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                              Laboratorio Concordia Lugaro, DAB CR5976 (2021)
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Laboratorio Concordia Lugaro, DAB CR5976 (2021)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Civil Remedies Division





Laboratorio Concordia Lugaro
(CLIA ID No.: 40D0658188),
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-21-426Decision No. CR5976November 9, 2021

        
              
    

      DECISION

I sustain the determination of the Centers for Medicare & Medicaid Services (CMS) to impose the following remedies against Petitioner, Laboratorio Concordia Lugaro: revocation of Petitioner’s CLIA certificate; cancellation of its approval to receive Medicare payments; and a civil money penalty of $2,000 for each of the instances in which Petitioner either improperly referred proficiency testing samples to another laboratory or falsely reported proficiency testing results.1

I. Background

This case originally was before me as a motion for summary judgment filed by CMS.  I issued a decision sustaining CMS’s motion.  Petitioner then appealed my decision to the Departmental Appeals Board (Board).  A Board appellate panel, asserting that it had discovered disputed issues of material fact, remanded the case to me so that I could afford the parties an in-person hearing.

Page 2

I held a hearing via videoconference on August 11, 2021.  At the hearing I received into evidence exhibits from CMS, identified as CMS Ex. 1-CMS Ex. 24, and exhibits from Petitioner, identified as P. Ex. 1-P. Ex. 3.  Transcript (Tr.) at 6.  I heard the cross-examination and redirect testimony of CMS’s witness, Mr. Carlos Rivera.2
  The parties filed post-hearing briefs.

Petitioner’s exhibits include an affidavit from Ms. Helen del Toro Segarra.  P. Ex. 3.  That affidavit constitutes Petitioner’s principal affirmative defense to CMS’s allegations of noncompliance.  Below, I explain why I do not find Ms. del Toro’s statements to be credible.

II. Issues, Findings of Fact and Conclusions of Law

**A.  Issues**

The issues are whether Petitioner failed to comply with one or more CLIA conditions of participation and whether CMS’s remedy determinations are reasonable.

**B.  Findings of Fact and Conclusions of Law**

**1.  Noncompliance**

Failure by a clinical laboratory to comply with CLIA conditions of participation is grounds for revocation of that laboratory’s CLIA certificate.  42 U.S.C. § 263a(f); 42 U.S.C. § 263a(i)(1)(C).

Carlos Rivera, who is employed as a surveyor/medical technologist in the laboratory division of the Puerto Rico Department of Health, completed a survey of Petitioner’s laboratory on March 21, 2019.  CMS Ex. 23.3
  Mr. Rivera’s findings, if not rebutted by the preponderance of the evidence, are ample basis to conclude that Petitioner failed to comply with CLIA conditions of participation, including, but not limited to, the condition governing proficiency testing.

I find Mr. Rivera’s testimony, both in his affidavit and on the record of the hearing, to be credible.

Page 3

First, his findings are prima facie proof that Petitioner violated CLIA conditions by, among other things, referring proficiency testing samples to another clinical laboratory and by reporting tests that it had not conducted as if it had conducted them.

Clinical laboratories participating in CLIA are from time to time required to test proficiency testing samples as a way of determining their competence and the accuracy of their tests.  CLIA makes it absolutely clear that each certified laboratory must perform its own tests without assistance from, or referral of testing samples to, another laboratory:

[T]he laboratory agrees to treat proficiency testing samples in the same manner as it treats materials derived from the human body referred to it for laboratory examinations or other procedures in the ordinary course of business, except that no proficiency testing samples shall be referred to another laboratory for analysis . . . .

42 U.S.C. § 263a(d)(1)(E).  CMS may revoke a laboratory’s CLIA certificate for one year if that laboratory intentionally refers proficiency testing samples to another laboratory for analysis.  42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4).  Cancellation of authority to receive Medicare payments operates as a concomitant remedy.  CMS may additionally impose a civil money penalty for each instance in which a laboratory makes an improper proficiency testing referral.4

Neither the statute nor implementing regulations define what is an intentional referral of a proficiency test.  The common and ordinary meaning of “intentional” is an act that is knowing and willful or deliberate as opposed to something that is accidental.  Merriam-webster.com; *Victor Valley Cmty. Hosp./Clinical Lab.*, DAB No. 2340 at 7-8 (2010); *Wade Pediatrics*, DAB No. 2153 at 13-14 (2008), *aff’d sub nom, Wade Pediatrics v. Dep’t of Health & Human Servs.*, 567 F.3d 1202 (10th Cir. 2009).  An intentional referral of a proficiency test occurs whenever a laboratory knowingly refers a test to another laboratory for testing.  Specific intent to violate CLIA or its regulations is not an element of an intentional referral.

Mr. Rivera interviewed Ms. del Toro, the laboratory owner’s wife and the laboratory’s director.  CMS Ex. 23 at 2.  She told Mr. Rivera that Petitioner had sent all proficiency testing samples for certain tests beginning in 2018 to another laboratory, Laboratorio Clinico Central I, but had reported that laboratory’s testing results as if Petitioner had performed them.  *Id.* at 3; CMS Ex. 1 at 3.  Ms. del Toro told Mr. Rivera that the Puerto Rico Proficiency Testing Program had instructed her to refer proficiency testing samples to the other laboratory because she was the director of both laboratories.  CMS Ex. 1 at 3-4; CMS Ex. 2 at 3-4; CMS Ex. 23 at 3.

Page 4

Second, Mr. Rivera’s findings are prima facie proof that Petitioner violated additional CLIA conditions.5
  During his survey of Petitioner’s laboratory Mr. Rivera discovered that Petitioner failed to maintain any records of proficiency testing from the beginning of 2017 through the proficiency testing event of February 2019.  CMS Ex. 23 at 4.  A clinical laboratory must document the handling, preparation, processing, examination, and each step in the testing and reporting of results for all proficiency testing samples.  The laboratory must maintain a copy of all proficiency testing records for a period of at least two years from the date of a proficiency testing event.  42 C.F.R. § 493.801(b)(5).  Failure by a laboratory to do so is a violation of a CLIA condition that supports the imposition of remedies.

The failure by Petitioner to maintain records of proficiency testing not only is by itself a regulatory violation, but it is strong evidence that Petitioner did not do proficiency testing on its premises.  It thus corroborates Mr. Rivera’s account of what Ms. del Toro told him.

Mr. Rivera’s findings support the conclusion that Petitioner failed to comply with the CLIA standards governing general recordkeeping.  To comply, a laboratory must retain or be able to retrieve a copy of patient test reports for a period of at least two years after the reporting date.  42 C.F.R. § 493.1105(a)(6).  Petitioner was unable to provide Mr. Rivera with copies of original test reports and copies of laboratory results.  CMS Ex. 23 at 5.

This failure by Petitioner to provide evidence that it maintained test records is therefore prima facie proof of an additional violation of the CLIA condition governing administration of a clinical laboratory.  CMS Ex. 23 at 5; 42 C.F.R. § 493.1100.

Mr. Rivera found evidence that Petitioner had received unsatisfactory proficiency test results in human Chorionic Gonadotropin tests in the first and third testing events of 2018.  CMS Ex. 8 at 6; CMS Ex. 23 at 4.  Those failing test scores imposed on Petitioner the obligation to take remedial action.  However, Ms. del Toro admitted that the facility

Page 5

had not undertaken any remedial action.  The failure to do so is prima facie evidence that Petitioner failed to comply with the CLIA standard stated at 42 C.F.R. § 493.843(e), which pertains to proficiency testing in endocrinology.  CMS Ex. 23 at 4-5.

Mr. Rivera documented numerous additional failures by Petitioner to maintain test reports and results required by CLIA regulations.  CMS Ex. 23 at 5-6.  These failures are additional prima facie proof that Petitioner did not comply with CLIA conditions and, if unrebutted, are another ground for revoking Petitioner’s CLIA certificate and the imposition of additional remedies.

Finally, all of the foregoing evidence, if unrebutted, is prima facie proof that Petitioner failed to meet the CLIA condition governing the performance of a clinical laboratory’s director and another basis for imposing remedies against Petitioner.  42 C.F.R. §§ 493.1403; 493.1407(e)(4)(i), 493.1407(e)(4)(iv).

CMS offered corroborating evidence to support Mr. Rivera’s testimony.  That corroboration exists in the contemporaneous notes that Mr. Rivera made when he interviewed Ms. del Toro on March 21, 2019.  CMS Ex. 22.

The notes are not a verbatim record of what Ms. del Toro said to Mr. Rivera.  They are clearly intended as memory joggers.  However, and as Mr. Rivera explained at the in-person hearing, they corroborate his direct testimony in significant respects.  For example, Mr. Rivera translated part of his notes as saying:  “Pt samples were done at L.C. Central I Humacao (as per director),” signifying that Ms. del Toro admitted that test samples were referred to another laboratory.  CMS Ex. 22 at 1; CMS Ex. 23 at 3; Tr. at 15, 21-23.  Mr. Rivera explained that a series of dates recorded in the notes referred to the dates of the proficiency tests that Petitioner had referred.  Tr. at 25-26; CMS Ex. 22 at 1.

Petitioner argues that the sometimes cryptic statements in Mr. Rivera’s notes prove that Ms. del Toro did not admit referring eight proficiency testing events to another laboratory.  I disagree.  As I have stated, the notes are not a verbatim record of the interview of Ms. del Toro.  But, as explained by Mr. Rivera, they are entirely consistent with and corroborate his direct testimony.  CMS Ex. 22; CMS Ex. 23.

In its defense Petitioner relies on Ms. del Toro’s affidavit and on what it claims are inconsistencies in Mr. Rivera’s testimony.  Petitioner’s post-hearing brief; P. Ex. 3; *see*CMS Ex. 23.  As I have discussed, I do not find any inconsistencies in Mr. Rivera’s testimony.  As for Ms. del Toro’s testimony, I do not find it to be credible.

Petitioner failed to submit Ms. del Toro’s affidavit in the initial iteration of this case, notwithstanding that I provided it with the opportunity to do so.  I ultimately accepted

Page 6

Ms. del Toro’s affidavit, albeit filed very untimely, because I wanted to eliminate any possible argument by Petitioner that I was denying it due process.

In her affidavit Ms. del Toro admits that Petitioner referred its May 2018 proficiency testing samples to another laboratory, Laboratorio Clinico Central.  She contends that she was authorized to do so by a “Mr. Ocasio” at the Puerto Rico Department of Health due to the loss of electrical power resulting from Hurricane Maria.  P. Ex. 3 at 1.  She denies referring other proficiency testing samples to other laboratories and denies having admitted to Mr. Rivera that she did so.  *Id.* at 2.  She asserts that she performed the June 2018 proficiency testing at Petitioner’s facility because those tests could be performed manually.  *Id.* at 1.  Thereafter, according to Ms. del Toro, electrical power was restored, and she performed all proficiency testing on Petitioner’s premises.  *Id.*

Petitioner did not support Ms. del Toro’s testimony with even a single page of corroborating evidence.  It offered no records of the proficiency tests that Ms. del Toro alleges that Petitioner conducted.  It offered no explanation for its failure to maintain the required records.

The only reasonable inference that I can draw from Petitioner’s failure to produce records of proficiency tests is that tests were not performed on Petitioner’s premises.  This plainly undercuts Ms. del Toro’s assertions that she performed proficiency tests at Petitioner’s laboratory.

Indeed, and in addition to Ms. del Toro’s admission in her affidavit that Petitioner referred the May 2018 testing samples to another laboratory, there is affirmative proof that Petitioner also reported results of other tests that it did not perform.  Petitioner reported October 2018 proficiency test results as if it had performed them.  CMS Ex. 9 at 1; CMS Ex. 20.  In fact, the testing organization had not sent test samples to Petitioner due to Petitioner’s failure to pay its bill.  CMS Ex. 3 at 1; CMS Ex. 20 at 1.  The inference that I draw is that Petitioner simply reported the test results obtained by another laboratory, Laboratorio Clinico Central, as if Petitioner had performed the tests.

The timing of Ms. del Toro’s affidavit renders it not credible.  As I have discussed, Petitioner did not file the affidavit until many months after its initial deadline for filing testimony had elapsed.  During the interval Petitioner had the opportunity to read and react to:  CMS’s exhibits, which include Mr. Rivera’s testimony; the several briefs that CMS filed before me and before the Board; my initial decision; and the Board appellate panel’s decision.  In other words, Petitioner had the advantage of seeing CMS’s case presented in detail.  That gave Petitioner the opportunity to tailor Ms. del Toro’s testimony to address the allegations that CMS had made, and both my original analysis and that of the Board appellate panel.

Page 7

Although not credible in other respects, Ms. del Toro’s testimony hurts Petitioner in one critical respect.  She admits that Petitioner referred a proficiency test exercise to another laboratory.6
  She contends that this was the only instance, and she asserts that she was granted permission to refer the test by a representative of the Puerto Rico Department of Health.  Petitioner has produced no record of the alleged conversation.  But, even if I accept as true Ms. del Toro’s description of the circumstance of that referral, it is grounds for me to find that Petitioner violated CLIA requirements and it provides a basis to impose remedies against Petitioner.

It does not matter that Ms. del Toro may have incorrectly concluded that a laboratory that shared common ownership and direction with Petitioner could perform proficiency testing on Petitioner’s behalf.  Petitioner’s motive in referring proficiency tests to another laboratory for testing is not relevant. What matters here is whether Petitioner knowingly referred the test samples to another laboratory.  Ms. del Toro admits to having made an intentional referral.7
  As I explain below, that admission, in and of itself, justifies CMS’s determination to revoke Petitioner’s CLIA participation.

The referrals in this case were not harmless errors.  Even if Ms. del Toro honestly believed that she could refer testing samples to another laboratory, her decision to do so masked potentially poor performance by Petitioner and endangered the health and safety of individuals whose specimens Petitioner tested.

When a laboratory refers proficiency testing samples to another laboratory it defeats the purpose of proficiency testing.  A principal purpose of CLIA is to assure that a *specific* laboratory conducts clinical tests in a way that satisfies standards of care for laboratories.  When another laboratory performs proficiency testing on a laboratory’s behalf the results say nothing about the performance of the referring laboratory.  Referred test results can mask poor performance by the referring laboratory.  Improperly performed tests by a laboratory can have a deleterious effect on the health and safety of the individual whose samples are being tested.  An error by a laboratory can result in a life-threatening misdiagnosis.

Page 8

Petitioner offers no defenses to CMS’s proof of noncompliance with CLIA participation conditions in addition to that governing performance of proficiency testing.  As I have discussed, Petitioner has 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.  It has not offered evidence to prove that it undertook required remedial action to address its zero proficiency test scores on some tests.  Consequently, even if Petitioner 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.

**2.  Remedies**

I have discussed the remedies that CMS may impose in the case of a laboratory that intentionally refers even one proficiency testing sample to another laboratory for testing.  To reiterate, CLIA and implementing regulations authorize revoking a laboratory’s CLIA certificate for at least one year to remediate even one unlawful referral.  42 U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b)(4).  If a laboratory’s CLIA certificate is revoked for improper referrals, its owners and operators are prohibited from owning or operating another CLIA-certified laboratory for a minimum of two years, unless CMS determines to impose other, alternative remedies.  42 U.S.C. § 263a(i)(3).

CMS is also empowered to impose remedies for condition-level failures to comply with CLIA other than unlawful referrals.  A single condition-level failure to comply justifies the imposition of remedies defined as principal sanctions.  42 C.F.R. §§ 493.1806(b), 1807(a); *Ward Gen. Practice Clinic*, DAB No. 1624 at 2 (1997).  Principal sanctions include revocation of a CLIA certificate.  42 C.F.R. § 493.1806(b).  When CMS revokes a laboratory’s CLIA certificate, CMS must also cancel that laboratory’s approval to receive Medicare reimbursement for its services.  42 C.F.R. §§ 493.1808(a), 493.1842(a).

CMS may impose alternative sanctions in lieu of or in addition to principal sanctions whenever a facility manifests one or more condition-level deficiencies.  42 C.F.R. §§ 493.1804(b)(2), 493.1806(c).  Alternative sanctions may include civil money penalties.  42 C.F.R. § 493.1806(c)(3).  Civil money penalties are specifically mentioned as remedies to address the instance where a laboratory improperly refers proficiency testing samples to another laboratory.  42 C.F.R. § 493.1840(b)(1)(i).

Civil money penalties for non-immediate jeopardy level condition violations may be imposed in a range that was originally set at from $50 to $3000.  42 C.F.R. § 493.1834(d)(2)(ii).  That range has subsequently been adjusted upward to account for inflation.  45 C.F.R. Part 102.

My authority is limited in addressing a determination by CMS to impose a civil money penalty for a CLIA violation.  I may decide whether that authority is present, i.e., whether

Page 9

a laboratory exhibits a condition-level violation of CLIA.  However, I may not address whether a particular civil money penalty amount is reasonable, because the penalty amount is not an initial determination that gives rise to hearing rights.  42 C.F.R. § 493.1844(c)(4), (7).

CMS determined to impose principal and alternative sanctions against Petitioner.  As a principal sanction, CMS determined to revoke Petitioner’s CLIA certificate.  CMS based this determination both on Petitioner’s unlawful referrals of proficiency testing samples to another laboratory and on Petitioner’s additional condition-level noncompliance with CLIA requirements.  CMS Ex. 4.  As I have explained, Petitioner’s referral of even one proficiency test to another laboratory sustains the determination to revoke Petitioner’s CLIA certificate.  Other failures by Petitioner to comply with CLIA conditions are additional grounds for imposing this sanction but are not necessary to sustain CMS’s determination.

The record also supports CMS’s determination to impose civil money penalties against Petitioner as alternative sanctions.  CMS offered proof that Petitioner made seven referrals of proficiency test samples to another laboratory and, in an eighth instance, reported the results of another laboratory’s proficiency testing as if it had performed the test.  These improper referrals and improper reporting of test results justify the imposition of alternative sanctions including civil money penalties.

The penalties of $2,000 per occurrence are within the permissible range of non-immediate jeopardy level penalties for CLIA violations.  I have no authority to decide whether the specific penalty amount is reasonable.


          /s/
        Steven T. Kessel

                      Administrative Law Judge
      1. Throughout this decision I use the acronym “CLIA” to refer to the Clinical Laboratory Improvement Amendments of 1988, 42 U.S.C. § 263a et seq.  There are implementing regulations at 42 C.F.R. Part 493. back to note 1
                      2. I did not permit cross-examination of a second CMS witness, Ms. Vanessa Sárraga.  See CMS Ex. 24.  She is not a fact witness and I found her testimony to be irrelevant. CMS did not cite her testimony in support of its arguments.  I do not rely in any respect on her testimony in deciding this case. back to note 2
                      3. Mr. Rivera’s cross-examination, redirect, and re-cross examination testimony are of record at Tr. 7-28. back to note 3
                      4. I discuss the authority for imposition of remedies in more detail, below. back to note 4
                      5. In its remand decision the Board appellate panel speculated whether CMS had given Petitioner notice of allegations of condition-level deficiencies other than improper referrals of proficiency testing samples.  Laboratorio Concordia Lugaro, DAB No. 3029 at 16-17 (2021).  Intentional referrals of proficiency testing samples to another laboratory are, in and of themselves, sufficient to justify CMS’s remedy determinations.  However, CMS has made it clear in multiple arguments that it is alleging more than just improper intentional referrals.  CMS argued consistently that Petitioner contravened multiple CLIA conditions, as I discuss in this decision.  I find that Petitioner received ample notice of the alleged violations and issues that I address here and was given every opportunity to respond to CMS’s contentions.  Life Care Ctr. of Bardstown, DAB No. 2479 at 7 (2012) (citing Livingston Care Ctr., DAB No. 1871 (2003)); Alden Town Manor Rehab. & HCC, DAB No. 2054 at 17 (2006) (citing Pac. Regency Arvin, DAB No. 1823 at 9-10 (2002)). back to note 5
                      6. In its remand decision the Board appellate panel expressed concern that CMS had not made it clear that it was relying on the referral of the May 2018 proficiency testing event as a basis for imposing remedies against Petitioner.  Laboratorio Concordia Lugaro, DAB No. 3029 at 13 n.11.  However, CMS has made it abundantly clear through its arguments that it relies on this referral as a basis for finding noncompliance with CLIA requirements and for imposing remedies. back to note 6
                      7. Ms. del Toro’s testimony is consistent with assertions in Petitioner’s plan of correction,  submitted in response to findings that it had violated CLIA, that it referred only one sample to Laboratorio Clinico Central for testing.  CMS Ex. 2 at 1. back to note 7 Back to top
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