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CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES

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


SUBJECT: Evette Elsenety, M.D., et al.

Petitioner,

DATE: November 8, 2001

             - v -

 

Health Care Financing Administration

 

Civil Remedies No. CR779
Docket No. A-2001-103
Decision No. 1796
DECISION
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FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

Oakland Medical Group, P.C. (Oakland) a Warren, Michigan, physician office laboratory, appealed a June 12, 2001 decision by Administrative Law Judge (ALJ) Steven T. Kessel granting summary disposition for the Health Care Financing Administration (HCFA).(1) Evette Elsenety, M.D., et. al, DAB CR779 (2001) (ALJ Decision). The ALJ Decision involved 16 Petitioners,(2) each a clinical laboratory certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). Based on "undisputed material facts," the ALJ found that Oakland owned each Petitioner and that Oakland's CLIA certificate had been revoked within the past two years. Therefore, the ALJ concluded, the law required HCFA to revoke each Petitioner's CLIA certificate. ALJ Decision at 4.

Based on the analysis below, we sustain the ALJ Decision, affirming and adopting each of the ALJ's underlying FFCLs.

Background

I. The Oakland Decision

HCFA's action against the 16 Petitioners stemmed from an earlier CLIA action involving Oakland. HCFA revoked Oakland's CLIA certificate in 1999. An ALJ sustained HCFA's action in Oakland Medical Group, P.C., DAB CR688 (2000). Essentially, the ALJ found that Oakland failed to meet condition level requirements for proficiency testing for testing events in 1998, failed to meet the condition level requirement for laboratory director and violated the standard for technical supervisor. Consequently, the ALJ determined that HCFA properly revoked Oakland's CLIA certification for one year and canceled Oakland's approval to receive Medicare payments for its services, effective October 1, 1999. This Board affirmed the ALJ Decision in Oakland Medical Group, P.C., DAB No. 1755 (2000).

II. Facts and Law

The pertinent section of the CLIA statute, 42 U.S.C. § 263a(i), provides:

(3) Ineligibility to own or operate laboratories after revocation

No person who has owned or operated a laboratory which has had its certificate revoked may, within 2 years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this section. . . .

On November 7, 2000, HCFA advised each Petitioner that Oakland's CLIA certificate had been revoked and that, since Oakland owned or operated each Petitioner, HCFA was also required to revoke each Petitioner's CLIA certificate. Each Petitioner requested a hearing before an ALJ and their appeals were consolidated into a single proceeding.

III. The ALJ Decision

The ALJ Decision was based on the following two findings of fact and conclusions of law (FFCLs):

1. Summary dispositions are appropriate in these cases.

a. Each Petitioner is owned by Oakland Medical Group.

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

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

ALJ Decision at 2-4.

Oakland, on behalf of Petitioners, took exception to both FFCLs.

ANALYSIS
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Our standard of review of an ALJ decision on a disputed issue of law is whether the ALJ decision is erroneous. Our standard of review on a disputed issue of fact is whether the ALJ decision as to that fact is supported by substantial evidence on the record as a whole. US Bio-Chem Medical Laboratories, Inc., DAB No. 1731 (2000).

1. Summary dispositions are appropriate in these cases.

a. Each Petitioner is owned by Oakland Medical Group.

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

Oakland conceded that it had provided HCFA with a letter demonstrating Oakland's ownership of the 16 Petitioners. However, Oakland asserted that upon receipt of this letter, HCFA broke off settlement discussions and revoked Petitioners' certifications. Oakland contended that this letter had been a product of settlement discussions and, pursuant to Rule 408 of the Federal Rules of Evidence, was not admissible into evidence or at least not worthy of substantial weight. Oakland argued that, at a minimum, HCFA should have been required to rehabilitate this letter with additional evidence of Petitioners' ownership. Oakland maintained that since this "clearly inadmissible evidence" was HCFA's only proof of ownership, the ALJ Decision should be reversed. Oakland Br. at 5-6; Oakland Reply Br. at 3-4.

As the ALJ noted, summary disposition is appropriate where there are no disputed issues of material fact. A party opposing summary disposition must allege facts which, if true, would refute the facts relied upon by the moving party. ALJ Decision at 2-3. The facts of this case are not in dispute. Oakland has offered no facts which would refute those relied upon by HCFA in moving for summary disposition.

a. Each Petitioner is owned by Oakland.

Oakland asserted that the ALJ erred when he relied on HCFA Exhibit 3 as a basis for this finding. Oakland complained that the letter was incorrectly dated October 24, 1998 instead of October 24, 2000. Further, Oakland argued the letter was a product of settlement negotiations and thus should be excluded from evidence pursuant to Rule 408 of the Federal Rules of Evidence. Oakland's arguments have no merit.

The ALJ considered the arguments relative to the misdating and the settlement aspect of the letter as follows:

That it may have been misdated does not detract from the significance of the contents of the letter. Nor is the letter made less probative by the fact that it was sent to HCFA as part of settlement discussions. Petitioners have not averred that they stated untruths to HCFA in order to settle these cases and there is no reason for me to assume that they would do so.

ALJ Decision at 3.

The ALJ did not err in his determination that the letter was misdated as it is clear from the context in which the letter was written (described below) that the letter was produced after the revocation of Oakland's CLIA certificate in 1999. As HCFA noted, Oakland's facsimile produced a "10/24/00" date stamp on the letter, thus resolving any confusion about the date. HCFA Br. at 3, n.1; see also HCFA Ex. 3 at 1.

In addition, we reject Oakland's assertion that the ALJ erred in failing to exclude Oakland's letter pursuant to Rule 408 of the Federal Rules of Evidence. Petitioners did not raise this issue before the ALJ.(3) Petitioners did not challenge the admission of this letter at all; their arguments focused on the issues of authenticity and credibility. As noted above, the ALJ considered these arguments and rejected them. Since there was no issue of admissibility under the Federal Rules of Evidence before the ALJ, there is, of course, no error in his failure to address the question.(4)

Moreover, since Petitioners did not contend before the ALJ that the letter should be excluded from the record as the product of settlement negotiations, the ALJ did not require them to address this issue as part of an analysis of the applicability of the privilege. Thus, other than Oakland's assertion here, there is no support in the record for such a conclusion. On October 17, 2000, HCFA wrote to Oakland explaining the consequences flowing from revocation of Oakland's CLIA certificate. HCFA noted the potential for criminal liability if Oakland operated a laboratory within two years of the date of revocation. HCFA continued:

. . . if you own or operate any other laboratory, we rely on you to provide the name and address of that laboratory so that we may initiate enforcement action against the laboratory pursuant to the . . . statutory and regulatory requirement.

HCFA Ex. 2 at 1-2.

Faced with potential criminal liability, Oakland provided the requested information to HCFA within seven days. HCFA Ex. 3. There is no indication on the face of the letter that Oakland considered the information to be proffered as part of any settlement negotiations.

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

Although it generally questioned the propriety of HCFA's action underlying the revocation, Oakland did not deny that its certification had been revoked within the past two years.

Accordingly, the ALJ did not err in finding that this matter was appropriate for summary disposition.

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

Oakland argued that ALJ erred by expanding the plain meaning of the word "person" in 42 U.S.C. § 263a(i)(3) to include corporations and companies. Oakland stated that section 263a(i)(1)(A)-(G) set out actions which, if performed by an employee, owner, or operator, jeopardize CLIA certification. However, Oakland asserted, these actions are attributable only to an individual, not to a corporation or an organization. Thus, Oakland reasoned, since an "individual" was meant to be a person in one part of the statute, that term could not be read differently later in that same statutory section. Additionally, Oakland relied on the statute's enforcement regulation, 42 C.F.R. § 493.1840(a)(8). Oakland asserted that the regulation limited its application and recognized the injustice of extending punishment for a CLIA violation to the entire organization, rather than just the individual location which violated the CLIA statute. Specifically, Oakland noted that the regulation's application was limited to "only the owner or operator, not all of the laboratory's employees." Oakland Br. at 6-7 (emphasis in original).

Oakland also asserted that the ALJ's expansive reading of the term "person" and the resultant conclusion that section 263a(i)(3) required revocation of Petitioners' CLIA certificates would frustrate the intent of 42 U.S.C. § 1395nn(b)(2), requiring group practice organization.

The statute at 42 U.S.C. § 1395nn, more commonly known as the Stark Amendment, was enacted in 1992 in order to combat kickbacks stemming from referrals for clinical laboratory work to laboratories often owned by the referring physician. Oakland Br. at 8-9. Oakland asserted that -

[t]he purpose of the provision set forth at 42 U.S.C. § 263a(i) . . . was in keeping with the intent of CLIA to ensure accurate and reliable clinical laboratory testing. That subsection . . . as with CLIA generally, was implemented prior to the Stark legislation during a period when multiple location physician owned practices were virtually nonexistent. Congress implemented that provision to avoid a situation in which a physician who was an owner or operator of a clinical laboratory . . . [whose CLIA certificate had been revoked] would be allowed to reapply for a new CLIA certificate and begin clinical laboratory testing all over again in the same location.

Oakland Br. at 10.

Oakland indicated that it was not attempting to reapply for CLIA certification. Rather, Oakland argued, HCFA was punishing laboratories not involved in the circumstances leading to revocation of Oakland's certificate, but who were merely part of the Oakland group practice. Thus, according to Oakland, HCFA was clearly practicing guilt by association. Oakland Br. at 10-11; Oakland Reply Br. at 5-7.

Oakland's position is without merit. The ALJ stated that, if the word "person" meant only an individual, there would be some merit to Petitioners' position. However, as he noted, CLIA is found in the United States Code. The general rules of construction applied to the Code are that, unless otherwise indicated, the word "person" includes a company or corporation. ALJ Decision at 5, citing 1 U.S.C.A. § 1 (West 2001). There is no indication in section 263a(i)(3) that a different construction of the term was intended.

If "person" referred only to an individual, a group with a revoked certificate, such as Oakland here, could simply restart its operation in another laboratory. That interpretation would undercut the purpose of section 263a(i)(3). Congress intended that --

an owner or operator whose conduct has precipitated a revocation not be allowed simply to begin operating a new or existing laboratory . . . , when such person bore ultimate responsibility for the conduct giving rise to the revocation.

H.R. Rep. No. 899, 100th Cong. 2d Sess. 35 (1988).

Where the group, rather than an individual, bore collective responsibility for the conduct, the provision must apply to the group in order to meet this intent.

Consequently, we agree with the ALJ that Petitioners' interpretation was invalid.

Conclusion

Based on the preceding analysis, we affirm and adopt each of the FFCLs underlying the ALJ Decision and sustain that decision in its entirety.

JUDGE
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Judith A. Ballard

Donald F. Garrett

M. Terry Johnson
Presiding Board Member

FOOTNOTES
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1. Although HCFA has been renamed the Centers for Medicare & Medicaid Services, we continue to use "HCFA" below since that acronym was used to refer to the agency at the time the actions at issue were taken. See 66 Fed. Reg. 35437 (July 5, 2001).

2. Petitioner parties before the ALJ were: Evette Elsenety, M.D., [Civil Remedies Docket No.] C-01-218; Harold Margolis, D.O., C-01-219; Mary C. Ferris, D.O., C-01-220; Gregory O. Claque, D.O., C-01-221; Gary B. Lungnas, D.O., C-01-222; Ronald I. Rothenberg, D.O.; C-01-223; Thomas J. Chwierut, D.O., C-01-224; Kenneth S. Meyers, D.O., C-01-225; Jeffrey H. Soffa, D.O., C-01-226; Dudley Roberts, III, M.D., C-01-227; James M. Kohlenberg, M.D., C-01-228; Stanley H. Remer, D.O., C-01-229; Harold Margolis, D.O., C-01-230; Phillip Newman, D.O., C-01-231; Daniel Jebens, D.O., C-01-232; and Gary L. Berg, D.O., C-01-233.

3. Oakland did not explain why Petitioners did not raise this issue before the ALJ. Generally, this "Board will not consider issues not raised in the request for review, nor issues which could have been presented to the ALJ, but were not." Guidelines - Appellate Review of Decisions of Administrative Law Judges Affecting Provider's Participation in the Medicare and Medicaid Programs at 4, § 4(c).

4. Additionally, the program regulations governing conduct of a hearing before an ALJ provide that "[e]vidence may be received at the hearing even though inadmissible under the rules of evidence applicable to court procedure. The ALJ rules on the admissibility of evidence." 42 C.F.R. §498.61.

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES