SUBJECT:

Evette Elsenety, M.D., Et. Al.,

Petitioner,

Health Care Financing Administration

DECISION

I sustain the determinations of the Health Care Financing Administration (HCFA) to revoke the Clinical Laboratory Improvement Amendments (CLIA) certificates of each of the Petitioners (Evette Elsenety, M.D., Docket No. C-01-218; Harold Margolis, D.O., Docket No. C-01-219; Mary C. Ferris, D.O., Docket No. C-01-220; Gregory O. Claque, D.O., Docket No. C-01-221; Gary B. Lungnas, D.O., Docket No. C-01-222; Ronald I. Rothenberg, D.O., Docket No. C-01-223; Thomas J. Chwierut, D.O., Docket No. C-01-224; Kenneth S. Meyers, D.O., Docket No. C-01-225; Jeffrey H. Soffa, D.O., Docket No. C-01-226; Dudley Roberts, III, M.D., Docket No. C-01-227; James M. Kohlenberg, M.D., Docket No. C-01-228; Stanley H. Remer, D.O., Docket No. C-01-229; Harold Margolis, D.O., Docket No. C-01-230; Phillip Newman, D.O., Docket No. C-01-231; Daniel Jebens, D.O., Docket No. C-01-232; and Gary L. Berg, D.O., Docket No. C-01-233) in these cases. The undisputed material facts of these cases establish that each of these Petitioners is a clinical laboratory that is owned by an entity, Oakland Medical Group, P.C. (Oakland Medical Group), whose CLIA certificate was revoked within the past two years. As a matter of law the CLIA certificates of these Petitioners must be revoked because CLIA prohibits an entity whose CLIA certificate has been revoked from owning or operating another laboratory during the two-year period from the date of revocation of the CLIA certificate.

I. Background

On November 7, 2000 HCFA sent a notice to each Petitioner in these cases. In each notice HCFA advised each Petitioner of its intent to revoke that Petitioner's CLIA certificate. HCFA asserted that it was acting to revoke the CLIA certificates at issue because it had determined that each Petitioner was owned or operated by Oakland Medical Group and because Oakland Medical Group's CLIA certificate had been revoked.

Each Petitioner requested a hearing and all of the cases were assigned to me for a hearing and a decision. I held a consolidated prehearing conference at which HCFA advised me that it intended to move for summary disposition. HCFA then moved for summary disposition and Petitioners opposed HCFA's motion with a consolidated response.

HCFA submitted four proposed exhibits (HCFA Ex. 1 - HCFA Ex. 4) in support of its motion. Petitioners, in their consolidated response to the motion, submitted four proposed exhibits (P. Ex. 1 - P. Ex. 4). I am receiving into evidence HCFA Ex. 1 - HCFA Ex. 4 and P. Ex. 1 - P. Ex. 4.

II. Issues, findings of fact and conclusions of law

A. Issues

The issues in these cases are whether:

1. Summary dispositions are appropriate; and

2. Petitioners' CLIA certificates must be revoked as a matter of law based on the undisputed material facts.

B. Findings of fact and conclusions of law

I make findings of fact and conclusions of law (Findings) to support my decisions in these cases. I set forth each Finding below as a separate heading. I discuss each Finding in detail.

1. Summary dispositions are appropriate in these cases.

Generally, summary disposition is appropriate in a case if there are no disputed issues of material fact. I find that there are no disputed issues of material fact in these cases. Consequently, summary dispositions are appropriate here.

A party who opposes a motion for summary disposition must do more than to deny the facts that are alleged as support for the motion. The party who opposes the motion must offer facts which, if true, would refute the facts that are relied on by the moving party. I would not find these cases appropriate for summary disposition had Petitioners offered any facts which, if true, called into doubt the material facts relied on by HCFA to support its motions for summary disposition in these cases. But, Petitioners did not do so.

HCFA rests its motion for summary disposition on two assertions of fact. First, it asserts that each Petitioner is owned by Oakland Medical Group. Second, it asserts that Oakland Medical Group's CLIA certificate was revoked within the past two years. As I discuss below, there is no genuine dispute as to these material facts.

a. Each Petitioner is owned by Oakland Medical Group.

There is no genuine dispute that each Petitioner is owned by Oakland Medical Group. Oakland Medical Group's ownership of Petitioners is established by a letter dated October 24, 1998 from Petitioners' counsel to HCFA's counsel. HCFA Ex. 3. In that letter counsel attaches a list of "the addresses and CLIA numbers of the laboratories owned by The Oakland Medical Group, P.C. . . ." Id. at 1 (emphasis added). The attached list includes the business address, along with the CLIA certificate number, of each of the Petitioners in these cases. Id. at 4 - 5.

Petitioners contend that HCFA presented no evidence that they are owned by Oakland Medical Group. Petitioners assert that the letter that HCFA relies on is erroneously dated "October 24, 1998" when, in fact, it actually was authored on October 24, 2000. Moreover, according to Petitioners, the letter was sent as part of settlement discussions between Petitioners and HCFA and, "[a]t no time has . . . [Oakland Medical Group] or counsel for . . . [Oakland Medical Group] indicated to HCFA or HCFA counsel that such letter was sent for any reason other than settlement." Petitioners' brief at 3.

These assertions by Petitioners are no basis for me to conclude that there is any genuine dispute as to whether Petitioners are owned by Oakland Medical Group. The letter is an admission made on behalf of Petitioners by their counsel that they are owned by Oakland Medical Group. That it may have been misdated does not detract from the significance of the contents of the letter. Nor is the letter made less probative by the fact that it was sent to HCFA as part of settlement discussions. Petitioners have not averred that they stated untruths to HCFA in order to settle these cases and there is no reason for me to assume that they would do so.

b. Oakland Medical Group's CLIA certificate was revoked within the past two years.

There is no dispute that Oakland Medical Group's CLIA certificate was revoked within the last two years. HCFA made a determination to revoke Oakland Medical Group's CLIA certificate. That determination was sustained after an administrative hearing by an administrative law judge and, on appeal, by the Departmental Appeals Board. Oakland Medical Group, P.C., DAB CR688 (2000), aff'd DAB No. 1755 (2000). Revocation of Oakland Medical Group's CLIA certificate was made effective July 19, 2000. HCFA Ex. 2.

2. Petitioners' CLIA certificates must be revoked as a matter of law based on the undisputed material facts.

The undisputed material facts of this case are that Petitioners all are owned by an entity, Oakland Medical Group, whose CLIA certificate was revoked within the past two years. I find that, as a matter of law and in light of the undisputed material facts, HCFA must revoke Petitioners' CLIA certificates.

CLIA provides that any "person" whose CLIA certificate has been revoked is prohibited from owning another laboratory within a two-year period from the date of revocation:

[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.

42 U.S.C. § 263(a)(i)(3). Regulations authorize HCFA to enforce this section by initiating adverse action to, among other things, revoke a laboratory's CLIA certificate where that laboratory's owner or operator has owned or operated another laboratory whose CLIA certificate was revoked during the preceding two-year period. 42 C.F.R. § 493.1840(a)(8).

Oakland Medical Group - whose CLIA certificate was revoked effective July 19, 2000 - is by law prohibited from owning any CLIA-certified laboratories for two years from that date. HCFA plainly was authorized to revoke Petitioners' CLIA certificates inasmuch as they are all owned by Oakland Medical Group. As a matter of law I must sustain HCFA's determination to do so.

Petitioners argue that revocation of their CLIA certificates is antithetical to the purpose of CLIA. Moreover, according to Petitioners, their organization and ownership is dictated by law enacted subsequent to the enactment of CLIA. Petitioners assert that it was not Congress' intent that laboratory owners be penalized for complying with this subsequently enacted law. Yet, according to Petitioners, that is the consequence of applying the requirements of CLIA to these cases. Petitioners' brief at 3 - 6.

The essence of Petitioners' argument is that they are organized as subsidiaries of Oakland Medical Group because jointly owned clinical laboratories may not be operated lawfully unless they are organized as part of a group practice. Petitioners assert that the manner of their organization is dictated by 42 U.S.C. § 1395nn(b)(2) which was enacted after the enactment of CLIA. However, according to Petitioners, the reality is that each of them continue to function as a discrete and independently operated laboratory. They assert that to revoke their CLIA certificates would frustrate the intent of legislation which requires that they be organized as part of a group practice. Moreover, they argue that common sense dictates that their CLIA certificates not be revoked inasmuch as they had nothing to do with the activities that resulted in the revocation of Oakland Medical Group's CLIA certificate.

The problem with Petitioners' argument is that it does not deal with the express requirements of CLIA. CLIA strictly prohibits a person whose CLIA certificate has been revoked from owning another laboratory during the two-year period after the date of revocation. It does not contain exceptions or permit a case-by-case analysis as Petitioners suggest is appropriate. Consequently, I may not consider the essentially equitable arguments made by Petitioners. Furthermore, Petitioners have not offered anything which would suggest that Congress intended to modify CLIA with the enactment of subsequent legislation.

I note that the word "person" is not defined in CLIA and I have considered the question of whether Oakland Medical Group is a "person" within the meaning of CLIA. If the word "person" meant only an individual then, arguably, there would be no statutory prohibition against Oakland Medical Group owning CLIA-certified laboratories despite the revocation of its CLIA certificate. The general rules of construction of the United States Code, of which CLIA is a part, are that the word "person" in any statute contained in the United States Code be interpreted to include a corporation or a company unless the context of the statute indicates otherwise. 1 U.S.C.A. § 1 (West 2001). I find nothing in CLIA to suggest that Congress intended the word "person" to mean only individuals and not corporations or companies. Thus, the general rule of construction that "person" means a corporation or a company applies to CLIA's use of the word "person."

Steven T. Kessel

Administrative Law Judge