Quantox Lab, LLC, CR6293 (2023)

DECISION

The Centers for Medicare & Medicaid Services (CMS) proposed to revoke the certificate of Quantox Lab, LLC (Petitioner), to operate as a laboratory under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).  CMS also imposed a temporary suspension of Petitioner’s CLIA certificate, a civil money penalty (CMP), and cancellation of Petitioner’s approval to receive Medicare reimbursement for its services.  As discussed below, CMS established a prima facie case for noncompliance with conditions for a CLIA certificate; however, Petitioner neither expressly disputed nor presented sufficient evidence to rebut CMS’s prima facie case.  Therefore, given the existence of at least one condition-level deficiency, I conclude that CMS had a legitimate basis to impose sanctions on Petitioner, including revocation of its CLIA certificate. 

I.  Legal Framework

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories.  42 U.S.C. § 263a.  The purpose of CLIA is “to strengthen federal oversight of clinical laboratories to ensure that [laboratory] tests are accurate and reliable.”  H.R. Rep. No. 100-899 at 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828-29.  The Secretary for Health and Human Services (Secretary) certifies laboratories under CLIA when those

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laboratories meet the conditions for certification set out in the statute and regulations that the Secretary promulgates.  42 U.S.C. § 263a(d), (f).¹  The Secretary may approve private nonprofit organizations to serve as accrediting bodies to accredit laboratories under CLIA.  42 U.S.C. § 263a(e). 

Under CLIA, the 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 of the conditions for certification and/or the standards for laboratories required by the statute or established by the Secretary.  42 U.S.C. § 263a(i).  Such sanctions may be imposed after providing the laboratory with notice and an opportunity for a hearing.  42 U.S.C. § 263a(i)(1).  The Secretary may also impose intermediate sanctions, such as a CMP or directed plan of correction.  42 U.S.C. §§ 263a(h), 1395w-2.  Intermediate sanctions can be imposed after providing the laboratory with notice and an opportunity to respond.  42 U.S.C. § 263a(h)(3). 

The Secretary 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 Secretary explained in regulations that CLIA’s enforcement mechanisms are intended to “protect all individuals served by laboratories against substandard testing of specimens,” “safeguard the general public against health and safety hazards that might result from laboratory activities,” and “motivate laboratories to comply with CLIA requirements so that they can provide accurate and reliable test results.”  42 C.F.R. § 493.1804(a). 

The regulations require that each laboratory must be either CLIA-exempt or have a CLIA certificate, including a “certificate of accreditation.”  42 C.F.R. § 493.5(c)(5); 42 C.F.R. § 493.2 (definition of CLIA certificate).  The regulations further specify conditions and standards for certification that a laboratory must meet and maintain 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.  The Secretary delegated to CMS the 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 CMP.  42 C.F.R. §§ 493.1806‑493.1844.  Cancellation of Medicare payments is also authorized as a principal sanction when condition-level deficiencies are found (42 C.F.R. §§ 493.1807(a), 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

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adequate basis for principal and alternative sanctions.  42 C.F.R. § 493.1806(a); White Lake Family Med., P.C., DAB No. 1951 at 2 (2004).  Noncompliance with even one standard, if sufficiently serious, may justify a condition-level deficiency.  Edison Med. Labs., Inc., DAB No. 1713 at 1-2 (1999) (summarizing the interrelationship between conditions and standards, and indicating that “noncompliance with one or more particular standards relating to a condition may or may not be serious enough to cause a deficiency at the level of the condition.”), aff’d, Edison Med. Lab., Inc. v. Health Care Financing Admin., 250 F.3d 735 (Table) (3rd Cir. 2001). 

The Secretary’s regulations provide that a laboratory or prospective laboratory dissatisfied with an initial determination to impose sanctions (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. Part 498, Subpart D apply 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).  Further, the cancellation of a laboratory’s approval to receive Medicare payments is an initial determination.  42 C.F.R. § 493.1844(b)(4).  In addition, the imposition of an alternative sanction, such as a CMP, is also an initial determination that is subject to review.  42 C.F.R. § 493.1844(b)(3), (f)(1). 

However, a CMS determination to impose a particular alternative sanction, the amount of a CMP, or that deficiencies pose immediate jeopardy, is not subject to ALJ review.  42 C.F.R. § 493.1844(c)(4), (6), (7); Edison, DAB No. 1713 (“The ALJ’s decision not to address the determination that the deficiencies constituted immediate jeopardy, while nevertheless reaching the factual challenges posed to the underpinnings of those deficiency findings is clearly mandated by the regulations on the scope of appeal.  42 C.F.R. § 493.1844(c)(6).”).  Generally, when a hearing is requested, revocation of a CLIA certificate is not effective until after a decision is issued by the ALJ.  42 C.F.R. §§ 493.1840(d)(1), (e), 493.1844(d)(2)(i).  This decision is final unless a party requests and receives review by the Departmental Appeals Board.  42 C.F.R. § 493.1844(d)(4)(i). 

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 Health & Human Servs., No. 98-3789 (GEB), slip op. (D.N.J. 1999); Edison, DAB No. 1713 (applying Hillman burden of proof to CLIA appeals).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

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ALJ.  The ALJ resolves these issues de novo.  Rustom Ali, Jahan Ferdous, & Scottsdale Medical Lab., DAB No. 2016 at 21 (2006) (citing Emerald Oaks, DAB No. 1800 at 16 (2001)). 

II.  Background and Procedural History

Petitioner is a clinical laboratory located in Berkeley, Missouri.  CMS Ex. 2 at 1.  It has had a CLIA certificate to perform high complexity testing in toxicology since August 29, 2017.²  CMS Ex. 15 ¶ 6. 

On January 3, 2019, the Missouri Department of Health and Senior Services (state agency) received a complaint alleging that Petitioner allowed unqualified personnel to perform testing outside the assigned specialty for its CLIA certificate.  CMS Ex. 14.  On February 4-6, 2019, surveyors from the state agency conducted a complaint survey of Petitioner’s laboratory.  CMS Ex. 12 ¶ 7; CMS Ex. 14 at 2; CMS Ex. 15 ¶ 6.  Based on the survey, the state agency issued a Statement of Deficiencies (SOD) detailing the reasons Petitioner was out of compliance with the following conditions for CLIA certification and Medicare coverage of its services:  42 C.F.R. § 493.1230 (General Laboratory Systems, Tag D5200); 42 C.F.R. § 493.1250 (Analytic Systems, Tag D5400); 42 C.F.R. § 493.1441 (Laboratory Director – Laboratories Performing High Complexity Testing, Tag D6076); and 42 C.F.R. § 493.1487 (Testing Personnel – Laboratories Performing High Complexity Testing, Tag D6168).  CMS Ex. 2 at 2-17.  Under each of the condition-level deficiencies, the SOD set forth one or more standard-level deficiencies identified by the surveyors.  CMS Ex. 2 at 2-17. 

In a March 1, 2019 letter, CMS advised Petitioner that, based on the survey, it determined that Petitioner was noncompliant with four CLIA conditions of participation, as well as with several standards, and that its deficient practices posed immediate jeopardy to patient health and safety.³  CMS Ex. 1 at 1-2; CMS Ex. 12 ¶ 12; CMS Ex. 15 ¶¶ 7-8.  CMS referenced the SOD.  CMS Ex. 1 at 2.  CMS informed Petitioner that it proposed to impose the following sanctions based on its noncompliance:  the principal sanctions of suspension and revocation of its CLIA certificate; cancellation of all Medicare and Medicaid payments; and a CMP of $19,787 per day for each day of noncompliance.  CMS gave Petitioner ten days to submit a credible allegation of compliance and acceptable evidence documenting removal of the immediate jeopardy and the correction of the identified Condition-level deficiencies.  CMS Ex. 1 at 2. 

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Petitioner submitted an allegation of compliance with supporting evidence on March 11, 2019.  CMS Ex. 3; CMS Ex. 15 ¶ 12. 

In an April 9, 2019 notice of initial determination, CMS advised Petitioner that its allegations of compliance and evidence of correction were not credible or acceptable and that Petitioner remained out of compliance with the CLIA conditions cited at the February 6, 2019 survey.⁴  CMS Ex. 4.  CMS also informed Petitioner that it was imposing the following sanctions, as proposed in its March 1, 2019 letter: 

• Suspension and revocation of Petitioner’s CLIA certificate effective June 8, 2019, unless Petitioner filed a timely hearing request, in which case the revocation would not become effective until an administrative hearing decision upheld the noncompliance).
• CMP of $19,787 per day for each day of non-compliance effective April 21, 2019, and continuing until either CMS verified that Petitioner was in compliance with all Condition-level requirements or its CLIA certificate was revoked.
• Cancellation of Petitioner’s approval to receive Medicare payments for any services, performed on or after April 21, 2019, if Petitioner did not file an appeal.

CMS Ex. 4 at 15.  CMS explained that Petitioner had 60 days to file a request for hearing before an ALJ.  Finally, CMS gave Petitioner until April 20, 2019, to submit another allegation of compliance.  CMS Ex. 4 at 16-17. 

Petitioner submitted an allegation of compliance on April 19, 2019.  P. Ex. 1; CMS Ex. 16.  In a May 16, 2019 letter, CMS advised Petitioner that the April 19, 2019 allegation of compliance was not credible or acceptable.  CMS Ex. 5.  CMS found that Petitioner continued to be noncompliant with Condition-level requirements and that immediate jeopardy remained uncorrected.  CMS Ex. 5 at 2.  CMS advised Petitioner that the sanctions previously imposed in its April 11, 2019 letter remained imposed, and that appeal rights had been provided in that letter.  CMS Ex. 5 at 10.  CMS also stated that it was imposing a directed plan of correction and that Petitioner had another opportunity to submit a credible allegation of compliance by May 28, 2019.  CMS Ex. 5 at 10-12. 

In response, Petitioner sent a May 21, 2019 letter to CMS.  P. Ex. 2.  Petitioner also submitted additional allegations of compliance to CMS on June 6, 2019, June 21, 2019,

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June 27, 2019, and July 5, 2019.  See CMS Ex. 15 ¶ 15; CMS Exs. 17, 18.  CMS reviewed and rejected all but the July 5, 2019 submission.  CMS Ex. 15 ¶ 16.  

On July 8, 2019,  Petitioner requested a hearing to challenge CMS’s determination of noncompliance with CLIA requirements and the imposition of sanctions.  The Civil Remedies Division (CRD) docketed this case under C-19-937.  On July 11, 2019, I issued an Acknowledgment, along with my Standing Prehearing Order (SPO), which directed the parties to file their respective pre-hearing exchanges.  In October 2019, the parties jointly moved for a stay to permit them to determine whether Petitioner could return to compliance, which I granted.  I continued the stay at the parties’ request while they continued to work toward resolution of this matter. 

CMS continued to communicate with Petitioner concerning a return to compliance.  CMS Ex. 15 ¶ 19; CMS Br. at 7.  In a July 30, 2019 letter, CMS advised Petitioner that it had determined that Petitioner’s sixth allegation of compliance, submitted on July 5, 2019, was acceptable and credible.  CMS Ex. 6 at 2; CMS Ex. 15 ¶ 20.  CMS also referred to the prior allegations of compliance submitted in June 2019, noting, “We received a third [allegation of compliance] on June 6, 2019 that was not credible.  We received a fourth [allegation of compliance] on June 21, 2019 that was not credible.  We received a fifth [allegation of compliance] on June 27, 2019 that was not credible.”  CMS Ex. 6 at 2.  CMS informed Petitioner that the sanctions of suspension and revocation of its CLIA certificate remained imposed but “[would] not be finalized.”  CMS advised that, after an unannounced onsite revisit survey verified compliance, the imposed sanctions would be rescinded.  Additionally, CMS noted that the daily accrual of the CMP would cease once compliance was verified.  CMS Ex. 6 at 2; CMS Ex. 15 ¶ 20. 

On October 29-30, 2019, the state agency conducted a revisit survey of Petitioner’s facility and documented their findings in another SOD.  CMS Ex. 7 at 2; CMS Ex. 8; CMS Ex. 12 ¶¶ 15-16. 

By letter dated November 4, 2019, CMS issued an initial determination in which it advised Petitioner, that, based on the October 2019 revisit survey, it determined that immediate jeopardy had not been removed.  CMS Ex. 7.  CMS also advised that Petitioner had two repeat condition-level deficiencies, 42 C.F.R. § 493.1250 (Analytic Systems, Tag D5400) and 42 C.F.R. § 493.1441 (Laboratory Director – Laboratories Performing High Complexity Testing, Tag D6076), and one new condition-level deficiency, 42 C.F.R. § 493.1100 (Facility Administration, Tag D3000).  CMS Ex. 7 at 2; CMS Ex. 8.  In addition, CMS found that multiple standard-level deficiencies cited at the February 6, 2019 survey remained uncorrected, and new standard-level deficiencies had been identified as well.  CMS Ex. 7 at 2; CMS Ex. 8.  CMS referenced the SOD, which was enclosed with the letter.  CMS Ex. 7 at 2; CMS Ex. 8. 

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CMS informed Petitioner that the previous sanctions detailed in the April 9, 2019 letter remained imposed.  In addition, CMS proposed the additional principal sanction of suspension of Petitioner’s CLIA certificate, effective November 9, 2019, based on immediate jeopardy found at the October 30, 2019 revisit survey and Petitioner’s failure to meet all CLIA conditions of participation.  CMS advised Petitioner that the suspension would take effect on November 9, 2019, regardless of whether it requested a hearing and would remain in effect until its CLIA certificate was revoked.  CMS Ex. 7 at 3.CMS’s letter reiterated Petitioner’s appeal rights.  CMS Ex. 7 at 3-4.  CMS gave Petitioner until November 14, 2019, to submit a credible allegation of compliance and acceptable evidence of correction.  CMS Ex. 7 at 2. 

On November 6, 2019, Petitioner submitted an allegation of compliance as well as an addendum on November 12, 2019.  CMS Br. at 8; CMS Ex. 19 at 2812-2862. 

In a November 13, 2019 letter, CMS advised Petitioner that it had reviewed its November 6 and November 12 submissions and determined that its allegation of noncompliance was not credible and evidence of correction was unacceptable.  CMS found that Petitioner continued to be out of compliance with CLIA requirements and that immediate jeopardy continued to exist.  CMS Ex. 9 at 1.  CMS advised Petitioner that the previously imposed sanctions remained imposed and that its CLIA certificate was suspended effective November 9, 2019.  CMS Ex. 9 at 6-7.  CMS reminded Petitioner of its appeal rights and that if it did not timely file an appeal request by January 4, 2020, revocation of its CLIA certificate would be effective that date.  CMS Ex. 9 at 7.  CMS also gave Petitioner until November 24, 2019, to submit an allegation of compliance.  CMS Ex. 9 at 6. 

On November 24, 2019, Petitioner submitted another allegation of compliance with supporting evidence.  P. Ex. 3; see CMS Ex. 15 ¶ 27. 

By letter dated December 17, 2019, CMS described the timeline of events up to that point (surveys, Petitioner’s submissions, and CMS’s responses), and advised Petitioner that its allegation of compliance received on November 24, 2019, was not credible and the evidence of correction was inaccurate and unacceptable.  CMS Ex. 10 at 1-2; CMS Ex. 15 ¶ 28.  CMS found that Petitioner was “still not compliant with CLIA requirements as cited during the October 30, 2019 revisit survey and that immediate jeopardy continues to exist.”  CMS Ex. 10 at 2.  CMS advised Petitioner that the sanctions remained imposed.  CMS Ex. 10 at 2.  Finally, CMS advised Petitioner that “CMS is not requesting any further allegations of compliance due to the inaccurate and unacceptable information in all previous submissions.”  CMS Ex. 10 at 2. 

On January 3, 2020, Petitioner requested a hearing to dispute the November 4, 2019 initial determination.  CRD docketed the new hearing request under C-20-219.  On January 9, 2020,  I consolidated the cases under docket numbers C-19-937 and C-20-219

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into C-20-219, dismissed C-19-937, and directed the parties to continue filing joint status reports each month concerning their efforts to resolve this matter. 

The parties filed joint status reports in January, February, and March 2020.  In an update to their March 2020 joint status report dated March 30, 2020, the parties advised me that they were unable to settle this case and requested to move forward with the appeal.  On April 1, 2020, I issued my SPO and a Notice Resetting Prehearing Submission Schedule. 

After receiving an extension, on August 6, 2020, CMS filed CMS’s Motion for Summary Judgment or in the Alternative Prehearing Brief, exhibit and witness lists, and 19 proposed exhibits (CMS Exs. 1-19), including the written direct testimony of two witnesses (CMS Exs. 12, 15).  After being granted an extension, on October 14, 2020, Petitioner filed its prehearing brief and response to CMS’s motion for summary judgment, along with exhibit and witness lists, and three unmarked, proposed exhibits (P. Exs. 1-3).  Petitioner listed four proposed witnesses on its witness list.  However, Petitioner neither offered the written direct testimony of any of these witnesses nor did it request any subpoenas to compel their testimony. 

III.  Admission of Evidence

Neither party objected to the proposed exhibits.  Therefore, I admit CMS Exhibits 1 through 19 and Petitioner Exhibits 1 through 3 into the record.  See SPO ¶ 9; Civil Remedies Division Procedures (CRDP) § 14(e). 

IV.  Decision on the Written Record

My SPO required the parties to submit written direct testimony for each of its witnesses in the form of an affidavit or declaration made under penalty of perjury.  SPO ¶ 10; CRDP §§ 16(b), 19(b).  The SPO specified that “[a] hearing to cross-examine witnesses will be necessary only if a party files admissible, written direct testimony, and the opposing party asks to cross-examine.”  SPO ¶ 12; CRDP § 19(b); see Vandalia Park, DAB No. 1940 (2004); Pacific Regency Arvin, DAB No. 1823 at 8 (2002) (holding that the use of written direct testimony for witnesses is permissible so long as the opposing party has the opportunity to cross-examine those witnesses).  The SPO stated further:  “Unless a hearing is required for cross-examination of a witness or witnesses, the record will be closed and the case will be ready for a decision after all the deadlines have passed.”  SPO ¶ 13; CRDP § 19(d). 

Petitioner neither submitted written direct testimony for any of its proposed witnesses nor requested subpoenas to compel testimony at a hearing.  See SPO ¶ 8.  Petitioner offered no statement as to why it failed to comply with my directives.  CMS submitted two declarations (CMS Exs. 12, 15), but Petitioner did not request to cross-examine those

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witnesses.  See SPO ¶ 11.  Therefore, there is no need to hold an in-person hearing in this case and I decide this case based on the written record.  SPO ¶ 13; CRDP § 19(d). 

I note that this case could be decided on summary judgment because Petitioner’s prehearing brief only challenges CMS’s finding of immediate jeopardy and the imposition and amount of the CMP.  As I explain in detail below, neither CMS’s immediate jeopardy findings nor the amount of the CMP that CMS imposed are appealable initial determinations.  Petitioner at first appeared to challenge the condition-level deficiencies in the hearing requests it filed.  However, my SPO explicitly required each party to file “[a] brief addressing all issues of law and fact” (SPO ¶ 7(d)(i)) and that “[p]rehearing briefs must contain all arguments that a party intends to make” (SPO ¶ 7 (second bullet point under “Note.”)).  See CRDP § 13(a)(v).  Therefore, I consider Petitioner to have abandoned the arguments only appearing in its hearing requests.  Because I could issue a decision based on either summary judgment or as a decision on the written record, I opt to issue a decision on the written record. 

V.  Issue

Whether, at the time of the February 6, 2019 complaint survey and the October 30, 2019 revisit survey, Petitioner was in compliance with all CLIA condition-level requirements. 

VI.  Findings of Fact, Conclusions of Law, and Analysis

Petitioner Raises No Appealable Issues

All of Petitioner’s arguments in its prehearing brief involve challenges to matters outside my jurisdiction.  Therefore, I cannot consider them. 

1. 1. CMS’s finding of immediate jeopardy is not an initial determination; therefore, it is not subject to appeal. 
2. 2. Although CMS’s imposition of a CMP is an initial determination, the amount of the per-day CMP is not an initial determination; therefore, it is not subject to appeal.

Based on the complaint survey that ended on February 6, 2019, and the revisit survey that ended on October 30, 2019, CMS found that Petitioner had several condition-level deficiencies.  Petitioner’s prehearing brief contests CMS’s immediate jeopardy finding and the CMP amount (and possibly the decision to impose a CMP). 

As stated above in the first section of this decision, neither the immediate jeopardy finding nor the CMP amount (nor CMS’s decision as to which alternative sanctions to impose) are appealable initial determinations in CLIA cases.  Because of Petitioner’s

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focus on matters that it has no right to appeal, I first discuss Petitioner’s arguments in detail and then explain why they are not justiciable issues in this case. 

Petitioner commences its brief as follows: 

CMS’s Motion for Summary Judgment should be denied because there are multiple disputed issues of material fact arising from CMS’ failure to find and articulate evidence to support its finding of immediate jeopardy.  CMS’s conclusions are based on conjecture and, as a matter of law, cannot support such a finding.  The Board should also reject CMS’s substantive finding of immediate jeopardy because CMS ignored the applicable law and regulatory requirements in determining that any deficiencies constituted immediate jeopardy.  Finally, the Board should also reject CMS’ astonishing attempt to impose nearly $4 million in civil monetary penalties – in a case where CMS did not identify a single affected patient – on the basis that such a penalty violates the Excessive Fines Clause of the Eighth Amendment to the United States Constitution. 

Br. at 1-2. Moreover, Petitioner views the issues in this case to be as follows:

1. Whether CMS determination of condition level deficiencies warranting immediate jeopardy was consistent with the requirements for such a finding.
2. Whether CMS failed to follow the law in finding and assessing immediate jeopardy.
3. Whether CMS imposition of civil monetary penalties in the amount of $19,787 per day is so disproportionate to the harm that it violates the Excessive Fines Clause of the Eighth Amendment to the United States Constitution.

Br. at 9 (“Issues Presented”) (emphasis added).

In arguing that there is no evidence to support the immediate jeopardy determination, Petitioner contends that:  

CMS . . . failed to establish evidence that the deficiencies created a likelihood of “serious injury, serious harm, serious impairment or death” and failed to identify any patients or

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likely to be affected by the alleged noncompliance.  This failure to establish these requirements or to articulate any temporal connection between the cited deficiencies and likely harm to patients - relying instead on speculation about potential harm to patients (CMS Br. at 27) – dooms CMS’ motion for summary judgment because Quantox maintains that there is no evidence of a connection between the alleged deficiencies and the likelihood of harm. 

Br. at 13.

Petitioner asserts that “the surveyors did not present and the Statements of Deficiencies do not contain evidence of any serious adverse outcome.”  P. Br. at 17.  According to Petitioner, contrary to the guidance of Appendix Q of the State Operations Manual, CMS failed to document and support the immediate jeopardy finding in the February 6, 2019 SOD.⁵  P. Br. at 13-14.  Petitioner contends that CMS nowhere articulated in the SOD how a serious adverse outcome occurred or was likely to occur as a result of the alleged condition-level noncompliance, and additionally, that CMS did not identify any patients who were affected or at risk for injury or harm.  P. Br. at 14.  Moreover, Petitioner asserts that CMS relied on “speculative conjecture,” which “is far short of the required finding of a ‘likelihood that serious harm will occur’ demanded by the regulations in order to find immediate jeopardy.”  P. Br. at 16.  As further argument, Petitioner maintains that the “immediate jeopardy determination was erroneous as a matter of law because CMS failed to find and articulate a likelihood of serious injury, harm, impairment or death as a result of [Petitioner’s] noncompliance.”  P. Br. at 16. 

Noting that the majority of the deficiencies related to the PolyChem 180 analyzer instrument, Petitioner goes on to argue that immediate jeopardy could not exist after October 5, 2018, because that is the date the PolyChem 180 instrument was decommissioned.  P. Br. at 9, 18-19.  Within this argument, Petitioner asserts: 

The general rule is that a petitioner cannot challenge the level of noncompliance assessed by CMS.  However, where CMS finds immediate

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jeopardy and that determination affects CMS’ assessment of a civil monetary penalty, there is an exception.  Such a situation exists here. 

Br. at 19.

Further, Petitioner argues that the CMP, which it estimates at nearly $4 million, is excessive and violates the Eighth Amendment’s prohibition against excessive fines.  Petitioner argues that given CMS’s failure to identify any harm or the likelihood of harm or death to any patients, the CMP is grossly disproportionate to the alleged deficiencies.  P. Br. at 20-24. 

None of Petitioner’s arguments relate to issues I have jurisdiction to review. 

The regulations governing CLIA cases are clear that a laboratory may only appeal actions which are initial determinations.  42 C.F.R. § 493.1844(b).  Actions which are not initial determinations are not subject to appeal.  42 C.F.R. § 493.1844(c).  The regulations explicitly state that the following actions are not initial determinations: 

• The determination as to which alternative sanction or sanctions to impose, including the amount of a civil money penalty to impose per day or per violation.
• The determination that a laboratory’s deficiencies pose immediate jeopardy.
• The amount of the civil money penalty assessed per day or for each violation of Federal requirements.

42 C.F.R. § 493.1844(c)(4), (6), (7); see Edison, DAB No. 1713.

As evident from the passages quoted from Petitioner’s brief, Petitioner’s primary focus was not to challenge the substantive deficiencies in the SODs, but to advance arguments to dispute CMS’s immediate jeopardy determination and the CMP amount that was imposed.⁶  However, whether Petitioner’s deficiencies posed immediate jeopardy to patient health and safety and whether the CMP amount is appropriate cannot be litigated by Petitioner because they are not appealable initial determinations, and thus, are not subject to my review.  42 C.F.R. § 493.1844(c)(4), (6), (7).  

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Finally, one of Petitioner’s arguments summarized above, regarding an exception to the review of an immediate jeopardy determination based on the CMP imposed, appears to be confusing CLIA cases with certain situations which may arise in cases involving skilled nursing facilities (SNFs).  In an SNF case, an ALJ may review CMS’s scope and severity findings, which include a finding of immediate jeopardy, only if a successful challenge would affect the range of the CMP assessed or CMS has made a finding of substandard quality of care that results in the loss of approval of a facility’s nurse aide training program.  42 C.F.R. § 498.3(b)(14), (d)(10); see Evergreen Commons, DAB No. 2175 (2008); Aase Haugen Homes, Inc., DAB No. 2013 (2006).  However, in a CLIA case, CMS’s finding of immediate jeopardy and the amount of the CMP are simply not appealable initial determinations and thus, are not subject to ALJ review. 

Analysis of the Deficiencies

Although Petitioner did not raise issues in its prehearing brief over which I have jurisdiction, the following findings and conclusions show that CMS met its burden to provide prima facie evidence that Petitioner had condition-level deficiencies.  Because Petitioner did not dispute the condition-level deficiencies in its prehearing brief, I only discuss some of those deficiencies to ensure that CMS’s actions had a factual and legal basis.⁷ 

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3. 3. The SOD for the survey completed on February 6, 2019, provided detailed and specific factual findings based on the observations of the surveyors. The SOD, along with the testimony of the lead surveyor, provides prima facie evidence that Petitioner was not in compliance with four of the standards under the Laboratory Director Condition, 42 C.F.R. § 493.1441 (Tag D6076), one of the condition-level requirements to maintain a CLIA certificate.  Petitioner presented no evidence to show that it was in compliance with the following standards under the Laboratory Director condition at the time of the February 6, 2019 survey:  42 C.F.R. §§ 493.1445(e)(3)(ii), 493.1445(e)(5), 493.1445(e)(12), and 493.1445(e)(14).  Therefore, I conclude that Petitioner was not in compliance with these standards, and, thus, was not in compliance with the condition at 42 C.F.R. § 493.1441. 

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.  At the February 6, 2019 survey, the surveyors alleged that Petitioner was out of compliance with four conditions required for CLIA certification.  At the October 30, 2019 revisit survey, the surveyors found that there were three condition-level violations, of which two were repeat deficiencies from the February 2019 survey. 

Because the failure to comply with even one CLIA condition is sufficient grounds for sanctions, it is not necessary for me to discuss all of the condition-level violations in this case.  In my analysis, I focus only on the Laboratory Director Condition and the Analytic Systems Condition, which were identified as the repeat condition-level deficiencies.  I conclude that Petitioner was not in compliance with these condition-level requirements at the time of both the February 2019 and October 2019 surveys.  Either one of these condition-level deficiencies is sufficient to support the principal and alternative sanctions CMS imposed. 

The CLIA condition for Laboratory Director with respect to laboratories performing high complexity testing requires the laboratory to “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.

In the SOD for the February 6, 2019 survey, the surveyors provided detailed factual findings to support the state agency’s conclusion that Petitioner was not in compliance with the Laboratory Director Condition at 42 C.F.R. § 493.1441 (Tag D6076).  The surveyors alleged in the SOD that Petitioner did not comply with the Laboratory Director Condition based on its failure to comply with four standards:  42 C.F.R. §§ 493.1445(e)(3)(ii) (Tag D6086), 493.1445(e)(5) (Tag D6093), 493.1445(e)(12) (Tag D6102), and 493.1445(e)(14) (Tag D6106).  CMS Ex. 2 at 10-13. 

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In its brief, consistent with the SOD, CMS argues that Petitioner violated the Laboratory Director Condition at 42 C.F.R. § 493.1441, and that this condition-level noncompliance was based on Petitioner’s violation of the four standards listed above.  CMS Br. at 9-13; CMS Ex. 2 at 10-13.  As support for its arguments, CMS relies primarily on the surveyors’ observations and conclusions as documented in the SOD as well as various CMS notice letters. 

The lead surveyor for the February 6, 2019 survey was Karen Sutterer, who provided written direct testimony.⁸  CMS Ex. 12.  Petitioner did not request to cross-examine Surveyor Sutterer and has not refuted her written direct testimony.  Therefore, I accept Surveyor Sutterer’s testimony as credible.  As discussed below, Surveyor Sutterer’s testimony supports CMS’s arguments and CMS’s reading of the SOD’s factual basis for noncompliance with the regulatory standards. 

Surveyor Sutterer testified that she and another surveyor conducted the survey on February 4-6, 2019, and they collaborated in writing the SOD.⁹  CMS Ex. 12 ¶¶ 7, 10.  Surveyor Sutterer testified that, “[t]he CMS Form 2567 [SOD] adequately captures the deficiencies and grounds for each citation.”  CMS Ex. 12 ¶ 10. 

Surveyor Sutterer testified to Petitioner’s deficient practices with respect to 42 C.F.R. § 493.1441 as follows: 

The laboratory director failed to fulfill his duties as the responsible party for the overall operations and administration of the laboratory.  The failure to ensure quality lab operations created the potential risk of death to individuals served by the laboratory due to the possibility of overmedication from false negatives or drug interactions.  Based on review of instrument documentation, the laboratory director failed to ensure the verification procedures were adequate on the Polychem 180; failed to ensure the quality control programs were established and maintained for the Polychem 180; failed to ensure prior [to] testing that all personnel have the required education and experience; failed to ensure an approved procedural manual for the Polychem 180 toxicology analyzer was available for testing personnel. 

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CMS Ex. 12 at 2-3 ¶ 11(a)(ii).  

CMS argues that Petitioner’s violation of the Laboratory Director condition was based on its noncompliance with the following four standard-level requirements:  42 C.F.R. §§ 493.1445(e)(3)(ii) (Tag D6086), 493.1445(e)(5) (D6093), 493.1445(e)(12) (Tag D6102), and 493.1445(e)(14) (Tag D6106).  As discussed below, I conclude that Petitioner was out of compliance with these standards, resulting in Petitioner’s failure to meet the overall Laboratory Director condition.  I discuss each of these standards. 

Under the standard at 42 C.F.R. § 493.1445(e)(3)(ii) (Tag D6086), the laboratory director must ensure that the laboratory’s verification procedures used are adequate to determine the accuracy, precision, and other pertinent performance characteristics of its test methodologies. 

CMS alleges that Petitioner was not in compliance with this standard-level requirement because its laboratory director failed to have “verification procedures for the PolyChem 180 analyzer for urine toxicology.”  CMS Br. at 11; see CMS Ex. 2 at 10.  Relying on the SOD, CMS notes that Petitioner’s general supervisor and technical supervisor confirmed that the lab director did not carry out this responsibility.  CMS Br. at 11 (citing CMS Ex. 2 at 10-11). 

In the SOD, the surveyors described the specific factual basis for this deficiency.  The surveyors found that there were no verification procedures for the PolyChem 180 chemistry analyzer for benzodiazepine, methadone, opiate, amphetamine, ethanol, tetrahydrocannabinol, and buprenorphine, and this “showed [Petitioner] failed to perform accuracy, precision, reportable range, normal values, specificity and sensitivity prior to testing patient samples.”  CMS Ex. 2 at 10.  Additionally, the surveyors noted that Petitioner’s general supervisor and technical supervisor confirmed in an interview that Petitioner’s laboratory director “failed to ensure adequate verification procedures for the PolyChem 180 analyzer.”  CMS Ex. 2 at 10-11. 

According to CMS, Petitioner responded to this deficiency in its allegation of compliance and claimed that “[b]ecause both PolyChem analyzer and the testing reagents are FDA-approved, the laboratory just needs to verify the performance of the test according to manufacturer’s product insert.”  Petitioner alleged that a “verification process was conducted in late July and early August of 2018.”  CMS Br. at 11 (citing CMS Ex. 3 at 145).  

CMS argues that Petitioner was non-responsive to the deficiency.  According to CMS, “the product package insert did not contain the laboratory’s verification of accuracy, precision, reportable range, patient normal values, specificity and sensitivity,” approved

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by the laboratory director before performing patient testing.  CMS Br. at 11-12 (citing CMS Ex. 4 at 10). 

I find that the SOD, which was supported by the written direct testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima facie case with respect to this deficiency.  The “SOD may function both as a notice document and as evidence of the facts asserted therein.”  Oxford Manor, DAB No. 2167 at 2 (2008).  Further, “[t]he SOD is a contemporaneous record of the survey agency’s observations and investigative findings, and [the Departmental Appeals Board has] made it clear that CMS may make a prima facie showing of noncompliance based on that document if the factual findings and allegations it contains are specific, undisputed, and not inherently unreliable.”  Guardian Health Care Ctr., DAB No. 1943 at 14 (2004).  My review indicates that CMS’s assertions are accurately reflected in the SOD, which was cited in CMS’s brief. 

Petitioner cited to no evidence in the record to rebut CMS’s prima facie showing of noncompliance. Petitioner did not dispute that its general supervisor and technical supervisor admitted the deficient practices which were cited under this standard.  I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1445(e)(3)(ii) (Tag D6086) during the February 2019 survey. 

Under the standard at 42 C.F.R. § 493.1445(e)(5) (D6093), the laboratory director is required to “[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.” 

In alleging that Petitioner was not in compliance with this standard-level requirement, CMS relies on the surveyors’ findings in the SOD.  CMS Br. at 12 (citing CMS Ex. 2 at 11).  As documented in the SOD, the surveyors observed that the PolyChem 180 analyzer for urine toxicology was powered on, and they reviewed 80 patient test reports for benzodiazepine, methadone, opiate, amphetamine, ethanol, tetrahydrocannabinol, buprenorphine during the timeframe of August 9, 2018 through October 8, 2018.  Based on their review, the surveyors found that Petitioner did not have any quality control records.  In addition, the surveyors noted that the technical supervisor confirmed in a phone interview that Petitioner “failed to establish and maintain a QC [quality control] program to assure quality of laboratory services.”  CMS Ex. 2 at 11.  

Petitioner admits that the PolyChem 180 “remained powered on for data retention purposes,” but asserts that it had been “decommissioned” at the time of the February 6, 2019 survey.  P. Br. at 10; see also P. Br. at 13 (asserting that “it is undisputed that the PolyChem 180 – the primary source of alleged deficiencies – did not perform a single test during the period [Petitioner] owned the lab” in relation to an argument that there was no “temporal connection between the cited deficiencies and likely harm [i.e., immediate jeopardy] to patients.”).  Other than making this claim, Petitioner did not address this

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deficiency in its brief.  Petitioner has not disputed the finding that no quality control records were available for review, nor has it denied its own employee’s statement that it failed to establish and maintain a quality control program.¹⁰ 

I find that the SOD, which was supported by the unrebutted written testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima facie case with respect to this deficiency.  Petitioner cited to no evidence in the record to rebut CMS’s prima facie showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1445(e)(5) (Tag D6093) during the February 2019 survey. 

Under the standard at 42 C.F.R. § 493.1445(e)(12) (Tag D6102), the laboratory director must “[e]nsure that prior to testing patients’ specimens, all personnel have the appropriate education and experience, receive the appropriate training for the type and complexity of the services offered, and have demonstrated that they can perform all testing operations reliably to provide and report accurate results.” 

Citing the SOD, CMS alleges that Petitioner was noncompliant with this standard because its laboratory director “failed to ensure four of seven testing personnel received appropriate training to perform high complexity testing on the SQID Elite instrument before reporting patient results.”  CMS Br. at 12 (citing CMS Ex. 2 at 12). 

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The SOD reveals that the surveyors examined Petitioner’s patient records from December 12, 2018 through January 31, 2019, which showed that four testing personnel tested a combined 63 patient celiac panels with four analytes per panel.  CMS Ex. 11 at 41, 43.  The surveyors found that Petitioner did not have documentation which showed that these four testing personnel “received appropriate training to perform celiac panel testing on the SQID Elite instrument.”  CMS Ex. 2 at 12; CMS Ex. 11 at 40.  The surveyors also interviewed Petitioner’s general supervisor, who confirmed that “no documentation was available to show the testing personnel received training before reporting patient results.”  CMS Ex. 2 at 12. 

According to CMS, Petitioner alleged, in its plan of correction and allegation of compliance, that the four testing personnel were trained and qualified to perform celiac testing.  CMS Br. at 12.  However, CMS notes the training certificates provided by Petitioner “did not indicate what the training consisted of, or that the testing personnel demonstrated they were able to perform all testing operations reliably to provide and report accurate results, before performing patient testing.”  CMS Br. at 12-13 (citing CMS Ex. 4 at 12). 

Petitioner did not address this deficiency in its brief.  While it acknowledges that celiac disease testing was performed, Petitioner does so only in the context of disputing CMS’s immediate jeopardy determination.  According to Petitioner, the SOD does not contain any evidence that the celiac test results were inaccurate or that there was any serious adverse outcome.  P. Br. at 17-18. 

I find that the SOD, which was supported by the unrebutted written testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima facie case with respect to this deficiency.  Petitioner cited to no evidence in the record to rebut CMS’s prima facie case.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1445(e)(12) (Tag D6102) during the February 2019 survey. 

Under the standard at 42 C.F.R. § 493.1445(e)(14) (Tag D6106), the laboratory director must “[e]nsure that an approved procedure manual is available to all personnel responsible for any aspect of the testing process.”  CMS alleges that Petitioner was noncompliant with this standard-level requirement because its laboratory director failed to approve the procedure manual for the PolyChem 180 instrument.  CMS Br. at 13 (citing CMS Ex. 2 at 13).  CMS argues that a laboratory director cannot delegate the responsibility for approving the procedure manual.  CMS contends further that the fact the PolyChem 180 was decommissioned does not relieve Petitioner of the requirement to have its procedure manual available for the periods at issue before testing on it was ceased.  CMS Br. at 13. 

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In describing the factual basis for this deficiency, the surveyors stated in the SOD that they reviewed the PolyChem 180 procedure manual and found that it had been approved on January 17, 2017, by an individual who was not serving as Petitioner’s laboratory director and who had never been listed on the CMS Form 209.  The surveyors found that Petitioner did not have documentation to show that its original and current laboratory director had approved the manual.  CMS Ex. 2 at 13.  Additionally, in an interview with the surveyors, Petitioner’s technical supervisor stated that the PolyChem 180 was used for patient testing from July 2, 2018 through September 4, 2018, and he confirmed that the laboratory director had not approved the instrument’s procedure manual prior to testing patients.  CMS Ex. 2 at 13. 

In its brief, Petitioner did not dispute the specific factual findings by the surveyors.  Further, Petitioner neither contested nor rebutted its technical supervisor’s admission that the laboratory director had not approved the PolyChem 180 procedure manual before testing patients.  See CMS Ex. 2 at 13. 

I find that the SOD, which was supported by the unrebutted written testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima facie case with respect to this deficiency.  Petitioner cited to no evidence in the record to rebut CMS’s prima facie showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1445(e)(14) (Tag D6106) during the February 2019 survey. 

In determining the standard to apply with respect to Petitioner’s noncompliance, I find instructive the regulatory definition of the term “[s]ubstantial allegation of noncompliance.”¹¹  This term is defined to mean “a complaint from any of a variety of sources . . . that, if substantiated, would have an impact on the health and safety of the general public or of individuals served by a laboratory and raises doubts as to a laboratory’s compliance with any condition level requirement.”  42 C.F.R. § 493.2. 

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Petitioner’s noncompliance with the four standard-level requirements discussed above under the Laboratory Director condition shows that Petitioner’s lab director failed to fulfill his duties to provide the “overall management and direction” of the laboratory.  42 C.F.R. § 493.1441.  I find that Petitioner’s noncompliance was serious and likely to “have an impact on the health and safety of the general public or of individuals served by [the] laboratory.”  See 42 C.F.R. § 493.2.  I base this on the uncontroverted testimony of Ms. Sutterer and Cheryl Dobbe that Petitioner’s deficiencies were likely to cause serious injury, harm or death to individuals served by the facility.¹²  CMS Ex. 12 ¶ 18; CMS Ex. 15 ¶ 30.  Accordingly, I find that, based on Petitioner’s standard-level deficiencies, CMS has established a prima facie case of noncompliance with the Laboratory Director condition at 42 C.F.R. § 493.1441.  In its response to CMS’s motion for summary judgment, Petitioner failed to present any evidence to rebut CMS’s prima facie case, much less show compliance by a preponderance of the evidence.  Therefore, I conclude that Petitioner was not in compliance with the Laboratory Director condition during the February 6, 2019 survey. 

4. 4. The SOD for the survey completed on February 6, 2019, along with the testimony of the lead surveyor, provides prima facie evidence that Petitioner was not in compliance with four of the standards under the Analytic Systems Condition, 42 C.F.R. § 493.1250 (Tag D5400), one of the condition-level requirements to maintain a CLIA certificate. Petitioner presented no evidence to show that it was in compliance with the following standards under the Analytic Systems condition at the time of the February 6, 2019 survey:  42 C.F.R. §§ 493.1254(b)(2), 493.1255(b), 493.1256(d)(3)(i)(g), and 493.1283(a).  Therefore, I conclude that Petitioner was not in compliance with these standards, and, thus, was not in compliance with the condition at 42 C.F.R. § 493.1250. 

The CLIA condition for Analytic Systems, found at 42 C.F.R. § 493.1250, requires a laboratory performing nonwaived testing to “meet the applicable analytic systems requirements in §§ 493.1251 through 493.1283,” absent exceptions not relevant here.   “The laboratory must monitor and evaluate the overall quality of the analytic systems and correct identified problems as specified in § 493.1289 for each specialty and subspecialty of testing performed.”  42 C.F.R. § 493.1250. 

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The SOD for the February 6, 2019 survey provided detailed factual findings to support the state agency’s conclusion that Petitioner was not in compliance with the Analytic Systems Condition, 42 C.F.R. § 493.1250 (Tag D5400).  Under this condition, the SOD identified four standards with which Petitioner was noncompliant:  493.1254(b)(2) (Tag D5435), 493.1255(b) (Tag D5439), 493.1256(d)(3)(i)(g) (Tag D5447), and 493.1283(a) (Tag D5787).  CMS Ex. 2 at 4-8.¹³  The SOD discusses the surveyors’ observations and conclusions for each of the aforementioned standard-level violations. 

In its brief, consistent with the SOD, CMS argues that Petitioner violated the Analytic Systems Condition based on Petitioner’s violation of the four standards described above.  CMS Br. at 14-21; CMS Ex. 2 at 4-9.¹⁴  As support for its arguments, CMS relies primarily on the SOD and various CMS notice letters. 

Surveyor Sutterer summarized Petitioner’s deficient practices with respect to 42 C.F.R. § 493.1250 as follows: 

Based on review of patient and instrument reports, the laboratory failed to perform calibration on the Polychem toxicology analyzer; failed to perform two levels of quality control each day of patient testing; and failed to maintain a system to identify the personnel performing the Celiac antibody test. 

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CMS Ex. 12 at 3 ¶ 11(b)(ii).  As discussed below, I conclude that Petitioner was noncompliant with the four standards identified in the SOD, resulting in Petitioner’s failure to meet the overall Analytic Systems condition.  I discuss these standards in turn. 

The standard at 42 C.F.R. § 493.1254(b)(2) indicates that when a laboratory uses “[e]quipment, instruments, or test systems developed in-house, commercially available and modified by the laboratory, or maintenance and function check protocols are not provided by the manufacturer,” a laboratory must do the following: 

(i) Define a function check protocol that ensures equipment, instrument, and test system performance that is necessary for accurate and reliable test results and test result reporting.  

(ii) Perform and document the function checks, including background or baseline checks, specified in paragraph (b)(2)(i) of this section. Function checks must be within the laboratory’s established limits before patient testing is conducted.  

In alleging Petitioner’s noncompliance with this standard-level requirement, CMS relies on the surveyors’ factual basis as set forth in the SOD.  The surveyors alleged that Petitioner did not have any documentation of a function check protocol for the 5702 Eppendorf centrifuge device and also, that Petitioner’s general supervisor admitted that Petitioner “failed to define a function check protocol to verify the accuracy of the timer and speed mechanisms on the laboratory centrifuge 5702 Eppendorf.”  CMS Br. at 16 (citing CMS Ex. 2 at 4).  Specifically, the SOD provided two findings by the surveyors: 

This STANDARD is not met as evidenced by:  Based on the lack of available documentation and interview with the general supervisor #2, the laboratory failed to define a function check protocol to verify the accuracy of the timer and speed mechanisms on the laboratory centrifuge 5702 Eppendorf. 

Findings

1. No documentation was available to show the laboratory defined a function check protocol to verify the accuracy of the timer and speed mechanisms on the 5702 Eppendorf centrifuge.

2. Interview with the general supervisor #2 on February 4, 2018 at 3:30 PM confirmed, the laboratory failed to have a

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protocol to verify the accuracy of time and speed on the laboratory centrifuge 5702 Eppendorf. 

CMS Ex. 2 at 4. 

In its brief, CMS notes that Petitioner claimed in its hearing request that the Eppendorf 5702 centrifuge was properly calibrated by the manufacturer before it was first used and was recalibrated in April 2019 according to the manufacturer’s guidelines.  CMS Br. at 16.  CMS argues that Petitioner’s response did not address the surveyors’ deficiency allegations and failed to show that Petitioner had implemented and documented a defined function check protocol during the February 2019 survey.  CMS Br. at 16. 

Significantly, Petitioner did not address this citation in its brief, and thus, the surveyors’ observations and allegations in the SOD are unrebutted.  Nor did Petitioner refute its general supervisor’s admission that the laboratory failed to have a function check protocol to verify the accuracy of the timer and speed mechanisms on the 5702 Eppendorf. 

I find that the SOD, which was supported by the unrebutted written testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima face case with respect to this deficiency.  Petitioner cited no evidence in the record to rebut CMS’s prima face showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1254(b)(2) (Tag D5435) during the February 2019 survey. 

Under the standard at 42 C.F.R. § 493.1255(b) (Tag 5439), a laboratory must perform and document calibration verification procedures for each applicable test system, unless otherwise specified in subpart K of Part 493.  The laboratory must follow the manufacturer’s calibration verification instructions, using the criteria it verified or established under 42 C.F.R. § 493.1253(b)(3).  42 C.F.R. § 493.1255(b)(1), (2).  Additionally, the laboratory must perform the calibration verification procedures at least once every six months and also, whenever a specific event as described in the subsections, occurs.  42 C.F.R. § 493.1255(b)(3)(i)-(iv). 

To establish Petitioner’s noncompliance with this standard, CMS relies on the surveyors’ findings in the SOD.  CMS Br. at 17-18 (citing CMS Ex. 2 at 5-6).  As detailed in the SOD, the surveyors observed that the PolyChem 180 analyzer for urine toxicology was powered on, and they reviewed 80 patient test reports for benzodiazepine, methadone, opiate, amphetamine, ethanol, tetrahydrocannabinol, buprenorphine during the timeframe of August 9, 2018 through October 8, 2018.  Based on their review of calibration records,  the surveyors determined that Petitioner failed to perform calibration for the PolyChem 180 analyzer for the following analytes:  benzodiazepine, methadone, opiate, amphetamine, ethanol, tetrahydrocannabinol, and buprenorphine.  Further, according to

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the SOD, Petitioner’s technical supervisor confirmed in an interview that Petitioner failed to perform calibration procedures on the PolyChem 180 analyzer.  CMS Ex. 2 at 6. 

Petitioner has not disputed any of the surveyors’ factual findings.  Rather, Petitioner takes the position that it purchased the laboratory on October 8, 2018, and that “[t]he previous owner of the lab failed to provide documentation for the calibration verification procedures.”  P. Br. at 10, 16-17.  Petitioner asserts that “[a]ll test results generated by the PolyChem 180 during this period [August 9, 2018 through October 8, 2018 were later confirmed as accurate using a [different instrument.]”  P. Br. at 11.  Petitioner asserts further that the PolyChem 180 was decommissioned on October 5, 2018, and “did not perform a single test during the period Quantox owned the lab.”  P. Br. at 13, 18. 

However, Petitioner has not shown it can evade its responsibility under the CLIA requirements by blaming the laboratory’s previous owner.  Specifically, Petitioner cites no law or facts showing that a change in ownership of the laboratory is a defense to the deficiencies found in the SOD. 

Further, as CMS notes, the requirement to perform calibration verification for every test system contains no provision permitting Petitioner to use another instrument to somehow show that the PolyChem 180 conformed to CLIA requirements.  CMS Br. at 18.  Petitioner failed to demonstrate that calibration verification was performed on the PolyChem 180, and in fact, its own technical supervisor admitted that the laboratory failed to perform calibration procedures on the PolyChem 180 analyzer.  CMS Ex. 2 at 6. 

CMS’s evidence, presented in the SOD and supported by the unrebutted written testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima facie case with respect to this deficiency.  Petitioner failed to rebut CMS’s prima face showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1255(b) (Tag D5439) during the February 2019 survey. 

Under the standard at 42 C.F.R. § 493.1256(d)(3)(i), (g) (Tag D5447), unless CMS approves equivalent testing, a laboratory must

(d)(3) At least once each day patient specimens are assayed or examined perform the following for—

(i) Each quantitative procedure, include two control materials of different concentrations;

                             ***

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(g) The laboratory must document all control procedures performed. 

Relying on the SOD, CMS alleges that Petitioner was noncompliant with this standard because it “failed to perform and document at least two levels of external controls each day of patient testing for urine toxicology testing.”  CMS Br. at 19 (citing CMS Ex. 2 at 6).  The surveyors’ factual findings underlying this deficiency in the SOD are identical to their findings in support of the deficiency under 42 C.F.R. § 493.1445(e)(5) (D6093), which I discussed above in connection with the Laboratory Director Condition.  Compare CMS Ex. 2 at 7 with CMS Ex. 2 at 11.  The focus of this deficiency is again the PolyChem 180 analyzer, and the surveyors found that “[n]o QC [quality control] documentation was available for review” and that Petitioner’s technical supervisor stated that another employee performed testing on the PolyChem 180 analyzer and that he “[did] not know how to access the information in the analyzer.”  CMS Ex. 2 at 7.  The technical supervisor also confirmed that Petitioner “failed to perform 2 levels of QC each day of patient testing.”  CMS Ex. 2 at 7.  In its brief, CMS contends that Petitioner failed to submit all of the required quality control documentation.  CMS Br. at 19. 

Petitioner did not address this deficiency in its brief.  Petitioner has not disputed the surveyors’ factual findings nor has Petitioner refuted its technical supervisor’s admission that two levels of quality control were not performed each day of patient testing.  

CMS’s evidence, presented in the SOD and supported by the unrebutted written testimony of Surveyor Sutterer, satisfies CMS’s burden to show a prima facie case with respect to this deficiency.  Petitioner cited no evidence in the record to rebut CMS’s prima face case.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1256(d)(3)(i), (g) (Tag D5447) during the February 2019 survey. 

Under the standard at 42 C.F.R. § 493.1283(a) (Tag D5787), a laboratory must maintain an information or record system that includes the following:  

(1) The positive identification of the specimen.

(2) The date and time of specimen receipt into the laboratory.

(3) The condition and disposition of specimens that do not meet the laboratory's criteria for specimen acceptability.

(4) The records and dates of all specimen testing, including the identity of the personnel who performed the test(s).

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CMS contends that Petitioner “did not maintain a record system that included the identify of four of four testing personnel performing celiac panel patient testing on the SQIDlite instrument.”  CMS Br. at 20.  I note that CMS relies on the SOD although it omitted citing to it.  According to the SOD, the surveyors reviewed patient records from the SQID instrument for the period December 12, 2018 through January 31, 2019, and “test reports revealed the laboratory did not have a system that identified the testing personnel performing tests on the SQID instruments.”  CMS Ex. 2 at 8.  The surveyors documented that Petitioner’s technical supervisor “confirmed the laboratory did not have a system to show the identity of testing personnel performing celiac panels patient testing.”  CMS Ex. 2 at 8.  

In its brief, CMS noted that Petitioner alleged in its hearing request that the testing personnel who performed the celiac tests were documented on a report generated by the instrument software and that there was an Excel calendar which showed which personnel was scheduled to perform the testing.  CMS Br. at 20.  However, CMS argues that the documents Petitioner allegedly relied on did not reveal the identity of personnel performing the celiac testing. 

Petitioner did not address this deficiency in its brief.  Although it mentions celiac disease testing, Petitioner does so only in the context of disputing CMS’s immediate jeopardy determination.  According to Petitioner, CMS offered no evidence that the test results were inaccurate or presented any serious adverse outcome.  P. Br. at 17-18. 

Petitioner has not disputed the surveyors’ factual findings set forth in the SOD.  Nor has Petitioner refuted the statement of its own technical supervisor that the laboratory did not have a system to specify the identities of testing personnel performing celiac testing. 

Based on the SOD and unrebutted written testimony of Surveyor Sutterer, CMS has satisfied its burden to show a prima facie case with respect to this deficiency.  Petitioner failed to cite any evidence in the record to rebut CMS’s prima face case.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1283(a) (Tag D5787) during the February 2019 survey. 

Petitioner’s noncompliance with the four standard-level requirements discussed above under the Analytic Systems condition shows that Petitioner failed to “meet the applicable analytic systems requirements.”  42 C.F.R. § 493.1250.  I find that Petitioner’s noncompliance was serious and likely to “have an impact on the health and safety of the general public or of individuals served by [the] laboratory.”  See 42 C.F.R. § 493.2.  I base this on the uncontroverted testimony of Ms. Sutterer and Ms. Dobbe that Petitioner’s deficiencies were likely to cause serious injury, harm or death to individual’s served by the facility.  CMS Ex. 12 ¶ 18; CMS Ex. 15 ¶ 30. 

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Accordingly, I find that, based on Petitioner’s standard-level deficiencies, CMS has established a prima facie case of noncompliance with the Analytic Systems condition-level requirement at 42 C.F.R. § 493.1250.  In its response to CMS’s motion for summary judgment, Petitioner failed to cite any evidence to rebut CMS’s prima facie case, much less show compliance by a preponderance of the evidence.  Therefore, I conclude that Petitioner was not in compliance with the Analytic Systems condition during the February 6, 2019 survey. 

5. 5. The SOD for the revisit survey completed on October 30, 2019, along with the testimony of the lead surveyor, provides prima facie evidence that Petitioner was not in compliance with two of the standards under the Analytic Systems Condition, 42 C.F.R. § 493.1250 (Tag D5400), which is a repeat condition-level deficiency cited previously at the February 2019 survey. Petitioner presented no evidence to show that it was in compliance with the following standards under the Analytic Systems condition at the time of the October 30, 2019 survey:  42 C.F.R. §§ 493.1251(b) and 493.1253(b)(1).  Therefore, I conclude that Petitioner was not in compliance with these standards, and, thus, was not in compliance with the condition at 42 C.F.R. § 493.1250. 

On October 29-30, 2019, Surveyor Sutterer and another surveyor returned to Petitioner’s laboratory for a revisit survey to verify that it had returned to substantial compliance.  Surveyor Sutterer testified that they found that Petitioner was out of compliance with three conditions:  42 C.F.R. §§ 493.1250 (Analytic Systems condition); 493.1441 (Laboratory Director condition); and 493.1100 (Facility Administration condition).  CMS Ex. 8.  Surveyor Sutterer noted that Petitioner’s noncompliance with the Analytic Systems condition and the Laboratory Director condition were repeat condition-level deficiencies, as both were previously cited at the February 2019 survey.  CMS Ex. 12 ¶ 15.¹⁵  The revisit survey determined that immediate jeopardy had not been removed.  See CMS Ex. 7 at 2. 

Surveyor Sutterer summarized Petitioner’s deficient practices with respect to the Analytic Systems condition at 42 C.F.R. § 493.1250 as follows:  “Based on review of the procedure manual the laboratory failed to include cutoff values and failed to verify normal values.”  CMS Ex. 12 ¶ 15(a)(ii). 

In the SOD for the October 2019 survey, the surveyors alleged that Petitioner did not comply with the Analytic Systems condition based on noncompliance with two standards:  42 C.F.R. §§ 493.1251(b) (Tag D5403) and 493.1253(b)(1) (Tag D5421).  

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CMS Ex. 8 at 2-5. 

The standard at 42 C.F.R. § 493.1251(b) (Tag D5403) provides requirements as to what must be contained in procedure manuals.  Among other requirements, a laboratory’s procedure manual must include:  instructions for “patient preparation; specimen collection, labeling, storage, preservation, transportation, processing, and referral;” “[s]tep-by-step performance of the procedure;” “[c]alibration and calibration verification procedures;” “[t]he reportable range for test results for the test system;” “[c]orrective action to take when calibration or control results fail to meet the laboratory’s criteria for acceptability;” and “[r]eference intervals (normal values).”  42 C.F.R. § 493.1251(b). 

In its brief, CMS relied on the surveyors’ factual findings in the SOD and alleged that Petitioner failed to comply with 42 C.F.R. § 493.1251(b) because it “failed to include the reference intervals (cutoff values) in use at the laboratory for one of 11 tests.”  CMS Br. at 21.  In the SOD, the surveyors found that “[r]eview of the procedure manual revealed two cutoff values, 100 ng/ml and 300 ng/ml, for oxycodone for urine toxicology screening.”  CMS Ex. 8 at 4; CMS Ex. 11 at 731 (documentation in surveyor notes); CMS Ex. 11 at 733 (Petitioner’s “Oxycodone run policy”).  The surveyors also stated that Petitioner’s technical consultant confirmed that “the only cutoff value in use at the laboratory for oxycodone is 100 ng/ml.”  CMS Ex. 8 at 4. 

In its brief, Petitioner neither addressed nor disputed the surveyors’ factual allegations regarding cutoff values, which are thus unrebutted.  CMS notes that Petitioner argued in the hearing request that the cutoff value of 100 ng/ml was always the cutoff for the oxycodone procedure and that the AU640e instrument had been configured to reflect this value, which was listed on the patient printouts.  CMS Br. at 21.  Petitioner’s statement is consistent with its technical consultant’s admission to the surveyors. 

Petitioner was required to have a procedure manual that contained reference intervals (normal values) applicable to the test procedure.  Based on Petitioner’s admission that only one cutoff value was in use for the oxycodone procedure, its procedure manual should not have listed two cutoff values. 

Based on the SOD and Surveyor Sutterer’s unrebutted testimony, I thus find that CMS has satisfied its burden to show a prima facie case with respect to this deficiency.  Petitioner failed to cite any evidence in the record to rebut CMS’s prima face showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1251(b) (Tag D5403) during the October 2019 survey. 

The standard at 42 C.F.R. § 493.1253(b)(1) (Tag D5421) relates to verification of performance specifications.  This standard provides: 

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(1)  Each laboratory that introduces an unmodified, FDA-cleared or approved test system must do the following before reporting patient test results:  

(i) Demonstrate that it can obtain performance specifications comparable to those established by the manufacturer for the following performance characteristics:  

(A) Accuracy.

(B) Precision.

(C) Reportable range of test results for the test system.

(ii) Verify that the manufacturer's reference intervals (normal values) are appropriate for the laboratory’s patient population.

In its brief, CMS relied on the surveyors’ factual findings in the SOD and alleged that Petitioner failed to comply with 42 C.F.R. § 493.1253(b)(1) because it “failed to verify the reference intervals (normal values) for 11 of 11 of tests reviewed.”  CMS Br. at 22.  In the SOD, the surveyors found, based on their review of the verification procedures for the Olympus AU640e chemistry analyzer for amphetamine, benzodiazepine, methadone, cannabinoid, opiate, buprenorphine, oxycodone, ethanol, specific gravity, pH, and creatinine, that there was no verification of normal values.  CMS Ex. 8 at 5.  In addition, in an interview, one of Petitioner’s testing personnel admitted that Petitioner “failed to ensure the verification procedures for normal values for the Olympus AU640e chemistry analyzer were appropriate for the laboratory’s patient population.”  CMS Ex. 8 at 5. 

CMS notes that, in its hearing request, Petitioner argued that normal ranges for the instrument had been established in the validation process and that documents showed the official approval of the normal ranges.  CMS Br. at 22.  CMS alleged that the data provided by Petitioner in an allegation of compliance submission “did not demonstrate it established normal ranges.”  CMS Br. at 22 (citing CMS Ex. 9 at 4). 

In its brief, Petitioner neither addressed nor disputed the surveyors’ factual allegations.  Petitioner cited no evidence in the record to show verification of normal values for the Olympus AU640e chemistry analyzer for the 11 tests identified above.  Nor has Petitioner refuted the statement of its own testing personnel that it “failed to ensure the verification procedures for normal values for the Olympus AU640e chemistry analyzer were appropriate for the laboratory’s patient population.” 

With the SOD and Surveyor Sutterer’s unrebutted testimony, CMS has presented sufficient evidence to support a prima facie case with respect to this deficiency.  Petitioner failed to offer any evidence to rebut CMS’s prima face showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the

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standard-level requirement at 42 C.F.R. § 493.1253(b)(1) (Tag D5421) during the October 2019 survey. 

Based on Petitioner’s noncompliance with the two standard-level requirements discussed above, it is evident that its analytic systems continued to be deficient in several areas.  I find that CMS has established a prima facie case of noncompliance with the Analytic Systems condition-level requirement at 42 C.F.R. § 493.1250 during the October 2019 survey.  I find that Petitioner’s noncompliance was serious as it was likely to “have an impact on the health and safety of the general public or of individuals served by [the] laboratory.”  See 42 C.F.R. § 493.2.  I base this on the uncontroverted testimony of Ms. Sutterer and Ms. Dobbe that Petitioner’s deficiencies were likely to cause serious injury, harm or death to individual’s served by the facility.  CMS Ex. 12 ¶ 18; CMS Ex. 15 ¶ 30.

In its response to CMS’s motion for summary judgment, Petitioner failed to present any evidence to rebut CMS’s prima facie case, much less a preponderance of the evidence.  Therefore, I conclude that Petitioner was not in compliance with the Analytic Systems condition during the October 2019 survey. 

6. 6. The SOD for the revisit survey completed on October 30, 2019, along with the testimony of the lead surveyor, provides prima facie evidence that Petitioner was not in compliance with two of the standards under the Laboratory Director Condition, 42 C.F.R. § 493.1441 (Tag D6076), which is a repeat condition-level deficiency previously cited at the February 2019 survey. Petitioner presented no evidence to show that it was in compliance with the following standards under the Laboratory Director condition at the time of the October 30, 2019 survey:  42 C.F.R. §§ 493.1445(e)(3)(ii) and 493.1445(e)(9).  Therefore, I conclude that Petitioner was not in compliance with these standards, and, thus, was not in compliance with the condition at 42 C.F.R. § 493.1441. 

With respect to Petitioner’s repeat condition-level violation of the Laboratory Director condition, 42 C.F.R. § 493.1441, at the October 2019 survey, Surveyor Sutterer summarized Petitioner’s deficient practices as follows:  “Based on review of Olympus AU640e instrument documentation, the laboratory director failed to ensure the verification procedures were adequate on the Olympus AU640e and failed to ensure consultation was made available to clients regarding quality of patient results.”  CMS Ex. 12 ¶ 15(b)(ii). 

In the SOD for the October 2019 survey, the surveyors alleged that Petitioner did not comply with the Laboratory Director condition based on its failure to comply with two standards:  42 C.F.R. §§ 493.1445(e)(3)(ii) (Tag D6086) and 493.1445(e)(9) (Tag D6099).  CMS Ex. 8 at 5-7. 

I note that the citation under the standard at 42 C.F.R. § 493.1445(e)(3)(ii) (Tag D6086) is a repeat standard-level deficiency, as it was also cited at the February 2019

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survey.  Because I have previously set forth the regulatory text of 42 C.F.R. § 493.1445(e)(3)(ii) above, I will not repeat it here.  I note, however, that a different lab instrument is the subject of the noncompliance found at the October 2019 survey. 

In describing Petitioner’s noncompliance with the standard, CMS argues that its laboratory director failed to ensure that verification procedures for the Olympus AU640e analyzer for urine toxicology were adequate to determine patient normal values for 11 of 11 tests.  CMS Br. at 13.  In the SOD, the surveyors described the specific factual basis for this deficiency.  They reviewed the verification procedures for the Olympus AU640e instrument for benzodiazepine, methadone, opiate, amphetamine, ethanol, cannabinoid, buprenorphine, specific gravity, pH, and creatinine, and found that Petitioner “failed to verify normal values prior to testing patient samples.”  CMS Ex. 8 at 6.  The surveyors also noted that Petitioner’s testing personnel confirmed that Petitioner’s laboratory director “failed to verify patient normal values for the Olympus AU640e analyzer.”  CMS Ex. 8 at 6.¹⁶ 

According to CMS, Petitioner argued, in its allegation of compliance and its hearing request, that normal ranges for the analyzer were established in the validation process and documents show the official approval of the normal ranges.  CMS Br. at 13-14.  CMS argued that the data provided by Petitioner failed to demonstrate that Petitioner had established normal ranges.  CMS Br. at 14. 

In its brief, Petitioner neither addressed nor disputed the surveyors’ factual allegations, which are thus unrebutted.  Petitioner cited no evidence in the record to show that it had verified normal values for the Olympus AU640e chemistry analyzer for the 11 tests identified above.  Nor has Petitioner refuted the admission by its own testing personnel that its lab director “failed to verify patient normal values” for the Olympus analyzer.  CMS Ex. 8 at 6.  

With the SOD and Surveyor Sutterer’s unrebutted testimony, CMS has presented sufficient evidence to support a prima facie case with respect to this deficiency.  Petitioner failed to cite any evidence in the record to rebut CMS’s prima face showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1445(e)(3)(ii) (Tag D6086) during the October 2019 survey. 

The surveyors also cited Petitioner with noncompliance with the standard at 42 C.F.R. § 493.1445(e)(9) (Tag D6099).  Pursuant to this standard, a laboratory director must “[e]nsure that consultation is available to the laboratory’s clients on matters relating to

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the quality of the test results reported and their interpretation concerning specific patient conditions.”  42 C.F.R. § 493.1445(e)(9). 

In its brief, CMS contends that Petitioner failed to have a process to receive patient questions and concerns and to respond to them.  CMS Br. at 14.  Relying on the SOD, CMS alleges that one of Petitioner’s patients, identified as Patient # 1, emailed CMS and stated that Patient # 1 had emailed Petitioner through a form on its website between July 10 and 18, 2019, and also made two phone calls to Petitioner and left voicemails.  CMS alleges further that Petitioner did not respond to Patient # 1’s email inquiry or voicemails.  CMS states that Patient # 1 forwarded a copy of their inquiry email to CMS.  CMS Br. at 14 (citing CMS Ex. 8 at 6-7). 

In the SOD, the surveyors explained that Patient # 1 contacted Petitioner because Patient #1 had “questions about the quality of their test results.”  CMS Ex. 8 at 7.  The surveyors reviewed Petitioner’s patient call in/complaint log, which revealed that Patient # 1’s email and phone calls had not been logged.  CMS Ex. 8 at 7; CMS Ex. 11 at 731.  According to the surveyors, Petitioner’s technical consultant confirmed in an interview that Petitioner’s laboratory director “failed to ensure that consultation was available to the laboratory’s clients relating to quality test results.”  CMS Ex. 8 at 7; CMS Ex. 11 at 731. 

CMS notes that Petitioner, in its hearing request, acknowledged that Patient #1’s inquiries had not been logged in the logbook and that, at the time of the October 2019 revisit survey, it had not contacted Patient #1 regarding Patient # 1’s concerns.  Petitioner claimed that it was unaware of Patient # 1’s email because it was sent to an employee’s spam folder.  CMS Br. at 14. 

In its brief, Petitioner neither addressed nor disputed the surveyors’ factual allegations, which are thus unrebutted.  Even if Petitioner’s laboratory director may not have received Patient #1’s email, the patient also left two voicemail messages regarding her concerns, which Petitioner had still failed to return, as of the October survey.  It is evident that  Petitioner and its laboratory director had no process in place to receive and respond to patients’ questions regarding the quality of their test results and their interpretation.  In fact, Petitioner’s own technical consultant admitted that Petitioner’s laboratory director failed to carry out consultation responsibilities  Petitioner’s patients.  CMS Ex. 8 at 7.  Checking the spam folder should be part of any business entity’s normal practice. 

Based on the SOD and Surveyor Sutterer’s unrebutted testimony, CMS has presented sufficient evidence to support a prima facie case with respect to this deficiency.  Petitioner failed to present any evidence to rebut CMS’s prima face showing of noncompliance.  Therefore, I conclude that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1445(e)(9) (Tag D6099) during the October 2019 survey. 

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Based on Petitioner’s noncompliance with the two standard-level requirements discussed above, it is evident that the lab director continued to fail in his responsibilities to provide necessary management and direction.  I find that CMS has established a prima facie case of noncompliance with the Laboratory Director condition-level requirement at 42 C.F.R. § 493.1441 during the October 2019 survey.  Petitioner’s noncompliance was serious as it was likely to “have an impact on the health and safety of the general public or of individuals served by [the] laboratory.”  See 42 C.F.R. § 493.2. I base this on the uncontroverted testimony of Ms. Sutterer and Ms. Dobbe that Petitioner’s deficiencies were likely to cause serious injury, harm or death to individual’s served by the facility.  CMS Ex. 12 ¶ 18; CMS Ex. 15 ¶ 30.  In its response to CMS’s motion for summary judgment, Petitioner failed to present any evidence to rebut CMS’s prima facie case, much less show compliance by a preponderance of the evidence.  Therefore, I conclude that Petitioner was not in compliance with the Laboratory Director condition during the October 2019 survey. 

7. 7. Because Petitioner was not compliant with condition-level requirements at the time of the February 6, 2019 survey, CMS had a legitimate basis to revoke Petitioner’s CLIA certificate and impose other sanctions.

Under the regulations, a single condition-level deficiency is an adequate basis for principal and alternative sanctions.  42 C.F.R. § 493.1806(a); White Lake Family Med., P.C., DAB No. 1951 at 2 (2004).  As I have determined above, Petitioner was not in compliance with the condition-level requirements for Analytic Testing (42 C.F.R. § 493.1250, Tag D5400) and Laboratory Director (42 C.F.R. § 493.1441, Tag D6076).  Although I uphold two condition-level deficiencies, either condition-level deficiency, by itself, is sufficient to support the principal and alternative sanctions CMS imposed, including suspending and revoking Petitioner’s CLIA license, and imposing a CMP.  

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; Ali, 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 [system] at the time of the survey.”).  So long as Petitioner had one condition-level deficiency at the time of the February 2019 survey, CMS was authorized to revoke its CLIA certificate.  42 C.F.R. §§ 493.1806(a)-(c), 493.1814(a)(2); see also HRT Lab., Inc., DAB No. 2118 at 10.  Petitioner was out of compliance with both the Analytic Systems condition and the Laboratory Director condition at the time of the February 2019 survey.  Therefore, CMS had a legitimate basis to revoke Petitioner’s CLIA certificate. 

8. 8. Because Petitioner was not compliant with condition-level requirements at the time of the October 30, 2019 revisit survey, and immediate jeopardy continued at Petitioner’s laboratory, CMS had a legitimate basis to suspend Petitioner’s CLIA certificate effective November 9, 2019.

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Following the October 30, 2019 revisit survey, CMS also suspended Petitioner’s CLIA certificate effective November 9, 2019, based on its determination that its condition-level deficiencies posed immediate jeopardy.  42 C.F.R. § 493.1840(d)(2)(i).  CMS advised Petitioner that suspension would take effect on November 9, 2019, regardless of whether it requested a hearing, and the suspension would remain in effect until its CLIA certificate was revoked.  CMS Ex. 7 at 3; CMS Ex 9 at 7; CMS Ex. 10 at 2.  The regulations explicitly authorize CMS to suspend a laboratory’s CLIA certificate before an ALJ hearing if the laboratory’s deficiencies pose immediate jeopardy.  42 C.F.R. § 493.1840(d)(2)(i).  Here, CMS determined that immediate jeopardy existed at Petitioner’s laboratory based on the February 6, 2019 survey, and that it continued to exist at the October 2019 revisit survey.  As I noted above, the determination that a laboratory’s deficiencies pose immediate jeopardy is not subject to appeal.  I do have the authority to determine whether the deficiencies existed.  Accordingly, because I uphold the deficiencies, CMS was justified in suspending Petitioner’s CLIA certificate because it continued to find that immediate jeopardy existed.  

9. 9. Petitioner’s CLIA certificate is revoked effective the date of this decision finding that Petitioner was out of compliance with a condition-level CLIA requirement.

CMS must notify a laboratory if it takes action to revoke the laboratory’s CLIA certificate, and the notice must inform the laboratory of the effective date of the revocation.  42 C.F.R. § 493.1844(g)(2)(i).  Under 42 C.F.R. § 493.1844(h)(1), when the laboratory’s deficiencies pose immediate jeopardy, as is the case here, the effective date of revocation is “at least 5 days after the date of the notice.”  However, under 42 C.F.R. § 493.1840(e)(1), CMS does not actually revoke a CLIA certificate until “after an ALJ hearing” upholds the revocation.  Further, pursuant to 42 C.F.R. § 493.1844(d)(4)(ii), “if an ALJ decision upholds a suspension imposed because of immediate jeopardy, that suspension becomes a revocation.” 

In its notice letter dated April 9, 2019, CMS advised Petitioner that if it filed a timely hearing request, revocation of its CLIA certificate would not become effective until after an ALJ hearing decision that upheld CMS’s determination of noncompliance.  CMS Ex. 4 at 15, 16.  Accordingly, the effective date of the revocation of Petitioner’s CLIA certificate is the date of this decision. 

10. 10. Cancellation of Petitioner’s approval to receive Medicare payments for any services performed is effective the date of this decision finding that Petitioner was out of compliance with a condition-level CLIA requirement. 

In its April 9, 2019 notice letter, CMS advised Petitioner that it was imposing the sanction of cancellation of its approval to receive Medicare payments for any services performed on or after April 21, 2019, if it did not appeal CMS’s action.  CMS Ex. 4 at 15.  CMS stated further that if Petitioner filed a timely request for hearing, then this sanction

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would not take effect “until after an ALJ hearing that upholds CMS’ sanction determination.”  CMS Ex. 4 at 16. 

This particular sanction is authorized when condition-level deficiencies are found (42 C.F.R. §§ 493.1807(a), 493.1842(a)(2)) and required when CMS suspends or revokes a laboratory’s certificate.  42 C.F.R. § 493.1842(a)(1).  Petitioner filed timely requests for hearing in this case.  Accordingly, pursuant to CMS’s directive in its April 9, 2019 notice letter, Petitioner’s Medicare payment cancellation is effective the date of this decision. 

11. CMS was authorized to impose a CMP against Petitioner. The amount of the CMP imposed by CMS is not subject to review. 

CMS’s April 9, 2019 initial determination informed Petitioner that a $19,787 per-day CMP would be imposed for each day of noncompliance, effective April 21, 2019, and it would continue to accrue until either CMS verified that Petitioner was in compliance with all condition-level requirements or its CLIA certificate was revoked.¹⁷  CMS Ex. 4 at 15. 

I reiterate that, under 42 C.F.R. § 493.1844(c)(4), the determination as to which alternative sanction to impose, including the amount of the CMP and whether the CMP is per instance or per day, is “not [an] initial determination[] and therefore [is] not subject to appeal.”  Likewise, “[t]he amount of the civil monetary penalty assessed per day or for each violation of Federal requirements” is not an initial determination that is subject to appeal.  42 C.F.R. § 493.1844(c)(7); see, e.g., Kensington Diagnostics LLC, DAB No. 2992 at 12 (2020) (Departmental Appeals Board’s explanation that it “has no authority to overturn or modify a legally valid agency action (such as the imposition of a CMP)” and that it “cannot entertain [a laboratory’s] argument that the penalty amount imposed by CMS in this case (which was within the authorized range) is excessive or unduly burdensome.”). 

Because I have concluded that Petitioner had a condition-level deficiency, CMS was authorized to impose a CMP.  42 C.F.R. § 493.1834(c).  The per-day CMP serves as an “interim” sanction, and, in this case, continued to accrue until the date Petitioner’s CLIA certificate was suspended, which was November 9, 2019.  42 U.S.C. § 263a(h); 42 C.F.R. § 493.1834(f)(2)(iii).  

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I note that the approximate CMP amount for the time frame at issue (April 21, 2019 through November 9, 2019) is nearly $4 million.  As previously mentioned, Petitioner  asserts that the CMP is excessive and contrary to the Eight Amendment of the United States Constitution.  Petitioner requests injunctive relief to prevent CMS from enforcing the sanction.  P. Br. at 20-25.  Petitioner maintains that no patients were harmed and that the CMP is disproportionate to the regulatory violations alleged.  P. Br. at 23. 

I reiterate that the per-day CMP amount is not subject to review.  As discussed above, I do not have authority to consider Petitioner’s Constitutional arguments, or provide relief not expressly permitted under the regulations.  See 1866ICPayday.com, L.L.C., DAB No. 2289 at 14 (2009) (“An ALJ is bound by applicable laws and regulations and may not invalidate either a law or regulation on any ground, even a constitutional one.”);  Fla. Health Sciences Ctr., Inc., DAB No. 2263 at 5-6 (2009).  Further, I have no authority to grant Petitioner’s request for injunctive relief.¹⁸ 

VII.  Conclusion

CMS has presented undisputed evidence that Petitioner failed to comply with the condition-level requirements for Laboratory Director and Analytic Testing at the time of the complaint survey on February 6, 2019 and at the time of the revisit survey on October 30, 2019.  Based on either one of these condition-level deficiencies, CMS had a legitimate basis to revoke Petitioner’s CLIA certificate and impose a CMP.  CMS was also authorized, based on Petitioner’s noncompliance, to suspend Petitioner’s CLIA certificate and cancel its approval to receive Medicare reimbursement for its services. 

Endnotes

¹  A condition represents a major division of laboratory services or required environmental protections; each condition is broken down into more detailed standards that laboratories must meet to be compliant with the overall condition.  White Lake Family Med., P.C., DAB No. 1951 at 2 (2004); RNA Labs., DAB No. 1820 at 1 (2002). 

²  Laboratory tests are categorized by complexity into one of the following categories:  waived tests, moderate complexity tests, and high complexity tests.  42 C.F.R. § 493.5(a). 

³ If the state agency believes that a laboratory’s deficient practices pose immediate jeopardy to patient health and safety, it consults with CMS.  CMS Ex. 15 ¶ 5. 

⁴ In its brief, CMS cited to the April 9 letter (CMS Ex. 4), but indicated its date was “April 4, 2019.” CMS Br. at 6; see also CMS Ex. 15 ¶ 13. The record has a CMS notice letter dated April 4, 2019; however, this letter appears to be an unsigned draft letter. CMS Ex. 18 at 1-17. Petitioner appealed the April 9, 2019 notice in its hearing request.

⁵  The State Operations Manual contains CMS guidance to state agency surveyors conducting surveys of different types of facilities, and Appendix C provides guidance regarding CLIA surveys of laboratories.  Appendix Q of the State Operations Manual provides guidance for identifying immediate jeopardy.  In its brief, Petitioner cites to Appendix Q, but did not offer any of the sections it relied upon into evidence.  Inasmuch as the State Operations Manual is not binding on these proceedings, and immediate jeopardy is not an appealable initial determination in a CLIA case, it is unnecessary for me to discuss Petitioner’s arguments relative to Appendix Q. 

⁶  In case there remains any question that Petitioner is only contesting the immediate jeopardy determination and the CMP amount, Petitioner concludes its brief by arguing that I should “reject CMS[’s] substantive conclusion of immediate jeopardy, and find that the civil monetary penalty assessed by CMS violates the Excessive Fines Clause of the Eight Amendment to the United States Constitution.”  P. Br. at 24-25. 

⁷  Most of the documentation in this case is in exhibits containing Petitioner’s allegations of compliance that Petitioner submitted to CMS at various times in 2019 in response to the deficiency findings.  CMS Exs. 16-19; P. Ex. 1.  Each of these exhibits are approximately 1,800 to 3,600 pages in length and include mostly technical information.  In its prehearing brief, Petitioner sparingly cited to the record and, when it did so, usually cited to Petitioner’s exhibits and CMS Exhibits 16-19 without specifying individual page numbers.  P. Br. at 11, 17.  The parties had been specifically instructed to “provide pinpoint citations to the record (i.e., the exhibit number and page number) to support each factual premise asserted in their briefs.”  SPO ¶ 7(fifth bullet point under “Note.”) (emphasis in original).  The reason for this requirement is obvious:  “Each page of each exhibit must be numbered so that the page can be located easily when the exhibit is being discussed in a brief. . . .”  CRDP § 14(c)(iv).  Further, “[a] sanction may not be imposed or rule or order issued except on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence.”  5 U.S.C. § 556(d) (emphasis added).  In this case, Petitioner has not provided specific page citations in exhibits to support its view that CMS has improperly imposed sanctions on it.  Further, Petitioner did not submit written direct testimony from witnesses who could explain the import of the voluminous technical documents in the record.  As a result, I issue this decision based on the written record, relying primarily on the record citations from the parties.  I do not cull through the thousands of pages of exhibits that neither party cited. 

⁸  Ms. Sutterer holds a Bachelor of Science degree in Biology/Medical Technology and has 17 years of experience working as a medical technologist in hematology and chemistry.  CMS Ex. 12 ¶ 3. 

⁹  In her declaration, Surveyor Sutterer stated that the survey dates were “February 4-6, 2020.”  CMS Ex. 12 ¶ 7.  I note that the year is a typo and should be “2019.”  

¹⁰  Petitioner appears to believe that CMS cannot impose sanctions because the deficient conduct occurred when there was a different owner of the laboratory, Petitioner was allegedly no longer using the PolyChem 180 at the time of the February 2020 survey, and Petitioner confirmed the results from the PolyChem 180 at issue in the survey using a Shimadzu 8040 LCMS.  P. Br. at 16-17.  CMS argues that simply decommissioning the PolyChem 180 does not absolve Petitioner from its failure to comply with applicable standards.  CMS Br. at 11, 13.  I agree.  Petitioner does not produce evidence that the laboratory met the standards identified in the SOD.  Further, confirming the results of the PolyChem 180 do not show compliance with the relevant standards in this condition.  There is also no evidence in the record that the laboratory ownership change resulted in Petitioner obtaining a new CLIA certificate as a new and different laboratory.  It is also significant that, as will be discussed below, although the original condition-level deficiencies were caused by the previous owners, the condition-level deficiencies during the revisit were not.  Petitioner was responsible for returning to compliance.  Cf. CarePlex of Silver Spring, DAB No. 1627 (1997) (“While these conditions were caused, in the sense that they began, under prior ownership, CarePlex is responsible for their continued existence during its administration as documented throughout the survey.  It is true that some of the most serious events did occur before CarePlex took over, and it is also true that CarePlex ultimately corrected the deficiencies.  These facts do not demonstrate, however, that CarePlex was not responsible for the observed existence of deficiencies at a facility which it was operating.”). 

¹¹  As discussed above, the standard for immediate jeopardy is not the correct standard to apply in this case.  Further, in the prehearing brief, Petitioner defines “substantial compliance” by citing to 42 C.F.R. § 488.301.  P. Br. at 3.  However, that definition only applies to cases under that 42 C.F.R. Part 488, Subpart E.  Further, a review of 42 U.S.C. § 263a and 42 C.F.R. Part 493, indicates that the term “substantial compliance” does not appear.  However, in CLIA matters, a CMP can be imposed in the amount of “$10,000 for each violation . . . or for each day of substantial noncompliance with the requirements of this section.”  42 USC 263a(h)(2)(B); see 42 CFR 493.1834(d)(2), (e)(1)(ii)(B), (g)(2), 493.1844(c)(4), (7).  The regulations do not define the terms “violation” or “substantial noncompliance.” 

¹²  Ms. Dobbe is employed by CMS as a Clinical Laboratory Scientist.  Ms. Dobbe has an Associate Degree in Applied Science – Medical Laboratory Technology, a Bachelor of Science Degree in Clinical Laboratory Science, and a graduate degree in Molecular Laboratory Diagnostic Science.  Further, prior to working for CMS, she gained more than 20 years of experience working as a Medical Technologist specializing in quality assurance, molecular testing, hematology, chemistry, and immunohematology.  CMS Ex. 15 ¶¶ 2-3. 

¹³  The surveyors also alleged in the SOD that Petitioner was not in compliance with the standard-level requirement at 42 C.F.R. § 493.1291(c) (Tag D5805).  CMS Ex. 2 at 8-9.  However, I note that this standard, which pertains to test reports, does not fall under the Analytic Systems Condition, but instead, falls under the Postanalytic Systems Condition at 42 C.F.R. § 493.1290.  Neither the surveyors nor CMS has alleged that Petitioner violated the Postanalytic Systems Condition.  In light of this, it is unnecessary for me to address the factual allegations presented under the standard at 42 C.F.R. § 493.1291(c) as they have no bearing on the Analytic Systems Condition. 

¹⁴  In its brief, CMS states that Petitioner violated the standard-level requirements found at 42 C.F.R. §§ 493.1251(b) (Tag D5403) and 493.1253(b)(1) (Tag D5421) at the time of the February 6, 2019 survey.  CMS Br. at 15.  However, the surveyors made no findings of noncompliance under these standards at the February 2019 survey; rather, they cited noncompliance under these two standards at the October 30, 2019 revisit survey.  Below, I discuss those deficiencies. 

¹⁵  In my discussion of the October 2019 survey, I focus only on Petitioner’s repeat condition-level violations of the Analytic Systems condition and the Laboratory Director condition.I do not discuss Petitioner’s violation of the Facility Administration condition as it is not necessary to my analysis. 

¹⁶  According to the SOD, the surveyors interviewed Petitioner’s testing personnel on “February 4, 2019;” however, this date appears to be an error, as the revisit survey occurred on October 30, 2019.  CMS Ex. 8 at 6. 

¹⁷  I note that for CMPs imposed after January 17, 2020, for noncompliance that occurred on or after November 2, 2015, a CMP of $19,787 per day is within the range ($6,530 - $21,410) for deficiencies at the immediate jeopardy level.  42 C.F.R. § 493.1834(d)(2)(i), as adjusted annually per 45 C.F.R. § 102.3; 85 Fed. Reg.  2869, 2878 (Jan. 17, 2020). 

¹⁸  While CMS had a legitimate basis for imposing a CMP in this case, I note that the accrued CMP is extremely high.  I agree with the reasoning in Rustom Ali, Ph.D., Operator of Scottsdale Medical Lab., DAB CR1280 (2005), that a CMP in CLIA cases must serve a remedial purpose.  In light of the suspension and now, revocation, of Petitioner’s CLIA certificate, CMS should consider whether the CMP amount imposed is still appropriate.