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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: Sol Teitelbaum, M.D.,

Petitioner,

DATE: October 4, 2002

             - v -

 

Centers for Medicare & Medicaid Services

 

Docket No. A-02-57
Civil Remedies CR863
Decision No. 1849
DECISION
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FINAL DECISION ON REVIEW OF
ADMINISTRATIVE LAW JUDGE DECISION

Dr. Sol Teitelbaum (Petitioner), a former director of Physicians Independent Laboratory (PIL), appealed the January 28, 2002 decision by Administrative Law Judge (ALJ) Keith W. Sickendick sustaining the determination of the Centers for Medicare & Medicaid Services (CMS) to revoke PIL's certificate under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), and concluding that, by operation of law, Petitioner was prohibited from owning, operating or directing another laboratory for two years. (1) Sol Teitelbaum, M.D., DAB CR863 (2002) (ALJ Decision). The ALJ Decision states that "[s]ummary judgment is appropriate as there are no genuine issues of material fact in dispute and the controlling issues may be resolved as a matter of law." ALJ Decision at 1. On appeal, Petitioner argued that the ALJ abused his discretion by entering summary judgment without permitting full briefing on the legal issues raised by the hearing request and without providing a hearing on what Petitioner asserted were material facts in dispute.

The Board's standard of review on a disputed issue of law is whether the ALJ decision is erroneous. US Bio-Chem Medical Laboratories, Inc., DAB No. 1731 (2000); Board Guidelines - Appellate Review of Decisions of Administrative Law Judges in Cases Under CLIA and Related Statutes (www.hhs.gov/dab/guidelines/clia.html). The bases for modifying, reversing or remanding an ALJ decision include the following: a finding of material fact necessary to the outcome of the decision is not supported by substantial evidence; a legal conclusion necessary to the outcome of the decision is erroneous; the decision is contrary to law or applicable regulations; a prejudicial error of procedure (including an abuse of discretion under the law or applicable regulations) was committed. Board Guidelines.

For the reasons explained below, we sustain the ALJ Decision.

Applicable law and regulations

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories. Pub. L. No. 100-578, amending § 353 of the Public Health Service Act, codified at 42 U.S.C. § 263a et seq. CLIA certification of a laboratory is dependent upon whether the laboratory meets the conditions of certification set out in the statute and regulations. 42 U.S.C. § 263a(f)(1)(E); 42 C.F.R. § 493.1 et seq. Each condition represents a major division of laboratory services to be offered by the laboratory or required environmental protections at the laboratory. The regulations also set forth standards, the specific components of the conditions of laboratory certification that a laboratory must meet as part of achieving compliance with applicable conditions. (2)

CLIA grants the Secretary of this Department broad enforcement authority. The implementing regulations provide that CMS may suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and may also impose alternative sanctions such as a directed plan of correction or monitoring by the state. 42 C.F.R. § 493.1806.

In addition to sanctions directed against laboratories, CLIA provides the following with respect to the owners and operators of non-compliant laboratories:

(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.

42 U.S.C. § 263a(i). The implementing regulations do not include any express provision for this two-year ban. However, the regulations provide that CMS may revoke a laboratory's CLIA certificate if it finds that the owner or operator has -

[w]ithin the preceding two-year period, owned or operated a laboratory that had its CLIA certificate revoked. (This provision applies only to the owner or operator, not to all of the laboratory's employees.)

42 C.F.R. § 493.1840(a)(8).

The regulations define the term "Operator" as--

the individual or group of individuals who oversee all facets of the operation of a laboratory and who bear primary responsibility for the safety and reliability of the results of all specimen testing performed in that laboratory. The term includes-

(1) A director of the laboratory if he or she meets the stated criteria . . . .

42 C.F.R. 493.2.

The regulations require as a condition of participation for laboratories performing moderate complexity testing that the laboratory have a director who "provides overall management and direction in accordance with § 403.1407 of this subpart."

Section 403.1407 provides in pertinent part that 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.

Factual and Procedural Background

The following information is drawn from the ALJ Decision and the record before him and is not intended to be a substitute for the ALJ's findings.

Petitioner was the laboratory director of PIL from July 21, 1999 to July 20, 2000. The California Department of Health Services, Laboratory Field Services (LFS), surveyed PIL beginning on August 17, 1999, and issued a Statement of Deficiencies. (3) The Statement of Deficiencies found PIL out of compliance with nine CLIA conditions in addition to finding numerous standard-level deficiencies.

PIL submitted a plan of correction which was found unacceptable by LFS. (4) CMS notified PIL on October 17, 2000 that it was taking action to revoke PIL's CLIA certificate as a result of the deficiencies identified during the survey which remained uncorrected. In addition, CMS notified Petitioner by letter dated October 18, 2000 that--

if [PIL's] CLIA certificate is revoked, the prohibition at 42 U.S.C. 263a(i)(3) and 42 C.F.R. 493.1840(a)(8) prohibiting the owner or operator (including director - see 42 C.F.R. 493.2) from owning or operating (or directing) a laboratory for at least two years from the date of the revocation would apply to you as well as to any other director we also determine to be responsible for the non-compliance with CLIA requirements which led to the revocation.

CMS's letter indicated that CMS had given Petitioner an opportunity to provide evidence "as to why we should not hold you responsible for the current sanction against" PIL, but that no such evidence had been provided. The letter continued:

The December 13, 1999 survey found deficiencies that occurred prior to as well as during your tenure as laboratory director. You had ample opportunity to correct all the cited deficiencies in order to bring the laboratory into full compliance with CLIA requirements while you were director of the laboratory.

Both PIL and Petitioner filed hearing requests. On December 29, 2000, an order was issued by the ALJ then assigned to this case, Carolyn Cozad Hughes, directing the parties to file within 60 days at least one of various types of documents. One of these documents was a report of the parties' readiness to present evidence for adjudication of the case, including an identification of legal issues and factual disputes and a statement of "whether there is a need for testimonial evidence, or whether some or all of the factual disputes may be resolved through a review of only the documentary evidence." Order at 2.

Petitioner filed a report of case readiness dated February 18, 2001, and CMS filed a report of case readiness dated February 27, 2001. (5)

Both parties stated in their readiness reports that an in-person hearing was necessary.

On April 5, 2001, ALJ Hughes issued a Notice of Jurisdictional Issues and Briefing Schedule. The notice stated that, "after a review of the reports, I have determined that jurisdictional issues are present in this case that require briefing and a ruling prior to any further procedures in this case." Notice at 1. The notice directed the parties to submit briefs and also provided an opportunity for replies.

Petitioner and CMS filed briefs on jurisdiction dated May 5, 2001 and May 11, 2001, respectively. Their replies were dated May 29, 2001 and May 31, 2001, respectively.

On October 11, 2001, the Chief, Civil Remedies Division, advised the parties that the case had been reassigned to ALJ Sickendick. ALJ Sickendick issued the January 30, 2002 decision appealed here without further proceedings in the case.

The ALJ made four numbered findings of fact and conclusions of law (FFCLs):

1. Petitioner has the right to appeal the initial determination of CMS to sanction PIL by limiting, suspending, or revoking the laboratory's CLIA certification.

2. Petitioner is properly subject to the two-year ban on owning, operating or directing a laboratory based upon his status as a "laboratory director" for PIL, whether or not he was also an employee.

3. Petitioner is properly banned from owning, operating or directing a laboratory for two years in this case.

4. The two-year ban on owning, operating or directing a laboratory is effective from the date of the revocation of PIL's certificate.

ALJ Decision at 6, 7, 9 and 10. Petitioner did not identify any numbered FFCLs to which he excepted; however, based on his arguments, we conclude that Petitioner excepted to FFCLs 2 and 3. (6)

ANALYSIS
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Below, we address Petitioner's arguments regarding the legal issues, and then we turn to Petitioner's argument that the ALJ erred in concluding that the two-year ban applied since there were no material facts in dispute.

1. The ALJ did not err in finding that the two-year ban applies to a laboratory director who is also an employee and who is not the licensee under CLIA.

Section 263a(i) of 42 U.S.C. prohibits a person "who has owned or operated a laboratory which has had its certificate revoked" from owning or operating another laboratory for the two-year period after the revocation. An "operator" is defined in 42 C.F.R. § 493.2 as "the individual or group of individuals who oversee all facets of the operation of a laboratory and who bears primary responsibility for the safety and reliability of the results of all specimen testing performed in that laboratory . . . ." The definition expressly includes a laboratory director "if he or she meets the stated criteria . . . ."

The ALJ rejected Petitioner's argument that, because he was an employee of PIL while he held the position of laboratory director, he was not responsible for "all facets" of PIL's operations and therefore did not meet the definition of "operator." The ALJ reasoned that the fact that the regulation provides that a "group of individuals" may qualify as an operator indicates "that the responsibilities for safety and reliability may be shared and not necessarily 'all' vested in a single laboratory director." ALJ Decision at 8. (7)

The ALJ also rejected Petitioner's argument that "CMS has no authority over him because he is not the 'licensee' under CLIA . . . ." since Petitioner "knew the law to which he was subject when he accepted the position of laboratory director . . . ." ALJ Decision at 9, n.8.

On appeal, Petitioner repeated arguments he had made before the ALJ that the definition of "operator" as including a laboratory director is unconstitutional, and that it violated his due process and equal protection rights to be held liable for the actions of his employer. (8) Petitioner also reiterated his argument that CMS had no authority to sanction him since he was not a licensee under CLIA. This argument in effect also challenges the constitutionality of the statute and regulations pursuant to which the two-year ban was imposed.

The Board previously addressed these arguments in another appeal brought by Petitioner to challenge the imposition on him of the two-year ban after the CLIA certificate of another laboratory of which he was the director was revoked. Sentinel Medical Laboratories, Inc., DAB No. 1762 (2001), aff'd Teitelbaum v. Health Care Financing Admin., No. 01-70236 (9th Cir. Mar. 15, 2002), reh'g denied, No. 01-70236 (9th Cir. May 22, 2002). In that decision, which upheld the imposition of the two-year ban, the Board stated that, like the ALJ, it "has no authority to reverse the action against Petitioner on the basis that the CLIA statute or regulations are unconstitutional." Sentinel at 9. Moreover, the Board in that decision rejected Petitioner's claims that the statute and regulations were unconstitutional as applied to him.

We see no reason to reach a different conclusion here. Petitioner specifically stated that his legal arguments in the instant case were the same arguments he had made in Sentinel.

While Petitioner contended that the Ninth Circuit decision upholding Sentinel was wrongly decided, he relied solely on a Fifth Circuit decision (Jackson Marine Corp. v. Blue Fox, 845 F.2d 1307 (5th Cir. 1988)) that the Board found in Sentinel "provides no authority to conclude that Congress may not impose remedies against persons other than the owner of a laboratory." Sentinel at 14, n.7. Petitioner thus provided no cogent reason why the Board or the Ninth Circuit erred in concluding that a laboratory director who is an employee of the laboratory may be an "operator" who is subject to the two-year ban. (9) We find no merit in Petitioner's argument that the ALJ should not have disposed of this issue without further briefing since Petitioner provided no indication that he would have raised any issues not previously addressed in Sentinel or by the Ninth Circuit.

Accordingly, we sustain FFCL 2.

2. The ALJ did not err in finding that the two-year ban applied to Petitioner since there were no material facts in dispute.

The ALJ noted that Petitioner's hearing request alleged "that CMS's failure to accept the PIL Plan of Correction was an abuse of discretion; that the Statement of Deficiencies was procedurally and substantively defective; that the noted deficiencies did not occur during his tenure as laboratory director . . . ." ALJ Decision at 2. However, the ALJ stated that Petitioner no longer disputed "[t]he procedure related to and substance of CMS's Statement of Deficiencies for PIL." Id. Similarly, the ALJ stated that Petitioner had "waived any alleged errors in the CMS findings of deficiencies either arising or existing during his tenure as laboratory director" and that there were no material facts in dispute. Id. at 7, 9. As support for his conclusion that Petitioner was no longer raising any issues of material fact, the ALJ quoted the following statement from Petitioner's reply to CMS's brief on jurisdictional issues:

Petitioner is not seeking a hearing to contest whether or not [CMS] has the authority to impose sanctions upon an owner of a laboratory who has allegedly violated [CMS] regulations or if there is any truth to the condition level deficiencies which it alleges were present at the laboratory.

Id. at 2, quoting Petitioner's reply brief on jurisdiction (including original emphasis).

On appeal, Petitioner asserted that the issues of material fact identified in his hearing request were still in dispute, that the ALJ's Notice of Jurisdictional Issues and Briefing Schedule did not make any reference to summary judgment, and that it was an abuse of discretion for the ALJ to "render summary judgment" without a hearing. Request for Review at 2. Petitioner denied that he had "ceded any right to hearing" or "acknowledged that any route other than hearing existed . . . ." Reply Br. at 5.

The regulations governing hearings provide that "[i]f an affected party wishes to waive its right to appear and present evidence at the hearing, it must file a written waiver with the ALJ." 42 C.F.R. § 498.66(a)(1) (made applicable to CLIA cases by 42 C.F.R. § 493.1844(a)(2)). This Board has previously held that-

in reviewing a case where an ALJ failed to either obtain a written waiver or hold an oral hearing, we may nonetheless uphold the decision if the affected party either had conceded all of the material facts or proffered testimonial evidence only on facts which, even if proved, clearly would not make any substantive difference in the result.

Glenburn Home, DAB No. 1806, at 17 (2002). Petitioner did not expressly waive his right to appear and present evidence at a hearing. However, as discussed below, we conclude that the ALJ reasonably determined that Petitioner had conceded all of the material facts in the case. While we are not persuaded that the statement from Petitioner's reply brief on jurisdictional issues quoted in the ALJ Decision is dispositive, (10) other language in Petitioner's briefing on jurisdictional issues clearly constitutes such a concession.

At the outset of his initial brief on jurisdiction, Petitioner stated: "The Petitioner has asked for a hearing for the purpose of determining whether or not HCFA has the statutory authority to impose sanctions on persons to whom it has not issued a CLIA Certificate. It is the Petitioner's position that HCFA is prohibited from imposing any sanction upon an employee regardless of his title according to 42 C.F.R. 493.1840(a)(8)." At 2. This clearly states that Petitioner intended to raise at the hearing only a single legal issue. There is no indication in this statement that Petitioner intended to raise any factual issues.

In addition, on page 5 of his initial brief and pages 8-9 of his reply brief, Petitioner urged that the ALJ delay proceedings in this case until the Ninth Circuit rendered its decision in Petitioner's appeal of the Board's decision in Sentinel. Petitioner stated that if he lost before the Ninth Circuit "there would be little reason" for him to pursue this action. This statement would not make sense if Petitioner intended to pursue any factual argument made in his hearing request and readiness report. Moreover, Petitioner specifically stated that the issues before the Ninth Circuit were "the same that Petitioner would argue in this matter," and identified issues which were solely legal issues.

Furthermore, under the heading "CONCLUSION" on page 10 of both his initial brief and his reply brief on jurisdiction, Petitioner stated:

The Petitioner once again restates the reason why he asked for this hearing.

a. The Petitioner has asked for this hearing to determine whether or not HCFA has any disciplinary jurisdiction over a person to whom a CLIA Certificate has not been issued.

b. The Petitioner has also asked for a hearing to make a determination as to the proper interpretation of the word "Operator" as noted in 42 C.F.R. § 493.2.

* * * * *

The only matter that needs to be considered at this time is to whether or not the ALJ in this matter desires to make these determinations or if she prefers to have the Ninth Circuit Court of Appeals to make this determination.

The Petitioner, in this case, would be satisfied with either decision.

The only reasonable reading of this language is that the legal issues identified in a. and b. are the only matters Petitioner was raising before the ALJ. Petitioner's use of the phrase "the reason why he asked for this hearing" indicates that there are no other reasons that might be stated elsewhere. Moreover, the fact that this language appears in a section headed "Conclusion" suggests that the language is intended to be a definitive summary of all that precedes it. Thus, to the extent that any other statements in the brief raise a question about whether Petitioner was still claiming that there were material disputes of fact, the Conclusion clarifies that he made no such claim. Finally, the last two paragraphs in the Conclusion indicate Petitioner's belief that a decision by the Ninth Circuit in Sentinel would be dispositive regardless of which party prevailed. As discussed above, this would not be the case if Petitioner were raising factual issues unique to the instant case in addition to the common legal issues.

The only reference to factual issues in either of Petitioner's briefs on jurisdiction appears in a section of the reply brief where Petitioner responded to the assertion in CMS's brief that "Petitioner has not contested that he was a Laboratory Director at Physicians Independent Laboratory between July 21,1999 and July 21, 2000." Petitioner stated:

Whereas Petitioner does not deny that he was the laboratory director between July 21, 1999 and July 20, 2000, (Petitioner was no longer employed at the laboratory effective July 20, 2000) the deficiencies in question here occurred prior to the time he took over the directorship from Dr. Sison. (See Exhibit R Declaration of Edd E. Epstein)

Reply Br. at 5 (emphasis in original). Next, Petitioner asserted that, in another case, CMS had rescinded a sanction imposed on a doctor where the events on which the sanction was based did not occur during that doctor's tenure as laboratory director. Petitioner then stated:

If HCFA had been consistent, it would be trying to impose sanctions upon Dr. Sison instead of the Petitioner Dr. Teitelbaum. One might wonder why HCFA has chosen to reverse itself.

However, even if the Petitioner had been present during the period of condition level deficiencies - he was still only [an] employee, HCFA did not issue a license to him and HCFA still lacks jurisdiction to impose sanctions on persons to whom it has not issued a CLIA Certificate.

Reply Br. at 6. Petitioner's assertion that he was not the laboratory director at the time that the deficiencies arose was contrary to CMS's position that some deficiencies occurred during Petitioner's tenure as laboratory director. However, nothing in this section indicates that Petitioner was requesting a hearing on this disputed fact. Instead, after claiming that CMS acted inconsistently in another case, Petitioner proceeded to restate legal arguments made elsewhere in this brief and in his initial brief on jurisdiction. Moreover, as noted above, there is no mention in the Conclusion section of any disputes of material fact. Thus, we conclude that, in context, this section cannot reasonably be read as requesting a hearing on any factual issue. Even if this section preserved Petitioner's argument that no deficiencies arose during his tenure as laboratory director, however, it contains no indication that Petitioner disputed that there were condition level deficiencies which arose prior to his tenure and remained uncorrected during his tenure. This undisputed fact would be a sufficient basis for imposing the two-year ban.

Petitioner also argued that the ALJ should not have proceeded to decision on the record in this case since the last communication from the ALJ indicated that there would be further procedures in the case following briefing on the jurisdictional issues. Once Petitioner had conceded that he was not pursuing the factual issues he had raised in his hearing request and readiness report, however, it was within the ALJ's discretion to proceed to decision without notifying the parties of his intent to do so (even if it might have been better practice to give such notice).

Accordingly, we sustain FFCL 3.

Conclusion

For the reasons discussed above, we sustain the ALJ Decision. In doing so, we affirm and adopt all the FFCLs made by the ALJ.

JUDGE
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Judith A. Ballard

M. Terry Johnson

Marc R. Hillson
Presiding Board Member

FOOTNOTES
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1. CMS was previously named the Health Care Financing Administration (HCFA). See 66 Fed. Reg. 35,437 (July 5, 2001). We use "CMS" in this decision unless we are quoting documents that refer to HCFA.

2. CMS may deem a laboratory to meet all applicable CLIA program requirements if the laboratory obtains a certificate of accreditation, as required in 42 C.F.R. Part 493, Subpart D, and meets the other requirements listed in 42 C.F.R. § 493.551(b).

3. CMS alleged that the survey was conducted between August 17, 1999 and December 13, 1999. CMS's Report of Case Readiness, dated 2/27/01, at 3-4. Petitioner alleged that the survey ended in August 1999. Petitioner's Report of Case Readiness, dated 2/18/01, at 4; Petitioner's Ex. R, at 2 (Declaration of Edd E. Epstein).

4. According to CMS, PIL submitted two plans of correction signed by Petitioner as PIL's director. CMS's Report of Case Readiness, dated 2/27/01, at 4. Petitioner referred only to a July 13, 2000 POC which he argued should have been accepted as a credible allegation of compliance. Petitioner's Report of Case Readiness, dated 2/18/01, at 3-4.

5. PIL's hearing request was dismissed on January 23, 2001 after PIL withdrew the request. On April 6, 2001, CMS advised Petitioner that it had revoked PIL's CLIA certificate effective January 23, 2001. CMS further advised Petitioner that as laboratory director for PIL, he was subject to a two-year ban on owning, operating or directing any laboratory. CMS stated, however, that the effective date of this prohibition would be delayed since Petitioner's hearing request was pending before the ALJ.

6. Before Petitioner filed the request for review, CMS filed a petition with the ALJ to reopen and revise the decision with respect to FFCL 4. Petitioner opposed the petition. On May 20, 2002, the ALJ issued an order denying reopening and revision.

7. The ALJ also suggested that the phrase "if he or she meets the stated criteria" in the definition of "operator" might refer to the qualifications and responsibilities for a laboratory director established by 42 C.F.R. §§ 493.1405 and 493.1407, rather than to the description of an operator in the preceding sentence of the definition. In the Sentinel decision referred to in the text below, however, the Board adopted the latter, more straightforward reading.

8. Although the ALJ did not address these arguments in his decision, this was harmless error since the ALJ was bound to resolve them according to the Sentinel decision discussed below.

9. Petitioner also asserted that CMS sought to impose the two-year ban on him in retaliation for his actions in Sentinel. Petitioner did not point to anything that supported this assertion or that indicated that CMS's determination that he was an operator to whom the two-year ban applied was not based on the applicable law, however.

10. This statement merely confirms that Petitioner had never argued that CMS did not have the authority to impose sanctions upon a laboratory owner (which is in any event a legal issue), or disputed that PIL had condition level deficiencies.

CASE | DECISION | ANALYSIS | JUDGE | FOOTNOTES