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CASE | DECISION |JUDGE | FOOTNOTES

Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
IN THE CASE OF  


SUBJECT:

Medimex Clinical Laboratory,

Petitioner,

DATE: April 14, 2003
                                          
             - v -

 

Centers for Medicare & Medicaid

 

Docket No.C-01-757
Decision No. CR1025
DECISION
...TO TOP

DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) (1) to impose remedies against Petitioner, Medimex Clinical Laboratories, under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). 42 U.S.C. § 263a. CMS was authorized to: revoke Petitioner's CLIA certificate for a period of one year; cancel Petitioner's approval to receive Medicare and Medicaid payments for its services, effective April 3, 2001; and impose a civil money penalty (CMP) in the sum of $30,000.00.

I. Background

Petitioner was issued a CLIA certificate to operate a clinical laboratory in the State of California. CMS, through its agent the California Department of Health Services, Laboratory Field Services (LFS), conducted a complaint survey. The survey, completed on January 8, 2001, found Petitioner to be out of compliance with seven CLIA conditions of participation, as well as with other standard-level requirements. The LFS examiners also concluded that the identified deficiencies posed immediate jeopardy to patient health and safety. On January 16, 2001, LFS informed Petitioner of the deficiencies found in the survey concluded on January 8, 2001, and of the remedies being recommended to CMS. See CMS Ex. 1. After Petitioner failed to provide a credible allegation of compliance and acceptable evidence of correction for all of the deficiencies cited, in spite several opportunities to do so, CMS imposed the following remedies:

•A CMP in the amount of $10,000.00 per day from March 31, 2001, until all condition-level requirements were in compliance, or until suspension of Petitioner's CLIA certificate became effective.

•A directed plan of correction requiring Petitioner to cease all testing, effective March 31, 2001.

•Suspension of Petitioner's CLIA certificate, effective April 3, 2001.

•Revocation of Petitioner's CLIA certificate, effective May 20, 2001.

•Cancellation of Petitioner's approval to receive Medicare payments for services performed on or after April 3, 2001.

CMS Exs. 1 - 6.

After being granted an extension, Petitioner requested an administrative hearing on June 5, 2001. The case was assigned to me for hearing and decision. I held a hearing in Los Angeles, California, from August 13 - 16, 2002. CMS offered 71 exhibits (CMS Exs. 1 - 71) and Petitioner offered 157 exhibits (P. Exs. 1 - 157). I admitted both parties' exhibits into evidence without objection. Transcript (Tr.) at 7 - 8. Both parties submitted posthearing briefs (CMS Br. and P. Br.) and response briefs (CMS R. Br. and P. R. Br.).

Based on the testimony offered at the hearing, the documentary evidence, the arguments of the parties, and the applicable law and regulations, I find that Petitioner was not in compliance with at least one condition of participation under CLIA as well as with other standard-level requirements. Therefore, CMS was authorized to revoke Petitioner's CLIA certificate, cancel its approval to receive Medicare payment for its services, and impose a CMP of $10,000 for three days (March 31, April 1, and April 2, 2001).

II. Applicable Law and Regulations

CLIA was designed to promote accurate medical tests by clinical laboratories. Congress' goal was to establish a single set of standards applicable to all laboratory services, including those provided to Medicare beneficiaries. See, H.R. Rep. 899, 100th Cong., 2nd Sess. 8 (1988), reprinted in 1998 U.S.C.C.A.N. 3828.

Under CLIA, the Secretary of Health and Human Services (Secretary) is authorized to inspect clinical laboratories and, in effect, license them to perform tests. The Act prohibits a clinical laboratory from soliciting or accepting specimens for testing unless it has first received from the Secretary a certificate authorizing it to perform the specific category of tests which the laboratory intends to perform. 42 U.S.C. § 263a(b). The Act directs the Secretary to establish standards to assure that clinical laboratories certified by the Secretary perform tests that are valid and reliable. 42 U.S.C. § 263a(f).

CLIA regulations authorize CMS or its designee to conduct a complaint inspection of a CLIA exempt laboratory or a laboratory issued a certificate of accreditation in order to determine whether the facility is in compliance with established requirements. 42 C.F.R. § 493.1780(b).

Furthermore, 42 C.F.R. Part 493, Subpart E, requires CMS or its agent to conduct, on a representative sample basis or in response to substantial allegations of non-compliance, surveys of an accredited laboratory as a means of validating its performance. The regulations confer enforcement authority on CMS in order to assure that laboratories comply with CLIA. 42 C.F.R. § 493.1800. Where CMS determines that a laboratory is not complying with one or more CLIA conditions it may impose as remedies principal sanctions which may include suspension and/or revocation of the laboratory's CLIA certificate. 42 C.F.R. § 493.1806(a), (b). CMS may also impose alternative sanctions against a noncompliant laboratory in lieu of or in addition to principal sanctions. 42 C.F.R. § 493.1806(c). Additionally, CMS may cancel a laboratory's approval to receive Medicare payments for its services where the laboratory is found not to be complying with one or more CLIA conditions. 42 C.F.R. § 493.1807(a). Payment for Medicaid services may only be made under a State plan if a laboratory has a CLIA certificate or is licensed by a State whose licensure program has been approved by the Secretary. 42 C.F.R. § 493.1809.

The regulations provide a noncompliant laboratory with the opportunity to correct its deficiencies so that CMS may remove alternative sanctions that have been imposed against the laboratory. 42 C.F.R. § 493.1810(e). However, the regulations do not afford a laboratory the same opportunity to have principal, as opposed to alternative, sanctions lifted.

A laboratory that is dissatisfied with a determination by CMS may request a hearing before an administrative law judge to contest that determination. 42 C.F.R. § 493.1844. In most circumstances, a determination to suspend, limit, or revoke a CLIA certificate will not become effective until after a decision by an administrative law judge that upholds CMS's determination to impose such a remedy. 42 C.F.R. § 493.1844(d)(2)(i). However, if CMS determines that a laboratory's failure to comply with CMS's requirements poses immediate jeopardy to patients, then CMS's determination to suspend or limit a laboratory's CLIA certificate will become effective after CMS gives notice of its determination and in advance of a hearing and decision by an administrative law judge. 42 C.F.R. § 493.1844(d)(2)(ii). A suspension automatically becomes a revocation of a laboratory's CLIA certificate in a case where an administrative law judge upholds a determination by CMS to suspend a laboratory's CLIA certificate based on a finding that the failure by the laboratory to comply with CLIA requirements poses immediate jeopardy to the health and safety of patients. 42 C.F.R. § 493.1844(d)(4)(ii).

A laboratory that has been found to pose immediate jeopardy to patients may appeal the finding or findings of condition-level deficiencies which are the basis for the imposition of remedies against that laboratory. However, the laboratory may not appeal CMS's determination that the deficiencies pose immediate jeopardy to patients. 42 C.F.R. § 493.1844(c)(6). Additionally, a laboratory may not appeal a determination by CMS not to rescind a suspension of that laboratory based on the laboratory's allegations of compliance where CMS has concluded that the reason for the suspension has not been removed or that there is insufficient assurance that the reason for the suspension will not recur. 42 C.F.R. § 1844(c)(3).

CMS has the burden of coming forward with sufficient evidence to prove a prima facie case that the laboratory is not complying with one or more CLIA conditions. The laboratory has the ultimate burden of rebutting, by a preponderance of the evidence, any prima facie case of noncompliance that is established by CMS. Edison Medical Laboratories, Inc., DAB No. 1713 (1999); Hillman Rehabilitation Center, DAB No. 1611 (1997) aff'd Hillman Rehabilitation Center v. HHS, No. 98-3789 (D.N.J. May 13, 1999).

III. Issue

The issue in this case is whether Petitioner failed to comply with one or more conditions of participation in CLIA, thereby giving CMS authorization to impose remedies against Petitioner, including the cancellation of all Medicare payments for laboratory services furnished to Petitioner, the suspension and revocation of the certificate issued to Medimex under CLIA, and the imposition of alternative sanctions consisting of a CMP in the amount of $30,000.00.

IV. CMS's Contentions

CMS contends that as a result of the survey ending January 8, 2001, it was established that Petitioner was out of compliance with seven conditions of participation, as well as with other standard-level requirements. According to CMS, Petitioner failed to comply with the following conditions:

•Patient Test Management (42 C.F.R. § 493.1101)

•General Quality Control (42 C.F.R. § 493.1201)

•Laboratory Director, Moderate Complexity Testing (42 C.F.R. § 493.1403)

•Laboratory Director, High Complexity Testing (42 C.F.R. § 493.1441)

•Technical Supervisor (42 C.F.R. § 493.1447)

•Clinical Consultant (42 C.F.R. § 493.1453)

•Quality Assurance (42 C.F.R. § 493.1701)

CMS Br. at 4.

CMS further posits that Petitioner posed immediate jeopardy to patient health and safety, and that whether or not the deficiencies resulted in immediate jeopardy, and whether the immediate jeopardy was removed, are not appealable issues. CMS also notes that the existence of just one condition-level deficiency suffices to sustain its determination to revoke Petitioner's CLIA certificate. CMS R. Br. at 1 - 2.

V. Petitioner's Contentions

Petitioner contends in its posthearing brief that every deficiency cited by CMS was addressed, and either cured or in the process of being cured, as outlined in the plans of correction it submitted. Petitioner further contends that the deficiencies do not warrant the revocation of its CLIA certificate, and that the action taken against it is the result of a witch hunt by an overzealous inspector. P. Br. at 1. In its reply brief, Petitioner argues that the issue before me is whether CMS provided it with a fair and reasonable opportunity to remove the alleged immediate jeopardy, not whether reasonable grounds exist for a finding of immediate jeopardy. P. R. Br. at 1.

VI. Findings of Fact and Conclusions of Law

I hereby make the following findings of fact and conclusions of law as set forth, below, in bold:

A. Petitioner failed to comply with the condition for Patient Test Management.

42 C.F.R. § 493.1101 establishes that the condition for Patient Test Management requires that laboratories engaging in moderate and/or high complexity testing, must employ and maintain a system that provides for proper patient preparation; proper specimen collection, identification, preservation, transportation, and processing; and accurate result reporting. This system must assure optimum patient specimen integrity and positive identification throughout the preanalytic, analytic, and postanalytic processes, and must meet the standards as they apply to the testing performed. It is evident that Petitioner did not satisfy this condition, as evidenced by the deficiencies that follow. Moreover, Petitioner's deficiencies under this condition were serious deficiencies which threatened the health and safety of its patients. See CMS Ex. 71.

1. Petitioner failed to perform tests only at the written request of an authorized individual and to assure that the test authorizations included the test to be performed (Tags D3017 and 3024). (2)

42 C.F.R. § 493.1105 (Tag D3017) provides that a laboratory must perform tests only at the written or electronic request of an authorized individual. This means, as stated by CMS's witness Tommy Barr, (3) that the laboratory must perform the specific tests requested; no more and no less. Tr. at 28. Thus, it is inappropriate for a laboratory to perform tests not authorized as well as to fail to perform authorized tests. Petitioner in this case was deficient in both respects. Tr. at 73.

Petitioner concedes that, on two occasions, it failed to perform tests that were requested. P. Br. at 14. However, it argues that it was never paid for tests it failed to perform. Such argument is misplaced, because, as stated by CMS, whether the laboratory was paid or not is irrelevant. What is significant to the health and safety of the patients for whom those tests were requested is the fact that treating physicians did not receive test results they believed were essential for proper treatment of their patients. CMS R. Br. at 11. To illustrate, Dr. Bazenyansky ordered a Bell Medical Center comprehensive panel #2 for Patient #1. See CMS Ex. 7, at 3 - 4. The request was entered into Petitioner's tracking system on November 3, 1999. CMS Ex. 8, at 1, 3. Petitioner's records reveal that the Bell Medical Center panel included an anemia panel. CMS Ex. 49, at 13. None of the tests associated with an anemia panel, such as reticulocyte count, vitamin B-12, folic acid, total iron binding capacity, or blood type, were performed. CMS Ex. 8, at 3. Troy Heatherwick, one of the LFS examiners, made a notation regarding these missing tests at the bottom of the laboratory report. Tr. at 78; CMS Ex. 8, at 3. In this regard, Tommy Barr testified as follows:

These tests, if you follow the agreement, would have been authorized to perform. However, they were not performed. And could have been the tests he wanted. This could be a pregnant woman who is being tested for B-12 folate deficiency, some kind of anemia in her pregnancy. All these particular tests are unique to a pregnant woman, and the problems that result from that, as well as having an ABO and RH to determine her blood type . . .

Tr. at 78.

Although, as stated earlier, Petitioner argues that it only failed to perform requested tests on two occasions, the record contains 11 "Notices of Tests not Performed" sent by Petitioner to various medical facilities for whom it had done testing. On April 5, 2001, Petitioner acknowledged that on October 21,1999, January 19, 2000, and January 21, 2000, it failed to perform requested testing in 11 instances, each involving several analytes. P. Ex 153, at 15 - 25.

CMS also determined that Petitioner performed many tests not requested by an authorized individual. These are noted at CMS Ex. 7, at 4 - 5. (4) One such instance of tests performed without being requested by an authorized individual occurred with respect to Patient #3. The requisition at CMS Ex. 10, at 1, did not include testing for triglycerides, but the laboratory report shows a result of 141 for triglyceride. Petitioner argues that, although on four occasions it allegedly performed tests which were not requested, even CMS admits that it did not bill for those items. P. Br. at 4. Again, Petitioner's argument here is without merit. It is of no consequence that the facility did not bill for the laboratory services in question. Petitioner is charged with performing unauthorized tests. 42 C.F.R. § 493.1105 does not say that it is permissible for a facility to perform tests without the request of an authorized individual if no billing for such services is generated. Additionally, Petitioner's very general denials and defenses based on conclusory claims do nothing to explain the sloppy work evident from the citation under Tag D3017 with reference to Patient #4. With respect to this patient, the Statement of Deficiencies documents that although the test was not ordered, a result was reported (.03). Moreover, the facility reported this PSA (prostate antigen test) on a female patient. CMS Ex. 7, at 4; CMS Ex. 11, at 1, 4; Tr. at 146.

Under Tag D3024, referencing 42 C.F.R. § 493.1105(c), CMS also cited Petitioner for failing to define or specify the tests associated with various panels. These deficiencies are itemized at CMS Ex. 7, at 6 - 8. Petitioner's response to these cited deficiencies is that special doctor's panels are not prohibited and constitute a standard practice in the industry. Petitioner also argues that the Bell Medical Group, one of the entities ordering special panels, had been using Medimex as its laboratory for many years without complaint. Furthermore, says Petitioner, even if CMS is correct in its assertions, the facility rectified the situation by ceasing acceptance of panels from any of its clients. P. Br. at 15.

Of course, the basis of this charge is not that panels are inherently wrong, but rather that they were not properly defined. As a result, the facility failed to perform requested tests or performed more tests than requested. Additionally, it is irrelevant whether any of the Petitioner's clients had lodged complaints in the past.

I note from Petitioner's plan of correction that the facility claimed that it had removed the Bell Medical Center panels and the Dr. Guzman prenatal panels to avoid confusion, and that it would revamp the service directories and request forms to avoid confusion and to bring them into harmony with the "CPT" book. P. Ex. 154, at 7; See CMS Br. at 42, n. 7. Petitioner also recognized that its failure to properly define the comprehensive panels was the reason for its not having performed a significant number of tests requested by medical facilities that it served. See P. Ex. 154, at 14. Unfortunately, Petitioner did not provide documentation that it corrected the patient tests involved in the deficiency cited under D3024. It also did not take the necessary action to determine whether other patients had the potential to be affected by the same deficient practice, and for all patients to be identified, in order to take appropriate corrective actions. Similarly, the facility did not document how the corrective actions would be monitored to ensure that the deficient practice would not recur. See CMS Ex. 5, at 6.

I thus find that Petitioner has not overcome CMS's showing that its facility failed to insure that tests were performed only at the written request of an authorized individual, and that the authorization included the test to be performed.

2. Petitioner failed to assure that test requisitions or test authorizations included the date of specimen collection (Tag D3025).

42 C.F.R. § 493.1105(d) requires that a laboratory assure that test requisitions or test authorizations include the date of specimen collection. The statement of deficiencies sets forth 18 instances in the years 1999 and 2000 where Petitioner's facility did not include a date of collection in the patient requisition form. CMS Ex. 7, at 8.

Petitioner concedes that on some requisition forms the date and time of specimen collection were not completed by the requesting physician. However, Petitioner argues that the facility should not be held responsible for the doctors' omissions and that the absence of the date on the requisition does not affect the accuracy of the test. P. Br. at 16.

Petitioner's attempt to shift responsibility to requisitioning physicians is without merit. The regulation cited above clearly states that the laboratory must assure that the requisition or test authorization includes the date of specimen collection. Thus, the onus is on the facility, and it cannot be shifted to third parties not contemplated by the regulation.

Moreover, CMS's witness, Tommy Barr, testified that the date of specimen collection is an important element in the testing process because, without that information, a laboratory would not know if it is complying with its self-imposed turn-around testing time. Strict adherence to turn-around times, he said, is essential to specimen integrity. If the specimen integrity is compromised, the test results are questionable. Tr. at 106, 107.

Petitioner's other argument, that the accession number assigned by the facility when it entered the test sample into its tracking system included the date, is also not persuasive inasmuch as that date is the date of acceptance of the sample by the laboratory and not the date of collection.

It is my finding that CMS has established a prima facie case that Petitioner failed to assure that the test requisition or test authorization included the date the specimen was collected. Petitioner has not overcome that showing.

3. Petitioner failed to maintain a record system to ensure reliable identification of patient specimens as they were processed and tested (Tag D3032).

42 C.F.R. § 493.1107 requires that a laboratory must maintain a record system to ensure reliable identification of patient specimens, as they are processed and tested, to assure that accurate test results are reported.

The Statement of Deficiencies reveals that with respect to Patient #10, the requisition contains an edited accession number of 105157. The accession number on the patient's test report, however, is shown as 10516. The reported test value for this patient, for chemistry, LH, FSH, progesterone, prolactin, and estradiol, were identical to the results on the instrument printout for patient 105157. CMS Ex. 7, at 9. See also CMS Ex. 17, at 1 - 3, 5 - 7. As noted by CMS, either the test requisition has the wrong patient identification number, or the test report is incorrect, or the number on the requisition was edited to match the instrument printout. CMS Br. at 36.

I find that CMS has established a prima facie case as to this deficiency. Petitioner has not disputed these findings.

4. Petitioner failed to retain all records of patient testing for at least two years (Tag D3034).

42 C.F.R. § 493.1107 requires that a laboratory retain all records of patient testing, including instrument printouts, if applicable, for at least two years.

Based on record review, for 21 patients out of 30 patient testing records reviewed from January 11, 1999 through February 1, 2000, it was determined that Petitioner failed to retain all records of patient testing, including instrument printouts, for at least two years.CMS Ex. 7, at 10 - 18.

Petitioner presented no evidence to dispute the finding that it failed to retain patient testing records for at least two years. CMS's prima facie case remains uncontradicted.

5. Petitioner failed to include in its record system the records and dates of all specimen testing, including the identity of the testing personnel (Tags D3041, D3042).

42 C.F.R. § 493.1107(d) requires that a laboratory must maintain a record system that provides documentation of information specified in 42 C.F.R. § 493.1105(a) through (f), and includes the records and dates of all specimen testing, including the identity of the personnel who performed the tests.

Based on patient record review from January 11, 1999 through February 1, 2000, for 21 of 30 patients, it was determined that Petitioner failed to have a system that included the records and dates of all specimen testing. Specifically, no testing documentation was found for 13 out of 30 patient testing records reviewed, including instrument printouts.

Additionally, testing record review of Petitioner's list of all employees and their identifying initials for the two years preceding the survey, revealed that Petitioner failed to always identify the personnel performing the testing, as detailed at CMS Ex. 7, at 20 - 23.

Petitioner has not disputed these deficiencies. Therefore, CMS's prima facie case remains unrebutted.

6. Petitioner failed to send test reports promptly to the authorized person, the individual responsible for using the test results, or the laboratory that initially requested the tests (Tag D3043).

42 C.F.R. § 493.1109 requires that a laboratory test report must be promptly sent to the authorized person, the individual responsible for using the test results, or the laboratory that initially requested the tests.

Based on review of patient requisitions, patient reports, Petitioner's computer data, and Petitioner's policies and procedures, for 18 of 26 records reviewed from January 1, 1999 through January 20, 2000, CMS determined that the facility failed to promptly report patient results to the authorized person that initially requested the test, or the individual responsible for using the test results. CMS Ex. 7, at 23 - 25.

CMS found that the results for 17 patients listed in the Statement of Deficiencies exceeded the turn-around time for routine tests that the facility had classified in its Patient Laboratory Test Reporting Policy as routine work that was to be performed and reported daily. CMS Ex. 49, at 1. Tests classified as special were designated with a 72 hour turn-around time. The tests for the 17 patients noted above were not labeled as special, thus they were impliedly routine and were required to be reported daily. See also Tr. at 271 - 272.

Petitioner argues that CMS did not consider that many of the specimens at issue were brought to the laboratory on a Friday, weekends, or holidays, which accounted for the majority of the discrepancy. P. Br. at 17. I note, however, that in only two of the 17 instances were samples received on a Friday. One of the samples was received on Friday, March 12, 1999, and was sent on Tuesday, March 16, 1999. The other sample was received on Friday, February 26, 1999, and sent on Friday, March 5, 1999. The absence of prompt dispatch is inexcusable in both instances. The sample received on Saturday, January 16, 1999, and sent on Wednesday, January 20, 1999, is the only one brought in on a weekend. Petitioner does not explain why this routine test was not performed and sent out on Monday, January 18, 1999. All of the other samples were received Monday through Thursday, but the facility failed to promptly report the results in each case. Petitioner's argument regarding weekends and holidays does not account for its procrastination. CMS Ex. 7, at 23 - 24.

The delay involved in this deficiency may have occurred in the testing and/or reporting stages of the process. If Petitioner was allowing the specimens to age, their integrity could be corrupted. On the other hand, if the delay occurred after the testing was performed, the failure to report results timely could adversely impact a physicians' ability to make a prompt diagnosis. Of course, it may have been possible for the laboratory to experience delays in the testing as well as in the reporting stages. In such event, it is more likely that the double delay took place in those instances where the specimen was in the laboratory for five days or more.

In view of the foregoing, I find that CMS has established a prima facie case as to this deficiency, and that Petitioner has failed to overcome that showing by a preponderance of the evidence.

7. Petitioner failed to have adequate systems in place to report results in a timely, accurate, reliable, and confidential manner (Tag D3050).

42 C.F.R. § 493.1109(a) requires that a laboratory must have adequate systems in place to report tests in a timely, accurate, reliable, and confidential manner. CMS found that this standard was not met, as evidenced by a review of patient test requisitions and patient reports, for 14 out of 30 patient records, from 1/11/99 through 1/01/00. CMS Ex. 7, at 25 - 32.

Some examples of the facility's failure to have an adequate system in place to report accurate and reliable results follow:

•The report for patient #37 from 7/17/99 showed HBcAB as negative, however, the worksheet reflected a positive result. CMS Ex. 7, at 26.

•The report for patient #37 from 7/17/99 showed HBSag as negative, however, the worksheet reflected a positive result. CMS. Ex. 7, at 26.

•The report for patient #39 from 7/06/99 showed that Folic acid was "<20", however, the instrument print-out reflected a result that was ">>>over range". CMS Ex. 7, at 27.

The test results for patient #39 indicated that Folic Acid and B12 values were reported on 7/06/99, however, the instrument print-out showed that the patient's samples were tested on 7/08/99; that is, the results were reported prior to the testing. CMS Ex. 7, at 27.

•The report for patient #10 from 1/12/00 indicated that the potassium value was reported as >6.5, however, the instrument print-out showed potassium level to be 14.9 which is incompatible with life. CMS Ex. 7, at 29.

•The final report date of laboratory testing results were delayed beyond the Petitioner's established turn-around time for patient results for at least 40 patients listed on the Statement of Deficiencies, all of whom had values defined by the laboratory as "critical" or "panic." CMS Ex. 7, at 30 - 31.

•Petitioner's records indicated that specimen testing was reported prior to specimen receipt, including but not limited to the following patients with test results showing an imminent life-threatening condition:

Patient # Date # Date Reported

Value

991015071 10/15/99 06/29/99 glu 39
991015077 10/15/99 06/29/99 glu 39

CMS Ex. 7, at 31.

•Communications from several clinics expressed a distrust of the values reported by Petitioner's laboratory based on inconsistent values, and unbelievable potassium and glucose results from the laboratory. CMS Ex. 7, at 31 - 32.

CMS established a prima facie case as to the deficiency under Tag D3050. Petitioner did not specifically dispute the citations.

8. Petitioner failed to immediately alert the individual or entity requesting a test when results indicated an imminent or life-threatening condition (D3066).

42 C.F.R. § 493.1109(f) requires that a laboratory must immediately alert the individual or entity requesting the test or the individual responsible for utilizing the test results when any test result indicates an imminent life-threatening condition. Based on a review of laboratory policy, patient records, laboratory records, lack of laboratory records, and interviews with individuals responsible for utilizing test results, CMS determined that Petitioner failed to satisfy this requirement. CMS Ex. 7, at 32 - 41.

Petitioner contends that it telephoned clinics every morning with critical value results discovered during testing the previous evening. P. Br. at 18. It appears, however, that Petitioner had no system in place for immediate notification of critical life-threatening results. Next day notification is not considered immediate. Additionally, in some instances, physicians were notified of the critical results two or more days subsequent to the date of the test. Contrary to Petitioner's testimony in this regard, this occurred at times even without an intervening weekend or holiday. Tr. at 614. The following examples provided by CMS illustrate the facility's unjustified procrastination:

Patient # Potassium Value (5) Date Tested

Date Notified

000320044 >6.5 (Monday) 3/20 (Wednesday) 3/22
000320040 >6.5 (Monday) 3/20 (Wednesday) 3/22
000317138 >6.5 (Saturday) 3/18 (Friday) 3/24
990825224 >6.5 (Monday) 8/23 (Thursday) 8/26
990816223 >6.5 (Saturday) 8/14 (Tuseday) 8/17
990816106 >6.5 (Saturday) 8/14 (Tuseday) 8/17

CMS Ex. 7, at 37 - 38.

Although in two of the above illustrations the sample was tested on a Saturday, notification of the life-threatening result did not take place until Tuesday, rather than on a Monday as claimed by Petitioner. In the third example noted above, the sample was tested on a Saturday, but notification of the critical result did not occur until a week later. Furthermore, Petitioner has not shown that there are holidays that justified late notification of these results. I must also add that a life-threatening situation cannot be allowed to remain unattended overnight or for a whole weekend. The onus was upon Petitioner to devise a system that assured immediate notification in those instances, but it failed to do so.

CMS also found that Petitioner failed to provide records to substantiate that the authorized individuals were notified by the laboratory of an imminent life-threatening condition for well over a hundred patients with critical value results. CMS Ex. 7, at 33 -37.

In view of the above, I find that CMS has established a prima facie case that Petitioner did not comply with the requirement under 42 C.F.R. § 493.1109(f). Petitioner has not overcome CMS's showing by a preponderance of the evidence.

9. Petitioner failed to provide information that may affect the interpretation of test results upon request (Tag D3069).

42 C.F.R. § 493.1109(g) requires, among other things, that information that may affect the interpretation of test results, such as test interferences, must be provided by a laboratory upon request.

Based on test report record review and technical supervisor interview, for 12 out of 24 patient report records reviewed from 1/1/99 through 2/5/00, CMS determined that Petitioner failed to have documentation that indicated the method by which they provided information on the patient test reports that might affect the interpretation of test results. Specifically, there was no documentation available to show that the authorized person was informed that direct LDL results for patients 1, 3, 6, 7, 13, 15, 17, 57, 59, 62, and 63, reported from 11/3/99, 1/5/00, 1/20/00, 2/1/00, 3/12/99, 7/29/99, 1/11/99, 9/20/99, 10/28/99, 9/28/99, and 8/12/99, were actually calculated values. CMS Ex. 7, at 41 - 42. The potential harm to patients is demonstrated by the example that follows. On October 21, 1999, the laboratory received a sample from Dr. Bazenyansky that included a Lipid profile. The laboratory reported to the physician a normal LDL value of 121, but did not indicate that the LDL was calculated rather than actually tested. The laboratory report states that "where [the] Triglyceride value is equal to or greater than 400 mg/dl, [the] calculated value for low density lipoprotein (LDL) is not valid." In this particular case the Triglyceride level was 583, therefore, the calculated LDL was invalid. CMS Ex. 61. Thus, while in some cases it may be appropriate to calculate certain values, it is, nonetheless, imperative that the physician who will utilize the test results for diagnosis and treatment be made aware of how the values were obtained. In the case at hand, the physician may have been misled to believe that the patient had a normal LDL when, in fact, that may not have been the case. See Tr. at 327 - 328, 332 - 333.

In view of the above, I find that CMS established a prima facie case as to this deficiency. Petitioner has offered no evidence to contradict this finding.

B. Petitioner failed to comply with the condition for general quality control (Tag D4000).

42 C.F.R. § 493.1201 requires, among other things, that a laboratory performing tests of moderate and/or high complexity must establish and follow written quality control procedures for monitoring and evaluating the quality of the analytical testing process of each method to assure the accuracy and reliability of patient test results and reports.

Based on interview with Petitioner's laboratory director and technical supervisor, and review of selected patient testing records from 1/05/99 through 2/01/00, and quality control records, it was determined that Petitioner did not establish and follow written quality control procedures for monitoring the quality of the testing process of each method to assure the accuracy and reliability of patient test results. Petitioner's failure to comply with the condition for general quality control is evident from the discussion of the deficiencies under Tags D4006 and D4173 (6) below.

1. Petitioner failed to perform and document control procedures using two levels of control material each day of testing (Tag D4006).

42 C.F.R. § 493.1202(c)(4) requires that each test of moderate complexity performed using an instrument, kit or test system cleared by the FDA through the premarket notification (510(k)) or premarket approval process for in-vitro diagnostic use, the laboratory must - (1) Follow the manufacturer's instructions for instrument or test system operation and test performance. Consistent with this, the regulation requires at subsection (4) that the laboratory must perform and document control procedures using at least two levels of control materials each day of testing.

Based on review of selected patient testing records from 1/05/99 through 2/01/00, for 21 of 30 patient testing records reviewed, it was determined that Petitioner failed to perform and document control material testing procedures using two levels of control material each day of patient testing. Petitioner did not dispute this deficiency. Therefore, CMS's prima facie case remains uncontradicted.

2. Petitioner failed to document all remedial actions taken when results of control material failed to meet the laboratory's established criteria for acceptability (Tag D4173).

42 C.F.R. § 493.1219(b) requires a laboratory to document all remedial actions taken when results of control and calibration materials fail to meet the laboratory's established criteria of acceptability.

Based on review of test records and quality control records from 1/01/99 through 2/01/00, CMS determined that Petitioner failed to document all remedial action taken when results of control materials failed to meet the laboratory's established criteria of acceptability.

CMS found, through interview with the technical supervisor, that Petitioner used the manufacturer's range as the established range for acceptability of control values. However, there was no documentation available regarding the remedial action taken when quality control values did not meet the acceptable range as set forth in the statement of deficiencies at CMS Ex. 7, at 54 - 55.

Petitioner did not dispute CMS's findings with respect to this deficiency. Therefore, the prima facie showing by CMS remains uncontradicted.

C. Petitioner failed to comply with the condition for Laboratory Director with respect to moderate complexity testing, as well as high complexity testing (Tags D6000, D6007, and 6076).

Under 42 C.F.R. §§ 493.1405 and 493.1441 a laboratory director must provide overall management and direction for the laboratory. Based on the number and severity of the deficiencies cited in the statement of deficiencies, CMS determined that the condition of laboratory director for laboratories performing moderate and high complexity testing was not met. CMS Ex. 7, at 55 - 60.

In the preceding discussion I have found that Petitioner was properly cited for the following deficiencies.

•Failure to perform tests only at the written request of an authorized individual, and the failure to assure that the test authorization includes the test(s) to be performed.

•Failure to include the date of specimen collection.

•Failure to maintain a record system to ensure reliable identification of patient specimens as they are processed and tested.

•Failure to retain all records of patient testing for at least two years.

•Failure to include in its record system the records and dates of all specimen testing, including the identity of the testing personnel.

•Failure to send test reports promptly to the authorized person, the individual responsible for using the test results, or the laboratory that initially requested the test.

•Failure to have adequate systems in place to report results in a timely, accurate, and reliable manner.

•Failure to immediately alert the individual or entity requesting a test when results indicated an imminent life-threatening condition.

•Failure to provide, upon request, information that may affect the interpretation of test results.

•Failure to perform and document control procedures using two levels of control material each day of testing.

•Failure to document all remedial actions taken when results of control material failed to meet the laboratory's established criteria for acceptability.

These multiple deficiencies are indicative of the laboratory director's lack of adequate supervision over the facility's operations. Petitioner appears to argue that the laboratory director is without fault because he had delegated his responsibilities to other laboratory personnel. Petitioner further seems to imply that the only shortcoming that the laboratory director may have exhibited is the failure to delegate matters to his subordinates in writing. P. Br. at 21. Moreover, Petitioner contends that written delegations are not required by the regulations. I note, however, that the regulations require that the laboratory director specify, in writing, the responsibilities and duties of each consultant, and each person, engaged in the performance of the preanalytic, analytic, and postanalytic phases of testing, and also identify which examinations and procedures each individual is authorized to perform, whether supervision is required for specimen processing, test performance or results reporting, and whether consultant or director review is required prior to reporting patient results. 42 C.F.R. § 493.1407(e)(14). Dr. Parsa, the laboratory director, testified that he never delegated anything in writing. Tr. at 1165.

In his testimony, Dr. Parsa admitted visiting the laboratory only two to three times a month, and that he delegated duties unofficially to people who were not listed on Petitioner's CLIA Laboratory Personnel Report. Dr. Parsa stated also that he was not aware of complaints by the California Department of Corrections. Tr. at 1165 - 1166, 1169.

Section 493.1407(b) of 42 C.F.R. establishes, however, that if the laboratory director reapportions performance of his or her responsibilities, he or she remains responsible for ensuring that all duties are properly performed. Thus, delegation of responsibilities does not relieve the laboratory director of the duty to provide overall direction and proper management for a laboratory pursuant to 42 C.F.R. §§ 493.1441 and 1445. The complaint log kept by one of Petitioner's client clinics (California Department of Corrections, Region III Parole Outpatient Clinic) from March 20, 1999 through October 4, 2000, itemizes several dozen complaints that highlight Petitioner's inability to report test results in a timely manner. CMS Ex. 40, at 9 - 12. In some cases, Petitioner never provided test results to the individual requesting specimen testing. Id. In one instance, the Department of Corrections complained that results were received for individuals who were not patients of their clinic. CMS Ex. 40, at 7. In other multiple instances, Petitioner could not produce records to show that it had notified the authorized individual of an imminent life-threatening condition reflected in critical result values. CMS Ex. 7, at 32 - 41. Some of those results were not compatible with human life. CMS Ex. 7, at 41.

While Dr. Parsa acknowledged errors in reporting results timely, he also claimed that the tests were accurately run and that quality controls were being met. Tr. at 1185. However, a review of the quality control records supplied by Petitioner showed that, for 19 out of 19 patient records reviewed that had hepatitis testing and eight of eight patients who had testing for HIV antibodies performed from 1/05/99 through 2/01/00, the laboratory failed to include both a positive and negative control with each run of qualitative testing of patient specimens. CMS Ex. 7, at 50 - 53. Dr. Parsa was so detached and out of touch with the day to day operations of the laboratory that he was oblivious to such an egregious flaw in the application of quality control measures.

Also, while Dr. Parsa refers to the possibility of only random errors, he overlooks the fact that, on April 5, 2001, Petitioner acknowledged that on October 21, 1999, January 19, 2000, and January 21, 2000, it failed to perform requested testing in 11 instances, each involving several analytes. Tr. at 1185; P. Ex 153, at 15 - 25.

In conclusion, I agree with CMS that Petitioner's laboratory director, Dr. Parsa, failed to meet his responsibility to oversee all of the preanalytical, analytical, and postanalytical phases of testing, resulting in tests not being performed as ordered; inaccurate and inconsistent patient testing records or a lack of records; errors in times and dates of specimen collection and testing; unreliable and inaccurate test reports being sent to the ordering clients; delays in reporting test results and reporting results with critical values, and failing to have a system in place for immediate notification of critical life-threatening results; and overall failure to enact and implement a quality control system which might have detected these serious, life-threatening problems. CMS Br. at 62.

Petitioner contends that CMS charged the facility with failure to meet the condition for laboratory director solely because other deficiencies were listed. P. Br. at 21. I note that the presence of deficiencies may or may not be indicative of a laboratory director's compliance with CLIA requirements. In this case, however, I find that the significant number of serious errors found in Petitioner's operations, to which Dr. Parsa was seemingly oblivious, is evidence of his failure to ensure that laboratory personnel carried out their duties properly, and that he was derelict in his obligation to ensure compliance with CLIA requirements.

In view of the foregoing, I find that CMS has established a prima facie case that the condition of laboratory director for laboratories performing moderate and high complexity testing was not met. Petitioner has not overcome that showing by a preponderance of the evidence.

D. Petitioner failed to comply with the conditions for Clinical Consultant and Technical Supervisor.

1. Clinical Consultant (Tag D6134).

42 C.F.R. § 493.1453 requires that a laboratory must have a clinical consultant who meets the requirements of 42 C.F.R. § 493.1455 and provides clinical consultation in accordance with 42 C.F.R. § 494.1457. This section requires that the clinical consultant:

•be available to provide consultation to the laboratory's clients;

•be available to assist the laboratory's clients in ensuring that appropriate tests are ordered to meet the clinical expectations;

•ensure that reports of test results include pertinent information required for specific patient interpretation; and

•ensure that consultation is available and communicated to the laboratory's clients on matters related to the quality of the test results reported and the laboratory's interpretation concerning specific patient conditions.

Dr. Cyrus Parsa was Petitioner's laboratory director as well as its clinical consultant. See Tr. at 376 - 377. CMS concluded that due to the number of complaints, patients involved, and severity of the deficiencies, the condition for clinical consultant was not met, as evidenced by the incidences of the lack of response by the clinical consultant or laboratory director to client's concerns. CMS Ex. 7, at 61 - 62. In spite of the multitude of complaints regarding the facility's deficient service, Dr. Parsa assumed that the complaints were unfounded and that the laboratory had done nothing improper. However, the client clinics complained that the laboratory was not sending results of patient testing (CMS Ex. 7, at 9), that the potassium and glucose levels were unreliable (clinic #1), that the laboratory was not responsive to communications regarding questionable billing practices (clinic # 2), that neither the clinical consultant or the laboratory director ever contacted affected clinics regarding unreliable glucose or potassium values (clinic #s 3, 4, 5, 6, and 7). CMS Ex. 7, at 61 - 62. In spite of this litany of complaints, Dr. Parsa apparently never contacted any of the clinics dissatisfied with the quality of the services they were receiving. See Tr. at 1169. It is obvious that Dr. Parsa merely glossed over the difficulties encountered by the laboratory, and assumed an aloof posture with respect to his responsibility to create meaningful channels of communication with facility clients.

It is my finding that Petitioner did not overcome CMS's prima facie showing that Petitioner did not comply with the condition for clinical consultant.

2. Technical Supervisor (Tag D6108).

42 C.F.R. § 493.1447 requires that a laboratory performing high complexity testing must have a technical supervisor who meets the qualifications set forth at 42 C.F.R. § 493.1449 and provides technical supervision in accordance with 42 C.F.R. § 493.1451. Petitioner's technical supervisor was Rachel Aghasi.

Based on the number and severity of the deficiencies cited, CMS determined that the technical supervisor failed to provide technical supervision in accordance with 42 C.F.R. § 493.1451.

Inasmuch as it is the responsibility of the technical supervisor to establish a quality control program appropriate for the testing performed and establishing the parameters for acceptable levels of analytic performance and ensuring that these levels are maintained throughout the entire testing process from the initial receipt of the specimen, through sample analysis, to reporting of the test results (42 C.F.R. § 493.1451(b)(4)), I find that the deficiencies regarding this requirement were so pervasive that it constitutes a failure to comply with the condition for technical supervisor. I also conclude that Petitioner presented no evidence to refute CMS's prima facie case regarding this deficiency.

E. Petitioner failed to comply with the condition for quality assurance (Tag 7000).

42 C.F.R. § 493.1701 requires that a laboratory's quality assurance program must evaluate the effectiveness of its policies and procedures; identify and correct problems; assure the accurate, reliable and prompt reporting of test results; and assure the adequacy and competency of its staff. As necessary, the laboratory must revise policies and procedures based upon the results of those evaluations. Additionally, all quality assurance activities must be documented.

Based on the number and severity of the deficiencies cited, CMS determined that the condition of quality assurance was not met. Petitioner failed to have an ongoing mechanism to evaluate the systems required for patient test management; failed to have a mechanism to ensure correct patient identification and labeling; failed to monitor information solicited on the requisition; failed to monitor the accuracy of the report information; failed to monitor the retrieval of testing documentation; failed to monitor unacceptable and unsatisfactory proficiency testing results; failed to have an ongoing mechanism to evaluate for effectiveness its policies for ensuring employee competency; and failed to maintain records of quality assurance activities for at least two years. The failure of the laboratory to perform these quality assurance procedures resulted in the failure to ensure accurate and reliable moderate and high complexity testing. CMS Ex. 7, at 63.

In an attempt to refute CMS's prima facie showing that it failed to comply with the condition for quality assurance, Petitioner advanced three arguments, each of which I reject:

1. Petitioner's computer crash of 1999 does not excuse the deficiencies cited or provide evidence of Petitioner's compliance.

Petitioner asserts that a computer crash that occurred in 1999 wreaked havoc on its records. Thus, the laboratory was in the process of addressing the problem when it was inspected. The difficulty that resulted from this crash, says Petitioner, is that the computer indicated that results were entered before the specimen was received. P. Br. at 19 - 20.

Petitioner presented no persuasive evidence in support of this argument. In fact, I find Petitioner's theory regarding the effects of the "computer crash" to be speculative. At the outset, it should be noted that the alleged computer crash occurred in July 1999, and the inspection took place in late April 2000. Tr. at 9. It was Ms. Aghasi's testimony that when the computer system broke down it took two days to bring it back into operation. However, Petitioner had to hire help to manually restore lost data for the period prior to the breakdown. Ms. Aghasi added that after the system was again operational, new data was being entered by laboratory personnel, while the old data was being input by hired help. She stated that the process of data restoration took a couple of months. When asked if the process of entering the old data onto disks was concluded in September, Ms. Aghasi responded: "September, October, end of October, or November." Tr. at 682 - 685.

Even if I were to accept Ms. Aghasi's understanding of what "a couple" means, the process of correcting the data in Petitioner's system was well concluded by the time of the inspection that began in late April 2000. Consequently, Petitioner's claim that "the clerks were not as careful as they should have been, and Medimex had not yet had a chance to review their work before the surprise inspection" (P. Br. at 19) lacks merit. Petitioner had at least six months to review the work of the hired computer technicians after the conclusion of their data recovery work. Moreover, Ms. Aghasi testified that she personally supervised the data recovery operation on a daily basis and made on the spot corrections when she detected errors in the entries being made by the hired personnel. Having testified to such close scrutiny of this data retrieval work, she was at a loss to explain why the system showed the entry of results before a specimen was received in the laboratory. Tr. at 686 - 687. Pertinent to this is Tommy Barr's testimony to the effect that in September and October 1999, test results were entered as having been completed before the testing machine yielded the results. For example, test results for patient #211 came out the Petitioner's machine on October 18, 1999, at 1:34 P.M., but were entered on that same day at 7:21 A.M.; that is, several hours earlier. CMS Ex. 23, at 15, 19; Tr. at 253 - 254. Also in September 1999, Petitioner's records showed testing result entries prior to results being accepted as completed, and a test result accepted as completed prior to the actual drawing of the specimen. CMS Ex. 68, at 1 - 2. According to Ms. Aghasi's testimony, those were current entries made by laboratory personnel, and not related to the alleged computer crash of July 1999. Tr. at 683.

In view of the foregoing, Petitioner's contention that it was not out of compliance with the condition for quality assurance because the July 1999 computer crash caused its system to indicate that results were entered before the specimen was received, is without merit. The erroneous entries discussed above were fresh entries made by laboratory personnel well after the crash and unrelated to the recovery work being performed by hired help to enter "pre-crash" data onto disks. More importantly, these erroneous entries account for only a minor portion of the grand scale quality assurance deficiencies noted above. With respect to many of the other quality assurance deficiencies, Petitioner has offered nothing in its defense.

2. Petitioner's having dropped the Department of Corrections, Parole Board Outpatient Clinic, as a client does not show that it was in compliance with participation requirements at the relevant times.

Petitioner argues that at the time of the inspection it was working diligently to resolve the problems related to low glucose and high potassium levels. It claims to have traced the problem to the Department of Corrections, who it asserts mishandled the specimens. Thus, says Petitioner, when it stopped serving this clinic, all of the alleged problems stopped. P. Br. at 20.

Contrary to Petitioner's assertion, there is ample evidence that the laboratory was reporting high potassium levels for a host of other clinics in addition to the Department of Corrections. The record also reflects that Petitioner failed to immediately notify eight different clinics of critical values which represented an imminent life-threatening condition. Some of the reported results included values that were incompatible with life. CMS Ex. 7, at 32 - 41; see CMS Ex. 53, at 77 - 84.

Although Petitioner alleges that the Department of Corrections clinic was the only facility which had any issue with the laboratory, and that all of the problems stopped when that client was dropped, the evidence of record shows instead that a number of other clinics took issue with Petitioner's quality of service. Additionally, whereas the evidence reflects a multitude of complaints aired by the Department of Corrections clinic, there is no evidence that Petitioner ever communicated with that clinic regarding the issues here under consideration. There is documented evidence, however, that the Parole Board Outpatient Clinic was incessantly complaining and frustrated because of Petitioner's gross incompetence. CMS Ex. 40, at 9 - 12. The record also shows multiple instances of where the Department of Corrections disputed overcharges and charges where results were not provided. CMS Ex. 40, at 35 - 46. Petitioner presented no evidence to refute these assertions.

3. Petitioner's argument that its calculation of LDL results comports with the industry standard does not show its compliance with participation requirements.

Petitioner contends that the deficiency reported under D3069 is inappropriate because calculating LDL in the industry is standard. Nonetheless, states Petitioner, it agreed to indicate on future test results that the values were calculated.

Petitioner fails to understand that CMS does not question whatever industry practice exists. What CMS takes issue with is the fact that calculated LDL results were reported to clients without informing the authorized persons that the results were calculated. Moreover, it does not suffice to merely discontinue the practice of reporting calculated results where they may be confused with actual testing results. It is important for a laboratory to actually test for LDL where a calculated result would yield an invalid value. More importantly, Petitioner did not document the actual corrective actions taken with respect to patients affected by the deficient practice, how it identified other patients having the same potential to be affected by the same deficient practice, and what corrective actions had been taken, what measures had been put into place or what systemic changes were made to ensure that the deficient practice did not recur, and how the corrective actions were being monitored.

In a broader sense, Petitioner has alleged that it has taken corrective action with respect to other deficiencies in the same manner as with respect to the one under discussion here. However, in the vast majority of those situations, with very few exceptions, it failed to document the corrective actions as outlined above. CMS Ex. 5. Consequently, Petitioner's argument that CMS improperly disregarded the evidence of compliance proffered by Petitioner is without merit.

I find that CMS has established a prima facie case that Petitioner did not comply with the condition for quality assurance regarding moderate and high complexity testing. Petitioner has offered no evidence to contest CMS's showing.

F. Petitioner's Ancillary Arguments

1. Petitioner's argument that CMPs, if any, should be reduced to reflect that Medimex has already been punished enough by losing its license, is unavailing.

The purpose of the CLIA is not to punish laboratories, but to strengthen federal oversight of laboratories in order to ensure that test results are accurate and reliable. 57 Fed. Reg. 7218 (1992). Thus, the regulatory enforcement scheme is designed to protect all individuals served by laboratories against substandard testing of specimens, and to safeguard the general public against health and safety hazards that might result from laboratory activities. 42 C.F.R. § 493.1804(a)(1), (2). In light of the principles here enunciated, I must consider whether the evidence supports a finding of noncompliance and whether Petitioner violated one or more conditions of participation. Once a basis for the imposition of principal sanctions is established, the inexorable results will ensue, with the purpose of protecting the public from improper and incompetent laboratory activities. Hopefully, the penalties imposed will motivate the laboratory to become compliant.

2. CMS is not barred by the Doctrine of Laches from alleging "immediate jeopardy" to patient health and safety.

Petitioner argues that the LFS commenced its investigation in April 2000, and took eight months to complete its initial report, in which it determined noncompliance with a finding of immediate jeopardy. This delay, contends Petitioner, undercuts the government's position that patients were at risk. P. Br. at 22 - 23.

CMS explained that this matter began with a complaint survey of Petitioner in late April 2000. The survey took several months because of the complexity of the types of deficiencies and the nature of the complaints. CMS further noted that many documents were requested from Petitioner, and that some were provided piecemeal. This, in CMS's view, was the main reason for the delay, which resulted in the survey report not being completed until early January 2001. Tr. at 9 - 10.

I find that any delay in completing the survey does not detract from merits and crucial issue before me, which is whether Petitioner was compliant with CLIA requirements. In fact, Petitioner has not shown that it has been prejudiced by the alleged delay. Petitioner's inability to return to compliance in a timely fashion is what brought the facility's activities to an end, not the delay it attributes to the government. Furthermore, as mentioned earlier, CMS's finding of immediate jeopardy is not an appealable remedy.

3. Petitioner's argument that CMS did not provide Medimex with a reasonable opportunity to remedy the alleged immediate jeopardy is unavailing.

Petitioner contends that CMS did not give it a reasonable opportunity to remove the jeopardy before it was ordered to close down. According to Petitioner, CMS only allowed it 10 days to respond to the Statement of Deficiencies and then, without explanation, rejected the plan of correction and refused to reinspect the facility. Furthermore, argues Petitioner, the government forced it to close and rejected its supplemental plan of correction, claiming that it lacked evidence that the plan was actually being implemented. P. Br. at 4 - 7.

On January 16, 2001, the California Department of Health Services served notice on Petitioner that, as a result of the survey completed on January 8, 2001, it had determined that several condition-level deficiencies existed which posed immediate jeopardy. The notice gave the facility 10 calendar days to submit credible evidence that the immediate jeopardy had been removed, and that action had been taken to correct all of the condition- level deficiencies. Petitioner was required to submit the following:

    1. Documentation showing what corrective action had been taken for patients affected by the deficient practice.

    2. How the laboratory had identified other patients having the potential to be affected by the same deficient practice and what corrective action had been taken.

    3. What measures had been put into place or what systemic changes had been made to ensure that the deficient practice did not recur.

    4. How the corrective actions were being monitored to ensure that the deficient practice did not recur.

CMS Ex. 1.

The 10 days given to Petitioner to remove the immediate jeopardy were not less than the amount of time set forth in the regulations. In fact, 42 C.F.R § 493.1812(a) states that "CMS requires the laboratory to take immediate action to remove the jeopardy."

In its February 5, 2001 response to the letter from the California Department of Health Services, Petitioner failed to provide acceptable evidence of correction as noted in the California Department of Health Service's letter dated February 28, 2001. That letter detailed the reasons why the response was not acceptable evidence of correction. Mainly, Petitioner's response did not evidence compliance in keeping with the four requirements listed above. CMS Ex. 2.

CMS adopted the California Department of Health Services' recommendation, and so notified Petitioner by letter dated March 21, 2001. Petitioner was given 10 days to show cause why the recommended sanctions should not be imposed. CMS Ex. 3. On March 28, 2001, CMS received a request from Petitioner seeking an extension to show cause why the sanctions should not be imposed. In granting the requested extension, CMS stated the following in a letter dated March 28, 2001:

We will need a written statement agreeing to cease testing effective March 31, 2001 before we can grant the extension. Please also be advised that when we evaluate all information received by the extension date of April 7, 2001, if we cannot make the determination that the laboratory has removed jeopardy and is in Condition level compliance, sanctions will be imposed with effective dates as proposed in our letter of March 21, 2001.

CMS Ex. 4.

Petitioner submitted an allegation of compliance, partially by facsimile during the week of March 26, 2001, and partially by Federal Express, on April 9, 2001. On May 10, CMS provided Petitioner with a detailed explanation as to why there was insufficient evidence provided to show that it had removed jeopardy and come into condition-level compliance with all CLIA requirements. Some of Petitioner's allegations were found to be outright unacceptable, while others were not considered credible, and some lacked evidence of correction. That letter also allowed Petitioner additional time, until May 15, 2001, to demonstrate that it had come into compliance with CLIA requirements. CMS Ex. 5. Petitioner's May 15, 2001 response revealed compliance with only one total deficiency (D4132) out of numerous deficiencies included in the Statement of Deficiencies (although two parts of another citation were found either acceptable or marginally acceptable). CMS Ex. 6.

From the foregoing history, it is evident that Petitioner's argument that it was given only 10 days to remove jeopardy is without merit. It appears that Petitioner really had four months to remove jeopardy and return to compliance with CLIA requirements. Additionally, CMS explained to Petitioner why its allegations of compliance were unacceptable.

I also find misplaced Petitioner's reliance on 42 C.F.R. § 493.1810(e)(2) to argue that the Government must revisit a laboratory where it is not possible to substantiate compliance based on submitted documentation. P. Br. at 9. The regulations provide a noncompliant laboratory with the opportunity to correct its deficiencies so that CMS may remove alternative sanctions that have been imposed against the laboratory. 42 C.F.R. § 493.1810(e). A laboratory may make an allegation of compliance once it believes it has corrected the deficiencies. CMS will verify whether the deficiencies have been corrected if it finds the allegations of compliance to be credible and will lift alternative sanctions effective as of the correction date. However, the regulations do not afford a laboratory the same opportunity to have to have principal, as opposed to alternative, sanctions lifted based on self-correction of deficiencies and an allegation of compliance by the laboratory. Thus, Petitioner is entitled to a resurvey only as to alternative sanctions, and not as to principal sanctions. Petitioner is also not entitled to a survey to determine whether the remedy should be rescinded. A laboratory may qualify for resurvey to determine whether alternative remedies should be rescinded where it has submitted a credible allegation of compliance. Here, CMS determined that the allegation was not credible. Ban Laboratories, DAB CR576 (1999).

G. CMS is authorized to impose principal sanctions against Petitioner.

The presence of one or more condition-level deficiencies in Petitioner's operations authorizes CMS to impose principal sanctions against Petitioner. 42 C.F.R. § 493.1806. These remedies include the suspension of Petitioner's CLIA certificate and cancellation of Petitioner's approval to receive Medicare payments. CMS is also authorized to impose a CMP at the rate of $ 10,000.00 per day for three days commencing March 31, 2001, a CMP which I find to be reasonable given the serious deficiencies I have found. The suspension of Petitioner's CLIA certificate becomes a revocation with my decision that Petitioner incurred condition-level deficiencies.

VII. Conclusion

At all relevant times, Petitioner had condition-level deficiencies that posed immediate jeopardy. Accordingly, CMS had a basis for revocation of its CLIA certificate, with simultaneous cancellation of its approval to receive Medicare payments for laboratory services. CMS is also authorized to impose a $10,000.00 per day CMP for a period of three days.

JUDGE
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Jose A. Anglada

Administrative Law Judge

FOOTNOTES
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1. The Health Care Financing Administration (HCFA) has been renamed the Centers for Medicare & Medicaid Services (CMS). Reference to either shall apply to both names.

2. The January 8, 2001 Statement of Deficiencies, CMS Form 2567 which is in the record of this case as CMS Ex. 7 (Statement of Deficiencies), refers to the regulatory citations through prefix tags identified by the letter D.

3. Mr. Barr is employed by LFS as a clinical laboratory examiner, investigator. Tr. 17. Petitioner asserts that Mr. Barr's testimony is inadmissable hearsay because Mr. Barr testified that he did not review the documents that Petitioner submitted in response to the Statement of Deficiencies. P. Br. at 2; See Tr. at 76 - 77, 389. I disagree. Mr. Barr testified that he went to Petitioner's facility with the examiners conducting the survey and acted as a consultant on technical issues, such as computer systems issues they might be unfamiliar with. Mr. Barr also testified that the foundation for his testimony is his review of the documents gathered by the surveyors, his review of the Statement of Deficiencies and his knowledge and experience looking at those documents and interpreting them. Tr. at 20, 389. Petitioner's argument that because Mr. Barr did not personally collect the information or review the documents that Petitioner submitted in response to the Statement of Deficiencies does not detract from the credibility of Mr. Barr's testimony before me.

4. However, CMS did determine that D3017-1.h was acceptable and D-3017-1.I was marginally acceptable. CMS Ex. 6.

5. Petitioner's written policy defines a potassium value above 6.5 as a critical value and an imminent life-threatening condition. See CMS Br. at 51.

6. Tag D4132 was also found to be out of compliance and cited as a deficiency, but it was later found to be acceptable. See CMS Ex. 6.

CASE | DECISION | JUDGE | FOOTNOTES