Blue Nile Clinic Lab, ALJ Ruling 2026-15 (HHS-CRD March 31, 2026)

RULING

Petitioner, Blue Nile Clinic Lab, is a Colorado-based clinical laboratory, certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 42 U.S.C. § 263a et seq.  Petitioner appeals the decision of the Centers for Medicare & Medicaid Services (CMS) to impose sanctions against it.  CMS moves to dismiss the appeal, citing 42 C.F.R. § 493.1844(a), (b), (c) and 42 C.F.R. § 498.70(b).  CMS argues that Petitioner does not have a right to a hearing on the issues it raised.  Petitioner did not respond to CMS’s motion to dismiss.  

I agree that Petitioner does not have the right to a hearing on the issues it appealed, and I grant CMS’s motion. 

Discussion

1. Petitioner’s hearing request must be dismissed because it does not raise an issue that I have the authority to review.1 

Statutory and regulatory 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

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certification process for laboratories that perform clinical diagnostic tests on human specimens.  Public Law No. 100-578 (1988), amending section 353 of the Public Health Service Act, codified at 42 U.S.C. § 263a; 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. § 263a(f); 42 C.F.R. Part 493.  A condition represents a major division of laboratory services or required environmental protections; each condition is broken down into more detailed standards that laboratories must meet to be compliant with the overall condition.  White Lake Fam. Med., P.C., DAB No. 1951 at 2-3 (2004); RNA Laboratories, Inc., DAB No. 1820 at 3 (2002). 

The statute gives the Secretary of Health and Human Services 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.  If it determines that a lab does not comply with one or more CLIA conditions, CMS may suspend or revoke its CLIA certificate (principal sanction), and it may impose alternative sanctions (directed plan of correction, state onsite monitoring, civil money penalty).  42 U.S.C. § 263a(h)(2), (i)(4); 42 C.F.R. §§ 493.1804(b)(1)(ii), 493.1806, 493.1807; The Malaria & Rheumatic Disease Rsch. Inst., Inc., DAB No. 2872 at 4 (2018) (citing Ward Gen. Prac. Clinic, DAB No. 1624 at 2 (1997)); HRT Lab’y, Inc., DAB No. 2118 (2007). 

Appeal rights of laboratories.  A laboratory may appeal CMS’s actions that constitute “initial determinations.”  42 C.F.R. § 493.1844.  Section 1844(b) lists the actions that are initial determinations and therefore reviewable:  1) the suspension, limitation, or revocation of the lab’s CLIA certificate because of noncompliance with CLIA requirements; 2) the denial of a CLIA certificate; 3) the imposition of alternative sanctions; and 4) the denial or cancellation of the lab’s approval to receive Medicare payment for its services.  The hearing procedures are set forth in 42 C.F.R. Part 498.  42 C.F.R. § 493.1844(a).  An ALJ may dismiss a hearing request if the laboratory does not have a right to a hearing.  42 C.F.R. § 498.70(b).  

Survey findings.  In this case, from November 25 through December 2, 2024, surveyors from the Colorado Department of Public Health and Environment (state agency), acting on behalf of CMS, conducted a complaint survey of the laboratory.  CMS Ex. 4 at 1.  They determined that the laboratory did not comply with four condition-level requirements and multiple standard-level requirements.  CMS Ex. 4 at 5-25.  CMS gave the laboratory opportunities to submit a credible allegation of compliance, which it did not do.  CMS Ex. 7 at 3.  Nevertheless, the state agency revisited the laboratory on February 18, 2025, to conduct another survey.  Based on their findings, CMS determined that the immediate jeopardy determination had been abated but that the laboratory remained out of compliance with two conditions – 42 C.F.R. § 493.1250 (Analytic

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Systems) and 42 C.F.R. § 493.1403 (Moderate Complexity Laboratory Director) – and several standards.  CMS Ex. 7.  

CMS’s notice letter.  In a notice letter dated April 15, 2025, CMS advised the laboratory that it did not comply with the two condition-level requirements and numerous standard-level requirements and that CMS would therefore impose the following sanctions:  1) limiting the lab’s CLIA certificate for the specialties of hematology and routine chemistry, effective April 30, 2025; 2) imposing a directed portion of a plan of correction, effective April 30, 2025; 3) imposing a directed plan of correction, effective April 30, 2025; and 4) cancelling the lab’s approval to receive Medicare and Medicaid payments for any laboratory services performed on or after April 30, 2025.  CMS Ex. 7. 

The notice letter also advised the facility of its appeal rights.  Citing 42 C.F.R. § 493.1844(a)(1)-(2) and 42 C.F.R. § 498.40(a)(2), the letter explained that a request for hearing should identify the specific issues, findings of fact, and conclusions of law with which the facility disagrees and should specify the basis for contending that the findings and conclusions are incorrect.  CMS Ex. 7 at 6.  

Petitioner’s hearing request:  correction efforts.  Petitioner timely appealed.  However, Petitioner did not appeal any of the actions that are listed as initial determinations.  In fact, its appeal all but concedes the laboratory’s noncompliance and focusses primarily on its efforts to achieve compliance: 

• “In response to the findings of the initial survey and subsequent reports, the lab voluntarily suspended all patient testing . . . pending resolution of all citations, including CLIA condition-level deficiencies and immediate jeopardy findings.”  Hearing Request at 1 (E-file #1).
• “We have been diligently working with CMS Enforcement Team to address all deficiencies and have made significant progress.”  Id.
• “Given our substantial corrective actions and continued cooperation with CMS and CLIA, we respectfully request reconsideration and removal of the . . . sanctions.”  Id. at 2. 

Whether the laboratory has, post-survey, made efforts to correct its deficiencies is not an issue that I have the authority to review.  I may consider only whether the laboratory complied with CLIA requirements, giving CMS the authority to impose sanctions.  Assoc. Internists, P.C., DAB No. 2298 at 6-7 (2010) (finding that CMS’s determination not to afford a laboratory the opportunity to correct deficiencies is not an initial determination for which the laboratory is entitled to review); HRT Lab’y, Inc., DAB No. 2118 at 11 (2007) (explaining that “an appeal of CLIA sanctions necessarily addresses whether a laboratory was in substantial compliance with CLIA requirements, and not

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whether corrective actions the laboratory proposed might have brought it into compliance.”); see 42 C.F.R. § 1844(b), (c). 

Petitioner’s hearing request:  “certain findings.”  Next, Petitioner challenges “the assertion [purportedly in the revisit report] that the Laboratory Information System (LIS) reference ranges did not match analyzer reference ranges.”  Hearing Request at 2.  This is confusing.  As CMS points out, the revisit report form does not allege that “LIS reference ranges do not match analyzer reference ranges.”  E-file #35 at 11; see CMS Ex. 8.  Petitioner points to no other report or notice suggesting that CMS made this finding.  Because that issue did not form a basis for the enforcement action, Petitioner is not entitled to review. 

Moreover, even assuming that the issue is buried somewhere in the survey findings, Petitioner has neither identified where it might be found nor explained the basis for contending that the finding is incorrect.  A hearing request must “identify the specific issues, and the findings of fact and conclusions of law” with which it disagrees and “[s]pecify the basis for contending that the findings and conclusions are incorrect.”  42 C.F.R. § 498.40(b). 

The Departmental Appeals Board has granted petitioners a degree of grace on the specificity issue, instructing judges to accept “as adequate to preserve a right to hearing” hearing requests that fall short of the regulatory requirements.  However, that grace is neither permanent nor absolute.  During the prehearing process, the petitioner must satisfy the requirements of section 498.40(b).  See The Carlton at the Lake, DAB No. 1829 at 9 (2002); Alden Nursing Ctr. – Morrow, DAB No. 1825 (2002).  Here, the prehearing exchanges have been completed; yet Petitioner has not identified, in any understandable way, the findings and conclusions with which it disagrees.  When CMS moved to dismiss, pointing out that the hearing request lacks specificity, Petitioner did not respond.  Indeed, although ordered to do so, Petitioner did not submit a written brief containing “all arguments” it intended to make.2   See Standing Order at 3 ¶ 4(c)(1) (E-file #2a) (June 23, 2025).  We are left with no understanding of the findings and conclusions that Petitioner challenges nor the bases for those challenges. 

Petitioner also complains that the state agency “reported that a lab technician stated the lab was using expired reagents.”  Hearing Request at 2.  Petitioner admits that, at the time of the initial complaint survey, this was true but insists that, since that time, it had corrected.  Although the survey report form mentions the lab’s failing “to replace and use control materials and collection tubes after they had exceeded their expiration date,” it does not ultimately describe that as a deficiency.  The report cross-references to Tag D5417 for a description of the specific deficiency.  CMS Ex. 8 at 1.  But the actual

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finding is not then described in the survey report form. The report does not include any specific citation under Tag D5417.  Again, the issue did not form the basis for the enforcement action, which are described under Tags D5421, D5469, D5481, and D6022.  See CMS Ex. 8. 

Petitioner’s hearing request:  surveyor bias.  Finally, Petitioner alleges “unintentional bias introduced by a State Agency representative during the revisit.”  Hearing Request at 2.  I have no authority to review attacks leveled against the surveyors or the conduct of the survey.  Liberty Lab’y, Inc., DAB No. 2562 at 3 (2014); Comprehensive Pro. Home Visits, DAB No. 1934 at 13 (2004) (quoting Beechwood Sanitarium, DAB No. 1906 at 44 (2004) (holding that “‘the appeals process is not intended to review the conduct of the survey but rather to evaluate the evidence of compliance regardless of the procedures by which the evidence was collected’. . . .  Consequently, the arguments concerning the surveyor’s alleged attitude and knowledge of program requirements are unavailing.”); see Nightingale Home Healthcare, Inc., DAB No. 2784 at 11 (2017) (quoting Rosewood Care Ctr. of Swansea, DAB No. 2721 at 7 (2016) (“evidence about the survey process is not relevant where the provider ‘has not shown how any alleged defects in the conduct of the survey . . . undercut or impeach the evidence of noncompliance offered by CMS.’”);  Angel Kidney Care of Inglewood, Inc., DAB No. 2795 at 10-11 (2017) (holding that an ALJ’s de novo evaluation of objective evidence corrects any alleged surveyor bias). 

Conclusion

Because Petitioner has not appealed any issue that I have the authority to review, I dismiss this hearing request pursuant to 42 C.F.R. § 498.70(b).