.1252(c), 493.1253(b)(2), 493.1255(b), 493.1256(e)(1), (g), 493.1289(a), (c) and, thus, not in compliance with the condition at 42 C.F.R. § 493.1250.

For a laboratory to hold a CLIA certificate to perform testing on human specimens, it must comply with the conditions of CLIA.  42 C.F.R. § 493.1.  One of the condition-level requirements for a laboratory that performs nonwaived testing is that the laboratory “must meet the applicable analytic systems requirements in §§ 493.1251 through 493.1283,” absent exceptions not relevant here.  42 C.F.R. § 493.1250.  “The laboratory must monitor and evaluate the overall quality of the analytic systems and correct identified problems as specified in § 493.1289 for each specialty and subspecialty of testing performed.”  42 C.F.R. § 493.1250.

The SOD provided detailed factual findings to support the state agency’s conclusion that Petitioner was not in compliance with 42 C.F.R. § 493.1250 (Tag D5400) (Analytic Systems).  The SOD discusses the observations and conclusions of the surveyors for each of the standards that Petitioner failed to meet.  The SOD identified the following standards under the condition in 42 C.F.R. § 493.1250 for which Petitioner was noncompliant:  42 C.F.R. §§ 493.1251(a), 493.1252(c), 493.1253(b)(2), 493.1255(b), 493.1256(e)(1), (g), 493.1289(a), (c).  CMS Ex. 2 at 4-16.

In its brief, CMS summarized the SOD and posits that Petitioner violated the condition‑level CLIA laboratory requirement for Analytic Systems (42 C.F.R. § 493.1250, Tag D5400), as set forth above.  CMS Br. at 21 (citing 42 C.F.R. § 493.1250).  CMS maintains, consistent with the SOD, that Petitioner violated six standards within this condition:  42 C.F.R. § 493.1251(a) (Tag D5401) (procedure manual); 42 C.F.R. § 493.1252(c) (D5415) (test systems, equipment, instruments, reagent); 42 C.F.R. § 493.1253(b)(2) (D5423) (establishment and verification of performance); 42 C.F.R. § 493.1255(b) (D5439) (calibration and calibration verification); 42 C.F.R. § 493.1256(e)(1), (g) (D5471) (control procedures); and 42 C.F.R. § 493.1289(a), (c) (D5791) (analytic systems quality assessment).  CMS Br. at 21; CMS Ex. 2 at 4, 7, 8, 11, 13, 14.

CMS notes the following problems identified by the surveyors at Petitioner’s laboratory: 

• Not following the procedure manual;
   

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• Not recording appropriate expiration dates on reagents and quality control materials; and
   
• Not validating upper and lower limits, reportable ranges, retention limits, or stability for multiple drugs.

CMS Br. at 21 (citing CMS Ex. 2 at 5, 7, 9-11).  CMS also contends that Petitioner failed to perform calibration verifications each six months for the Immuno Tox instrument from 2016-2018, although it performed “8,300 tests annually.”  CMS Br. at 21-22 (citing CMS Ex. 2 at 12-13).  In addition, CMS asserts that Petitioner failed to establish proper linearity and other validation testing for the LC/MS/MS tests, despite performing “201,600 LC/MS/MS tests annually.”  CMS Br. at 22 (citing CMS Ex. 2 at 6, 9, 11).  CMS summarizes that these failures could cause false positive or negative results for tests conducted and thus violate Condition D5400.  CMS Br. at 22.

In this proceeding, the surveyors who conducted the survey that ended on June 26, 2018, provided written testimony.  This testimony supports CMS’s summary and its reading of the SOD’s factual basis for noncompliance with the regulatory standards.

Surveyor Kathy Rymut first testified as to her education and experience, which included nearly 30 years of working at hospitals and private laboratories, much of the time as laboratory director, before becoming state agency surveyor.  CMS Ex. 4 at 1 ¶ 1.  Ms. Rymut testified both to the problems found at Petitioner’s laboratory and why those problems were a serious concern.  She testified that: 

During our survey of the laboratory, we found numerous problems.  This included not recording appropriate expiration dates on reagents and quality control materials.  Failing to record appropriate expiration dates could cause inaccurate results if used beyond the expiration dates.  The laboratory also failed to establish reportable ranges, retention limits, stability, or upper and lower limits, for multiple drugs used with the LC/MS/MS.  Failing to establish upper and lower limits, reportable ranges, retention limits, or stability tests could cause either false negative or false positive patient results.

The laboratory did not perform calibration verification at least every six months, from 2016—2018, for the ImmunoTox instrument.  Failing to perform calibration every 6 months could cause the instrument or test system to shift outside the patient reportable range for patient test results.  This could cause inaccurate test results.  Similarly, the laboratory failed

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to properly establish linearity and other validation testing for the LC/MS/MS instrument and its method.  As explained above, these failures could cause either false negative or false positive results.

CMS Ex. 4 at 2 ¶¶ 10-11.

Surveyor Shelley Olm also testified about the survey.  In her testimony, she detailed her training and employment experience with hospital, private, environmental, and molecular research laboratories.  She stated that “[w]hile in various roles within the various hospital laboratories where I was employed, I was also responsible for the day to day operations in microbiology, procedure writing, and all state and federal regulatory compliance, including surveys of the main laboratory in 2 of those laboratories.”  CMS Ex. 4 at 4 ¶ 1.

Ms. Olm testified as follows concerning the factual bases for the SOD’s findings that supported noncompliance with several of the standards concerning the Analytic Systems condition: 

Several of the deficiencies found applied to conditions D5400 and D6076.  Some examples include, but are not limited to, the failure to perform lot to lot testing of new reagents and controls, and failure to document the in-use and expiration date for reagents and [quality control] materials.  Additionally, the laboratory repeated [quality control] multiple times until the results were acceptable, failed to document remedial action when the [quality control] was out of range, failed to calibrate the ImmunoTox instrument every 6 months, had no oversight of [quality control] program, and calibrators and controls were housed out of storage requirements.  Any of these deficiencies could cause false positive or false negative laboratory results.

CMS Ex. 4 at 5 ¶ 10.

I find that the SOD, which was supported by testimony, satisfies CMS’s burden to show a prima facie case.  The DAB has concluded that a “SOD may function both as a notice document and as evidence of the facts asserted therein.”  Oxford Manor, DAB No. 2167 at 2 (2008).  Further, “[t]he SOD is a contemporaneous record of the survey agency’s observations and investigative findings, and [the DAB has] made it clear that CMS may make a prima facie showing of noncompliance based on that document if the factual findings and allegations it contains are specific, undisputed, and not inherently unreliable.”  Guardian Health Care Center, DAB No. 1943 at 14 (2004).

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Petitioner disputes none of the specific factual findings by the state agency in the SOD, either in its hearing request or in its brief.  Petitioner did not cross-examine the surveyors, dispute their testimony, or submit testimony of witnesses to refute the surveyors’ testimony.  My review indicates that CMS’s assertions are accurately reflected in the provisions of the SOD cited in CMS’s brief.

Further, surveyor notes from the June 26, 2018 survey state, among other things, that Petitioner did not document unacceptable quality control corrective action, per its standard operating procedure; did not follow package inserts for reagents and quality control open date; and did not properly validate its LC/MS/MS testing.  CMS Ex. 3 at 17‑19.  In summary, the notes indicate that there are quality assurance issues throughout the entire lab, referencing the “LD” (laboratory director).  The summary further states that calibration verification was not performed each six months, Petitioner also was either not following or had no procedures for quality control, and Petitioner was not following package inserts for storing reagents and controls for open and expiration dates.  CMS Ex. 3 at 19.  With respect to LC/MS/MS testing, the surveyor wrote that “[l]inearity studies too low and ULOL [upper limit of linearity] no data for some drugs.  Need acceptable CRITERIA for LCMS validation.  Stability testing can’t use zero concentrations.”  CMS Ex. 3 at 19.  All of these surveyor notes are consistent with and supported by the SOD and the written surveyor testimony.  CMS. Ex. 4 at 2 ¶¶ 9-11 (Rymut Decl.), CMS Ex. 4 at 5-6 ¶¶ 10-11 (Olm Decl.).

I find that CMS has established a prima facie case of noncompliance for the Analytic Systems condition-level deficiency (42 C.F.R. § 493.1250, Tag D5400), based on noncompliance with six standards under that condition.  Petitioner has failed to present any evidence to rebut CMS’s prima facie case, much less a preponderance of the evidence.  Therefore, I conclude that Petitioner was not in compliance with the Analytic Systems deficiency during the June 26, 2018 survey.

2. Because Petitioner was not compliant with a condition-level requirement at the time of the June 26, 2018 survey, CMS had a legitimate basis to revoke Petitioner’s CLIA certificate and impose other sanctions.

CMS may impose sanctions when it determines that a CLIA laboratory is out of compliance “with one or more CLIA conditions.”  CMS Br. at 20 (citing 42 C.F.R. §§  493.1804, 493.1806(a)); see also 42 C.F.R. § 493.1806(b), 493.1814(a)(2).  As I have determined above, Petitioner was not in compliance with the condition-level requirement for Analytic Testing (42 C.F.R. § 493.1250, Tag D5400).  The Analytic Testing deficiency alone is sufficient to support the principal and alternative sanctions imposed, including revoking Petitioner’s CLIA license and imposing $1,000 per-day CMPs.

More specifically, CMS may revoke a laboratory’s CLIA certificate if the laboratory has any condition-level deficiencies “at the time of the survey.”  HRT Lab., Inc., DAB

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No. 2118 at 10; Ali, DAB No. 2016 at 8-9 (“Even if [post-survey corrective action] met the regulatory standard, however, it is irrelevant since the salient question here is whether [the laboratory] had the requisite [system] at the time of the survey.”).  Because Petitioner was noncompliant with a CLIA condition at the time of the June 26, 2018 survey, CMS was authorized, based on that single condition-level deficiency alone, to revoke its CLIA certificate.  42 C.F.R. §§ 493.1806(a)-(c), 493.1814(a)(2); see also HRT Lab., Inc., DAB No. 2118 at 10.  Therefore, CMS had a legitimate basis to revoke Petitioner’s CLIA certificate.

An ALJ also need not consider all deficiencies cited, so long as the deficiencies affirmed support the sanctions imposed.  Perry Cnty. Nursing Ctr. v. U.S. Dep’t of Health & Human Services, 603 F. App’x 265, 271 (5th Cir. 2015) (agreeing that the regulations require ALJs to review only those findings that are material to the outcome of a case); Claiborne‑Hughes Health Ctr. v. Sebelius, 609 F.3d 839, 847 (6th Cir. 2010); Carrington Place of Muscatine, DAB No. 2321 at 20-21 (2010); Senior Rehab. & Skilled Nursing Ctr., DAB No. 2300 at 6 n.5 (2010), aff’d, Senior Rehab. & Skilled Nursing Ctr. v. Health & Human Servs., 405 Fed. App’x 820 (5th Cir. 2010); Rockcastle Health and Rehab. Ctr., DAB No. 2891 at 23-24 (2018).  I thus find that the single condition-level deficiency for Analytic Systems in the June 26, 2018 survey provides a legitimate basis for the principal and alternative sanctions imposed in this case, including revoking Petitioner’s CLIA certificate.  Therefore, I do not need to discuss the second condition-level deficiency identified in the SOD.

3. Petitioner has not submitted evidence to refute that it was operational during the June 26, 2018 survey or that it had withdrawn from the CLIA program and voluntarily surrendered its CLIA certificate by that date.

Although Petitioner generally disputes the sanctions imposed, it has not, at any point, submitted material evidence to challenge that it was not compliant with the condition and standard level deficiencies concerning Analytical Testing (42 C.F.R. § 493.1250, Tag D5400) at the time of the CLIA survey on June 26, 2018.  Instead, Petitioner’s primary arguments are that it ceased testing patient samples as of June 4, 2018, and that after the CLIA survey, it submitted multiple plans of correction and ultimately ceased all laboratory operations after terminating all laboratory staff.  P. Ex. 3 at 8-10; P. Br. at 5.

With respect to the first argument, other than unsupported assertions in its hearing request and brief, Petitioner submits no evidence to support that it actually ceased operations on June 4, 2018.  In contrast, CMS submits the uncontroverted written direct testimony from the two state agency surveyors that the laboratory was operating and testing patient samples during the survey on June 26, 2018.  CMS Ex. 4 at 3 ¶¶ 12-13 (Rymut Decl.); CMS Ex. 4 at 6 at ¶¶ 12-13 (Olm Decl.).  Further, Petitioner nowhere disputes that its CLIA certificate remained in effect during the survey.  Instead, and apparently for the

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first time, Petitioner offers in its hearing request, dated December 14, 2018, to voluntarily surrender the CLIA certificate in lieu of the CMS sanctions imposed.  P. Ex. 3 at 8-9.

The CMS State Operations Manual (CMS Pub. 100-07) (SOM) makes clear that CMS may proceed with an enforcement action that is underway despite a laboratory’s withdrawal from the CLIA program and that the laboratory’s “CLIA certificate will remain active until the enforcement action takes effect . . . .”  SOM Ch. 6 § 6256 (effective Apr. 18, 2008).7   Absent a determination of immediate jeopardy, “suspension, limitation, or revocation of a CLIA certificate is not effective until after a hearing decision by an ALJ is issued.”  42 C.F.R. § 493.1844(d)(2)(i).  Petitioner presented no evidence that it had attempted to voluntarily withdraw from the CLIA program or to surrender its CLIA certificate.

Therefore, I reject Petitioner’s arguments that it ceased to function as a laboratory as of June 4, 2018, and that CMS’s enforcement remedies should be dismissed on that basis.  Further, I agree with CMS that even if Petitioner had suspended all activity as of June 4, 2018, CMS still had the authority to conduct a complaint survey and to impose sanctions.  CMS Br. at 13‑14 (citations omitted).

I also reject Petitioner’s arguments concerning post-survey remedial actions (allegations of compliance and plans of correction) because they provide no basis for removing the CMS remedies imposed.  As previously noted, the primary issue before me is whether Petitioner was in compliance at the time of the survey, not whether Petitioner returned to compliance at any point after the survey.

Since the regulations authorize CMS to impose sanctions for noncompliance with CLIA requirements, an appeal of CLIA sanctions necessarily addresses whether a laboratory was in substantial compliance with CLIA requirements, and not whether corrective actions the laboratory proposed might have brought it into compliance.  That the State afforded Petitioner an opportunity to submit a credible allegation of compliance and acceptable evidence of correction before recommending that CMS impose sanctions does not convert the State’s and CMS’s conclusions that Petitioner’s submissions were not credible or acceptable into the basis for the sanctions.

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HRT Lab. Inc., DAB No. 2118 at 11.  Petitioner’s arguments about the post-survey work of its Laboratory Director and staff to return Petitioner to compliance are thus irrelevant to the issue decided in this case.

4. Petitioner’s CLIA certificate is revoked effective the date of this decision finding that Petitioner was out of compliance with a condition-level CLIA requirement.

CMS must notify a laboratory if it takes action to revoke the laboratory’s CLIA certificate, and the notice must inform the laboratory of the effective date of the revocation.  42 C.F.R. § 493.1844(g)(2)(i).  Under 42 C.F.R. § 493.1844(h)(2), the effective date of revocation is the date given in the CMS notice, which must be “at least 15 days after the date of the notice” if the laboratory’s deficiencies do not pose immediate jeopardy.  However, under 42 C.F.R. § 493.1840(e)(1), CMS does not actually revoke a CLIA certificate until after an “ALJ hearing” upholds the revocation.  After an ALJ decision, CMS may decide to revoke a CLIA certificate, even if CMS did not previously suspend or limit the CLIA certificate.  42 C.F.R. § 493.1840(e)(2).  Under 42 C.F.R. § 493.1844(d)(2)(i), absent a determination of immediate jeopardy, “suspension, limitation, or revocation of a CLIA certificate is not effective until after a hearing decision by an ALJ is issued.”  Accordingly, the effective date of the revocation of Petitioner’s CLIA certificate is the date of this decision.

5. Petitioner’s ability to bill the Medicare program was cancelled for services it provided on or after December 4, 2018.

CMS also indicated that it was imposing the principal sanction of Cancellation of Medicare payments for services provided on or after December 4, 2018.  CMS Ex. 1 at 16.  This sanction is authorized when condition-level deficiencies are found (42 C.F.R. §§ 493.1807(a), 493.1842(a)(2)) and required when CMS suspends or revokes a laboratory’s certificate.  42 C.F.R. § 493.1842(a)(1).  This sanction may take effect before an ALJ issues a decision so long as CMS has provided written notice of the rationale, effective date, and the effect of the cancellation, and CMS provided the laboratory with an opportunity to submit written evidence or other information in response to the proposed cancellation.  42 C.F.R. § 493.1842(b).  In this case, CMS provided sufficient notice and Petitioner had the opportunity to respond.  CMS Ex. 1 at 11-12.  Accordingly, Medicare payment cancellation is effective December 4, 2018.

6. CMS’s directed portion of a plan of correction was effective December 17, 2018.

CMS also indicated it intended to impose an alternative sanction on Petitioner of a directed portion of a plan of correction, effective December 4, 2018, which would require Petitioner to give a list of the names and addresses of all physicians and other clients who have used the laboratory’s services since June 1, 2016.  CMS Ex. 1 at 11.  Petitioner was given an opportunity to respond and submit evidence and information.  CMS Ex. 1 at

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11‑12.  In the initial determination, CMS modified the directed portion of a plan of correction by limiting the list of physicians and clients who had used the laboratory’s services to those since July 20, 2018,8 and by changing the effective date to December 17, 2018.  CMS Ex. 1 at 16.

As with the cancellation of Medicare payments, CMS’s actions complied with the notice requirements in the regulations to impose this alternative sanction.  42 C.F.R. § 493.1832(b).  Further, because I have upheld a condition-level deficiency in this case, CMS was authorized to impose this sanction.  42 C.F.R. § 493.1832(a). 

Petitioner may have complied with this sanction in so far as it responded to CMS that it had ceased testing before July 2018 and had no list of physicians and clients who used the laboratory’s services since July 20, 2018, to provide to CMS.  See P. Ex. 3 at 6, 10; see also P. Br. at 6.  In any event, this sanction is no longer effective as of the date of this decision, because this sanction terminates when a revocation becomes effective.  42 C.F.R. § 493.1832(c)(2). 

7. CMS was authorized to impose a CMP on Petitioner. The amount of the CMP imposed by CMS is not subject to review.  However, given Petitioner’s allegations that it closed the laboratory, disposed of the laboratory equipment, and had not reopened it, CMS must determine whether and for how long the CMP should be imposed in this case.  CMS is only authorized to impose CMPs for remedial purposes, and there is no remedial purpose when a laboratory is no longer in existence.

CMS’s December 7, 2018 initial determination informed Petitioner that a $1,000 per-day CMP would be imposed for each day of noncompliance.  CMS Ex. 1 at 15.  The primary motivation for Petitioner’s hearing request appears to be that Petitioner wants the CMP to be “dismissed,” as it has no future plans to resume laboratory testing and the laboratory stopped testing before the survey.  P. Ex. 3 at 10; P. Br. at 6.  As Petitioner stated in a December 13, 2018 letter to CMS: 

The practice has no future plans to resume laboratory testing.  It is understood that if it were to resume testing, a new application would be submitted, a new laboratory director and all other laboratory personnel would be retained.  Please let me know if you require any further information/ documentation as I am trying to prevent institution of any

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monetary sanctions.  If a hearing is required to dismiss these sanctions and further discuss the laboratory closure please let me know. 

P. Ex. 3 at 6.

Petitioner maintains in briefing that it had no physicians or clients “using the lab prior or since June 4, 2018,” as it was a physician-owned laboratory processing patient samples from its own facility.  P. Ex. 3 at 3; P. Br. at 6.  Further, Petitioner stated: 

The laboratory worked extensively to regain compliance and attempted to correct all cited deficiencies found by the State Agency.  However, due to changes in the practice and lack of revenue, the attempt to bring the lab back to code was abandoned. The laboratory no longer has any equipment or staff and no future plans to resume laboratory testing due to developments and changes made by the practice.

P. Br. at 7 (emphasis added); see P. Ex. 3 at 3 (November 19, 2018 email from Petitioner to CMS staff stating that “[d]ue to unfortunate events that have occurred here as of late we will no longer be perusing [sic] a laboratory now or anywhere in the near future (or the next several years). With that being said we no longer have a laboratory director[] or any laboratory personnel on staff.”).

Petitioner also expresses confusion as to why it received a CLIA Certificate of Accreditation, effective January 23, 2019, through January 22, 2021, when it was not interested in continuing operations, did not want a renewed CLIA certificate, and “had [not] been cleared to renew the certificate due to deficiencies.”  P. Br. at 7; P. Ex. 4.  However, the regulations provide that a certificate of accreditation is “reissued before the expiration date, pending an appeal . . . when a validation or complaint survey has found the laboratory to be noncompliant with one or more CLIA conditions.”  42 C.F.R. § 493.2 (definition of CLIA certificate, sub-definition of Certificate of accreditation).  Because Petitioner appealed deficiency findings in the complaint survey on June 26, 2018, CMS reissued Petitioner’s certificate of accreditation pending that appeal.  Under 42 C.F.R. § 493.1844(c)(4), the determination as to which alternative sanction to impose, including the amount of the CMP and whether the CMP is per instance or per day, is “not [an] initial determination[] and therefore [is] not subject to appeal.”  Likewise, “[t]he amount of the civil monetary penalty assessed per day or for each violation of Federal requirements” is not an initial determination that is subject to appeal.  42 C.F.R. § 493.1844(c)(7); see, e.g., Kensington Diagnostics LLC, DAB No. 2992 at 12 (2020) (DAB’s explanation that it “has no authority to overturn or modify a legally valid agency action (such as the imposition of a CMP)” and that it “cannot entertain [a laboratory’s]

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argument that the penalty amount imposed by CMS in this case (which was within the authorized range) is excessive or unduly burdensome.”).

Because I have concluded that Petitioner had a condition-level deficiency, CMS was authorized to impose a CMP.  42 C.F.R. § 493.1834(c).  However, this per-day CMP is to serve as an “interim” sanction and runs until this decision is issued.  42 U.S.C. § 263a(h); 42 C.F.R. § 493.1834(f)(2), (g)(1)(ii).  Due to a significant backlog of cases at the Civil Remedies Division, this case has taken some time to be completed, which could lead to a CMP well in excess of an amount that is reasonable or appropriate.  The parties have not filed anything since prehearing exchanges and there is no evidence that CMS attempted to confirm whether Petitioner had ceased its operations and sold or disposed of its equipment, as indicated in Petitioner’s brief.

The Secretary has stated the purposes for imposing sanctions as follows: 

(a) Purpose. The enforcement mechanisms set forth in this subpart have the following purposes:

(1) To protect all individuals served by laboratories against substandard testing of specimens.

(2) To safeguard the general public against health and safety hazards that might result from laboratory activities.

(3) To motivate laboratories to comply with CLIA requirements so that they can provide accurate and reliable test results.

42 C.F.R. § 493.1804(a).  I agree with the reasoning in Rustom Ali, Ph.D., Operator of Scottsdale Medical Laboratory, DAB CR1280 (2005), that a CMP in CLIA cases must serve a remedial purpose and, if a laboratory is no longer functioning, the CMP no longer serves its intended purpose.  Therefore, while I uphold CMS’s authority to impose a CMP in this case, I direct CMS to inquire whether the length of the per-day CMP should be terminated on a date when the laboratory ceased functioning.

VIII.  Conclusion

Because CMS has presented undisputed evidence that Petitioner failed to comply with the condition-level requirement for Analytic Testing at the time of the CLIA complaint survey on June 26, 2018, CMS had a legitimate basis to revoke Petitioner’s CLIA certificate.  CMS was also authorized to impose the other principal and alternative sanctions specified, based on Petitioner’s noncompliance.  However, regarding the CMP in this case, I direct CMS to determine whether Petitioner ceased to function as a

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laboratory, as alleged by Petitioner’s filings, and to consider limiting the length of the per-day CMP to a date when Petitioner no longer continued to operate a laboratory.

1. An “analyte” is “a substance or constituent for which the laboratory conducts testing.”  42 C.F.R. § 493.2 (definition of Analyte).
• back to note 1
2. “The LC/MS/MS is an analytical chemistry technique that combines the physical separation capabilities by liquid chromatography (LC) and the mass analysis capabilities of tandem mass spectrometry.  While liquid chromatography separates mixtures with multiple components, mass spectrometry provides structural identity of the individual components with high molecular specificity and detection sensitivity.  This tandem technique can be used to analyze biochemical, organic, and inorganic compounds commonly found in complex samples of environmental and biological origin.  Tandem mass spectrometry (MS/MS) is a combination of two mass analyzers in one mass spectrophometer (MS) instrument that measures the ion masses within a sample.  Ions of a particular mass-to-charge ratio (precursor ions) MS1 are selected and fragment ions (product ions) are created by a second stage of mass spectrometry (MS2) used to determine the elemental or isotopic signature (isotopic fingerprint) of a sample.  In the case of [Petitioner], the LC/MS/MS was used to quantitatively confirm and identify the presence of drugs and/or their metabolites in patient urine samples.”  CMS Ex. 4 at 1-2 ¶ 5 (Rymut Decl.).
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3. Laboratory tests are categorized by complexity into one of the following categories:  waived tests, moderate complexity tests, and high complexity tests.  42 C.F.R. § 493.5(a).
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4. Dr. Lee resigned two days after the June 26, 2018 survey at issue.  On July 18, 2018, Petitioner hired Dr. Suraj Saksena as laboratory director.  Petitioner’s Brief (P. Br.) at 4.  In email correspondence dated December 11, 2018, Dr. Saksena stated that Petitioner had notified the state agency that, effective November 28, 2018, Dr. Saksena was no longer laboratory director.  P. Ex. 3 at 32; P. Br. at 5.  (Petitioner’s brief is not paginated and is combined with its exhibit list.  I cite to pages in Petitioner’s brief by the PDF counter number.).
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5. Elsewhere, in an undated letter received by the state agency on July 17, 2018, Petitioner asserts that it ceased testing with the LC/MS/MS and Immunotox analyzers on June 26, 2018.  CMS Ex. 3 at 3; CMS Ex. 4 at 3 ¶ 16 (Rymut Decl.); CMS Ex. 4 at 6 ¶ 15 (Olm Decl.).  Petitioner does not explain the three-week gap between the June 4, 2018 and June 26, 2018 dates provided.
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6. Findings of fact and conclusions of law are in bold and italics.
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7. The CMS SOM can be found online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Internet-Only-Manuals-IOMs-Items/CMS1201984  (last visited February 4, 2022).
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8. CMS states that the July 20, 2018 “date is harmless error, it should read June 1, 2016.  CMS will issue a correction letter.”  CMS Br. at 2 n.1 (emphasis in original); CMS Br. at 5 n.2.  The record contains no such CMS correction letter; therefore, the directed portion of a plan of correction still limits Petitioner’s response to July 20, 2018.
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