Laboratorio Concordia Lugaro, DAB No. 3067 (2022)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Laboratorio Concordia Lugaro (Petitioner or the Lab) appeals an Administrative Law Judge (ALJ) decision sustaining a determination by the Centers for Medicare & Medicaid Services (CMS) that the Lab violated conditions of the Clinical Laboratory Improvement Amendments of 1988 (CLIA) program by, among other things, referring proficiency testing samples to another laboratory and reporting tests it had not conducted as its own.  Laboratorio Concordia Lugaro, DAB CR5976 (2021) (ALJ Decision).  The ALJ upheld the following remedies imposed by CMS:  (i) revocation of the Lab's CLIA certificate; (ii) cancellation of the Lab's approval to receive Medicare payments; and (iii) a civil money penalty of $2,000 for each of eight instances in which the Lab either improperly referred proficiency testing samples to another laboratory or falsely reported proficiency testing results.  Id.  We affirm the ALJ Decision because it is supported by substantial evidence and free of legal error.¹

Legal Background

CLIA authorizes the Secretary of the Department of Health and Human Services (Secretary) to establish and enforce requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories.  Pub. L. No. 100-578, amending § 353 of the Public Health Service Act (PHS Act), codified at 42 U.S.C. § 263a, et seq.  The Secretary's enforcement authority includes the ability to suspend, limit, or revoke the certificate of a laboratory that is out of compliance with one or more certification requirements.  CLIA requirements are intended to ensure the accuracy and reliability of testing and, therefore, the health and safety of

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those tested.  See H.R. Rep. No. 899, 100th Cong. 2d Sess. 8 (1988), reprinted in 1988 U.S.C.C.A.N. 3828, 3829.

A laboratory that is not CLIA-exempt must have a CLIA certificate meeting the requirements of 42 C.F.R. Part 493.  Part 493 sets forth the regulatory conditions that laboratories must meet to be certified to perform testing on human specimens.  42 C.F.R. § 493.1.  The type of CLIA certificate a laboratory is required to have depends on the category of examinations or procedures performed by the laboratory.  42 U.S.C. § 263a(f)(1), (2); 42 C.F.R. §§ 493.3, 493.5, 493.20, 493.25.

Each laboratory holding a CLIA certificate allowing it to perform tests of moderate or high complexity must, among other things, enroll and participate in a proficiency testing program approved by CMS as outlined in Part 493, Subpart H.  See 42 U.S.C. § 263a(f)(1)(D), (f)(3); 42 C.F.R. §§ 493.20(b), 493.25(b), 493.803.  The laboratory must participate in a proficiency testing program "for each specialty, subspecialty, and analyte or test in which the laboratory is certified under CLIA."  42 C.F.R. § 493.803(a).  Proficiency testing programs are administered by private nonprofit organizations, federal or state agencies, or entities designated as agents of the state.  Id. § 493.901.

To successfully participate in a proficiency testing program, a laboratory must satisfy the requirements of Part 493, Subpart H, including among other requirements, the following:  a participating laboratory must test samples with its regular patient workload in the same manner as it tests patient specimens (42 C.F.R. § 493.801(b)(1)); must not engage in inter-laboratory communications about the results of proficiency testing sample(s) before the reporting deadline (id. § 493.801(b)(3)); must not refer samples to another laboratory for analysis (id. § 493.801(b)(4)); and must maintain documentation of the handling, preparation, processing, examination, and each step in the testing and reporting of results for all samples (id. § 493.801(b)(5)).  Moreover, any laboratory that receives a proficiency testing sample from another laboratory for testing must notify CMS of the receipt of that sample regardless of the reason for the referral.  Id. § 493.801(b)(4).

CMS imposes one or more of the principal or alternative sanctions specified in Part 493 when CMS determines a laboratory has one or more condition-level deficiencies.  See 42 C.F.R. §§ 493.1804(b)(2), 493.1806(a).  A condition-level deficiency means noncompliance with the requirements identified as "conditions" in Part 493, Subparts G through Q.  Id. § 493.2 (definitions).²  As a principal sanction, CMS may suspend, limit, or revoke the non-compliant laboratory's CLIA certificate.  Id. § 493.1806(b).  A failure to comply with even a single CLIA condition may be grounds for suspension or

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revocation of the laboratory's certificate.  White Lake Family Med., P.C., DAB No. 1951, at 5 (2004) (citing Ward Gen. Prac. Clinic, DAB No. 1624, at 2 (1997)).  In addition to or instead of imposing principal sanctions, CMS may impose alternative sanctions, including a directed plan of correction, onsite monitoring by the state, or civil money penalties.  42 C.F.R. § 493.1806(c).  CMS bases its choice of sanctions on the consideration of various regulatory factors.  Id. § 493.1804(d).  Similar factors are considered by CMS in determining the amount of a civil money penalty.  Id. § 493.1834(d).

Any laboratory that CMS determines intentionally referred its proficiency testing samples to another laboratory for analysis may have its CLIA certificate revoked for at least one year.  42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4).  An intentional referral occurs when a referral is made "knowingly and willfully," as opposed to one that is made by mistake, accident, negligence, or recklessness.  See Victor Valley Cmty. Hosp./Clinical Lab., et al., DAB No. 2340, at 7-8 (2010); Wade Pediatrics, DAB No. 2153, at 13-14 (2008), aff'd, 567 F.3d 1202 (10th Cir. 2009).  When CMS revokes a laboratory's CLIA certificate, it will also cancel that laboratory's approval to receive Medicare payments.  42 C.F.R. § 493.1842(a).  A laboratory without a CLIA certificate would also have no right to receive payments under a state Medicaid program.  See Social Security Act § 1902(a)(9)(C), 42 U.S.C. § 1396a(a)(9)(C); 42 C.F.R. § 493.1809.

A laboratory is entitled to a hearing before an ALJ to contest the imposition of CLIA remedies, including the suspension, limitation, or revocation of the laboratory's CLIA certificate.  42 C.F.R. § 493.1844(a)(2), (b)(1).  The imposition of alternative sanctions may also be appealed, but not the determination by CMS as to which alternative sanctions to impose, or the amount of civil money penalties imposed per day or per violation.  Id. § 493.1844(b)(3), (c)(4), (c)(7).  A laboratory may request review of the ALJ's decision by the Departmental Appeals Board.  Id. § 493.1844(a)(3).  The CLIA regulations at § 493.1844(a)(2) and (3) incorporate by reference the hearing procedures and the request for review provisions in 42 C.F.R. Part 498, Subparts D and E.

Case Background³

The Lab is a clinical laboratory located in Puerto Rico subject to the certification requirements under CLIA.  On March 21, 2019, a surveyor from the Puerto Rico Department of Health (PRDOH), Carlos Rivera, completed an on-site survey of the Lab

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and documented his findings in a statement of deficiencies.  CMS Ex. 1.  The surveyor reported that the Lab was enrolled in the Puerto Rico Proficiency Testing Program (PRPTP) for syphilis serology, endocrinology, occult blood, and urinalysis and participated in testing events in 2018 and 2019.  Id. at 3.  Regarding the Lab's proficiency testing performance, the surveyor made the following finding:

The [Lab] (40D0658188) sent all the proficiency samples for year 2018 (syphilis serology, urinalysis ([dipstick] and urinary sediment), endocrinology (serum - Human Chorionic Gonadotropin - hCG) and occult blood) and the first testing event of 2019 (urinalysis ([dipstick] and urinary sediment), endocrinology (serum - Human Chorionic Gonadotropin - hCG) and occult blood) to Laboratorio Clinico Central I (40D0673051).  The [Lab] reported the test results as its own.

Id. at 1-2.  Thus, according to the surveyor, the Lab referred "all the proficiency samples for year 2018" and "the first testing event of 2019" to Laboratorio Clinico Central I and reported the results obtained from that laboratory as its own.  Id.; see also CMS Ex. 23, at 3 (¶ 5).

According to the surveyor, the Lab director disclosed the improper and intentional referrals during an interview he conducted at the time of the survey.  CMS Ex. 1, at 3; see also CMS Ex. 23, at 2-3 (¶¶ 4-5).  The surveyor reported that the Lab director told him the PRPTP had directed her to run the proficiency testing samples at the other laboratory "because it was like an internal procedure" since she was the director of both laboratories.  CMS Ex. 1, at 4; CMS Ex. 23, at 3 (¶ 6).  The surveyor documented additional condition-level deficiencies at the Lab including, among other things, the failure to "retain proficiency testing records," even for tests the Lab performed itself (CMS Ex. 1, at 2; CMS Ex. 23, at 4-5 (¶¶ 9-10, 13)), and the failure to take remedial actions when the Lab received unsatisfactory test results (CMS Ex. 1, at 6; CMS Ex. 23, at 4 (¶ 11)).

By letter dated July 1, 2019, CMS notified the Lab that based on the results of the survey, the Lab was out of compliance with the following three CLIA conditions:

D2000:  42 C.F.R. § 493.801 Enrollment and Testing of [Proficiency Testing] Samples;
D6000:  42 C.F.R. § 493.1403 Laboratories performing moderate complexity testing; laboratory director; and
D3000:  42 C.F.R. § 493.1100 Facility Administration.

CMS Ex. 4, at 2.  CMS alleged that in eight separate instances, the Lab improperly referred proficiency testing samples to another laboratory and reported the test results as

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its own.  Id. at 1-2.⁴  As a result, CMS proposed to impose as a principal sanction the revocation of the Lab's CLIA certificate and, as an alternative sanction, a civil money penalty (CMP) of $2,000 for each of the eight improper referrals.  Id. at 2 (calculating a total CMP of $16,000).  CMS further proposed the cancellation of the Lab's approval to receive Medicare and Medicaid payments.  Id. at 3.  The Lab was given ten days to submit evidence or information as to why the proposed sanctions should not be imposed.  Id. at 4.

On July 16, 2019, CMS received the Lab's plan of correction (dated July 9, 2019) in response to the statement of deficiencies.  CMS Ex. 2 (plan of correction); CMS Ex. 5, at 1.⁵  In the plan of correction, the Lab repeatedly stated that it did not refer all proficiency testing samples to another laboratory but processed all of them (with one exception) in its own facility.  CMS Ex. 2, passim.  In response to the surveyor's assertion that the Lab violated 42 C.F.R. § 493.801(b)(4) by referring proficiency testing samples to another laboratory, the Lab denied that its director told the surveyor that all proficiency testing samples were referred to another laboratory.  Id. at 1-2.  The Lab explained:

[T]he only proficiency event referred to Laboratorio Clinico Central I was the syphilis serology event on May 2018.  The reason for [that] referral was the absence of electric energy prevailing in [the] premises of [the Lab] since the pass of Hurricane Maria in [Puerto Rico].  Electric power was restore[d] on May 2018.  Those facts were explained to the inspector.

Id. at 1.  In the same document, the Lab reiterated:  "Only the May 2018 events for proficiency [testing] for syphilis serology were referred to Laboratorio Clinico Central I.  The rest of the proficiency [testing] events [were] performed in [the Lab]."  Id. at 3-4.

With respect to the May 2018 proficiency testing event, the Lab further explained that the PRPTP had allegedly approved that referral in the aftermath of Hurricane Maria:

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The proficiency event on May 2018 was process[ed] in Laboratorio Clinico Central I after a call to the proficiency program office of Puerto Rico indicated that since Hurricane Maria there [is] not electric power in the laboratory.  The personal [sic] of the office of Proficiency Testing Program approved the referral of that event based on the fact that [Laboratorio Clinico Central I] [has] the same owner and is not consider[ed] as a reference laboratory.  All the additional events since May 2018 [were] process[ed] in [the Lab].

CMS Ex. 2, at 15; see also P. Ex. 3 (Affidavit of Helen del Toro Segarra), at ¶¶ 5-6.

In addition, in a letter dated July 10, 2019, directed to representatives of the PRDOH and CMS, and signed by the Lab director, the Lab reported that only the proficiency testing event of May 2018 was processed at Laboratorio Clinico Central I, and that was done only after consulting with and obtaining the approval of the PRDOH.  CMS Ex. 21, at 25.⁶  The Lab wrote:  "I want to emphasize that it was only that [May 2018] event that was carried out at the [Laboratorio Clinico Central I].  The rest of the proficienc[y] events for the year 2018 and the year 2019 were processed at the [Lab].  It is for this reason that I understand that the report submitted by [the surveyor] is not correct or faithful to the facts occurred . . . ."  Id.  The Lab submitted additional documents with its letter, but did not provide documentation of the handling, preparation, processing, examination, and each step in the testing and reporting of results for the proficiency testing samples at issue.  Id.

By email dated August 2, 2019, a representative of the PRDOH communicated to CMS its analysis of the plan of correction and additional materials submitted by the Lab.  CMS Ex. 3.  Soon after, by letter dated August 21, 2019, CMS acknowledged receipt of the Lab's plan of correction dated July 9, 2019, and determined the submission had "no effect on our sanction determination."  CMS Ex. 5, at 1.  CMS imposed the sanctions proposed in its July 1, 2019 letter, including the revocation of the Lab's CLIA certificate, imposition of a CMP in the amount of $16,000, and cancellation of the Lab's approval to receive Medicare and Medicaid payments.  Id. at 2.  CMS advised the Lab of its right to file an appeal.  Id.

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ALJ Proceedings and Decision

The Lab timely requested an ALJ hearing, challenging the imposition of sanctions and denying that it improperly referred eight proficiency testing samples to another laboratory.  When the case first came before the ALJ, the ALJ issued a decision granting summary judgment in favor of CMS.  Laboratorio Concordia Lugaro, DAB CR5589 (2020).  The Lab appealed.  The Board determined that summary judgment was improper due to the existence of disputed issues of material fact and remanded the case to the ALJ for a hearing.  Laboratorio Concordia Lugaro, DAB No. 3029, at 12-13 (2021) (finding genuine issues of material fact primarily relating to the Lab's representations that it did not, with one exception, refer proficiency testing samples to another laboratory).

On remand, the ALJ held a hearing by videoconference.  The ALJ received into evidence all exhibits proffered by the parties, including CMS Exhibits 1 - 24 and Petitioner Exhibits 1 - 3.  ALJ Decision at 2; Transcript (Tr.) at 6.⁷  Petitioner's exhibits included late-filed written direct testimony in the form of an affidavit from the Lab's director, Helen del Toro Segarra.  P. Ex. 3.  CMS declined to cross-examine the Lab director.  CMS's exhibits included the written direct testimony of Carlos Rivera, the surveyor (CMS Ex. 23) and Vanessa Sárraga, a supervisor in the laboratory division of the PRDOH (CMS Ex. 24).  The ALJ permitted the cross-examination and redirect testimony of the surveyor.  ALJ Decision at 2; Tr. at 9-28.  The ALJ denied cross-examination of Ms. Sárraga, who the ALJ determined was not a fact witness and whose testimony the ALJ found irrelevant.  ALJ Decision at 2 n.2 ("I do not rely in any respect on [Ms. Sárraga's] testimony in deciding this case."); Tr. at 8-9.

Following the submission of post-hearing briefs by both parties, the ALJ issued a decision sustaining CMS's determination that the Lab violated conditions of the CLIA program and affirming the remedies imposed by CMS.  ALJ Decision at 1.  Relying on the surveyor's testimony, which the ALJ found to be credible, the ALJ stated that the surveyor's findings were "prima facie proof" that the Lab violated CLIA conditions by referring proficiency testing samples to another laboratory and by reporting tests it had not conducted as its own.  Id. at 2-3 (citing CMS Ex. 23 and Tr. 7-28).⁸

The ALJ found the surveyor's contemporaneous notes (made when he interviewed the Lab director) corroborated his testimony.  Id. at 5 (citing CMS Ex. 22).  The ALJ acknowledged that the surveyor's notes were not a "verbatim record" of what the Lab

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director said but, as the surveyor explained, they signified that the Lab director admitted to referring multiple proficiency testing samples to another laboratory.  Id. (citing CMS Ex. 22, at 1; CMS Ex. 23, at 3 (¶ 5); Tr. at 15, 21-23).  The ALJ further found that a series of dates recorded in the surveyor's notes refer to the dates of the proficiency tests that the Lab had referred.  Id. (citing Tr. at 25-26; CMS Ex. 22, at 1).  The ALJ found no inconsistencies in the surveyor's testimony and rejected the Lab's argument that the surveyor's notes "prove" the Lab director did not admit to referring eight proficiency testing events to another laboratory.  Id.

As for the Lab director's written direct testimony, the ALJ found her testimony not to be credible.  Id. at 5-6 (citing P. Ex. 3).  The ALJ noted the Lab director admitted to referring the May 2018 proficiency testing samples to another laboratory and that a PRDOH representative allegedly approved the referral due to a loss of electricity; but, she denied referring any other proficiency testing samples or telling the surveyor that she had done so.  Id. at 6 (citing P. Ex. 3, at 1-2).  The ALJ found the Lab director's testimony was not supported with "even a single page of corroborating evidence."  Id.  The ALJ observed that the Lab "offered no records of the proficiency tests" that the Lab director alleged the Lab conducted and "offered no explanation for its failure to maintain the required records."  Id.  The ALJ concluded: "The only reasonable inference that I can draw from [the Lab's] failure to produce records of proficiency tests is that tests were not performed on [the Lab's] premises."  Id.

In addition, the ALJ found other "affirmative proof" that the Lab reported results for proficiency testing events that it had not conducted.  Id.  The ALJ found the Lab reported results for an October 2018 proficiency testing sample that the PRDOH had never sent to the Lab due to an overdue bill.  Id. (citing CMS Ex. 9, at 1; CMS Ex. 20, at 1; CMS Ex. 3, at 1).  Based on this evidence, the ALJ inferred that the Lab "simply reported the test results obtained by another laboratory, Laboratorio Clinico Central [I], as if [the Lab] had performed the tests."  Id.

The ALJ further found the timing of the Lab director's affidavit "renders it not credible."  Id.  The ALJ noted that the Lab director's affidavit was not filed until many months after the initial deadline for filing testimony and only after the Lab had the benefit of reviewing CMS's exhibits, the surveyor's written direct testimony, the several briefs that CMS filed before the ALJ and the Board, the ALJ's initial summary judgment decision, and the Board's decision remanding the case to the ALJ.  Id.  According to the ALJ, this gave the Lab "the advantage of seeing CMS's case presented in detail" and provided an "opportunity to tailor [the Lab director's] testimony" to address CMS's allegations and arguments and the original analysis of the ALJ and the Board.  Id.

The ALJ further found that the Lab director's admission about referring the May 2018 proficiency testing exercise to Laboratorio Clinico Central I, by itself, justifies CMS's decision to revoke the Lab's CLIA certificate regardless of what a representative of the

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PRDOH may have told her.  Id. at 7.  The ALJ determined that Petitioner's motive for making the referral is irrelevant.  Id. ("What matters here is whether [the Lab] knowingly referred the test samples to another laboratory.  [The Lab director] admits to having made an intentional referral.").  The ALJ, therefore, determined the Lab had condition-level deficiencies under 42 C.F.R. § 493.801 for referring proficiency testing samples to another laboratory, reporting tests it had not conducted as its own, and for failing to maintain records of proficiency testing.  Id. at 3-4.  The ALJ further found the Lab's failure to ensure that proficiency testing samples were tested in accordance with Subpart H (42 C.F.R. § 493.801) resulted in a separate condition-level deficiency regarding the Lab director's performance.  Id. at 5 (citing 42 C.F.R. §§ 493.1403, 493.1407(e)(4)(i)).

With regard to other condition-level deficiencies identified by CMS, the ALJ found the Lab offered "no defenses to CMS's proof of noncompliance."  Id. at 8.  Specifically, the ALJ found the Lab had "not offered a single record to show that it complied with recordkeeping requirements, either relating to proficiency tests or to the tests that it performed on patients' specimens."  Id.  The ALJ determined these were also condition-level deficiencies.  Id. at 4 (citing 42 C.F.R. §§ 493.801(b)(5), 493.1100, 493.1105(a)(6)).

The ALJ further found the Lab had "not offered evidence to prove that it undertook required remedial action to address its zero proficiency test scores on some tests."  Id. at 8.  The ALJ found the Lab violated the standard under 42 C.F.R. § 493.843(e) when it failed to take corrective action after receiving unsatisfactory results for human Chorionic Gonadotropin (hCG) proficiency tests in the first and third testing events of 2018.  Id. at 4-5 (citing CMS Ex. 8, at 6; CMS Ex. 23, at 4-5 (¶¶ 11-12)); see also CMS Ex. 1, at 5-6.  The ALJ found the failure to take corrective action resulted in a condition-level deficiency concerning the Lab director's performance under sections 493.1403 and 493.1407(e)(4)(iv).  ALJ Decision at 5.  The ALJ concluded:  "[E]ven if [the Lab] were to prevail on the allegations that it improperly referred proficiency tests, there would remain other unrebutted allegations of noncompliance that would justify the imposition of remedies by CMS."  Id. at 8.

With regard to remedies, the ALJ found that CMS imposed both principal and alternative sanctions based on the Lab's unlawful referrals of proficiency testing samples and other condition-level noncompliance.  Id. at 9 (citing CMS Ex. 4).  With regard to the principal sanction revoking the Lab's certificate, the ALJ noted that even one unlawful referral is sufficient to sustain the revocation.  Id.  The ALJ noted that the Lab's other condition-level deficiencies provided additional grounds for revocation but were not necessary to sustain that determination.  Id.  The ALJ further noted that the improper referrals and improper reporting of test results justified the imposition of alternative sanctions, including civil money penalties.  Id.  The ALJ observed the CMP of $2,000 per occurrence fell within a permissible range under the regulations, id. at 8-9 (citing 42 C.F.R. § 493.1834(d)(2)(ii)), but the ALJ concluded he had no authority to review or decide the specific penalty amount, id. at 9 (citing 42 C.F.R. § 493.1844(c)(4), (7)).

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Board Proceedings

The Lab timely filed a request for review (RR) of the ALJ Decision.  The Lab argues that the ALJ erred by (i) denying its request to examine Ms. Sárraga who, according to the Lab, was the only witness with personal knowledge about the "impossibility" of the Lab referring proficiency testing samples relating to the May 2018 exercise; (ii) limiting the cross-examination of the surveyor; (iii) admitting hearsay testimony of the surveyor; (iv) not considering the "range and importance" of the surveyor's admissions about his contemporaneous notes that, according to the Lab, referred only to the May 2018 proficiency testing exercise; (v) finding noncompliance based on the Lab's "involuntary" referral of the May 2018 proficiency testing exercise due to the loss of electricity; and (vi) concluding that CMS's imposition of "monetary sanctions" is not subject to review.  RR at 1-2.

CMS filed a response brief (CMS Br.) emphasizing the sworn testimony provided by the surveyor, which the ALJ found credible, and the statements made in the Lab director's affidavit, which the ALJ found not to be credible.  CMS Br. at 7.  CMS pointed out that there is "not a stitch of corroborating documentation" from the Lab demonstrating that the eight proficiency testing events at issue were performed on its premises.  Id. at 8.  CMS further noted that the Lab admitted to referring the May 2018 proficiency testing samples to the other laboratory and failed to rebut evidence of the other condition-level deficiencies that the ALJ found CMS had established.  Id. at 7, 12-13.

The Lab subsequently filed a reply, reiterating its arguments about the surveyor's contemporaneous survey notes and the need for "judicial review" of the monetary penalties imposed by CMS.  Reply at 1-3.

Standard of Review

The standard of review on a disputed factual issue is whether the ALJ's decision is supported by substantial evidence in the record as a whole.  The standard of review on a disputed issue of law is whether the ALJ's decision is erroneous.  See Guidelines – Appellate Review of Decisions of Administrative Law Judges in Cases Under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and Related Statutes (Board Guidelines), at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/clia/index.html.

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Analysis

I.  The ALJ's evidentiary rulings are not legally erroneous.

Petitioner challenges several of the ALJ's evidentiary rulings.  The ALJ proceedings were subject to the hearing procedures under 42 C.F.R. Part 498, Subpart D (§§ 498.40 – 498.79).  See 42 C.F.R. § 493.1844(a)(2).  In proceedings governed by Part 498, "[t]he ALJ has broad discretionary authority over evidentiary matters."  Thomas Falls, M.D., DAB No. 3056, at 18 (2022).  Thus, the Board defers to the ALJ's evidentiary rulings in the absence of a compelling reason not to do so.  See HeartFlow, Inc., DAB No. 2781, at 19 (2017) (citation omitted).  Still further, "the conduct of the hearing rests generally in the ALJ's discretion."  Carrington Place of Muscatine, DAB No. 2321, at 22 (2010).  That principle extends to the limitations and ground rules ALJs may establish for cross-examination.  See id.  The Board will vacate or modify an ALJ's decision based on an improper evidentiary or procedural ruling "only if the appellant demonstrates that the ruling was prejudicial."  Id. at 22.  With this framework in mind, we turn to the Lab's arguments concerning the ALJ's evidentiary and procedural rulings.

A.  The ALJ did not err by denying the Lab's request to cross-examine Vanessa Sárraga.

The Lab argues the ALJ erred by denying its request to examine Ms. Sárraga, who the Lab contends was the only witness "present" at the hearing with personal knowledge about the "impossibility" of the Lab referring proficiency testing samples relating to the May 2018 exercise.  RR at 1.  Following a pre-hearing conference on May 24, 2021, the ALJ issued an order denying the Lab's request to cross-examine Ms. Sárraga.  Order Following Prehearing Conference (May 25, 2021).  The order did not specify the reasons for the denial, but the ALJ gave two reasons at the start of the hearing when the Lab renewed its request to examine Ms. Sárraga, who the ALJ permitted to observe the hearing via videoconference (but not provide testimony).  Tr. at 8-9.⁹

First, the ALJ explained that he had reviewed Ms. Sárraga's written direct testimony (CMS Ex. 24) and determined that he would not consider it in deciding the case.  Tr. at 8.  The ALJ found that Ms. Sárraga is "not a fact witness," "made none of the observations that are the basis for CMS'[s] determination," and "[h]er testimony consists almost entirely of opinions as to whether what the surveyor found violated the regulations."  Id.  The ALJ determined her opinions are "in the nature of legal conclusions which no witness is qualified to make."  Id.  Thus, the ALJ found her testimony to be irrelevant and

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determined there was no reason to cross-examine her.  ALJ Decision at 2 n.2.  Second, the ALJ explained that the Lab failed to make a written request that Ms. Sárraga be made available for cross-examination.  Tr. at 9.  A written request was a requirement under the initial Prehearing Order issued by the ALJ and one of the requirements an ALJ may impose under applicable Civil Remedies Division (CRD) Procedures.  See Acknowledgement and Pre-Hearing Order (Oct. 8, 2019) at ¶ 8; CRD Procedures at ¶ 16.b.

We reject the Lab's assertion that it needed to examine Ms. Sárraga because her "sworn statement established the impossibility" of the Lab referring the May 2018 proficiency samples.  RR at 1.  This assertion is unfounded.  Nothing in Ms. Sárraga's proposed written direct testimony (CMS Ex. 24) suggested she had any personal knowledge about the Lab's referral of the May 2018 proficiency testing exercise.  Moreover, the Lab director admitted to referring the May 2018 proficiency testing exercise to Laboratorio Clinico Central I.  P. Ex. 3, at 1-2 (¶¶ 6, 9).  The Lab failed to explain in its request for review what information it expected to elicit from Ms. Sárraga, or how her cross-examination was necessary to impeach testimony the ALJ excluded from consideration.  Accordingly, we find no error in the ALJ's denial of Petitioner's request to cross-examine Ms. Sárraga.  See, e.g., Carrington Place at 23 (finding no prejudice where the petitioner "failed to explain with any specificity how the ALJ's conduct of the hearing impaired its ability to litigate specific issues material to the outcome of the proceeding").

Moreover, to the extent the Lab intended to elicit live testimony from Ms. Sárraga at the hearing it was incumbent on the Lab to request a subpoena in accordance with 42 C.F.R. § 498.58.  See CRD Procedures at ¶ 17.b.  The Lab did not request a subpoena or comply with any of the requirements of section 498.58.  Thus, we find no error in the ALJ's denial of Petitioner's oral request to examine Ms. Sárraga either at the time of the prehearing conference or on the day of the hearing and, absent a subpoena, there was no basis to compel her to testify.

B.  The ALJ did not err in limiting the cross-examination of the surveyor.

The Lab argues that in the surveyor's sworn statement and contemporaneous notes he mentioned only the Lab's improper referral of the May 2018 proficiency testing exercise.  RR at 1.  The Lab argues that the ALJ "never understood" its line of questioning establishing the "improbability" of what the surveyor had reported and ordered the Lab's representative to "cease that line of questioning" and leave it for argument.  RR at 1-2. An ALJ "has discretion to limit the scope of cross-examination where the result does not substantively impair the ability to decide the issue presented on a full, fair record."  Vitas Healthcare Corp. of Cal., DAB No. 1782, at 22 (2001) (citing Cent. Freight Lines, Inc. v. United States, 669 F.2d 1063, 1068 (5th Cir. 1982)).  The Board will vacate or modify an ALJ's decision based on an allegedly improper evidentiary or procedural ruling "only if the appellant demonstrates that the ruling was prejudicial."  Carrington Place at 22-23

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(noting that the facility "failed to explain with any specificity how the ALJ's" limitations on cross-examination "impaired its ability to litigate specific issues material to the outcome of the proceeding").  To the extent the Lab contends that its cross-examination of the surveyor was improperly curtailed, we find no error by the ALJ.

The transcript shows that the Lab's representative repeatedly asked the surveyor about his contemporaneous notes (CMS Ex. 22) and whether his notes specifically identified each of the eight improperly referred proficiency tests reported in the statement of deficiencies (CMS Ex. 1, at 1).  Tr. 11-21.  After lengthy questioning and an objection by CMS, the ALJ advised the Lab's representative: "Mr. Oquendo, I get your point.  Your, your point is . . . his notes only refer[] to some of the things that he says in his affidavit.  I guess you want to argue from that, that if he didn't put it in his notes, that renders his affidavit less credible."  Tr. at 21.  Mr. Oquendo responded: "That is exactly."  Id.  The ALJ then responded:  "Okay.  Okay.  I understand.  It's time for us to move onto something else."  Id.  Thus, contrary to the Lab's argument, the ALJ understood the Lab's line of questioning, and the Lab's representative expressly confirmed that understanding at the hearing.  Id.  In its request for review, the Lab failed to explain with any specificity how the ALJ's limitation on cross-examination impaired its ability to litigate any issue material to the outcome of this case.  We find no basis to conclude that the ALJ improperly curtailed the cross-examination of the surveyor and reject the Lab's contention that the ALJ committed any prejudicial error in connection with the cross-examination of the surveyor.

C.   The Lab failed to preserve any hearsay objection concerning the surveyor's testimony.

The Lab further argues that certain testimony by the surveyor "explaining the situation of the referral of October 2018" was "clearly hearsay evidence."  RR at 2.  Consistent with CMS Ex. 20, which was admitted into evidence without objection, the surveyor confirmed at the hearing that the reference to "10/2018 – 0%" in his contemporaneous notes (CMS Ex. 22) indicates that the Lab was not a participant in the October 2018 proficiency testing event due to an overdue payment.  Tr. at 25-26; see also CMS Ex. 20, at 1-3 (records indicating that the October 2018 proficiency testing samples were not sent to the Lab and yet the Lab reported results relating to this testing event).  Although the Lab's representative generally objected to this questioning, he did not raise any hearsay objection and never specified what, if any, testimony by the surveyor was hearsay.  Tr. at 25-26.  The Lab, therefore, failed to preserve this issue for appellate review by the Board.  See Board Guidelines, "Completion of the Review Process, ¶ (a) (stating that the Board "will not consider issues . . . which could have been presented to the ALJ but were not"); see also Copperas Cove LTC Partners, Inc., DAB No. 3049, at 32 (2021) (holding that petitioner failed to preserve issue for review where counsel failed to raise objection concerning scope of cross-examination at the time of the hearing to alert the ALJ to the issue and enable opposing counsel to take corrective measures).

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Even if the issue had been preserved, we find no error or abuse of discretion by the ALJ in connection with the surveyor's testimony.  The Lab never specified in its request for review what testimony by the surveyor amounted to hearsay.  Our review of the transcript indicates the surveyor explained the significance of entries in his contemporaneous notes; however, it is unclear how that would amount to hearsay.  Tr. at 25-26.  Moreover, hearsay is admissible in Part 498 administrative proceedings and may be probative on the issue of the truth of the matter asserted, where sufficient indicia of reliability are present.  See, e.g., Britthaven, Inc., DAB No. 2018, at 3 (2006) (citing 42 C.F.R. § 498.61).  Still further, "the ALJ has broad discretionary authority in evidentiary matters."  Heartflow at 22 (citing 42 C.F.R. § 498.61 ("Evidence may be received at the hearing even though inadmissible under the rules of evidence applicable to court procedure."); Lakeport Skilled Nursing Ctr., DAB No. 2435, at 6 (2012) (Federal Rules of Evidence and the Federal Rules of Civil Procedure do not apply to Part 498 proceedings); Jennifer Matthew Nursing & Rehab. Ctr., DAB No. 2192, at 51 (2008) ("Under 42 C.F.R. § 498.61, an ALJ has broad discretion to admit evidence.")).  In light of this broad discretionary authority, we do not disturb an ALJ's evidentiary ruling without a compelling reason to do so.  The Lab has not provided any such compelling reason.  We find no error or abuse of discretion by the ALJ in connection with the surveyor's testimony.

II.  The ALJ Decision is supported by substantial evidence and free of legal error.

Before the ALJ, CMS had the burden of coming forward with sufficient evidence to establish a prima facie case that the Lab did not comply with one or more CLIA conditions.  The Malaria & Rheumatic Disease Rsch. Inst., Inc., DAB No. 2872, at 11 (2018).  Once CMS satisfied its burden, the Lab then had the burden of showing by a preponderance of the evidence that it complied with the CLIA conditions at issue.  Id. (citing Immuno Biogene, Inc., DAB No. 1946, at 3 (2004)); see also Edison Med. Labs., Inc., DAB No. 1713, at 12-13 (1999), aff'd, 250 F.3d 735 (3d Cir. 2001).  The ALJ determined that the surveyor's findings were "prima facie proof" that the Lab violated CLIA conditions, ALJ Decision at 3-4, and that the Lab failed to sufficiently rebut CMS's evidence of noncompliance, id. at 6-8.  For the reasons explained below, we find the ALJ Decision is supported by substantial evidence and free of legal error.

A.  The Board defers to the ALJ's conclusions concerning witness credibility and the weight accorded to specific evidence absent compelling reasons not to do so.

Focusing primarily on the surveyor's testimony, the Lab argues that the ALJ Decision is not supported by substantial evidence.  RR at 1-2.  According to the Lab, the surveyor's testimony on cross-examination "clearly established" that the Lab director only admitted to referring the May 2018 proficiency tests as the Lab asserted "from the onset of the case."  Id. at 2.  The Lab further complains that "[s]ome expressions of the ALJ suggest that he . . . made a decision before the hearing" and never considered "the range and

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importance" of the surveyor's admissions on cross-examination.  Id.  The Lab contends the ALJ did not consider its plan of correction (CMS Ex. 2) in which the Lab director "denied the charges" consistent with her affidavit and the surveyor's "admissions."  Id.  For the reasons explained below, we reject each of the Lab's arguments and find the ALJ Decision is supported by substantial evidence and free of legal error.

The Lab's assertion that the surveyor's testimony and notes "clearly established" that the Lab director only admitted to referring the May 2018 proficiency tests is contradicted by both the surveyor's testimony and his notes.  First, the surveyor confirmed, in both his written direct testimony and in-person testimony, that the Lab director told him the Lab referred all proficiency testing samples for the year 2018 and the first testing event of 2019 to another laboratory and reported those results as its own.  CMS Ex. 23, at 3 (¶ 5); Tr. at 13, 21, 22-23.  Thus, as the ALJ recognized, the surveyor's testimony about the Lab director's admissions was not limited to the May 2018 proficiency test.  ALJ Decision at 3, 5.

Second, while acknowledging that the surveyor's notes are not a "verbatim record" of what the Lab director told him, the ALJ found the notes corroborate his direct testimony in significant respects.  Id. at 5.  For example, the surveyor translated part of his notes as saying:  "Pt samples were done at L.C. Central I Humacao (as per director)," signifying that the Lab director admitted that samples were referred to another laboratory.  CMS Ex. 22, at 1; CMS Ex. 23, at 3 (¶ 5); Tr. at 15, 21-23.  The surveyor further explained that a series of dates recorded in his notes referred to the dates of the proficiency tests that the Lab had referred.  Tr. at 25-26; CMS Ex. 22, at 1.  Simply put, the surveyor's testimony and notes do not support the Lab's assertion that the Lab director only admitted to referring the May 2018 proficiency tests.

Still further, the ALJ found the surveyor's testimony to be credible and found no inconsistencies in his testimony.  ALJ Decision at 2, 5.  "[T]he Board will defer to an ALJ's findings on weight and credibility of witness testimony (oral or written) unless there are compelling reasons not to do so."  Copperas Cove at 16 (quoting Nightingale Home Healthcare, Inc., DAB No. 2784, at 10 (2017) (internal quotation marks omitted)); see also Avalon Place Trinity, DAB No. 2819, at 9 (2017) ("We defer to the ALJ's conclusions about witness credibility and the weight to accord to specific evidence, absent compelling reasons not to do so." (citations omitted)), aff'd, 761 F. App'x 407 (5th Cir. 2019).  The ALJ held a hearing in which the surveyor was subject to cross-examination, redirect, and re-cross examination.  Tr. at 7-28.  Thus, the ALJ was in the best position to observe and fully assess the witness's demeanor and the quality of his testimony.  Here, the ALJ clearly explained why he found the surveyor's written and oral testimony to be credible (i.e., corroborated by documentation and no inconsistencies) and the Lab has given us no compelling reason to disregard the ALJ's assessment of the witness or the weight given to his testimony.

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We further reject the Lab's assertion that the ALJ did not consider the Lab's plan of correction (CMS Ex. 2).  In fact, the ALJ specifically acknowledged the Lab's plan of correction and that statements in the Lab director's affidavit are consistent with statements in the plan of correction.  ALJ Decision at 7 n.7 (citing CMS Ex. 2, at 1).  Nevertheless, the ALJ found the Lab director's written direct testimony, including her assertion that the Lab only referred the May 2018 proficiency test to another laboratory, not to be credible.  Id. at 5.  Again, we defer to an ALJ's findings on the weight and credibility of witness testimony unless there are compelling reasons not to do so.  Copperas Cove at 16.  Here, the ALJ's reasons for discounting the Lab director's testimony, which largely tracked assertions she made in the plan of correction, were well founded.  The Lab did not support the Lab director's assertions "with even a single page of corroborating evidence."  ALJ Decision at 6.  The Lab offered no records of the proficiency tests the Lab allegedly conducted and no explanation for its failure to maintain the required records.  Id.  The Lab also produced no record of the conversation in which a representative of the PRDOH allegedly authorized the Lab director to refer the May 2018 proficiency test to Laboratorio Clinico Central I.  Id. at 7.  The ALJ also found the Lab director's affidavit lacked credibility because it was filed late and only after the Lab had the opportunity to review all of the evidence submitted by CMS and several of its briefs.  Id. at 6.  For all of these reasons, we find no compelling reason to disregard the ALJ's assessment of the Lab director's testimony.

We further reject the Lab's assertion that "[s]ome expressions of the ALJ" suggest he decided the case before the hearing.  The Lab failed to identify anything in the record to support this assertion.  We find that on remand the ALJ afforded the Lab a fair and impartial hearing, and we find nothing in the record suggesting the ALJ decided the case before hearing all the evidence presented by the parties.

B.  The ALJ did not err in concluding that the Lab's referral of the May 2018 proficiency test was intentional.

The Lab also challenges the ALJ's determination that the referral of the May 2018 proficiency test to Laboratorio Clinico Central I was intentional.  RR at 2 (arguing that the referral was "involuntary" because it was "provoked" by Hurricane Maria and testing could not be performed due to a loss of electricity); Reply at 2.  As the ALJ explained, it does not matter that the Lab director may have incorrectly concluded that a laboratory that shared common ownership could perform proficiency testing on the Lab's behalf due to a loss of electricity because the Lab's motive for referring proficiency tests is not relevant.  ALJ Decision at 7.

The applicable regulations do not require an element of bad intent for a referral to be "intentional."  See 42 C.F.R. § 493.801(b)(4).  As the Board has long recognized, an intentional referral occurs when it is made "knowingly and willfully."  See Victor Valley Cmty. Hosp. at 7-8; Wade Pediatrics at 13-14.  And, while the regulations recognize that

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certain referrals in very limited circumstances (not applicable here) will be considered improper but not intentional, the regulations provide no exception for natural disasters or a temporary loss of testing capabilities.  42 C.F.R. § 493.801(b)(4).¹⁰  Accordingly, the only relevant question is whether the Lab knowingly and willfully referred the May 2018 proficiency testing samples to another laboratory, and the Lab director admits to having done just that.  ALJ Decision at 7; CMS Ex. 2, at 1.  As the ALJ found, that admission by itself justifies CMS's determination to revoke the Lab's CLIA certificate.  Id.  We find no error in the ALJ's conclusion that the Lab's referral of the May 2018 proficiency test was intentional.¹¹

C.  The other condition-level deficiencies sustained by the ALJ were not challenged by the Lab.

In the proceedings before the ALJ, CMS raised several other allegations of CLIA noncompliance apart from the Lab's improper referral of proficiency testing.  ALJ Decision at 4-5 & n.5.  The ALJ noted the Lab offered no defense to these additional allegations and found condition-level deficiencies relating to its failure to comply with record-keeping requirements (42 C.F.R. §§ 493.801(b)(5), 493.1100, 493.1105(a)(6)) and its failure to undertake required remedial action to address its zero proficiency test scores on some tests (42 C.F.R. §§ 493.1403, 493.1407(e)(4)(iv)).  ALJ Decision at 4-5, 8.  The Lab did not challenge these additional findings before the Board and, therefore, they are summarily affirmed.

D.  The ALJ did not err in declining to review the CMP amount.

The Lab complains that the ALJ erred by deciding that CMS's "power to impose monetary sanctions" is not subject to judicial review.  RR at 2.  Petitioner misunderstands the ALJ's decision.  The ALJ made no determination about the scope of judicial review.

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Rather, the ALJ determined that (i) CMS may impose CMPs as an alternative sanction for one or more condition-level deficiencies, (ii) the CMP amount fell within a permissible range under the applicable regulations, and (iii) the ALJ had no authority to address whether a specific CMP amount is reasonable.  ALJ Decision 8-9.  Thus, contrary to the Lab's assertions, the ALJ expressly determined that he may review whether CMS had authority to impose CMPs.  Id. ("I may decide whether that authority is present, i.e., whether a laboratory exhibits a condition-level violation of CLIA.").

The ALJ determined that the Lab's improper referral of proficiency testing samples and improper reporting of test results were condition-level deficiencies that justify the imposition of alternative sanctions, including CMPs.  Id. at 8-9.  The ALJ, however, declined to address whether the specific CMP amounts were reasonable.  Id.  This is because the amount of a CMP assessed per day or per violation is not an initial determination subject to review by an ALJ (or the Board).  42 C.F.R. § 493.1844(c)(7).  Thus, under the applicable regulations, an ALJ may review CMS's decision to impose alternative sanctions; but, the determination as to which alternative sanctions to impose, including the amount of a CMP to impose per day or per violation, is not subject to review.  Id. § 493.1844(b)(3), (c)(4), (c)(7).  We find no error in the ALJ's assessment of the remedies imposed by CMS in this case.

Conclusion

For the reasons stated above, and because it is supported by substantial evidence and free of legal error, we affirm the ALJ Decision.

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Endnotes

¹  This matter initially came before the Board after the ALJ granted summary judgment in favor of CMS in Civil Remedies Division Docket No. C-19-1093.  See Laboratorio Concordia Lugaro, DAB CR5589 (2020).  The Board determined that summary judgment was improper and remanded the case to the ALJ for a hearing.  See Laboratorio Concordia Lugaro, DAB No. 3029 (2021).  On remand, this matter was assigned Civil Remedies Division Docket No. C-21-426.  Thus, the record for this appeal includes documents and exhibits submitted by the parties under Docket No. C-19-1093 (before remand) and Docket No. C-21-426 (after remand).

²  The ALJ found the Lab had condition-level deficiencies under 42 C.F.R. §§ 493.801 (proficiency testing), 493.1100 (facility administration/record retention), and 493.1403 (performance of laboratory director).  ALJ Decision at 3-5.

³  Background information is drawn from the ALJ Decision and the record before the ALJ and is not intended to substitute for the ALJ's findings.  Except for the Lab director's affidavit (P. Ex. 3), which was filed in Docket No. C-21-426 (after remand), all other exhibit citations refer to the exhibits filed by the parties in Docket No. C-19-1093 (before remand).

⁴  The letter identified the following eight instances of improper proficiency testing referrals:

Syphilis serology, 2nd and 3rd 2018 (2 events);
hCG, 3rd 2018 and 1st 2019 (2 events);
Urinalysis with microscopy, 3rd 2018 and 1st 2019 (2 events); and
Occult Blood, 3rd 2018 and 1st 2019 (2 events).

CMS Ex. 4, at 2.

⁵  Both parties submitted copies of the Lab's plan of correction as part of their respective exhibits.  The copy submitted by the Lab is part of the record as Petitioner's Exhibit 2.  To avoid redundant citations, we will cite to CMS Ex. 2 unless otherwise specified.

⁶  This cite refers to the English translation of the Spanish-language letter appearing on the previous page of the exhibit.  See CMS Ex. 21, at 24.  We note that none of the translations in the record were certified by a translator.  We accept the substance of the translation because neither party objected to the accuracy of the translation or its admissibility before the ALJ.

⁷  Except for Petitioner's Exhibit 3 (Affidavit of Helen del Toro Segarra), all of the exhibits were filed in Docket No. C-19-1093.  The affidavit (P. Ex. 3) and hearing transcript were filed in Docket No. C-21-426.

⁸  The surveyor's declaration was an unsworn declaration made under penalty of perjury.  CMS Ex. 23, at 1, 7.  It has the same force and effect as a sworn declaration.  See 28 U.S.C. § 1746.

⁹  "The hearing is open to the parties and their representatives and technical advisors, and to any other persons whose presence the ALJ considers necessary or proper."  42 C.F.R. § 498.60(a).

¹⁰  The full text of the exception reads:  "If CMS determines that a proficiency testing sample was referred to another laboratory for analysis, but the requested testing was limited to reflex, distributive, or confirmatory testing that, if the sample were a patient specimen, would have been in full conformance with written, legally accurate and adequate standard operating procedures for the laboratory's testing of patient specimens, and if the proficiency testing referral is not a repeat proficiency testing referral, CMS will consider the referral to be improper and subject to alternative sanctions in accordance with § 493.1804(c), but not intentional."  42 C.F.R. § 493.801(d)(4).

¹¹  We further note the applicable regulations do not permit individual proficiency testing programs to authorize laboratories, under any circumstances, to refer proficiency testing samples to another laboratory in violation of federal regulations.  Thus, to the extent Petitioner seeks equitable relief based on the PRDOH representative's alleged authorization, the Board is bound by the applicable regulations and cannot grant relief based on equitable doctrines, theories, or reasons.  See, e.g., Gregory J. Frazer, Au.D., Ph.D., DAB No. 3038, at 11-12 (2021) (rejecting petitioner's equitable arguments and further noting that, even if equitable estoppel were available (which it is not), erroneous oral advice provided by a government representative is insufficient, as a matter of law, to estop the government from enforcing federal law).