Dr. Kenneth U. Ihenetu, Ph.D., DABCC, FACB, Laboratory Director of EMS Toxicology, LLC, DAB CR5494 (2019)

DECISION

Dr. Kenneth U. Ihenetu, Ph.D., DABCC, FACP (Petitioner) was the laboratory director for EMS Toxicology, LLC (EMS or “the laboratory”) when the Centers for Medicare & Medicaid Services (CMS) proposed to revoke its certificate to operate as a clinical laboratory under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). I conclude there was a basis to revoke EMS’s CLIA certificate due to failings directly attributable to Petitioner, which placed EMS out of compliance with the condition required for CLIA certification and Medicare coverage of its services located at 42 C.F.R. § 493.1441 (laboratories performing high complexity testing; laboratory director).

Because I uphold the revocation of EMS’s CLIA certificate pursuant to 42 C.F.R. § 493.1840(e)(1), EMS’s owners and operators are prohibited from owning, operating, or directing a laboratory subject to CLIA for two years due to the revocation of its CLIA certificate. 42 U.S.C. § 263a(i)(3). Because Petitioner was EMS’s laboratory director during the period examined by the survey in this case, he is subject to the application of 42 U.S.C. § 263a(i)(3). Petitioner is prohibited from owning, operating, or directing a laboratory for a period of two years, effective the date of this decision. 42 U.S.C. § 263a(i)(3); see 42 C.F.R. §§ 493.1840(e), 493.1844(d)(2).

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I. Background

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, § 2, 102 Stat. 2903, 2903-15 (1988) (amending sec. 353 of the Public Health Service Act, Pub. L. No. 78-410, 102 Stat. 682 (1944) (as added by the Clinical Laboratory Improvement Act of 1967, Pub. L. No. 90-174, § 5, 81 Stat. 533, 536-39 (1967))) (codified at 42 U.S.C. § 263a). The purpose of CLIA is to “to strengthen federal oversight of clinical laboratories to ensure that [laboratory] tests are accurate and reliable.”The Secretary has explained that CLIA’s enforcement mechanisms are intended to “protect all individuals served by laboratories against substandard testing of specimens,” “to safeguard the general public against health and safety hazards that might result from laboratory activities,” and “to motivate laboratories to comply with CLIA requirements so that they can provide accurate and reliable test results.” 42 C.F.R. § 493.1804(a). H.R. Rep. No. 100-899 at 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828-29. CMS certification of a laboratory under CLIA is dependent upon whether the laboratory meets the conditions for certification set out in the statute and regulations. 42 U.S.C. § 263a(d), (f); 42 C.F.R. pt. 493. Pursuant to CLIA, the Secretary of the Department of Health and Human Services (Secretary) has broad enforcement authority, including the ability to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more requirements for certification. 42 U.S.C. § 263a(h)-(i).

The Secretary has exercised the authority granted by 42 U.S.C. § 263a(f) and issued regulations implementing CLIA that are codified at 42 C.F.R. pt. 493. The regulations specify conditions and standards for certification that a laboratory must meet and maintain in order to be certified to test human specimens and participate in the Medicare program. The regulations confer broad authority on CMS to ensure that laboratories perform as Congress intended, including the authority to inspect and sanction laboratories that fail to comply with the regulatory requirements. CMS has the delegated authority to suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and CMS may also impose alternative sanctions, such as a directed plan of correction, monitoring by the state, and a civil monetary penalty (CMP). 42 C.F.R. §§ 493.1806‑.1844. Cancellation of Medicare payments is also authorized as a principal sanction when condition-level deficiencies are found (42 C.F.R. §§ 493.1807(a) and 493.1842(a)(2)) and required when CMS suspends or revokes a laboratory’s certificate (42 C.F.R. § 493.1842(a)(1)). Under the regulations, a single condition-level deficiency is an adequate basis for principal and alternative sanctions. 42 C.F.R. § 493.1806(a); see White Lake Family Med., DAB No. 1951 at 2 (2004). The Departmental Appeals Board (DAB) has explained that “[n]oncompliance with one or

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more individual standards relating to a condition may be serious enough to cause a condition level deficiency.” The Malaria & Rheumatic Disease Research Inst., Inc., DAB No. 2872 at 2 (2018), citing 42 C.F.R. §§ 493.2, 493.1812-.1816; 57 Fed. Reg. 7218, 7219 (Feb. 28, 1992). Standard-level deficiencies, alone, do not warrant the imposition of a sanction, except when the laboratory fails to correct such deficiencies within 12 months after the last day of inspection. 42 C.F.R. § 493.1816(b).

CLIA provides that a laboratory’s certificate may be suspended, revoked, or limited only after reasonable notice and opportunity for hearing to “the owner or operator of the laboratory . . . .” 42 U.S.C. § 263a(i)(1). The Secretary’s regulations provide that a laboratory or prospective laboratory dissatisfied with an initial determination listed in 42 C.F.R. § 493.1844(b) is entitled to a hearing before an administrative law judge (ALJ). 42 C.F.R. § 493.1844(a), (f). The hearing procedures of 42 C.F.R. pt. 498, subpt. D are applicable pursuant to 42 C.F.R. § 493.1844(a)(2). The “suspension, limitation or revocation of the laboratory’s CLIA certificate . . . because of noncompliance” is an initial determination that triggers a right to a hearing before an ALJ. 42 C.F.R. § 493.1844(b)(1). The imposition of an alternative sanction, such as a CMP, is also an initial determination that triggers a right to request a hearing. 42 C.F.R. § 493.1844(b)(3), (f)(1). However, the rejection of a plan of correction is not listed among the initial determinations in section 1844(b). See HRT Lab., Inc., DAB No. 2118 at 10 (2007). A CMS determination to impose an alternative sanction, including the amount of a per-day or per-violation CMP, is not subject to ALJ review. 42 C.F.R. § 493.1844(c)(4), (6) and (7). Generally, when a hearing is requested, revocation of a CLIA certificate is not effective until after a hearing decision is issued by the ALJ.EMS has not appealed the imposition of the sanction of revocation, and Petitioner does not present arguments on behalf of EMS. Rather, Petitioner argues that he is not responsible for the cited deficiencies and should be exempted from the prohibition set forth in 42 U.S.C. § 263a(i)(3). 42 C.F.R. §§ 493.1840(d)(1), (e), 493.1844(d)(2). This decision is final unless a party requests and receives review by the DAB. 42 C.F.R. § 493.1844(d)(4).

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

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)(3).

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The implementing regulations do not include any express provision implementing or imposing this two-year prohibition against an offending owner or operator. However, the regulations provide that CMS may suspend, limit, or 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). 42 C.F.R. § 493.1840(a)(8).

CLIA does not include a definition of the term, “operator.” However, the regulations define an “operator” as:

[T]he 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 “stated criteria” for a laboratory director to be considered an operator are those criteria described in the introductory sentence of the above-quoted section, i.e., whether a person oversaw all facets of the operation of the laboratory and bore primary responsibility for the safety and reliability of the results of specimen testing performed in the laboratory. Sentinel Med. Labs., Inc., DAB No. 1762 at 13 (2001), aff’d, Teitelbaum v. Health Care Financing Admin., 32 F. App’x 865 (9th Cir. 2002), reh’g denied, No. 01-70236 (9th Cir. May 22, 2002); see also Sol Teitelbaum, M.D., DAB No. 1849 at 8 n.7 (2002). It is a condition-level requirement that a CLIA-certified laboratory have a qualified laboratory director who is required to assume oversight and responsibility for the laboratory and the results of its testing. 42 C.F.R. §§ 493.1403, 493.1405, 493.1407, 493.1441, 493.1443, and 493.1445. Further, CMS explained that Petitioner, as the laboratory director, was an operator of the laboratory within the meaning of CLIA and its implementing regulations. CMS Ex. 15 at 5 (“[T]he owners and operator(s) (including the laboratory director) are prohibited from owning or operating (or directing) a laboratory for at least two (2) years from the date of the revocation.”).

The allocation of the burden of proof in an appeal of CMS’s sanctions is discussed in Hillman Rehab. Ctr., DAB No. 1611 (1997), aff’d, Hillman Rehab. Ctr. v. Dep’t of

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Health & Human Servs., No. 98-3789 (GEB), slip. Op. (D.N.J. 1999); Edison Med. Labs., Inc., DAB No. 1713 (1999) (applying Hillman burden of proof to CLIA appeals), aff’d, Edison Med. Lab., Inc. v. Health Care Financing Admin., 250 F.3d 735 (Table) (3rd Cir. 2001). CMS has the burden of presenting sufficient evidence to prove a prima facie case of noncompliance with one or more CLIA conditions. The petitioner then has the ultimate burden of showing by a preponderance of the evidence (i.e., more likely than not) that it was in compliance with CLIA conditions. Regarding the imposition of sanctions, the issue to be resolved by the ALJ is not whether CMS properly exercised discretion in imposing either principal or alternative sanctions, but rather, whether a basis existed for the imposition of sanctions under governing statutory and regulatory authorities based upon the evidence before the ALJ, i.e.,the ALJ resolves these issues de novo. Rustom Ali, Jahan Ferdous, & Scottsdale Med. Lab., DAB No. 2016 at 20 (2006) (citing Emerald Oaks, DAB No. 1800 at 16 (2001)).Petitioner, despite being represented by counsel, repeatedly misstates the proper standard of review in this case, calling CMS’s findings and sanctions “arbitrary and capricious” or “arbitrary, capricious and an abuse of discretion” no fewer than 24 times in his 17-page brief.

EMS was a clinical laboratory located in Las Vegas, Nevada. CMS Exhibit (Ex.) 2 at 1. EMS had a CLIA certificate to perform nonwaived, high complexity testing. CMS Exs. 2 at 3; 3 at 1-2. Surveyors B. Waples (from the Nevada Department of Health and Human Services, Division of Public and Behavioral Health (state agency)) and G. Yamamoto (from CMS) conducted a survey of EMS’s facility that was completed on April 11, 2017. CMS Exs. 1; 16 at 2; 17 at 2. The state agency found that EMS was out of compliance with three conditions required for CLIA certification and Medicare coverage of its services: 42 C.F.R. §§ 493.1230 (general laboratory systems, Tag D5200), 493.1250 (analytic systems, Tag D5400), and 493.1441 (laboratory director, Tag D6076).In addition to its noncompliance with the three aforementioned conditions, the statement of deficiencies detailed noncompliance with the following 11 standard-level requirements: 42 C.F.R. §§ 493.1236(a) (evaluate and review the results obtained in proficiency testing performance, Tag D5211); 493.1236(c)(1) (verify the accuracy of testing and procedures, Tag D5217); 493.1239(b), (c) (quality assessments and corrective actions, Tag D5293); 493.1256(d)(10), (g) (establish or verify criteria for the acceptability of control materials, Tag D5469); 493.1282(b)(3) (reagent and specimen storage, Tag D5785); 493.1445(e)(3)(ii) (laboratory director responsibilities – verification procedures, Tag D6086); 493.1445(e)(4)(iii) (laboratory director responsibilities – review all proficiency testing reports, Tag D6091); 493.1445(e)(4)(iv) (laboratory director responsibilities – ensure corrective action plan is followed when proficiency testing is unacceptable or unsatisfactory, Tag D6092); 493.1445(e)(5) (laboratory director responsibilities – quality control programs, Tag D6093); 493.1445(e)(5) (laboratory director responsibilities – quality assessment programs, Tag D6094); and 493.1445(e)(14) (laboratory director responsibilities – approved procedure manual, Tag D6106). CMS Ex. 1. For the sake of administrative economy, I limit my discussion to the condition and standards relating to the laboratory director responsibilities that squarely involved Petitioner. CMS

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Exs. 1 at 1-2, 7-8, 11-12; 8 at 1. The state agency instructed EMS to submit a credible allegation of compliance and acceptable evidence of correction for the cited deficiencies. CMS Ex. 8 at 2. EMS submitted a plan of correction (POC), signed by Petitioner on May 11, 2017, alleging that it had corrected all the alleged deficiencies as of May 12, 2017, along with supporting evidence. CMS Ex. 9. In a detailed letter dated May 18, 2017, the state agency found EMS’s allegation of compliance not credible and evidence of correction unacceptable and gave EMS another opportunity to submit a credible allegation of compliance with acceptable evidence of correction. CMS Ex. 10. EMS, through Petitioner, did so (CMS Ex. 11), but the state agency again rejected the POC in a detailed letter issued on June 28, 2017. CMS Ex. 12.

Thereafter, in a July 19, 2017 letter, CMS notified EMS that it concurred with the state agency and proposed a series of sanctions against EMS. CMS Ex. 13. CMS afforded EMS 10 days to “submit in writing any evidence or information as to why the sanctions . . . should not be imposed.” CMS Ex. 13 at 4 (emphasis omitted). On July 29, 2017, EMS, through Petitioner, submitted largely the same documents to CMS that it had submitted to the state agency, along with a cover letter authored by Petitioner (CMS Ex. 14 at 1-3), eight pages of email correspondence between Petitioner and EMS’s president and corporate counsel (CMS Ex. 14 at 4-11), a copy of EMS’s California clinical laboratory license (CMS Ex. 14 at 76), and an August 6, 2015 letter from the state agency to EMS’s former laboratory director (CMS Ex. 14 at 77). By letter dated August 15, 2017, CMS notified EMS that it had rejected EMS’s submissions and was imposing the following sanctions: revocation of EMS’s CLIA certificate effective October 14, 2017, unless a hearing was requested, in which case the revocation would not take effect unless upheld by an ALJ decision; a CMP of $6,033 per day effective August 30, 2017, and continuing until either CMS verified correction of all cited deficiencies or EMS’s laboratory certificate was revoked; a directed portion of a plan of correction effective August 30, 2017; and cancellation of EMS’s approval to receive payments from Medicare for services performed on or after October 14, 2017. CMS Ex. 15 at 1, 3-4.

Petitioner timely requested a hearing before an ALJ on September 29, 2017 (P. RFH); see 42 U.S.C. § 263a(i); 42 C.F.R. § 493.1844(f)(1). Pursuant to my Acknowledgment and Pre-Hearing Order (Pre-Hearing Order), CMS filed a pre-hearing brief (CMS Br.) and 17 exhibits (CMS Exs. 1-17). Petitioner submitted a pre-hearing brief (P. Br.), along with

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nine exhibits (P. Exs. A, B, 1-7) and two declarations he authored on his own behalf. CMS filed objections to all of Petitioner’s exhibits and his two declarations (CMS Objections).

II. Evidentiary Rulings

Petitioner, through his counsel, failed to adhere to the requirements of both the Civil Remedies Division Procedures (CRDP) and my Pre-Hearing Order with respect to the filing of exhibits and declarations. First, Petitioner did not mark his exhibits at all, let alone with the full designations described by the instructions in section 14 of the CRDP and section 6 of my Pre-Hearing Order. Second, in his exhibit list, Petitioner used letters, rather than numbers, to identify two exhibits, contrary to the requirement that parties must designate each exhibit with a separate, unique, and whole identifying number. CRDP § 14(iii); Pre-Hearing Order § 6(c). Third, although Petitioner identified himself as a witness and submitted two separate declarations, he neither listed nor marked them as exhibits,To avoid confusion, I will refer to the notarized declaration, a 14-page document located within item # 12 in the Departmental Appeals Board’s Electronic Filing System (DAB E-File), as P. Decl. I and the other declaration, a 5-page document located within item # 13 in DAB E-File, as P. Decl. II. contrary to the requirement that the parties “must exchange as a proposed exhibit the complete, written direct testimony of any proposed witness.” Pre-Hearing Order § 8; see CRDP § 16(a). Fourth, and relatedly, Petitioner attached five of his exhibits to his declarations, rather than submitting each of them as a separate document as had been required. CRDP § 14(a); Pre-Hearing Order § 6(e).I specifically instructed, “Multiple exhibits should not be uploaded as one file.” Pre-Hearing Order § 6(e). Finally, Petitioner disregarded the directive that he “NOT file as proposed exhibits any documents that CMS has already filed among its proposed exhibits” when he filed duplicate copies of CMS’s July 19 and August 15, 2017 notices of proposed and imposed sanctions. Pre-Hearing Order § 4; see CRDP § 14(a); compare CMS Exs. 13 at 1-5; 15 at 1-6 with P. Exs. 6, 7.

For these reasons, CMS objects to the exhibits and declarations Petitioner submitted. CMS Objections at 5-6. CMS also objects to P. Exs. 1-5 on the basis of irrelevance. CMS Objections at 6-7. Petitioner did not respond to any of CMS’s objections, nor did he submit any filings or motions requesting any relief following CMS’s filing of its objections.

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I sustain the objections to P. Exs. 6 and 7 because they are duplicative of CMS Exs. 13 at 1-5 and 15 at 1-6, and as such, were submitted in contravention of the CRDP and my Pre-Hearing Order. CRDP § 14(a); Pre-Hearing Order § 4. Therefore, P. Exs. 6 and 7 are excluded. I also sustain the objections to P. Exs. 2 and 3 and exclude them because they are irrelevant; not only do they relate to a separate survey cycle that does not bear on the issues in this case, but Petitioner has not cited to these proposed exhibits in his briefing. 42 C.F.R. § 498.60(b)(1) (“The ALJ . . . receives into evidence the testimony of witnesses and any documents that are relevant and material.”). I overrule CMS’s technical objections to P. Exs. A, B, 1, 4, and 5Although Petitioner did not mark any of these exhibits properly and attached P. Exs. A, B, and 1 to his declarations, each is consecutively paginated, except for P. Ex. B. To the extent I refer to any of those exhibits herein, I will cite to them using their native page numbers. P. Ex. B contains two separately paginated documents, one with four pages, and the other with three pages. For ease of reference, I will cite to the pages as though the exhibit was consecutively paginated with pages 1 through 7. and admit them into the evidentiary record. In the absence of objections, I also admit CMS Exs. 1-17. I discuss CMS’s objections to Petitioner’s two declarations in more detail below.

Petitioner proposed the following witnesses (other than himself): Unnamed and unspecified “Principals of EMS”; William Dully, president of the laboratory division for EMS and its parent company; Tricia Desmarias, in-house counsel for EMS and its parent company; and Isaac Park, a former EMS employee. Petitioner stated that he would be calling all of these witnesses “by subpoena,” and for the three named witnesses, he indicated he did not know each witness’s current location. Further, based on Petitioner’s failure to identify some of the proposed witnesses with any specificity (i.e., “Principals of EMS”) and his inability to provide an address or location for any of the proposed witnesses, it appears that Petitioner did not undertake meaningful efforts to timely request that any of these witnesses voluntarily provide written direct testimony.A subpoena request “must,” inter alia, “[d]escribe [witnesses’] addresses or location with sufficient particularity to permit them to be found.” 42 C.F.R. § 498.58(c)(2).

CMS objects to all of Petitioner’s witnesses based on his noncompliance with the Pre-Hearing Order, particularly because Petitioner did not submit as an exhibit the written direct testimony of any of the witnesses (although, as previously noted, Petitioner did submit two of his own declarations that were not marked as exhibits). CMS Objections at 2-3. CMS further objects to Petitioner’s other listed witnesses because their testimony is irrelevant and Petitioner did not make a proper request for subpoenas. CMS Objections at 3-5.

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Even after CMS submitted its objections, Petitioner has not sought the issuance of a subpoena. At a party’s request or on my own motion, I “may issue subpoenas if they are reasonably necessary for the full presentation of a case.” 42 C.F.R. § 498.58(a). A request for a subpoena(s) must be in writing, identify the witnesses or documents to be produced, describe their location with sufficient particularity to permit them to be found, and explain what facts the party expects to establish through the documents or witness testimony and why the party could not establish those facts without a subpoena. 42 C.F.R. § 498.58(b)-(c).

Petitioner has not provided any explanation for his failure to submit the written direct testimony of his proposed witnesses. In section 8 of my Pre-Hearing Order, I directed that a “party must exchange the complete, written direct testimony of any proposed witness.” See CRDP § 16(a) (“If the ALJ directed each party to file written direct testimony of its proposed witnesses, the witness list should identify which proposed exhibit contains the written direct testimony of each proposed witness.”); see also Golden Living Ctr.—Frankfort v. Sec’y of Health & Human Servs., 656 F.3d 421, 426 (6th Cir. 2011) (upholding ALJ’s use of written direct testimony); Vandalia Park, DAB No. 1940 (2004) (permitting use of written direct testimony so long as the opposing party has an opportunity for cross-examination). Petitioner has not alleged that he attempted to obtain the written direct testimony of any of these witnesses and was unable to do so. In fact, Petitioner did not even identify all of the proposed witnesses by name (i.e., generically listing “Principals of EMS” as witnesses) and was unable to report any of their locations, evidencing his lack of effort to seek out the written testimony of these individuals when he prepared his pre-hearing exchange. And even after CMS objected to Petitioner’s proposed witnesses, Petitioner did not seek relief such as by requesting the issuance of a subpoena to compel the testimony of any of the witnesses. See 42 C.F.R. § 498.58; CRDP § 17(b).

Further, even if Petitioner had requested that I issue a subpoena to compel the testimony of any of his proposed witnesses, such testimony would be irrelevant to the factual bases supporting the condition-level and standard-level deficiencies that are the focus of this decision; Petitioner, as the laboratory director, personally failed ensure that the laboratory was compliant with the conditional-level requirement set forth at 42 C.F.R. § 493.1441 (qualified laboratory director who provides overall management and direction) and several associated standard-level deficiencies, and the testimony he has proposed is irrelevant to his individual performance as the laboratory’s director. Petitioner states that he expected that witnesses (to include the unnamed “Principals”) would testify about circumstances such as the laboratory’s bankruptcy, the laboratory’s

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“failures to implement processes and procedures from Petitioner,”To the extent that Petitioner raises this allegation, he effectively concedes that the laboratory did not implement necessary procedures and processes. Such a concession undoubtedly undermines his argument that he complied with 42 C.F.R. § 493.1441. Petitioner, as the laboratory director, was responsible for the laboratory’s overall management and direction. and threats to sue him if he resigned. However, the references to the bankruptcy in Petitioner’s brief are not connected to any of the deficiencies involving his performance as the laboratory director. See P. Br. at 5 (alleging that EMS “knew it was going to shut down and did not care what would happen to those who would, ultimately, bear the brunt of the failures by EMS”); P. Br. at 13 (alleging that EMS “stopped caring and terminated almost all of [its] staff”); P. Br. at 16 (alleging that EMS “closed and laid off all employees without notice to him”). There is no indication in either the statement of deficiencies or the plans of correction he authored that any cited deficiencies were related to a lack of staffing or that EMS would bolster its staffing to correct the deficiencies. See CMS Ex. 9 at 41; see also CMS Ex. 11 at 91 (listing the same three laboratory employees who completed training in April and June of 2017).Although Petitioner argues that he sent emails and text messages about the laboratory’s staffing (P. Decl. I at 9), he did not submit any of these documents as proposed exhibits. Petitioner has not shown that the proposed testimony regarding the laboratory’s bankruptcy petition or its staffing is relevant to the cited deficiencies that directly relate to his role as the laboratory director.

Petitioner also states he intends to request a subpoena to obtain the testimony of Isaac Park, who he identifies as a “former employee” of the laboratory.The record includes email correspondence between Mr. Park and Surveyor Waples in which Mr. Park lists his job title as “general supervisor.” CMS Ex. 5 at 28. Petitioner vaguely states that Mr. Park will testify “as to the compliance with the SODs as well as the conduct of EMS during this period including the termination of employees and the bankruptcy.” Not only has Petitioner not given any indication why he failed to submit Mr. Park’s written direct testimony, he also has not demonstrated that Mr. Park will provide any evidence that EMS complied with the laboratory director condition and standards discussed herein. In fact, in his own testimony, Petitioner does not assert the laboratory was in compliance with all of the CLIA requirements addressed herein; it is unclear why Petitioner would expect Mr. Park would testify to such compliance when Petitioner did not do so himself. See P. Decl. II at 4 (“I did recognize the alleged ‘problems’ but, contrary to Mr. Waples’ allegations, I had been diligently attempting to

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remedy any and all issues discovered.”). Petitioner has not shown that Mr. Park would provide relevant testimony regarding compliance with the CLIA condition and standards regarding laboratory director responsibilities.

CMS also objects to Petitioner’s two declarations on more technical grounds, but does not object to their substance. CMS Objections at 3. Although I recognize that Petitioner, presumably through his counsel, disregarded the CRDP and my Pre-Hearing Order insofar as he did not mark his declarations as exhibits or include them in his exhibit list,I note that such disregard of filing requirements places additional administrative burdens on this tribunal. he did submit them as written declarations under penalty of perjury. Therefore, I overrule these objections and admit both declarations into the evidentiary record. I consider the record to be closed and the matter ready for a decision on the merits.Petitioner did not ask for an opportunity to cross-examine CMS’s witnesses. In its objections, CMS stated that, “[i]f the witnesses identified by Petitioner are approved, CMS respectfully requests to cross-examine each and every witness called by Petitioner.” CMS Objections at 7. In my Pre-Hearing Order, I explained that “[a]n in-person hearing will be necessary only if a party files admissible, written direct testimony, and the opposing party asks to cross-examine the witness or witnesses.” Pre-Hearing Order § 10. I have admitted Petitioner’s testimony. However, as I explain below, even without hearing the testimony CMS might elicit from Petitioner on cross-examination, I conclude that CMS has demonstrated a basis to revoke EMS’s CLIA certificate and that Petitioner, as EMS’s laboratory director, is subject to a two-year prohibition on owning, operating, or directing a CLIA laboratory. Under these circumstances, any cross-examination of Petitioner would serve no purpose and CMS is not prejudiced. See, e.g., Golden Living, 656 F.3d at 426, citing Laurels at Forest Glenn, DAB No. 2182 at 9 (2008).

III. Issues

The issues are:

1. Whether CMS had a legitimate basis to revoke EMS’s CLIA certificate; and
2. Whether Petitioner, as EMS’s laboratory director, was subject to a two-year prohibition on owning, operating, or directing a CLIA laboratory pursuant to 42 U.S.C. § 263a(i)(3).

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IV. Findings of Fact, Conclusions of Law, and AnalysisFindings of fact and conclusions of law are in bold and italics.

1. There was a legal basis to revoke EMS’s CLIA certificate.

As I already explained, if a laboratory is out of compliance with even a single CLIA condition, CMS may revoke the laboratory’s CLIA certificate. 42 C.F.R. §§ 493.1806(a), (b); 493.1814(a)(2). Specifically, CMS may revoke a laboratory’s CLIA certificate if the laboratory has any condition-level deficiencies “at the time of the survey.” HRT Lab., Inc., DAB No. 2118 at 10; see also Rustom Ali, Jahan Ferdous, & Scottsdale Med. Lab., DAB No. 2016 at 8-9 (“Even if [post-survey corrective action] met the regulatory standard, however, it is irrelevant since the salient question here is whether [the laboratory] had the requisite record system at the time of the survey.”). CMS has submitted prima facie evidence that EMS, through Petitioner, did not comply with the condition-level requirement regarding laboratory director responsibilities. CMS Exs. 1 (statement of deficiencies); 16 (testimony of Surveyor Waples); 17 (testimony of Surveyor Yamamoto). Petitioner has not refuted this prima facie evidence. The evidence demonstrates that, at the time of the April 2017 survey, EMS was out of compliance with at least one CLIA condition due to Petitioner’s failure to ensure the laboratory complied with the condition-level requirement regarding laboratory director responsibilities. As a result, CMS had a legal basis to revoke EMS’s CLIA certificate.

1. EMS did not comply with the standard at 42 C.F.R. § 493.1445 because Petitioner, as laboratory director, did not ensure compliance with four separate elements of the standard set forth at 42 C.F.R. § 493.1445(e)(3)(ii), (4)(iii)-(iv), and (5).

Subpart M of 42 C.F.R. pt. 493 establishes the qualifications and responsibilities for personnel of laboratories conducting non-waived testing. The responsibilities for a laboratory director of a laboratory conducting non-waived, high complexity testing are established by 42 C.F.R. § 493.1445. It is undisputed that EMS conducted non-waived, high complexity testing. CMS Exs. 2 at 3; 3 at 1; CMS Br. at 3. It is also undisputed that, beginning in March of 2016, Petitioner became EMS’s laboratory director and continued in that role thereafter. CMS Exs. 3 at 1, 4; 14 at 76; 16 at 13; P. Decl. I at 2; P. Ex. 1 at 1. Thus, upon his assumption of that role, Petitioner was responsible for ensuring that EMS complied with the laboratory director responsibilities for its laboratory pursuant to 42 C.F.R. § 493.1445.

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The statement of deficiencies outlines that EMS, through Petitioner, failed to comply with various elements of the standard. CMS Ex. 1 at 12-24. I discuss EMS’s failure to comply with four of those elements below.

42 C.F.R. § 493.1445(e)(3)(ii)

Pursuant to 42 C.F.R. § 493.1445(e)(3)(ii), a laboratory director must ensure that the verification procedures that it uses “are adequate to determine the accuracy, precision, and other pertinent performance characteristics of the [test] method[s].”

EMS had a “Validation Plan” for its drug testing that had six elements for ensuring the validity of drug testing. CMS Ex. 6 at 49-51. The first element, “Bias and Precision,” established a process for conducting bias and precision studies, to include both within-run and between-run precision calculations. CMS Ex. 6 at 49. The second element, “Calibration Model,” involved analyzing calibrator samples “to establish the model (from the bias and precision studies).” CMS Ex. 6 at 49-50. The third element, “Carryover,” established a process for conducting carryover studies. CMS Ex. 6 at 50. The fourth element, “Limit of Detection (LOD) and Limit of [Quantitation] (LOQ),” described how to determine the limit of detection and limit of quantitation. CMS Ex. 6 at 50-51. The fifth element, “Stability Study for Processed Samples,” provided, “Samples will be re-injected at 24 hours, 48 hours and 72 hours. If signal decreased by more than 20%, then…” CMS Ex. 6 at 51 (punctuation as in original). Finally, the sixth element, “Dilution Integrity,” provided, “Dilution Integrity is already tested: when we made our calibrators, we do so by serial dilutions.” CMS Ex. 6 at 51.

Surveyor Yamamoto described this plan as a “written protocol for test performance specifications” and testified that it “was incomplete in certain areas and [EMS’s] records did not reflect that the protocol was actually being followed.” CMS Ex. 17 at 5. He detailed a variety of shortcomings with both the protocol itself and EMS’s adherence to the protocol. CMS Ex. 17 at 5-7. The validation plan with respect to stability studies contained a patently obvious flaw, stating: “Samples will be re-injected at 24 hours, 48 hours and 72 hours. If signal decreased by more than 20%, then…” CMS Ex. 6 at 51. The fact that the instruction in EMS’s protocol literally ends with “…” evidences that Petitioner failed to provide EMS staff with guidance for handling stability studies when a signal decreased by more than 20% after a sample was re-injected at 24, 48, and 72 hours. CMS Ex. 6 at 51. In addition, as Surveyor Yamamoto pointed out in his testimony, the section on carryover studies only gave instructions for how to conduct such studies; it did not establish any criteria for EMS to determine whether the results of those studies were acceptable. CMS Exs. 6 at 50; 17 at 5. Surveyor Yamamoto correctly observed that this failure to identify acceptability criteria for its carryover studies rendered those studies “meaningless.” CMS Ex. 17 at 5.

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Given these facial deficiencies with EMS’s Validation Plan, which Petitioner does not dispute,Indeed, according to the surveyors—and as he admits in his brief—Petitioner even signed a copy of the Validation Plan that included the facial deficiencies described in the text, apparently to indicate his approval of the plan. CMS Ex. 1 at 24; P. Br. at 10; see also CMS Ex. 6 at 51. it is plainly evident that Petitioner did not ensure that EMS’s verification procedures were “adequate to determine the accuracy, precision, and other pertinent performance characteristics” of its testing methods. 42 C.F.R. § 493.1445(e)(3)(ii). The plan contemplated using stability and carryover studies to assess the validity of EMS’s testing methods, yet it did not include complete procedures for conducting and analyzing results from such tests. I therefore conclude that EMS, through Petitioner, failed to comply with 42 C.F.R. § 493.1445(e)(3)(ii).

Petitioner argues that he provided a “proper validation plan to EMS as required” and “implemented standards within the written protocol which are within the industry standard,” P. Br. at 10, but the record belies this argument. Even though he submitted multiple plans of correction with accompanying documents, Petitioner never once submitted a different version of the Validation Plan that corrected (or omitted) the patently obvious deficiencies discussed above. See generally CMS Exs. 9, 11, 14.As part of its plan to correct its noncompliance with 42 C.F.R. § 493.1445(e)(3)(ii), EMS submitted several documents, each labeled “Validation Data Evaluation Summary” for four separate drug panels. CMS Exs. 9 at 37-40; 11 at 94-97; 14 at 108-11. It asserted in its plans of correction that these documents were its revisions to its protocols for “Accuracy (=Bias), Precision, Calibration Model, Carryover, LOD, LOQ, Stability Study and Dilution Integrity.” CMS Exs. 9 at 12; 11 at 16; 14 at 93. The state agency gave detailed reasons why it found these documents inadequate to correct the deficiency, and CMS agreed with these determinations. CMS Exs. 10 at 5; 12 at 4; 15 at 3. In particular, the state agency noted that the documents “did not include any written instructions as to the procedures the laboratory was to follow to determine whether the laboratory’s test system met the acceptability criteria established.” CMS Exs. 10 at 5; 12 at 4. Petitioner does not dispute the state agency’s explanation or argue that these documents served to correct its facially deficient Validation Plan, instead asserting that the plan itself was proper. P. Br. at 10. Therefore, these documents do not correct the deficiencies cited under 42 C.F.R. § 493.1445(e)(3)(ii) involving the Validation Plan. Despite Petitioner’s unsupported claim, the only version of the Validation Plan in the record is the facially deficient version that was neither “proper” nor “within the industry standard.”

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Petitioner also mechanically asserts that he “has, in his responses to Mr. Waples, set forth his position that the findings of Mr. Waples were incorrect.”Petitioner repeats this rote assertion nine times in four pages of his brief. P. Br. at 7-10. P. Br. at 10. Surveyor Waples did not make findings about EMS’s failure to comply with 42 C.F.R. § 493.1445(e)(3)(ii), though; rather, Surveyor Yamamoto addressed these deficiencies. In his declarations, Petitioner does not dispute, nor does he address, Surveyor Yamamoto’s findings. Petitioner thus has not rebutted the evidence showing that EMS, through Petitioner, failed to comply with 42 C.F.R. § 493.1445(e)(3)(ii).

42 C.F.R. § 493.1445(e)(4)(iii) & (iv)

Pursuant to 42 C.F.R. § 493.1445(e)(4)(iii), a laboratory director must ensure that “appropriate staff” review all proficiency testing reports to “evaluate the laboratory’s performance and to identify any problems that require corrective action.” A laboratory director must ensure that “[a]n approved corrective action plan is followed when any proficiency testing result is found to be unacceptable or unsatisfactory.” 42 C.F.R. § 493.1445(e)(4)(iv).

CMS has met its prima facie burden to demonstrate that EMS, through Petitioner, did not comply with both of these provisions. CMS Ex. 1 at 15-21; see CMS Ex. 16 at 5-8; CMS Br. at 20. Petitioner did not specifically dispute these alleged deficiencies, either in his hearing request or in his brief. See generally P. RFH, P. Br.

EMS had a proficiency testing policy. CMS Ex. 5 at 24-27. The policy provided the following, in relevant part: “Upon receipt of graded [proficiency testing] results, review and investigate all unacceptable results. Document investigation findings. . . . Submit all report[s] to the Laboratory Director and/or Technical Consultant for review[.] . . . Review results with laboratory staff[.] . . . File graded reports and investigation of problems in the [proficiency testing] book or file.” CMS Ex. 5 at 25. During Petitioner’s tenure as EMS’s laboratory director, EMS was enrolled in proficiency testing with the College of American Pathologists (CAP) and conducted several proficiency testing events for a variety of analytes in its testing menu. CMS Ex. 5 at 7-15; P. Decl. II at 2-3. During proficiency testing events, EMS received a grade of “Unacceptable” during proficiency testing for one or more of the following analytes on several occasions: buprenorphine, 6-acetylmorphine, and noroxycodone (March 2016); benzoylecgonine and methylenedioxymethamphetamine (MDMA) (September 2016); and fentanyl, hydrocodone, hydromorphone, oxazepam, morphine, and norbuprenorphine (March 2017). CMS Ex. 5 at 9-11, 14-15; see also CMS Ex. 1 at 3-5, 16-18, 20-21. No documentation pre-dating the survey indicates that EMS or Petitioner investigated these unacceptable results or submitted any reports to Petitioner or a technical consultant

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for review, much less that EMS or Petitioner undertook any action to correct whatever problems led to the unacceptable results.

Surveyor Waples reviewed documents related to the proficiency testing events and interviewed EMS staff, including Petitioner. CMS Ex. 16 at 5. In paragraph 15 of his declaration, Surveyor Waples testified that, based on his document review and interviews, he determined EMS “failed to review and evaluate the results from the [CAP] proficiency testing reports,” including from testing events in March 2016, April 2016, September 2016, November 2016, and March 2017. CMS Ex. 16 at 5, 7, 12; see also CMS Exs. 1 at 2-5, 15-18; 5 at 7-15. In paragraph 22 of his declaration, Surveyor Waples noted that the findings concerning these testing events (which are documented on pages 2 through 5 of the statement of deficiencies) relate to either EMS’s “failure to evaluate proficiency testing results from CAP” or its “fail[ure] to perform corrective action to address the analyte results.” CMS Ex. 16 at 7; see CMS Ex. 1 at 2-5.

In his declaration responding to Surveyor Waples, Petitioner asserts that Surveyor Waples’s testimony in paragraph 15 in his declaration “is inaccurate,” testifying that “CAP proficiency testing reports were reviewed and evaluated.” P. Decl. II at 2. In support of his testimony, Petitioner cites to one of his exhibits, P. Ex. B, that is attached to his declaration. Notably, though, Petitioner does not dispute the testimony in paragraph 22 of Surveyor Waples’s declaration. See P. Decl. II at 3.

I give little weight to Petitioner’s testimony on this point, for several reasons. First, Petitioner’s testimony is utterly vague, in that it fails to identify when the CAP proficiency testing reports were purportedly reviewed or who purportedly reviewed them.It does appear that at least one person looked at the reports shortly after CAP sent them to EMS, as apparent by the relatively contemporaneous signatures on the report cover pages. CMS Exs. 11 at 37, 40, 45, 50, 52, 54; CMS Ex. 14 at 20, 23, 28, 33, 35, 37. But the identity of that person is unknown, much less that the person was the “appropriate staff,” as contemplated by that provision, to review the reports. 42 C.F.R. § 493.1445(e)(4)(iii). The fact, discussed further in the text, that EMS and Petitioner took no action to remedy the unacceptable proficiency testing results strongly suggests this individual conducted minimal, if any, review or was not competent to conduct the review—or both. The exhibit Petitioner cites is unhelpful, as it only contains evidence that someone reviewed the CAP proficiency testing reports from testing events in 2015, which pre-dated Petitioner’s tenure as EMS’s laboratory director. P. Ex. B at 1, 6. Further, the exhibit contains markings dated May 2017—after the survey—that do not appear on the surveyors’ version of the same reports, suggesting that EMS conducted a more thorough review of the results after the survey, and not prior. Compare CMS Ex. 5 at 1, 3-5 with P. Ex. B at 2-4, 7. Second, although Petitioner goes nearly paragraph-by-paragraph through

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Surveyor Waples’s declaration and disputes his findings and conclusions (P. Decl. II at 2-5), Petitioner does not challenge Surveyor Waples’s specific assertions in paragraph 22 of his declaration that EMS failed to evaluate or take corrective action to address CAP proficiency testing reports returned during Petitioner’s tenure as EMS’s laboratory director. Finally, despite EMS’s policy requiring investigation of unacceptable proficiency testing results, documentation of those investigations, and inclusion of the investigation documentation in the proficiency testing file (CMS Ex. 5 at 25), Petitioner produced no records or documentation of any pre-survey investigations of EMS’s numerous unacceptable proficiency testing results.

This lack of documentation evidences that neither EMS nor Petitioner, as its laboratory director, investigated EMS’s unacceptable proficiency testing results, nor made any attempt to correct the problems giving rise to those unacceptable results, prior to the survey. The lack of documentation also supports Surveyor Waples’s determination that neither Petitioner nor any other appropriate EMS staff reviewed or evaluated any of EMS’s proficiency testing reports prior to the survey. CMS Ex. 16 at 5, 7. Bolstering these inferences is the fact that someone marked up the proficiency testing reports after the survey, as is evident in the newly marked up documents EMS submitted to the state agency and CMS. CMS Exs. 11 at 31-33, 35-36, 38-39, 43-45, 48-49, 51, 57-58; 14 at 14-16, 18-19, 21-22, 26-28, 31-32, 34, 40-41.As noted, Petitioner does not dispute that EMS, through him, did not comply with the requirement at 42 C.F.R. § 493.1445(e)(4)(iii)-(iv). Relatedly, he has not argued that post-survey actions related to EMS’s pre-survey proficiency testing results (which are listed in EMS’s various plans of correction) corrected those deficiencies. Even if he had raised the argument, though, the state agency explained in detail why the post-survey actions were inadequate, CMS Ex. 12 at 5-7, and Petitioner has not responded to that explanation, much less disputed the numerous shortcomings identified by the state agency. Petitioner has not demonstrated, by a preponderance of the evidence, that he or the “appropriate staff” reviewed the March 2016, April 2016, September 2016, November 2016, or March 2017 proficiency testing reports, nor did EMS create or implement a corrective action plan to address the numerous unacceptable proficiency testing results. Consequently, I conclude, and Petitioner does not dispute, that EMS, through Petitioner, failed to comply with 42 C.F.R. § 493.1445(e)(4)(iii)-(iv).

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42 C.F.R. § 493.1445(e)(5)

Pursuant to 42 C.F.R. § 493.1445(e)(5), a laboratory director must “[e]nsure that the quality control and quality assessment programs are established and maintained to assure the quality of laboratory services provided and to identify failures in quality as they occur.”

The statement of deficiencies details that EMS, through Petitioner, failed to comply with this provision. CMS Ex. 1 at 22-23; see CMS Br. at 14-16, 20. Specifically, the statement of deficiencies charges that EMS, through Petitioner, failed to comply with 42 C.F.R. § 493.1445(e)(5) because, among other things, its “director approved Quality Assessment policy and monthly documentation of Quality Assessment failed to address CAP proficiency testing failures with no corrective action taken by the laboratory . . . .” CMS Ex. 1 at 23. As explained by CMS, although Petitioner established quality control and quality assessment programs for EMS, he failed to ensure EMS complied with that program. CMS Br. at 20. As with the two previously discussed deficiencies, Petitioner did not specifically dispute this cited deficiency, either in his hearing request or in his brief. See generally P. RFH, P. Br.

I have already found that, prior to the survey,And again, similar to the discussion in the previous footnote, just as Petitioner has not disputed that EMS, through him, failed to comply with 42 C.F.R. § 493.1445(e)(5), he also has not argued that post-survey actions (again listed in EMS’s various plans of correction) corrected the deficiency. Similarly, he has not challenged the state agency’s detailed explanation for why the post-survey actions related to this deficiency were also inadequate. CMS Ex. 12 at 8. no one on behalf of EMS, to include Petitioner, created or implemented a corrective action plan to address EMS’s numerous unacceptable proficiency testing results. EMS’s unacceptable proficiency testing results undeniably constituted failures in quality that EMS and Petitioner were obligated to correct. Based on EMS’s and Petitioner’s collective failure to create or implement a corrective action plan in response to any of its numerous unacceptable proficiency testing results, it is apparent that neither EMS nor Petitioner even identified the unacceptable results as the failures in quality they were. In addition, by failing to take corrective action, Petitioner failed to assure the integrity of EMS’s testing results and, by extension, the quality of its laboratory services. In light of these facts, I conclude, and Petitioner does not dispute, that Petitioner did not ensure that EMS’s quality control and quality assessment programs were maintained to assure the quality of EMS’s laboratory services and to identify obvious failures in quality as they occurred, in contravention of 42 C.F.R. § 493.1445(e)(5).

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2. Collectively, EMS’s failure to meet the standard-level requirements of 42 C.F.R. § 493.1445(e)(3)(ii), (4)(iii)-(iv), and (5) was serious and had the potential to adversely affect patient test results.
3. At the time of the April 2017 survey, EMS, through Petitioner, failed to comply with the condition-level requirement for laboratory director responsibilities set forth in 42 C.F.R. § 493.1441.
4. Because EMS was not compliant with a condition-level requirement at the time of the April 2017 survey, CMS had a legitimate basis to revoke EMS’s CLIA certificate.

For a laboratory to hold a CLIA certificate to perform testing on human specimens, it must comply with the conditions of CLIA. 42 C.F.R. § 493.1. Laboratories that perform at least one of the “high complexity” tests as described in 42 C.F.R. § 493.17(a), must obtain a CLIA certificate for high complexity testing and meet the requirements 42 C.F.R. pt. 493, subpt. M, among others. 42 C.F.R. § 493.25(a)-(b). One of the condition-level requirements in subpart M is that “[t]he laboratory must have a director who meets the qualification requirements of [42 C.F.R] § 493.1443 . . . and provides overall management and direction in accordance with [42 C.F.R.] § 493.1445 . . . .” 42 C.F.R. § 493.1441. Because EMS performs only tests of high complexity within the meaning of 42 C.F.R. § 493.17, it is subject to the condition-level requirement established by 42 C.F.R. § 493.1441. CMS Exs. 2 at 3, 3 at 1; see CMS Br. at 3.

On its face, the language of 42 C.F.R. § 493.1441 suggests that a laboratory fails to comply with this condition any time the laboratory fails to meet either of the standard-level requirements established by 42 C.F.R. §§ 493.1443 and 493.1445. However, that reading of 42 C.F.R. § 493.1441 would be inconsistent with the regulatory distinction between condition-level deficiencies, which are a basis for imposing principal and alternative sanctions (42 C.F.R. § 493.1806(a)), and standard-level deficiencies, which are not a basis for imposing sanctions unless the laboratory fails to correct the deficiencies within 12 months of the conclusion of the survey (42 C.F.R. § 493.1816(b)). No regulation specifies the precise relationship between standard-level and condition-level deficiencies or specifies how to determine when standard-level deficiencies rise to the level of a condition-level deficiency. At the time the regulations were promulgated, “[s]everal commenters want[ed] condition level deficiency and lower level deficiency to be more clearly delineated,” and likewise, the commenters “were also unclear about the relationship between ‘elements,’ ‘standards’ and ‘conditions.’” 57 Fed. Reg. at 7221. The Secretary explained:

A condition level deficiency is a deficiency with respect to any of the conditions that a laboratory must meet in order to obtain a CLIA certificate. A deficiency not at the condition

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level is a deficiency with respect to one or more of the standard level requirements that are below the condition level, and, therefore, are not identified as conditions. These requirements may appear in this part under the heading “standard” or under no heading, and are what is meant by “lower level” requirements. There is no official requirement category designated “element” in this part. We have expanded the definition of “condition-level deficiency” in the final rule.

Id.

Thereafter, in order to assist surveyors, CMS further elaborated on when a surveyed laboratory’s standard-level deficiencies also constitute condition-level deficiencies. CMS Pub. 100-07, State Operations Manual (SOM), App’x C - Survey Procedures and Interpretive Guidelines for Laboratories and Laboratory Services (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_c_lab.pdf (last visited December 5, 2019)).This guidance was in effect at the time of the survey. Consistent with section 493.1441 and the rulemaking, the SOM explains that surveyors should “consider a condition out of compliance as a result of one or more deficiencies if, in your judgment, the deficiency(ies) constitutes a significant or serious problem that adversely affects patient test results/patient care, or has the potential for adversely affecting patient test results/patient care.” SOM, App’x C (Rev. 140; eff. May 29, 2015); CMS Ex. 7 at 81. The SOM also instructs surveyors that “[w]hen [a laboratory’s] deficient practice is of such a serious nature that correction is a condition for allowing the laboratory to continue with patient testing, cite the most appropriate condition . . . .” SOM, App’x C (Rev. 140; eff. May 29, 2015); CMS Ex. 7 at 81. The SOM notes the obvious distinction between condition-level and standard-level deficiencies that a condition-level deficiency represents a “significant or serious problem.” A surveyor must use his or her judgment to determine whether one or more deficiencies are significant or serious enough to cite as a condition-level deficiency, and that judgment is subject to challenge in this forum. Id. Both surveyors detailed their education, experience, and qualifications as laboratory surveyors, and they separately have decades of relevant laboratory experience, hold an ASCP certification, and have a relevant baccalaureate degree.Petitioner does not specifically challenge either surveyor’s education, experience, or qualifications, and he waived the right to question them about their qualifications by failing to request cross-examination of them. CMS Exs. 16 at 1-2, 14-15; 17 at 1-2, 10-12. Not only are the surveyors well-qualified to render

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opinions about general laboratory systems and laboratory compliance, they also have the knowledge, skill, experience, training, and education to assess whether one or more deficiencies is serious enough to cite as a condition-level deficiency. See Fed. R. Evid. 702.The Federal Rules of Evidence, while not binding in this forum, provide useful guidance.

In the statement of deficiencies, the surveyors cited EMS’s noncompliance with the condition at 42 C.F.R. § 493.1441 based on Petitioner’s numerous failures, which included, inter alia, his failure to do the following:

• “ensure that verification procedures are adequate to determine the accuracy, precision and performance characteristics for testing methods,” in violation of 42 C.F.R. § 493.1445(e)(3)(ii);
• “ensure that all proficiency testing reports received are evaluated to identify any problems that require corrective action,” in violation of 42 C.F.R. § 493.1445(e)(4)(iii);
• “follow the corrective action plan for any proficiency testing results that were found to be unacceptable,” in violation of 42 C.F.R. § 493.1445(e)(4)(iv); and
• “establish and maintain a quality assessment program that would assure the quality of laboratory services provided and identify any failures,” in violation of 42 C.F.R. § 493.1445(e)(5).

CMS Ex. 1 at 12. In his declaration, Surveyor Waples explained that a condition-level deficiency pursuant to 42 C.F.R. § 493.1441 existed because EMS’s “significant deficiencies” had “presented serious problems that had the potential to adversely affect patient test results.” CMS Ex. 16 at 12. Surveyor Waples further remarked that Petitioner’s “failure to prevent, identify, and correct these issues thus likewise constituted a serious problem with the potential to adversely affect patient test results.” CMS Ex. 16 at 12. Likewise, Surveyor Yamamoto addressed EMS’s and Petitioner’s joint failure to comply with 42 C.F.R. § 493.1445(e)(3)(ii), stating that “[b]y failing to follow its own procedures to verify accuracy and precision of its testing before reporting out results, EMS . . . could not ensure its patient test results were accurate and reliable, and therefore

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was at risk for reporting inaccurate and unreliable test results to patients.”Surveyor Yamamoto also addressed the undisputed facial deficiencies with EMS’s Validation Plan, which I previously detailed, that he determined had put EMS’s patients at risk for receiving inaccurate and unreliable test results. CMS Ex. 17 at 7.

As I previously remarked, Petitioner does not, in either of his two declarations, challenge Surveyor Yamamoto’s testimony,In his brief, Petitioner characterizes Surveyor Yamamoto’s testimony regarding the seriousness of the noncompliance as “unsupportable,” arguing that, contrary to Surveyor Yamamoto’s findings, he “had established and was taking necessary steps to ensure accuracy and reliability and the integrity of the results but was thwarted by [EMS’s] owners . . . .” P. Br. at 13. Petitioner cannot credibly claim that Surveyor Yamamoto’s testimony was unsupportable because of steps he took to ensure EMS’s results were accurate and reliable while simultaneously admitting he failed to carry out those steps (regardless of the cause of his failure). Given the substantive evidence of Petitioner’s failures that supports Surveyor Yamamoto’s testimony, I find his testimony more probative than Petitioner’s testimony. although he did assert general disagreement with Surveyor Waples’s opinion about the significance of EMS’s and his failures and claim he “diligently attempt[ed] to remedy any and all issues discovered.” P. Decl. II at 5. Petitioner also asserted generally that the deficiencies cited during the survey were “classified as condition level deficiencies when they should be standard level deficiencies.” P. Decl. I at 11. Finally, Petitioner asserted that the deficiencies “did not directly impact patients’ management because the two physicians working with EMS . . . were duly informed about EMS . . . problems with the Nevada/CMS survey, but no evidence was shown that EMS Toxicology results were inaccurate or negatively impacted patient management . . . .” P. Decl. I at 11. While Petitioner’s testimony, in a vacuum, could sound persuasive based on factors such as his education and experience (P. Ex. A at 1-6), he, himself, recognized his shortcomings as a laboratory director when he conceded that “there is only so much one can do when the lab ownership and its staff fail to comply.” P. Decl. II at 5.

As discussed above, EMS’s verification procedures were inadequate because Petitioner adopted a facially deficient Validation Plan, contrary to 42 C.F.R. § 493.1445(e)(3)(ii), and EMS and Petitioner failed to review proficiency testing reports and further failed to investigate and take corrective action in response to unacceptable proficiency testing results, in contravention of 42 C.F.R. § 493.1445(e)(4)(iii)-(iv) and (e)(5). Without even resolving the conflicting testimony of the surveyors and Petitioner, the evidence underlying these deficiencies together raises a serious question regarding the integrity of EMS’s reported test results. The evidence of these deficiencies thus is consistent with

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and supports the surveyors’ testimony regarding the seriousness of Petitioner’s failures and EMS’s standard-level noncompliance. Conversely, the evidence underlying these deficiencies is more probative than Petitioner’s self-serving testimony minimizing EMS’s and his own noncompliance with CLIA requirements. Further, even assuming Petitioner is correct that no patient’s “management” was directly impacted by the deficiencies, I am not persuaded that this was not the product of coincidence or random chance. To the contrary, it is apparent that, based on the surveyors’ testimony and the substantive evidence of EMS’s and Petitioner’s noncompliance, the standard-level deficiencies identified during the survey were serious and had the potential to adversely affect patient test results.

Given the seriousness of those deficiencies, I conclude that, at the time of the April 2017 survey, EMS’s laboratory director did not provide overall management and direction in accordance with 42 C.F.R. § 493.1445 and thus did not comply with the laboratory director CLIA condition for laboratories performing high complexity testing at 42 C.F.R. § 493.1441. I further conclude that, because EMS was noncompliant with a CLIA condition at the time of the April 2017 survey, CMS had a basis, even considering this condition-level deficiency alone, to revoke EMS’s CLIA certificate. 42 C.F.R. §§ 493.1806(a), (b), 493.1814(a)(2); see also HRT Lab., Inc., DAB No. 2118 at 10.

Petitioner essentially agrees that revocation of EMS’s CLIA certificate is a desirable outcome, as he testified that he “do[es] not think that the shutting down of EMS is a bad result . . . .” P. Decl. I at 12. Remarkably, Petitioner goes so far as to state in his brief that he “does not object to sanctions as to EMS . . . .” P. Br. at 16. Nevertheless, Petitioner makes several arguments why EMS’s CLIA certificate should not be revoked. None of these arguments has merit.

Petitioner’s primary argument opposing the revocation,Although Petitioner appears to recognize that CMS revoked, rather than suspended, EMS’s CLIA certificate, he repeatedly refers to “suspension” rather than revocation in his briefing. In both its notice of proposed sanctions and notice of imposition of sanctions, CMS clearly informed EMS and Petitioner that it was considering, and then imposing, the principal sanction of revocation, not the separate and distinct principal sanction of suspension. CMS Exs. 13 at 2; 15 at 3; see 42 U.S.C. § 263a(i)(1); 42 C.F.R. § 493.1806. A suspension, as opposed to a revocation, would not trigger a two-year prohibition on owning, operating, or directing a CLIA laboratory in 42 U.S.C. § 263a(i)(3) because such a prohibition is only triggered by revocation, not suspension, of a laboratory’s CLIA certificate. which he expands upon at some length, is that CMS abused its discretion and acted arbitrarily and capriciously in revoking EMS’s CLIA certificate. P. Br. at 10-17. In support of this argument,

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Petitioner asserts that CMS did not initially explain its basis for revoking EMS’s CLIA certificate and only belatedly provided a post-hoc rationalization for the first time in this proceeding. P. Br. at 12-13. Petitioner also points to the non-exclusive list of factors that CMS, by regulation, has indicated it will consider when deciding which sanctions to impose against a deficient laboratory under CLIA. Id. at 10-11 (quoting 42 C.F.R. § 493.1804(d)). Petitioner then goes point-by-point through those factors, as well as identifying a laundry list of other factors he contends bears on the rationality of the revocation, in his attempt to show revocation is “arbitrary and capricious.” Id. at 14-17.

I reject this argument for three reasons. First, as already explained, I do not review whether CMS’s imposition of sanctions is arbitrary and capricious or an abuse of discretion; rather, I review de novo whether CMS had a legal basis for those sanctions. EMS had at least one condition-level deficiency, which gave CMS a legal basis to revoke EMS’s CLIA certificate. Second, as should be apparent from the discussion above, CMS provided an adequate explanation for the revocation and Petitioner has been given a full and fair opportunity to respond to CMS’s allegations in this proceeding.To the extent that, in its submissions in this proceeding, CMS has provided more detail about its basis for sanctioning EMS, those details are consistent with the surveyors’ allegations in the statement of deficiencies and do not amount to post-hoc rationalizations. Further, Petitioner has had an opportunity to respond to those additional details, and I have considered the facts and issues de novo and rendered an independent judgment on their merits, mooting any concerns about any post-hoc rationalizations. Third, and perhaps most importantly, Petitioner himself “[does] not think that shutting down EMS is a bad result” and does not object to sanctions against EMS. P. Decl. I at 12.

Petitioner argues that he is an innocent victim of EMS’s “fraud” and does not deserve to be a “scapegoat” for EMS’s failures. P. Br. at 5, 16; P. Decl. I at 6-9, 12. Petitioner argues that he did his best to implement measures to maintain or return EMS to CLIA compliance, but was undercut by a fraud scheme perpetrated by EMS’s owners that thwarted his efforts. He asserts, for example, that EMS’s owners filed for bankruptcy and cut 90 percent of EMS’s other staff without his knowledge. P. Decl. I at 7, 9. This argument also fails. I find it difficult to reconcile Petitioner’s claim that he was an unwitting victim of fraud with the reality that he had signed on to being a laboratory director of a laboratory that was located nearly all the way across the country. Petitioner claims that he only worked “part time” as the laboratory director and “would only be physically present at the lab one or two days per month on average.” P. Decl. I at 6. However, I know of no circumstances that would have prevented Petitioner from being present at the laboratory on a full-time basis, but rather, he chose to travel from New York to Las Vegas to provide on-site laboratory management just one or two days per month. In fact, despite the professed “part time” nature of Petitioner’s responsibilities as the laboratory’s director, his contract indicates that he was to be

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remunerated at a rate of $150,000 per year (plus a potential $50,000 year-end bonus) and would be entitled to reimbursement for his travel expenses between his home in New York and the laboratory in Las Vegas. P. Ex. 1 at 6. While Petitioner repeatedly stresses the part-time nature of his responsibilities, his contractual salary belies the claim that his work was of such a part-time nature that it had to be limited to only 1 or 2 days per month. Perhaps, rather than falling victim to fraud, it is possible that Petitioner simply did not recognize that, when he was hired at what many would consider to be a full-time salary, EMS expected that he would provide the necessary management, even if extending beyond 1-2 days per month, to ensure that EMS complied with CLIA requirements. Furthermore, given how infrequently Petitioner physically appeared at the laboratory, he may simply have failed to observe that EMS was undergoing difficulties, to include financial troublesPetitioner appears to believe that it is significant that the laboratory filed for bankruptcy after the survey. While speculative, it is certainly possible that based on the breadth and seriousness of the multiple deficiencies cited in the survey, to include three conditions and numerous standards, the laboratory’s ownership could have simply determined that a return to compliance was improbable. and staffing reductions.I make no findings regarding EMS’s staffing levels; Petitioner’s vague testimony is the only evidence that EMS did not have adequate staffing. See CMS Exs. 1, 16, 17. In any event, even without considering failures attributable to others and focusing only on failures for which Petitioner personally bears full responsibility, I have concluded that EMS was out of compliance with at least one condition-level CLIA requirement.And to the extent that Petitioner feels he was somehow under duress to remain as the director because the laboratory threatened to sue him, I note that it is just as possible that the laboratory may believe he is responsible for the laboratory’s failings; his attempt to abdicate his laboratory director responsibilities in the midst of the survey process would expectedly put EMS in an even more precarious position when attempting to contest the survey findings. Thus, even if Petitioner was a victim of fraud, that has no bearing on the appropriateness of the revocation sanction and its attendant collateral consequences for Petitioner.Frankly, if EMS’s owners truly were acting fraudulently as Petitioner alleges, that would cut in favor of the revocation. This simply is not the appropriate forum to remedy any harm Petitioner may have suffered from a purported fraud scheme.

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Finally, Petitioner argues that I “must consider the totality of the facts, which are essentially equitable reasons, to determine whether the penalties to which [sic] CMS seeks to impose are justified by the facts.” P. Br. at 17. Failing to do so, according to Petitioner, “would result in arbitrary and capricious penalties which are excessive . . . .” P. Br. at 17. Petitioner’s argument ignores the fact that I do not have authority to provide equitable relief. See US Ultrasound, DAB No. 2302 at 8 (2010). So long as CMS had a basis for the sanctions it imposed (which it did), it did not act arbitrarily and capriciously, and I am not empowered to overturn those sanctions for equitable reasons.In any event, the balance of equities here does not weigh in Petitioner’s favor against revocation, given that Petitioner’s own failings caused EMS to be out of compliance with a CLIA condition and, by extension, supplied a basis for revocation.

2. Based on the revocation of EMS’s CLIA certificate, Petitioner, as EMS’s laboratory director, is subject to the two-year prohibition on owning, operating, or directing a CLIA laboratory, pursuant to 42 U.S.C. § 263a(i)(3), effective the date of this decision.

As previously discussed, CMS had a legitimate basis to revoke EMS’s CLIA certificate. See CMS Ex. 15 at 1; 42 C.F.R. §§ 493.1806(a), (b); 493.1814(a)(2); 42 U.S.C. § 263a(i). CLIA provides that “[n]o 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)(3). As discussed in section II.A of this decision, Petitioner, as the laboratory director, was an operator of the laboratory within the meaning of the regulations and CLIA. 42 C.F.R. §§ 493.2, 493.1403, 493.1405, 493.1407, 493.1441, 493.1443, and 493.1445.

The Secretary’s regulations and 42 U.S.C. § 263a(i)(3) do not provide any due process such as notice and an ALJ hearing related to the application of the two-year prohibition. However, the DAB has affirmed ALJ decisions that have concluded that a laboratory director, if an operator and allegedly subject to 42 U.S.C. § 263a(i)(3), must be given notice and an opportunity for a hearing to challenge the revocation of the laboratory CLIA certificate. See, e.g., Sentinel Medical Labs, Inc. DAB No. 1762 n.6. The genesis of this case was the notice CMS provided to Petitioner of the revocation of EMS’s CLIA certificate. CMS Ex. 15. In the notice, CMS warned that, if the revocation was upheld on appeal, “the owners and operator(s) (including the laboratory director) are prohibited from owning or operating (or directing) a laboratory for at least two (2) years from the date of the revocation.” CMS Ex. 15 at 5. Petitioner has had a full and fair opportunity to litigate the propriety of the revocation. Thus, because, as the laboratory director, he is considered to be an operator (and has not demonstrated otherwise), he is subject to

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the two-year prohibition on owning, operating, or directing a laboratory, which takes effect the date of the revocation (i.e., the date of this decision).

Petitioner testified that he became EMS’s “part time medical director on or about March 15, 2016.” P. Decl. I at 2. However, the employment agreement he made with EMS is titled “Laboratory Director Employment Agreement,” and, in it, he agreed to be employed as the laboratory director for EMS. P. Ex. 1 at 1. Among other things, Petitioner represented and warranted that he was and would “remain in compliance with all applicable Federal, State and local laws, rules and regulations . . . including federal Clinical Laboratory Improvements Amendments (CLIA) . . . .” P. Ex. 1 at 2. The contract specified that Petitioner’s term as EMS’s laboratory director would continue for one year from the initial effective date and thereafter would “renew automatically for successive renewal terms of one year each . . . , unless terminated earlier . . . .” P. Ex. 1 at 6. A March 17, 2016 letter from CMS, which is addressed to Petitioner and EMS jointly, notes that, in a March 4, 2016 submission from EMS to CMS, EMS reported that Petitioner “became the laboratory director of EMS . . . on February 26, 2016.” P. Ex. 2 at 2. Based on the foregoing, the evidence supports that Petitioner became EMS’s laboratory director on February 26, 2016.

Included among EMS’s July 29, 2017 submissions to CMS is an email thread from June 2017 between Petitioner and EMS’s corporate counsel. CMS Ex. 14 at 4-11. Petitioner titled the initial email “Resignation as EMS Toxicology Director,” although in the body of the email he simply indicates that he had “decided to offer [his] resignation as EMS Toxicology Director.” CMS Ex. 14 at 4, 10. Nothing in the email chain indicates that EMS accepted his offer, and the remaining emails in the message thread indicate that Petitioner never contacted CMS to inform them of any break in his relationship with EMS. CMS Ex. 14 at 5-10. In any event, it is not material whether Petitioner in fact resigned from the laboratory director position with EMS in June 2017, as he undisputedly was EMS’s laboratory director at least from February 26, 2016, through the beginning of June 2017. He thus was EMS’s laboratory director for the overwhelming majority of the time period relevant to the April 2017 survey.

CMS addressed its August 15, 2017 notice imposing sanctions to Petitioner (as EMS’s laboratory director), among others. CMS Ex. 15 at 1. The notice advised Petitioner of the right to request an ALJ hearing. CMS Ex. 15 at 4. The notice also advised that the two-year prohibition of 42 U.S.C. § 263a(i)(3) applied to EMS’s “owners and operator(s) (including the laboratory director) . . . .” CMS Ex. 15 at 5. Petitioner, as the laboratory director, was a laboratory operator during most of the period covered by the survey; in fact, his employment contract with EMS tasked him with providing EMS “administrative, supervisory and oversight services necessary and appropriate for the proper clinical conduct of the Laboratory and its compliance with Applicable Law.” P. Ex. 1 at 2. Moreover, he conceded in his brief that we was an operator, recognizing that because “the sanctions include the revocation of EMS’s CLIA certificate, under the

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regulations, Petitioner would be barred from owning or operating a laboratory for two years.” P. Br. at 5. CMS notified Petitioner of the imposition of sanctions and the application of 42 U.S.C. § 263a(i)(3), and Petitioner has had a full and fair opportunity to challenge those sanctions. Thus, I conclude that Petitioner, as the laboratory director, is subject to the two-year prohibition effective the date of this decision. See Sentinel Medical Labs, Inc., DAB No. 1762 at 7 (upholding that the two-year prohibition “became effective upon issuance of the ALJ decision”); Rustom Ali, Jahan Ferdous, & Scottsdale Med. Lab., DAB No. 2016 at 2 (upholding “ALJ’s conclusion that . . . the laboratory director[ is ] banned from owning, operating, or directing a laboratory subject to CLIA for a period of two years from the effective date of the ALJ decision.”).

Petitioner appears to argue that subjecting him to the two-year prohibition mandated by 42 U.S.C. § 263a(i)(3) is arbitrary and capricious. P. Br. at 5, 6, 17. This argument also fails. First, the two-year prohibition is triggered automatically by statute against any owner or operator, including a laboratory director who is an operator, of a laboratory that has had its CLIA certificate revoked. It is not my place to question Congress’s judgment on this point, whether it be under an arbitrary-and-capricious standard or any other. That said, I fully agree with the rationality of the prohibition. As a general matter, owners and operators of CLIA laboratories are responsible for ensuring those laboratories comply with CLIA’s requirements, and, as CMS’s regulations make clear, laboratory directors generally qualify as operators who bear the same responsibility. It is hardly arbitrary or capricious to prohibit from owning or operating a CLIA laboratory any owner or operator (to include a laboratory director filling the role of an operator) of a laboratory that has demonstrated an inability to comply with CLIA requirements. The obvious fear is that an irresponsible or neglectful owner or operator will simply move on to another laboratory, to the detriment of Medicare beneficiaries and the general public. More importantly in Petitioner’s specific case, though, it is wholly rational to prohibit from owning or operating a CLIA laboratory an individual, Petitioner, whose own failings were serious enough to cause a laboratory to be out of compliance with at least one CLIA condition.

V. Conclusion

For the foregoing reasons, Petitioner, the laboratory director of EMS, is prohibited from owning, operating, or directing a laboratory subject to CLIA for a period of two years from the date of this decision. 42 U.S.C. § 263a(i)(3); 493.1844(d)(2).