SUBJECT:

Immuno Biogene, Inc.,

Charles T. Black, M.D.,,

Petitioner,

Centers for Medicare & Medicaid

A. IBI was not in compliance with the condition of PT set forth in 42 C.F.R. § 493.801.

1. IBI was not enrolled in PT for all tests it was performing as required by 42 C.F.R. § 493.801(a)(3).

2. IBI failed to comply with the standard requirement to test PT samples in the same manner as it tested patient specimens as required by 42 C.F.R. § 493.801(b). IBI's laboratory director did not attest to the routine integration of the samples into the patient workload, as required by 42 C.F.R. § 493.801(b)(1).

3. IBI failed to comply with the regulatory prohibition on sending PT samples or portions of samples to another laboratory for an analysis IBI was certified to perform, as set forth in 42 C.F.R. § 493.801(b)(4).

a. Prohibited inter-laboratory communications about PT

b. Intentional referral of PT and accepting PT from another laboratory without notifying CMS

. . . I did tell the owner of Cell Marx that you could utilize the equipment at another location if certain conditions were met.

. . .

I specifically told him that they would have to have a written agreement between the laboratories. That written agreement would include, for instance, expenses, operating hours, who's going to do the maintenance, that type of groundwork. Also, that testing - patient testing would be done separately, meaning you can't mix Cell Marx and Immuno Biogene patients together and then run the whole run at one time. It has to be separate testing, separate bookkeeping, separate record retentions. And also you would have to have a separate procedure manual.

Tr. at 540 - 41.

With respect to whether he was told IBI and Cell Marx would have to have a written agreement to share equipment, Dr. Kermani testified:

I didn't hear that. I didn't register that only there was an - - there only was have your own book reports or your own procedures, your own QCs. That was the only thing he said.

Tr. 691.

If IBI and Cell Marx had any written agreement or letter to explain or specify the terms of its planned arrangement, the writing was not offered as an exhibit. Dr. Kermani's testimony is ambiguous about whether there was any type of writing setting forth the arrangements between IBI and Cell Marx. Tr. 692 - 693. ⁽⁷⁾ I find that IBI and Cell Marx had no written agreement regarding the arrangement between Dr. Kermani and the owner of Cell Marx. Tr. 689.

I find, nonetheless, that whether or not the agreement between IBI and Cell Marx was in writing is irrelevant. If it is a violation of CLIA prohibitions against PT sharing for one laboratory to carry its specimens outside its exact CLIA location to test at another CLIA location, it would be impossible for two laboratories to share equipment for PT without violating CLIA, whether the equipment-sharing agreement was oral or written.

It is clear that Congress, in enacting CLIA, was concerned about laboratories that were sending their PT samples to other laboratories for analysis or retesting to ensure a satisfactory result. Congress noted, in its consideration of the 1988 CLIA improvements that:

A significant deficiency in the current proficiency testing regime is its inability to assure that proficiency testing samples are treated like patient specimens.

H.R. Rep. No. 899, 100^th Cong., 2d Sess. 8, reprinted in 1988 U.S.C.C.A.N. at 3837. This would suggest that, if IBI and Cell Marx were using each other's equipment for patient testing, the laboratories would have to do PT samples using each other's equipment. Yet, 42 C.F.R. § 493.801(b)(4) unequivocally states:

The laboratory must not send PT samples or portions of samples to another laboratory for any analysis which it is certified to perform in its own laboratory. (Emphasis added.)

The wording of this regulation is unambiguous. It does not specify that transferral of a PT sample is prohibited only for repeat or second analysis or checking analysis. The regulation states clearly that, if a laboratory is certified to do a particular test, it must do the PT in its own laboratory. The laboratory cannot take any specimens for any test for which it is certified to perform, outside the confines of the laboratory for PT.

A recent DAB decision discusses this issue. In Lackawanna Medical Group Laboratory, DAB No. 1870 (2003), the Board found that a laboratory that sent its patient testing to another laboratory and also sent the integrated PT samples to the other laboratory was not in compliance with the PT condition even though the laboratory had submitted to the testing agency the laboratory's own testing of the PT samples and not the reference laboratory's results. The Board agreed with the ALJ's conclusion that the motives of the laboratory that sent PT samples to another laboratory for analysis are irrelevant and not a defense to a violation of 42 C.F.R. § 493.801(b)(4). Moreover, the Board adopted the conclusion that CMS is not bound or estopped by prior agency action when that action was based on an erroneous interpretation and application of the statute and regulations. Lackawanna, at 5. Thus, it is irrelevant what Mr. Yamasaki may have told Dr. Kermani. IBI could not take its PT samples to Cell Marx and test the samples on Cell Marx equipment.

While I might not think that the arrangement between IBI and Cell Marx was the exact type of PT sharing Congress was trying to prevent in its enactment of CLIA, I must follow the clear statutory and regulatory language and the Board's interpretation of the language as expressed in the Lackawanna case. Petitioner IBI intentionally analyzed some of its PT samples at the Cell Marx laboratory. It, therefore, was not in compliance with 42 C.F.R. § 493.801(b)(4). ⁽⁸⁾ Moreover, the potential for patient harm is patent if a laboratory uses a machine in another laboratory for patient and PT testing. If that machine becomes unavailable to the laboratory, there is no way for the laboratory to know whether it could provide satisfactory testing on the machine it does possess.

The violation of 42 C.F.R. § 493.801(b)(4) triggers a mandatory one-year revocation of Petitioner IBI's CLIA certificate which requires cessation of entitlement to Medicare and Medicaid payments.

Of course, if Dr. Kermani did portions of Cell Marx PT at the IBI laboratory on IBI's machines, IBI was receiving PT specimens from another laboratory. IBI was required to report that fact to CMS and it did not, in violation of 42 C.F.R. § 493.801(b)(4).

4. CMS failed to prove that Petitioner IBI did not comply with the standard of successful PT as required by 42 C.F.R. § 493.803.

Section 493.803(a) of 42 C.F.R. requires each laboratory performing tests of moderate and/or high complexity to successfully participate in a PT program for each specialty, subspecialty, analyte, or test for which the laboratory is certified under CLIA. Each subspecialty standard set forth in the regulations defines unsuccessful PT performance.

For routine chemistry, section 493.841(a) of 42 C.F.R. provides that failure to attain a score of at least 80% for each analyte in each testing event is an "unsatisfactory" performance. Failure to achieve satisfactory performance for the same analyte in two consecutive testing events or two out of three consecutive testing events is "unsuccessful" performance. 42 C.F.R. § 493.841(f).

For the first PT event for 1999, Petitioner IBI received scores of 60% on albumin, 60% on glucose, 40% on pregnancy serum, and 60% on triglycerides. CMS Ex. 7, at 29. For the second PT event of 1999, IBI received scores of 60% on albumin, 20% on urea nitrogen, and 60% on amylase. CMS Ex. 7, at 33. For the third PT event of 1999, IBI received a score of 40% on amylase. CMS Ex. 7, at 36; IBI Ex. 14, at 8.

In the first PT event of 2000, IBI had scores of only 60% for bilirubin and iron tests, and 0% for cholesterol. CMS Ex. 7, at 49; IBI Ex. 14, at 8. In the second PT event of 2000, IBI had only a 60% score for amylase and chloride, 40% for creatinine, and 60% for glucose. CMS Ex. 7, at 55; IBI Ex. 14, at 9. IBI's chemistry scores for the third PT event of 2000 were acceptable. CMS Ex. 7, at 61; IBI Ex. 14, at 13.

Petitioner IBI's PT scores reflect (1) "unsuccessful" performance in chemistry testing in albumin due to its less than 80% scores in the first and second events in 1999, ie., two consecutive testing events; (2) "unsuccessful" performance in chemistry testing for amylase due to its less than 80% scores in the second and third testing events of 1999 and second event in 2000; i.e., two out of three consecutive testing events.

Petitioner IBI had difficulty with its PT. Nonetheless, IBI had been in communication with LFS during the period of time when it was not achieving appropriate results on PT. On October 26, 2000, LFS sent a letter to IBI that stated:

The . . . Laboratory Field Services, Proficiency testing (PT) unit has determined that your documentation for the corrective action taken and for the technical assistance, education, and/or training provided for the unsuccessful PT is acceptable. No further action is required.

IBI Ex. 14, at 12.

CMS provided no evidence that IBI had failed to implement the corrective action that LFS had previously found to be acceptable. IBI's results for the third PT event in 2000 were satisfactory. IBI Ex. 14, at 13; CMS Ex. 7, at 61. Therefore, I find that CMS did not prove that IBI failed to comply with this regulatory requirement.

With respect to the condition of PT as a whole, I find that, because of IBI's failure to comply with more than one of the standard requirements under the condition for PT, IBI was not in compliance with this condition. 42 C.F.R. § 493.801. That is, IBI performed patient testing for unexpected antibody detection without being enrolled in PT for that test; IBI intentionally referred PT samples or portions of samples to another laboratory for analysis and did not report to CMS the receipt of PT specimens from another laboratory; and IBI's laboratory director did not attest to the routine integration of PT samples into the patient workload.

B. Petitioner IBI failed to comply with the condition of Patient Test Management set forth in 42 C.F.R. § 493.1101.

Each laboratory performing moderate 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. 42 C.F.R. § 493.1101.

1. Petitioner IBI failed to comply with the standard for procedures for specimen submission and handling.

Section 493.1103(a) of 42 C.F.R. requires the laboratory to have available and to follow written policies and procedures with respect to specimen identification. The policies and procedures must assure optimum integrity of patient specimens from the time the specimens are collected until testing has been completed and the results reported.

Section 493.1103(b) of 42 C.F.R. requires the laboratory, if it accepts referral specimens, to have available for clients written instructions to assure appropriate patient preparation, specimen collection, specimen labeling, specimen preservation, conditions for specimen transportation, and specimen processing.

I find that IBI inappropriately tested a number of old or stale specimens. According to IBI's own policies, any potassium test result that was under 3.0 or over 6 mEq/L (IBI Ex. 21, at 14), would constitute a "critical" or "panic" value, meaning a testing result that would indicate the patient may be in danger and the patient's physician should be notified. Tr. 194 - 195; Tr. 652. A review of IBI patient testing for potassium levels for the time period between May 22, 2000 and June 18, 2001, shows that IBI recorded very high potassium levels - above 7 - on thirty-eight occasions. CMS Ex. 69, at 11 - 26. It is unlikely that a living being would have a potassium value that high. The most likely explanation for the high potassium values is that the specimens were old at the time of testing. Tr. 175 - 176. For a number of the specimens with high potassium results, Dr. Kermani certainly realized during testing that the specimens were old. He noted as much on his chemistry testing sheets, and on some laboratory reports sent to the ordering physician. See, e.g., CMS Ex. 22, at 7, 16; CMS Ex. 26, at 5 - 6; CMS Ex. 27, at 5; CMS Ex. 34, at 1; CMS Ex. 35, at 12; CMS Ex. 37, at 3, 10; CMS Ex. 47, at 8; CMS Ex. 48, at 10.

At the hearing, Dr. Kermani explained the receipt of old specimens as follows. He testified that one of Cell Marx's owners had heard about a laboratory, called PIL, that was having difficulties with testing and wondered if the laboratory could refer some specimens to IBI for testing. Dr. Kermani agreed. Tr. 762 - 763. Dr. Kermani testified that, after processing the specimens, he realized the specimens were "problematic" and would not provide valid tests. Tr. 650 - 651. He said he notified the original ordering physicians and PIL. He said he took a few more specimens from PIL but when he started receiving more problematic specimens, he stopped accepting specimens from PIL. Tr. 650 - 651; Tr. 763. ⁽⁹⁾ I note that most of the specimens yielding high potassium (K) levels in the record were from PIL. See, e.g., CMS Exs. 21- 22, 24 - 26, 31, 33 - 35, 37 - 39. However, not all of the specimens with suspiciously high potassium levels from the same time period were from PIL. See, e.g., CMS Exs. 29 - 30, 40, 42.

IBI submitted a letter that it allegedly sent that states the following:

Dear referring physician:

Please be inform [sic] that unexpected increase in serum potassium and or decrease in blood glucose levels may due [sic] improper blood collection, storage, handling including aged specimen prior submission to our laboratory. Recently we have observed multiple specimens received from your office exhibited unusual potassium and or glucose levels (as described above). For a quality service please direct your staff to follow proper guideline concerning specimen collection, preparation, handling storage and delivery. In order to continue our quality service we are asking your immediate attention and cooperation in this serious matter. If you have any question or information please do not hesitate to contact us.

IBI Ex. 16, at 44.

The letter quoted above is not addressed to anyone in particular, is undated and does not indicate where it was mailed. Therefore, I do not find it to be reliable evidence that Petitioner IBI notified any referring physician about the bad specimens, whether the specimens came from PIL or elsewhere. Whether or not IBI appropriately notified any physician, there is no evidence that IBI rejected the questionable specimens and ceased testing on them. A laboratory should have written procedures for rejecting specimens and IBI had none and the specimens at issue should have been rejected. Tr. 175; See Tr. 201 - 203.

Moreover, in its reporting of test results to physicians, IBI was inconsistent in notifying the physician that something was wrong with the specimen. On some of the reports that IBI sent to ordering physicians that contained high potassium levels, notes about the condition of the specimen were included. See, e.g., CMS Ex. 21, at 4; CMS Ex. 22, at 7 ("result is based on old specimen"); CMS Ex. 31, at 5 ("Please note that serum was hemolyzed"); CMS Ex. 32, at 1 ("grossly hemolyzed"); CMS Ex. 34, at 1 ("Please note that serum was old"); CMS Ex. 35, at 3 ("result is based on the specimen condition").

Not all of IBI's reports to physicians for other patients whose potassium values were high and whose specimens were likely too old for accurate testing, however, included a caution about the staleness or condition of the specimen. See, e.g., CMS Exs. 30, 33, 42, 44, 54, 56, 63.

IBI has argued that the reason for the high potassium values, i.e., stale specimens, on the testing in 2000 and 2001 was because IBI received stale specimens from PIL. I find that the condition of these specimens cannot be blamed entirely on the specimens' condition on arrival at IBI. In the manual/brochure submitted as IBI Ex. 16, IBI indicates the turn-around times for its processing of tests. For the vast majority of tests, including potassium and glucose, IBI's turn-around time is stated to be from 1 - 2 days. In rare situations, the turn-around time for some testing was up to 7 days or longer. In the exhibits CMS submitted regarding the high potassium values, turn-around times for IBI's testing (after IBI received the specimen) were far longer than stated in IBI's brochure. On most of IBI's testing reports to physicians in the record, the time between specimen collection and reporting exceeded seven days. See, e.g., CMS Exs. 24, 25, 31, 33, 34, 35, 38, 39, 44, 45, 46, 47, 48, 49, 51, 52, 55. I must question whether such late reporting contributed to the less than optimum specimen integrity. Tr. 174, 204 - 207, 212 - 214, 216 - 217. This late reporting supports a finding that IBI's policies were not followed and the failure to follow its policies resulted in less than optimum integrity of the patients' specimens.

IBI's policies and procedures did not assure optimum integrity of patient specimens as required by the standard in 42 C.F.R. § 493.1103.

2. Petitioner IBI failed to meet the standard for test records as set forth in 42 C.F.R. § 493.1107.

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 record system must include: the patient identification number or accession number; the date and time of receipt of the specimen; the condition and disposition of specimens that do not meet the laboratory's criteria for specimen acceptability; and the records and dates of all specimen testing, including the identity of the personnel who performed the tests. 42 C.F.R. §§ 493.1107(a) - (d).

When Examiner Hunter first went to IBI in February 2001, he noticed IBI's general difficulty with retrieving requested records. With respect to immunohematology records, Examiner Hunter was shown to the Cell Marx laboratory where he noticed worksheets. Tr. 382 - 383. He found the data recorded on the worksheet was not like a typical immunohematology worksheet with which he was familiar. He noted there were a variety of cross-outs and data changes and the worksheet did not contain the initials of the person who did the testing. Examiner Hunter made some photocopies of the worksheets. Tr. 387, 390.

When Examiner Hunter returned to IBI in March 2001, he continued to ask IBI for documentation. While IBI attempted to provide documents, it could not provide all the documentation LFS requested. Tr. 389. Examiner Hunter looked at what appeared to be the same worksheet he had reviewed previously, but the worksheet had changes on it. On at least one of the blood typing worksheets, Examiner Hunter noted that the data was different than when he reviewed the worksheet in February. He made copies of these as well. Tr. 391 - 392; CMS Ex. 5, at 1, 4.

Examiner Hunter explained that generally a person doing blood typing goes to great lengths to ensure not using "white-out" and to include an "audit trail" for the original answer. The worksheet Examiner Hunter reviewed included overwrites that had partially obscured the original results. Tr. 392 - 393. Because the manual method of blood typing requires the tester to look at the specimen and record the reaction based on what is seen, it is unlikely that a person can later correct what was seen at the time of testing. There is no way to go back and recreate the testing scenario unless the testing is actually repeated. Tr. 393 - 395. Even IBI's documentation for its PT antibody screens was incomplete and/or hard to follow. The worksheets did not record all the information that was necessary for the testing. Tr. 69 - 70; 87 - 88; CMS Ex. 7, at 50 - 52.

Dr. Kermani testified that he used worksheets and the results were then entered into the computer, after which they would be transferred to a log book. Tr. 638 - 640; Tr. 726 - 728. Compare CMS Ex. 7, at 106 with CMS Ex. 7, at 134. He claimed that the examiners had reviewed the log book sheets rather than his worksheets. See Tr. 638, 640.

When LFS reviewed the IBI worksheets for antibody screening, LFS concluded IBI was using an incorrect screening process; that is, a one-cell process rather than a two-cell process. CMS Ex. 67, at 38; IBI Ex. 18, at 10; Tr. 76. I make no finding about which screening process must be used as the record in this case on this issue is inconclusive. I note, nonetheless, that such records are important for examiners to determine how a laboratory is doing its testing.

At the hearing, Dr. Kermani conceded there were a number of transcription errors from the worksheets to the log book. He blamed it upon one particular employee whom he said he eventually had to fire. Tr. 649, 656 - 657. IBI, however, had no contemporaneous memos regarding the employee or audit trails with respect to the transcription errors.

Other errors with IBI's records included a discrepancy involving two log book sheets, both dated "Feb. 2001," where one log book sheet had more patients listed on it than the other (Compare CMS Ex. 7, at 137 with CMS Ex. 66, at 2) and a logsheet with patient results not listed in a chronological manner. CMS Ex. 66, at 8; Tr. 107, 113 - 114.

I note other failures of IBI's record system. It did not track "the condition and disposition of specimens that did not meet its criteria for specimen acceptability," as required. IBI's records with respect to the PIL specimens it received certainly did not track the condition and disposition of the specimens. See Finding B.1., above. Further, IBI reported to the local public health department that it had tested and found positive HIV results for four individuals. IBI, however, only had testing records for two of the individuals. CMS Ex. 67, at 3 - 8. IBI claims that it sent the other two tests to a reference laboratory.

Nonetheless, IBI should have had copies of the test reports. Also, IBI did not have copies of reagent purchase invoices or other proof of reagent purchases. See Finding C.2, below.

Given IBI's problems with accessing and maintaining records and appropriate documentation, I find that IBI did not comply with the standard for test records.

3. Petitioner IBI failed to meet the standard for test reports as set forth in 42 C.F.R. § 493.1109.

The laboratory report must be sent promptly to the authorized person that initially requested the test. The laboratory must have adequate systems in place to report results in a timely, accurate, reliable and confidential manner. The laboratory must indicate on the test report any information regarding the condition and disposition of specimens that do not meet the laboratory's criteria for acceptability. 42 C.F.R. §§ 493.1109(a) and (c).

As noted above, Petitioner IBI did not have adequate systems in place to report results in a timely manner. Also, Petitioner IBI did not always indicate on the report the condition of specimens that did not meet its criteria for acceptability. Finding B.1, above.

a. Blood Gas Testing

The laboratory must also indicate on the test report the name and address of the laboratory location at which the test was performed. 42 C.F.R. § 493.1109(b).

At some point in time, IBI decided to begin doing blood gas testing. IBI used forms with the letterhead, "IBI Reference Medical Laboratory - Pulmonary & Respiratory Services." See e.g., CMS Ex. 68, at 194. IBI reported blood gas results on a form which had the letterhead "IBI Pulmonary & Respiratory Services." See e.g., CMS Ex. 68, at 90. ⁽¹⁰⁾ IBI's plan was to have a "person" in the field, testing patients at nursing homes and other sites with a portable blood gas testing apparatus. IBI would then bill for the tests. See Tr. 268 - 269, 274, 276, 322.

IBI entered into a contract in January 2000 with Isaac Morin, respiratory therapist, to provide these services to IBI as an independent contractor. ⁽¹¹⁾ One of the terms of the contract provided that:

It is understood neither contractor nor client intends by this agreement that contractor shall be or deemed to be an employee of [IBI].

* * *

While working out in the field in order to perform the work for which the client has sought the services of the contractor, all liabilities including but not limited to safety at work practices, technical competence as well as professional and procedural codes are all the responsibility of the contractor.

CMS Ex. 68, at 1.

Isaac Morin did not have a separate CLIA certificate. Tr. 321 - 322. Mr. Morin did the blood gas PT for IBI. CMS Ex. 68, at 7 - 8.

The reports for these blood gas tests report the laboratory location or address as IBI's. E.g., CMS Ex. 68, at 39, 44, 49, 54, and 59. The tests, however, were not performed at IBI but were performed at a field location such as a nursing home. The tests were performed by "IM" or Isaac Morin. E.g., IBI Ex. 21, at 47, 48, 52, 56, 57, 75, 78, 80; CMS Ex. 68, at 39, 44, 47, 49, 52, 54, 59, 62, 64, 67, 69, 72, 74. ⁽¹²⁾

Whether a laboratory can actually enter into an independent contractor relationship with a non-licensed individual for testing and still comply with CLIA regulations is unclear. But certainly, IBI did not accurately state on the blood gas test reports the location of the laboratory that could explain the results to an inquiring physician. Dr. Kermani disavowed expertise on blood gas testing. Tr. 760.

b. Reporting critical values

42 C.F.R. § 493.1109(f) requires the laboratory to develop and follow written procedures for reporting imminent life-threatening laboratory results or panic values. In addition, the laboratory must immediately alert the individual or entity requesting the test or the individual responsible for using the test results when any test result indicates an imminent life-threatening condition.

CMS argues that the test results showing very high potassium and glucose results, as discussed above in Finding B.1, indicated an imminent life-threatening condition and the laboratory had no documentation showing that the doctor or clinic requesting the test had been notified.

IBI's written policy was that:

When a critical value is obtained on a patient specimen, the ordering physician will be notified in person or by telephone. If the notification is in person, the physician will initial, date, and time the abnormal value. If the notification is by telephone, the technician will note as such, initial, date, and time the abnormal report.

CMS Ex. 69, at 1.

IBI's documentation of reporting of critical values to doctors by facsimile - not by telephone as indicated in IBI's policies - was spotty at best. See CMS Ex. 69, at 97, et seq. IBI did eventually produce a log of reporting panic values. CMS Ex. 69, at 45 - 96, 99, 111 - 120; Tr. 193 - 194. IBI primarily faxed critical results to the ordering physicians. Tr. 715 - 717. No confirmations of the facsimiles were contained in IBI's patient records. Moreover, if IBI determined it was no longer reasonable to attempt telephoning each doctor regarding panic values, IBI should have changed and implemented other policies to assure that all panic values were promptly reported to the ordering physician. ⁽¹³⁾

With respect to the condition of patient test management as a whole, I find that IBI failed to comply with more than one of the standard requirements within this condition including: a lack of adequate procedures for optimum integrity of the patient specimens; a lack of a record system that identified the condition and disposition of specimens not meeting the laboratory's criteria for specimen acceptability; a failure to include on the test report the name and address of the laboratory location where the test was performed or information about the condition and disposition of specimens that did not meet the laboratory's criteria for acceptability; and the lack of adequate, updated procedures for reporting panic values. Therefore, I find Petitioner IBI failed to comply with the condition of patient test management as required by 42 C.F.R. § 493.1101. ⁽¹⁴⁾

C. Petitioner IBI failed to comply with the condition for General Quality Control as set forth in 42 C.F.R. § 493.1201.

1. Petitioner failed to meet the standard for facilities as set forth in 42 C.F.R. § 493.1204.

A laboratory must provide the space and environmental conditions necessary for conducting the services offered. It must be constructed, arranged, and maintained to ensure the space, ventilation, and utilities necessary for conducting all phases of testing.

Additionally, the laboratory must establish, post and observe safety precautions to ensure protection from physical, chemical, biochemical and electrical hazards and biohazardous materials. 42 C.F.R. §§ 493.1204 (a) and (b).

At the hearing, both Examiners Barr and Hunter described IBI as small, crowded and dangerous with electrical cords across the floor, things stacked on counters, and the exit door partially blocked. Tr. 29, 412, 415.

Dr. Kermani testified that IBI's exit door was blocked because he had moved boxes there particularly to accommodate the examiners. Tr. 663. I accept that to be true. Nonetheless, Examiners Barr and Hunter, although their testimony was imprecise, have seen numerous laboratories and would be able to see when one laboratory was substantially more cluttered than others and make a finding that Petitioner IBI's facility did not meet the standard required by CLIA.

Although Examiner Hunter expressed concern that a machine used to test for Hepatitis C was actually in Dr. Kermani's office, CMS provided no evidence that Dr. Kermani had been using the machine for testing. Tr. 412 - 413.

2. Petitioner IBI failed to comply with the standard for test methods, equipment, instrumentation, reagents, materials, and supplies.

A laboratory must have appropriate and sufficient equipment, instruments, reagents, materials, and supplies for the type and volume of testing performed and for the maintenance of quality during the testing. 42 C.F.R. § 493.1205(b).

Additionally, 42 C.F.R. § 493.1205(e)(1) requires that reagents, solutions, culture media, controls, calibration materials and other supplies must be stored and handled in a manner to ensure that they are not used when they have exceeded their expiration date, have deteriorated, or are of substandard quality. Based on Examiner Hunter's observation of IBI's supplies and materials stored at Cell Marx, CMS determined that the laboratory had available for use reagents and culture media that had exceeded their expiration date. CMS has made a prima facie case that Petitioner did not meet the standards of 42 C.F.R. § 493.1205(b) and (e)(1) for test methods. Petitioner presented insufficient evidence to refute this charge.

Examiner Hunter credibly testified that during his visit to IBI in February 2001, he began looking in the refrigerators to find reagents for immunohematology testing and blood banking. He was unable to find the reagents at IBI. He questioned the lab assistants and then Dr. Kermani about finding the reagents. Tr. 382 - 383. He was shown to the Cell Marx laboratory across the hall where he was shown the immunohematology work sheets and told this was the space where immunohematology was done. Tr. 383; CMS Ex. 66, at 5.

Examiner Hunter testified that one of IBI's work sheets he reviewed had reagents listed that were expired. Examiner Hunter asked Dr. Kermani to show him the reagents. Dr. Kermani pulled some blood banking reagents from the refrigerator at Cell Marx to show Examiner Hunter. Examiner Hunter noticed that the reagents he was shown had the same lot numbers and expiration dates that had been noted on the immunohematology work sheet he had previously reviewed and that the reagents had expired. Tr. 384 - 385.

When Examiner Hunter conveyed his observation that these particular reagents had expired, Dr. Kermani opened some new boxes to show him that IBI did have reagents. Dr. Kermani then threw out the expired reagents. Tr. 385.

In his own testimony, Dr. Kermani explained that he had a particularly bad laboratory clerk who had mistakenly carried over the lot numbers of expired reagents onto the worksheets for the most recent testing. Dr. Kermani said, due to this employee's frequent errors, he was forced to fire her. Tr. 656 - 657. Dr. Kermani's testimony, however, does not explain why Examiner Hunter was actually shown expired reagents that had not been disposed of and why IBI had to open a new box of reagents. The only logical conclusion is that IBI was using expired reagents for its immunohematology testing.

The regulations at 42 C.F.R. § 493.1205(e)(1) require that reagents must be stored and handled in a manner to ensure that they are not used when they have exceeded their expiration date. Petitioner IBI failed to meet this standard.

CMS argues that IBI could not have done blood antibody screening prior to November 2000 because IBI could not produce invoice copies to show it had purchased the necessary immunohematology reagents to do the testing. Tr. 132. ⁽¹⁵⁾ The earliest invoice produced by IBI showing the purchase of some reagents for this testing is dated November 13, 2000. CMS Ex. 72, at 1; IBI Ex. 23, at 5. Moreover, according to Examiner Barr, the reagents listed on the November 13, 2000 invoice do not include all the reagents necessary to perform the immunohematology testing that IBI was doing. Tr. 133. Examiner Barr stated that IBI still needed to purchase the "anti A antisera, the anti B, the anti AB antisera. You would need the reverse cells, which would be the A-1 cells, the B cells." Tr. 133 - 134. CMS provided evidence with respect to 91 ABO/Rh tests reported by IBI between June 1, 2000 and January 29, 2001, the first date at which IBI showed the purchase of the anti-A and anti-B reagents, and reverse group A1 and B cells necessary to do this testing as required by 42 C.F.R. § 493.1269(b). Tr. 132 - 135; See CMS Ex. 67, at 1 - 2; CMS Ex. 72, at 5; IBI Ex. 23, at 9.

Dr. Kermani testified that he could not provide CMS with invoice copies of reagent purchases prior to November 2000 because IBI only keeps invoices from standing orders until the invoices are paid. He further testified that he contacted the company from which he purchases reagents and they also kept no invoice copies after the amount was remitted by the purchaser. Tr. 654 - 655.

A breakdown in communication between Dr. Kermani and CMS must have occurred perhaps because CMS had specifically asked for "invoices" of reagent purchases rather than proof of receipt. I assume a communication problem because it is absolutely inconceivable that a business, either IBI or its supplier, could not reconstruct what was purchased by IBI from the supplier and when it was purchased. At a minimum this information must be maintained by IBI for tax purposes as the record of legitimate business expenses. Even if Dr. Kermani had understood CMS's request in a literal way, after the SOD was issued and IBI had the assistance of counsel, Petitioner had to know that CMS was requesting proof that IBI had purchased the reagents necessary to do the tests. Thereafter, IBI made no attempt to provide check copies or other assurances of payment made to the reagent supplier.

Dr. Kermani testified IBI had a reagent log sheet. Tr. 731; IBI Ex. 23, at 3. IBI's own log sheet shows no incoming anti-A, anti-B, or anti-D reagents between March and November of 2000. IBI Ex. 23, at 3. I can only assume that, in fact, IBI did not purchase the applicable reagents prior to November 2000.

Even if IBI had "borrowed" the reagents from Cell Marx or had used reagent samples, it surely could have traced the lot numbers of the reagents from its work sheets to show that the reagents were actually available to IBI to do the testing. Tr. 655. Without any confirmatory evidence, I can only conclude that IBI did not do the immunohematology testing between June 1, 2000 and November 13, 2000, according to the reagent manufacturers' or regulatory instructions.

3. Petitioner failed to comply with the standard of remedial actions as set forth in 42 C.F.R. § 493.1219.

Section 493.1219 of 42 C.F.R. requires the laboratory to establish remedial action policies and procedures to maintain the laboratory's operations in a manner that assures accurate and reliable patient test results and reports. The regulation also requires the laboratory to document all remedial actions taken when, inter alia, patient test values are outside of the laboratory's reportable range of patient test results; results of control and calibration materials fail to meet the laboratory's established criteria; or the laboratory cannot report patient test results within its established time frames.

When Examiner Hunter returned to IBI in March 2001, he asked Dr. Kermani to show him the IBI policies and procedures for its quality control program for hematology and for documenting corrective or remedial action. Examiner Hunter testified that IBI never provided that information. Tr. 397 - 399. ⁽¹⁶⁾

For patient test values on potassium and glucose that were significantly outside accepted values because the specimens were old, IBI's patient test reports do not indicate what IBI did to remediate the problems. Dr. Kermani testified that he wrote to the ordering physicians and to PIL to advise about the problems with the specimens. Tr. 650 - 651; IBI Ex. 16, at 44. See Finding B.1, above. IBI, however, did not appear to have any set procedure for corrective action. Nor did IBI include information on all of the patient result worksheets or logsheets to document whether corrective action was taken. For those many instances documented in the record when IBI did not report results within its established time frames (Finding B.1, above), IBI provided no documentation of corrective action taken or its policies and procedures for taking corrective action.

A preponderance of the evidence shows that IBI did not meet this standard of quality control.

4. Petitioner failed to comply with the standard of quality control for specialties and subspecialties for tests of moderate and/or high complexity as set forth in 42 C.F.R. § 493.1227(c)(1).

The laboratory 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. 42 C.F.R. § 493.1223. For the subset condition of bacteriology, the laboratory, in conducting antimicrobial susceptibility tests, must check each new batch of media and each lot of antimicrobial discs before initial use, using approved reference organisms. In addition, the laboratory's zone sizes or minimum inhibitory concentration for reference organisms must be within established limits before reporting patient results. 42 C.F.R. §§ 493.1227 (c) and (c)(1).

CMS alleges IBI failed to establish antimicrobial susceptibility zone size limits for its reference organisms prior to reporting patient test results. To determine whether a patient has an infection, a laboratory places the patient's specimen on a variety of plates to determine if pathogenic organisms are present. If the laboratory determines the specimen does have a disease-causing organism, the laboratory will use different concentrations of various antibiotics with the specimen to determine which antibiotic might be effective for a physician to use in treating the disease. Tr. 399.

To do quality control for this testing, the laboratory will generally buy pedigreed organisms, which are bacteria that have known responses to biochemicals and antibiotics so the laboratory can determine whether its test system works. The lab will put some of the pedigreed organisms on paper disks with a different concentration of a variety of different antibiotics and will then swab a concentration of bacteria on top. The laboratory will watch how the bacteria grows in the presence of the antibiotic. Generally, if the antibiotic works on the organism, the disk will show a "zone size" where the bacteria will not grow next to the disk. The laboratory measures the size of the zones, and the measured size determines whether the antibiotic is effective. Tr. 399 - 400.

During the survey of IBI in March 2001, Examiner Hunter saw that IBI was testing an organism with an antibiotic not normally used with that organism (in this case erythromycin on Escherichia coli (E. coli)). Examiner Hunter asked Dr. Kermani where he had obtained the appropriate values for the combination and Dr. Kermani responded that IBI used guidelines from the National Committee for Clinical Laboratory Standards (NCCLS). Tr. 401.

Examiner Hunter investigated and determined that NCCLS provides no standards for the combination of erythromycin and E. coli. Tr. 401 - 402; 404 - 405; CMS Ex. 71, at 28. Examiner Hunter then asked Dr. Kermani whether IBI had any documentation that would validate or provide a quality control for the combination. Tr. 402; See CMS Ex. 71, at 1. In Examiner Hunter's opinion, IBI had no criteria to be able to interpret the results of its testing. Tr. 404.

Dr. Kermani testified that he was using erythromycin with E. coli as a form of research because a special control lot of E. coli was showing sensitivity to erythromycin. Dr. Kermani was concerned that there may be a new strain of E. coli, and he stated that he himself established a zone for E. coli based on his control. Tr. 658. As soon as he realized that the E. coli was resistant to erythromycin on the patient specimens he tested, he stopped doing this "research." Tr. 658 - 659.

CMS provided no evidence that patients were directly harmed or that any physicians were misled that erythromycin would actually work with E. coli as a result of IBI doing this extra testing. Nonetheless, this incident does show that Dr. Kermani was actually doing E. coli testing on patient specimens without any meaningful quality control or adequate record-keeping to document his intentions. Moreover, the CLIA regulations do require a laboratory's zone sizes or minimum inhibitory concentration for reference organisms to be within established limits before reporting patient results. IBI failed to meet this requirement. If patient testing is done, quality control must also be done. If a laboratory does a test without also performing the quality controls for antibiotic susceptibilities, the physician ordering the test would have significantly less assurance that a particular antibiotic would work with the patient. Tr. 408 - 410.

As stated above, section 493.1227(c)(1) of 42 C.F.R. requires that a laboratory's zone sizes or minimum inhibitory concentration for reference organisms must be within established limits before reporting patient results. This evidence establishes that IBI failed to meet the quality control requirements for bacteriology.

Because IBI failed to comply with several regulatory standards for quality control, I find that IBI did not meet the condition for general quality control.

D. Petitioner IBI failed to comply with the conditions for Laboratory Director, Moderate Complexity Testing and Laboratory Director, High Complexity Testing, as set forth in 42 C.F.R. § 493.1403 and § 493.1441, respectively.

For moderate complexity testing, the condition requirement at 42 C.F.R. § 493.1403 requires a laboratory to have a director who meets the qualifications of § 493.1405 and who provides overall management and direction of the laboratory in accordance with § 493.1407. ⁽¹⁷⁾ Pursuant to § 493.1407, the laboratory director:

is responsible for the overall operation and administration of the laboratory, including the employment of personnel who are competent to perform test procedures, and record and report test results promptly, accurate (sic), and proficiently and for assuring compliance with the applicable regulations.

42 C.F.R. § 493.1407.

The laboratory director can perform the duties of the technical consultant, clinical consultant, and testing personnel, or can delegate these responsibilities to personnel who meet the qualifications set forth in the regulations. Nonetheless, even if the laboratory director delegates performance of his or her responsibilities, the director remains responsible for ensuring that all duties are properly performed. 42 C.F.R. §§ 493.1407(a) and (b). There are similar regulatory requirements for the director of a laboratory performing high complexity testing. 42 C.F.R. §§ 493.1441, 493.1443, and 493.1445.

Also, pursuant to 42 C.F.R. § 493.1407, even though Dr. Kermani was the owner and technical supervisor at IBI, Dr. Black, as the laboratory's director, was required to ensure inter alia that:

(1) testing systems developed and used for each of the tests performed in the laboratory provide quality laboratory services for all aspects of test performance, which includes the preanalytic, analytic, and postanalytic phases of testing. 42 C.F.R. § 493.1407(e)(1).

(2) IBI's physical plant and environmental conditions were appropriate for the testing performed and that the laboratory was a safe environment for the employees. 42 C.F.R. § 493.1407(e)(2).

(3) IBI was enrolled in an approved PT program for the testing performed (42 C.F.R. § 493.1407(e)(4)), and that the PT samples are tested as required under Subpart H of 42 C.F.R. Section 493. 42 C.F.R. § 493.1407(e)(4)(i).

(4) IBI had defined criteria for quality control, and maintained those criteria prior to IBI reporting test results. 42 C.F.R. § 493.1407(5).

(5) IBI's reports of test results included pertinent information required for interpretation. 42 C.F.R. § 493.1407(e)(8).

Section 493.1407 also requires the laboratory director to "[s]pecify, 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, that identifies which examinations and procedures each individual is authorized to perform . . . and whether . . . director review is required prior to reporting patient test results. 42 C.F.R. § 493.1407(e)(14).

Petitioners contend that Dr. Black delegated almost all of IBI's operations to Dr. Kermani. Dr. Kermani is the owner of IBI and the primary qualified testing person at the laboratory. However, neither Dr. Black nor Dr. Kermani provided a written statement with a particularized delegation as required by the regulations. 42 C.F.R. § 493.1407 (e)(14).

Dr. Black failed to ensure that IBI had procedures in place to afford acceptable patient test management. Obviously, IBI failed to have adequate procedures for specimen identification and optimum integrity of patient specimens. IBI's handling of stale specimens referred from another laboratory was inadequate in a number of respects as noted above in Finding B.1. The specimens were old when IBI received them and older when IBI did the testing. IBI was non-compliant with general quality control as noted in Finding C. Dr. Black was not ensuring that IBI provided quality laboratory services for all aspects of test performance. 42 C.F.R. § 493.1407(e)(1).

Dr. Black contends that no physicians contacted him with respect to late test reports or reports not specifying the condition of a specimen. In particular, no physician contacted Dr. Black about the high potassium and low glucose levels IBI reported in late 2000. See Tr. 788, 806. Moreover, Petitioners argue, with respect to the PIL samples, that CMS did not contact physicians to determine whether any physician was confused about the results.

Petitioners' argument is unpersuasive because CLIA requires the laboratory to document its appropriate treatment and reporting of specimens. There is no evidence in the record that, once Dr. Kermani determined the PIL specimens were old, he stopped testing and immediately notified the ordering physicians the specimens were old. Instead, he completed the testing even though the results were likely to be erroneous. Additionally, not all of the test reports contained notification; i.e., "pertinent information" required for interpretation. Finding B.1. Dr. Black provided insufficient oversight to ensure the accuracy and completeness of test reports. 42 C.F.R. § 493.1407(e)(8).

Similarly, Dr. Black failed to ensure that IBI had sufficient reagents for testing. Since Dr. Black testified he did not know the arrangements IBI had with Cell Marx, or that Cell Marx even existed (Tr. 812), Dr. Black obviously did not know how IBI was storing reagents or where IBI was doing its testing. Dr. Black could not ensure quality laboratory services for the analytic phase of testing if he did not know where the testing was being performed.

Dr. Black failed to ensure, as required, that IBI's physical plant and environmental conditions were appropriate for the testing performed or provided a safe environment for employees. Both Examiners Barr and Hunter described IBI's physical plant as cluttered with electrical cords dangerously placed in aisles and limited egress from the laboratory. Dr. Black was clearly insufficiently involved in the necessities of the laboratory's plant and equipment since he denies any knowledge that IBI was actually using additional space at another laboratory, Cell Marx. Tr. 789, 811 - 812.

Dr. Black's overall lack of knowledge with respect to many of IBI's operations equates with the director's failure to ensure quality services at IBI. As another example, he testified he was unaware who at IBI was performing blood gas tests. Tr. 813 - 814. This suggests Dr. Black was either untruthful in his testimony or his testimony confirms his lack of involvement in IBI's laboratory's services.

With respect to PT, Dr. Black failed to assure that IBI was enrolled in PT for each of specialties and subspecialties for which IBI reported patient testing. See Finding A.1, above. ⁽¹⁸⁾ While he may have reviewed PT results, Dr. Black must have done the review in the most cursory manner or he would have discovered that IBI's PT was being done on equipment IBI did not possess. This is hardly the type of director overview the CLIA regulations contemplate.

Dr. Black testified that he reviewed and updated IBI's manuals and protocols at least annually. Tr. 782, 783 - 784. Obviously he did not sufficiently update the manuals because when IBI had apparently determined that faxing physicians or speaking with nurses about panic values was more efficient than following its own written policy to speak by telephone with the ordering physician, no corresponding change was made to the policy manual. Tr. 716, 807 - 808.

Even if a laboratory director determines that the laboratory's technical supervisor is highly qualified and the laboratory director delegates all day-to-day responsibilities to that supervisor, the laboratory director cannot delegate the ultimate responsibility for the operation of the laboratory.

For the reasons stated above, I find that IBI failed to comply with the CLIA conditions of laboratory director for moderate and high complexity testing.

E. IBI failed to comply with the condition for quality assurance, as set forth in 42 C.F.R. § 493.1701.

The quality assurance condition appears to be a catch-all condition, with requirements similar to those of the other conditions. It appears to focus on a well-run laboratory's need for policies and procedures designed to protect against the failure to comply with the other regulatory conditions. If a laboratory fails to comply with other conditions, obviously its quality assurance policies and procedures are not working. I discuss below the ways in which I find IBI most seriously failed to implement policies and procedures to assure quality testing.

Section 493.1701 of 42 C.F.R. requires that each laboratory performing moderate and high complexity testing must establish and follow written policies and procedures for a comprehensive quality assurance program that is designed to monitor and evaluate the ongoing and overall quality of the total testing process. Moreover, the laboratory must document all quality assurance activities.

IBI failed to have adequate policies and procedures to deal with: (1) stale specimen rejection; (2) high-turnaround times; (3) haphazard documentation of critical value reporting; (4) retrieving and retaining test records; (5) storing, recording and purchasing reagents necessary for testing; and (6) not involving the director in important aspects of the laboratory's activities for which he had ultimate responsibility, such as IBI's use of another laboratory's equipment for both PT and patient testing.

With respect to patient test management assessment, as noted above, in Finding B., IBI failed to monitor, evaluate and revise, as appropriate, the accuracy and reliability of test reporting systems, appropriate storage of records and retrieval of test results as required by 42 C.F.R. § 493.1703(f). This failure has the potential clearly to compromise the reports of testing made to a referring physician. IBI was unable to provide or find records requested by the examiners. This inability led to many of the deficiencies cited by the examiners. Had IBI been able more readily to retrieve documents, a number of the citations might have been unnecessary. Examiner Hunter explained that if a laboratory can show the examiners the requested documents or manuals, which can then be reviewed on the spot, further requests for document copies are unnecessary. Tr. 490 - 492.

When IBI did provide documents to the examiners, some documents had unacceptable and confusing edits with no documentation as to why the edits had been made. Tr. 51, 54 - 57. Further, IBI's documentation was difficult to follow or seemed to be missing essential information. Tr. 804 - 805; CMS Ex. 67, at 48; Compare CMS Ex. 7, at 137 with CMS Ex. 66, at 2 (a discrepancy involving two log book sheets, both dated "Feb. 2001," where one log book sheet had more patients listed on it than the other); Tr. 107. One of the log book sheets had patient results not listed chronologically. CMS Ex. 66, at 8; Tr. 113 - 114. IBI had duplicate, confusing PT attestation documentation. CMS Ex. 7, at 15 - 16, 17 - 18, 19 - 20; Tr. 126 - 128.

This lack of readily available and correct documentation is problematic for the survey process and patient testing. The seriousness of IBI's failures in accurate and accessible record-keeping is sufficient to find IBI did not meet the condition for quality assurance.

F. CMS's finding that IBI's condition-level deficiencies constituted immediate jeopardy to patient health and safety is not subject to review. 42 C.F.R. § 493.1844(c)(6).

In this case, CMS determined that IBI's condition-level deficiencies constituted immediate jeopardy to patient health and safety. Under the regulations, CMS's determination that a laboratory's deficiencies pose immediate jeopardy is not an initial determination and therefore, not subject to appeal. 42 C.F.R. § 493.1844(c)(6). Therefore, CMS's finding of immediate jeopardy is not open to review by me in this proceeding.

VI. Conclusion

Petitioner IBI's failure to comply with more than one condition-level CLIA requirement fully supports CMS's determination to revoke Petitioner IBI's CLIA certificate and cancellation of IBI's ability to receive Medicare payments for laboratory services and imposition of a $30,000 CMP. Further, and as a result, Dr. Kermani and Dr. Black are prohibited from owning, operating or directing a laboratory for at least two years from the date of revocation.

Anne E. Blair

Administrative Law Judge

1. Effective July 5, 2001, the Health Care Financing Administration (HCFA) was renamed the Centers for Medicare & Medicaid Services. 66 Fed. Reg. 35,437 (2001). Reference to either HCFA or CMS means the same entity, CMS.

2. The AAB refers to each mailing of samples to enrolled laboratories as "quarters" or an "event." Although the events are referred to as "quarters," in fact, there are only three events per year. Tr. 66.

3. I accept Dr. Kermani's explanation that one unexpected antibody screen result in June 2000 was merely a "dummy" for installation of his Schuyler computer system. Tr. 620.

4. When IBI did enroll in PT for unexpected antibody detection, IBI failed to attain a satisfactory result. Tr. 101 - 102; CMS Ex. 7, at 65. The purpose of PT testing is to foster accuracy in patient testing by assuring that a laboratory can satisfactorily do a test. IBI did many patient unexpected antibody detection tests before it showed it could do the test accurately.

5. Petitioner contends Examiner Barr conceded IBI was enrolled in PT for unexpected antibody detection for the third event of 2000. Based on Examiner Barr's just preceding testimony, I find Petitioner misinterprets Examiner Barr's testimony. See Tr. 108, 110 - 111. Clearly, IBI was not enrolled in PT testing for unexpected antibody detection in the third quarter of 2000.

6. These machines are hematology analyzers for hemoglobin, hematocrit, and white cell count testing. Tr. 30.

7. Dr. Kermani testified that he had a written agreement, but he could not recall with any certainty what was in this agreement. Tr. 692 - 693. He stated "I don't know what I, at that time, wrote to him or I told him verbally." Tr. 693.

8. The "intention" required to constitute a violation is not a specific intent to violate the regulations. Rather the intent is an intent to do the act that was done. 42 C.F.R. § 493.2; Primary Care Medical Group, DAB CR439 (1996).

9. Dr. Kermani testified he wrote a letter to PIL terminating their relationship, but a copy of the letter was not submitted as an exhibit. Tr. 763.

10. When IBI billed patients for the blood gas testing, the bills sent to patients stated "Immuno Biogene, Inc." at the top. See e.g., CMS Ex. 68, at 161.

11. I note that in its required regulatory report for July 2001, IBI listed Isaac Morin as an employee. CMS Ex. 75.

12. At the hearing, at the end of the first day of testimony, Examiner Barr testified that LFS had determined that IBI had billed Medicare/Medicaid for over 1000 blood gas tests from September of 1999 to September of 2000. Tr. 269 - 273; CMS Ex. 7, at 274. The next day, during Examiner Barr's cross-examination, IBI counsel questioned whether the SOD contained an allegation that IBI had not produced documentation for the over 1000 billings for blood gas testing. IBI counsel pointed to several boxes of documents IBI had brought to the hearing and proffered that these were the documents LFS had said IBI could not produce. Counsel argued that because the SOD was silent about the lack of these documents, IBI had no reason to provide the documents previously. Tr. 329 - 331. Upon my later review of the SOD, as amended by and added to by CMS's letter of April 17, 2002 (CMS Ex. 6), I saw no particular reference to a request by CMS for documents related to billings for blood gas tests. In this decision, therefore, I gave no consideration to Examiner Barr's testimony concerning IBI's failure to provide such documentation.

13. I do not agree with CMS that because some of IBI's test results were entered into the computer after the dates shown in the panic value report log, indicating they were faxed, IBI was faxing panic values prior to actually testing the specimens. CMS Br. at 44; Tr. 215, 217. I find that the incorrect dates on the panic value report log are indicative of IBI's failure in record keeping and reporting.

14. IBI is a small laboratory at which Dr. Kermani did most of the hands-on work with few employees. Some of the deficiencies CMS alleged against IBI relate to IBI's failure to document adequately its operations and testing. The LFS examiners were concerned that IBI documents were not readily provided to them during the IBI surveys in February, March and August 2001. I am aware that Dr. Kermani believes he comprehends what is happening at his laboratory without the more extensive, formal documentation required at larger laboratories. Tr. 730 - 731. I am also aware that Dr. Kermani may not have the equipment necessary to copy quickly the large volumes of documents CMS requested. Tr. 34. Moreover, many of the IBI records suffered from Dr. Kermani's less than legible handwriting. I am also aware, however, that the CLIA requirements apply to small laboratories as well as large. In fact, CLIA was amended in 1988 inter alia to eliminate the prior exemption of small laboratories from CLIA regulation. H.R. Rep. 100 - 899, 1988 U.S.C.C.A.N. 3828. Laboratory examiners cannot determine whether a laboratory is performing in a manner that protects public health unless the laboratory has appropriate and understandable documentation to show it is doing so. Such documentation was lacking at IBI.

15. Section 493.1269(a) of 42 C.F.R. provides that for the condition of immunohematology, The laboratory must perform ABO group and D(Rho) typing, unexpected antibody detection, antibody identification and compatibility testing in accordance with manufacturer's instructions, if provided, and as applicable, with 21 C.F.R. part 606 . . . and 21 C.F.R. part 640 et seq. Section 493.1269 (b) of 42 C.F.R. provides that for the condition of immunohematology, The laboratory must perform ABO group by concurrently testing unknown red cells with anti-A and anti-B grouping reagents. For confirmation of ABO group, the unknown serum must be tested with known A1 and B red cells.

16. Examiner Hunter also testified about some of IBI's hematology test results that appeared on the analyzer as being "out of control." Tr. 396. CMS's evidence on this issue was so vague that I cannot, however, affirmatively find that IBI was running hematology tests with a machine not within acceptable control parameters.

17. CMS made no argument that Dr. Black was not qualified to be a laboratory director or that he had exceeded the maximum number of laboratories for which he could be the laboratory director. CMS Ex. 1.

18. The regulations require the laboratory director to ensure that all PT reports received are reviewed by the appropriate staff to evaluate the laboratory's performance and to identify any problems that require corrective action. 42 C.F.R. § 493.1407(e)(4)(iii). Since Dr. Kermani did the PT, the only person available to review his work would have been Dr. Black. CMS failed to prove that Dr. Black did not review IBI's PT reports or remedial action for unsatisfactory or unsuccessful PT. Tr. 785 - 786, 811. A number of the AAB PT score reports received by IBI appear to have Dr. Black's undated initials on them, although Dr. Black did not verify the initials at the hearing. IBI Ex. 11, at 12, 19, 22, 24, 25; IBI Ex. 12 at 2, 7, 12, 27; IBI Ex. 13, at 1, 13; IBI Ex. 14, at 8, 9, 13. Giving Petitioners the benefit of the doubt, I conclude that Dr. Black did review the PT score reports from AAB. Moreover, IBI's PT corrective action was submitted to LFS and was accepted by LFS as adequate. IBI Ex. 12, at 3 (LFS letter of 10/26/00 for second event of 2000); duplicated at IBI Ex. 14, at 12.