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# Kensington Diagnostics LLC, DAB CR5385 (2019)

----

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

### Kensington Diagnostics LLC

### (CLIA No.:  15D1019268),

### Petitioner,

### v.

### Centers for Medicare & Medicaid Services.

### Docket No. C-17-289Decision No. CR5385August 5, 2019

### DECISION

Petitioner’s certificate to operate as a clinical laboratory under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) is revoked effective the date of this decision. 42 C.F.R. § 493.1840(e)(1). Pursuant to 42 U.S.C. § 263a(i)(3), Petitioner’s owners and operators are prohibited from owning, operating, or directing a laboratory subject to CLIA for two years due to the revocation of Petitioner’s CLIA certificate. Sanjoy Banerjee, MD was Petitioner’s owner and operator and William Nguyen, MD, was Petitioner’s laboratory director during the period examined by the survey in this case, and they are subject to the application of 42 U.S.C. § 263a(i)(3). The two-year prohibition runs from the date of the revocation of the laboratory’s certificate, i.e., the date of this decision, pursuant to 42 U.S.C. § 263a(i)(3). A civil money penalty (CMP) of $5,936 per day, effective December 7, 2016 through March 2, 2017, is approved.

### I. Background

Petitioner is a clinical laboratory located in Wildomar, California, owned and operated by Sanjoy Banerjee, MD (Banerjee) in his practice office. Joint Stipulation of Undisputed Facts (Jt. Stip.) ¶ 1-2, 4. Petitioner had a CLIA certificate issued November 25, 2014, to perform nonwaived, high complexity testing. Jt. Stip. ¶¶ 3, 7; Petitioner’s exhibit (P. Ex.) 4. The California Department of Public Health (state agency) conducted a survey of

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Petitioner’s facility that was completed on January 7, 2016. Jt. Stip. ¶ 9; Centers for Medicare & Medicaid Services (CMS) exhibit (Ex.) 1 at 1, 4. The state agency found that Petitioner was in violation of three conditions required for CLIA certification and Medicare coverage of its services: 42 C.F.R. §§ 493.1230;1 493.1250; and 493.1441. CMS Ex. 1 at 1, 4, 11-12, 37-38; Jt. Stip. ¶ 10.

CMS notified Petitioner by letter dated November 22, 2016, that CMS was imposing the following sanctions: revocation of Petitioner’s CLIA certificate effective January 21, 2017, unless a hearing was requested, in which case the revocation would not be effective unless upheld by an administrative law judge (ALJ) decision; cancellation of approval to receive payments from Medicare for services performed on or after January 21, 2017; a directed portion of a plan of correction effective December 7, 2016; and a CMP of $5,936 per day effective December 7, 2016, and continuing until either CMS verified correction of all cited deficiencies or Petitioner’s laboratory certificate is revoked. CMS Ex. 10 at 1, 4-5; Jt. Stip. ¶ 15.

Petitioner requested a hearing before an ALJ on January 17, 2017. There is no dispute Petitioner’s request for hearing was timely filed as required by 42 U.S.C. § 263a(i); 42 C.F.R. § 493.1844(f)(1). On January 30, 2017, the case was assigned to me for hearing and decision and an Acknowledgment and Prehearing Order (Prehearing Order) was issued at my direction. On August 24, 2017, Petitioner waived oral hearing and agreed to a decision on the briefs and documentary evidence. CMS did not oppose the waiver. On September 5, 2017, I accepted Petitioner’s waiver of oral hearing and set a briefing schedule.

On October 20, 2017, the parties filed opening briefs (CMS Br. and P. Br., respectively). On November 20, 2017, the parties filed reply briefs (CMS Reply and P. Reply, respectively). On September 17, 2018, in response to my order specifying issues, the parties filed supplemental briefs addressing additional issues not addressed in their opening and reply briefs (CMS Supp. Br. and P. Supp. Br., respectively).

CMS offered as evidence CMS Exs. 1 through 30.2 CMS also filed two declarations of Surveyor Gabriele Sabino (Sabino Decls. I (dated and filed as DAB E-File3 Item # 28 on

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October 20, 2017) and II (dated and filed as DAB E-File Item # 31a on November 20, 2017)) not marked as CMS exhibits.4 Though not marked as evidence, it is apparent CMS offered the Sabino declarations as written testimony and the declarations are considered as such. Petitioner waived cross-examination of Surveyor Sabino by its waiver of oral hearing. Petitioner did not object to my consideration of CMS Exs. 1 through 30 or Sabino Decls. I and II and they are admitted as evidence. Many pages of CMS Ex. 5 are unreadable and are considered for no purpose.

Petitioner filed P. Exs. 1, 1A through 1H, 2, 2A through 2C, 2F, 2J, 2K, 3 through 17, 17(2), 18 through 22, and 24 through 275 and four declarations not marked as evidence, including two declarations of Sanjoy Banerjee, MD, QME, Petitioner’s owner (Banerjee Decls. I (signed and filed as DAB E-File Item # 21b on August 6, 2017) and II (signed and filed as DAB E-File Item # 32a on November 20, 2017)), and declarations of Firas Tamary, Petitioner’s technical consultant (Tamary Decl.), and William Nguyen, M.D., F.A.C.P. (W. Nguyen), Petitioner’s laboratory director (W. Nguyen Decl.).6 CMS filed evidentiary objections on June 29, 2017 and November 30, 2017. CMS objected on various grounds to P. Exs. 1, 1F, 1G, 2, 2B, 2F, 2J, 3, 12-16, and 25, as well as to

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portions of Banerjee Decl. II and W. Nguyen Decl. Petitioner opposed many of CMS’s objections. CMS did not object to Petitioner’s waiver of oral hearing and demand to cross-examine Petitioner’s witnesses, and CMS thereby waived its right to cross-examine Banerjee, Tamary, and W. Nguyen.

In its June 29, 2017 objections CMS objected to P. Exs. 1, 2, and 3 on grounds they are arguments addressing the individual condition-level deficiencies not evidence. The objection is sustained. The documents are not sworn or signed by Banerjee or any other identified witnesses and do not qualify as witness testimony as they are not made under oath or affirmation. 42 C.F.R. § 498.62. Although the documents summarize relevant evidence, they are clearly intended as argument in support of Petitioner’s defense rather than substantive evidence. Accordingly, P. Exs. 1, 2, and 3 are not admitted as evidence but are considered as argument in support of Petitioner’s case. CMS objects to P. Exs. 1F, 1G, 2B, 2F, and 2J on grounds they do not include evidence relevant to the issues before me. The objection is overruled as the exhibits do contain relevant information. CMS objects to P. Exs. 12 through 16 on grounds they contain information reflecting upon possible irregularities in the survey and enforcement process and are irrelevant. However, the credibility of Surveyor Sabino must be assessed and the documents are at least minimally relevant for that reason. The objection is overruled.

In its November 30, 2017 objections, CMS objected to Banerjee Decl. II (DAB E-File Item # 32a) and the W. Nguyen Decl. (DAB E-File Item # 32b) on grounds they did not meet the requirements of 28 U.S.C. § 1746 made applicable by my September 5, 2017 Order and Schedule for Final Briefing. Petitioner subsequently filed amended declarations (DAB E-File Items ## 34a and 34b) that meet the requirements of 28 U.S.C. § 1746, and the amended declarations are admitted and considered as evidence. CMS also objected to various paragraphs of Banerjee Decl. II7 on relevance grounds, grounds the paragraphs are argument rather than evidence, or on grounds that Banerjee’s testimony is not the best evidence. The CMS objections are overruled as the evidence is at least minimally relevant to Petitioner’s defense and Banerjee, as laboratory owner and operator, is a witness with relevant knowledge. The Federal Rules of Evidence are not strictly applied in these proceedings and Fed. R. Evid. 1001 through 1008, which codify the best evidence rule, will not be applied in this case to preclude Banerjee’s testimony. However, the CMS objections are considered in judging the weight of Banerjee’s testimony. CMS objects to certain paragraphs of the W. Nguyen Decl. on relevance

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grounds. The objections are overruled, as the opinions of W. Nguyen as Petitioner’s laboratory director are relevant. CMS objects to portions of Petitioner’s reply brief. The objection is noted and no portion of Petitioner’s reply brief is considered as evidence. CMS objects to P. Ex. 25 on grounds it is not relevant; the objection is sustained and P. Ex. 25 is not admitted as evidence. CMS did not object to my consideration of the Tamary declaration or Petitioner’s other exhibits.

On November 9, 2018, CMS filed a “Supplemental Notice Regarding Administrative Extension of Petitioner’s CLIA Certificate” (DAB E-File # 38) (Supplemental Notice); a copy of the letter notifying Petitioner of the administrative extension was also filed by CMS (DAB E-File # 38a) described as “Ex. A Notice Sent to Petitioner.” On November 17, 2018, Petitioner filed P. Ex. 26, a letter responding to the administrative extension. On April 22, 2019, Petitioner filed P. Ex. 27, copies of email between Petitioner and a representative of CMS. The Supplemental Notice (Ex. A) and P. Exs. 26 and 27 are not evidence that is relevant to the issues before me and not admitted as evidence. P. Exs. 26 and 27 are further argument by Petitioner on the merits of its case and are considered as such.

P. Exs. 1A through 1H, 2A through 2C, 2F, 2J, 2K, 4 through 17, 17(2), 18 through 22, 24, Banerjee Decls. I and II, the Tamary Decl., and the W. Nguyen Decl. are admitted and considered as evidence.

On March 18, 2019, Petitioner filed a motion for an expedited decision in this case or interim relief. This decision renders Petitioner’s motion moot.

### II. Discussion

**A. Statutory and Regulatory Program Requirements**

CLIA establishes requirements for all laboratories that perform clinical diagnostic tests on human specimens and provides for federal certification of such laboratories.8 The purpose of CLIA is to ensure the accuracy and reliability of laboratory tests, and hence the public health of all Americans. H.R. Rep. No. 100-899, at 8, 18 (1988), *reprinted in* 1988 U.S.C.C.A.N. 3828-29, 3839. CMS certification of a laboratory under CLIA is dependent upon whether the laboratory meets the conditions for certification set out in

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the statute and regulations. 42 U.S.C. § 263a(d), (f); 42 C.F.R. pt. 493. Pursuant to CLIA, the Secretary of Health and Human Services (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 requirements for certification. 42 U.S.C. § 263a(h)-(i).

The Secretary has exercised the authority granted by 42 U.S.C. § 263a(f) and issued regulations implementing CLIA that are codified at 42 C.F.R. pt. 493. The regulations specify conditions and standards for certification that a laboratory must meet and maintain in order to be certified to test human specimens and to participate in Medicare. The regulations confer broad authority on CMS to ensure that laboratories perform as Congress intended, including the authority to inspect and sanction laboratories that fail to comply with the regulatory requirements. CMS has the delegated authority to suspend, limit, or revoke the CLIA certificate of a laboratory that is out of compliance with one or more CLIA conditions, and CMS may also impose alternative sanctions, such as a directed plan of correction, monitoring by the state, and a CMP. 42 C.F.R. §§ 493.1806‐.1844. Cancellation of Medicare payments is also authorized as a principal sanction when condition-level deficiencies are found (42 C.F.R. §§ 493.1807(a) and 493.1842(a)(2)) and required when CMS suspends or revokes a laboratory’s certificate (42 C.F.R. § 493.1842(a)(1)). Under the regulations, a single condition-level deficiency is an adequate basis for principal and alternative sanctions. 42 C.F.R. § 493.1806(a). Conversely, standard-level deficiencies are not an adequate basis for the imposition of a sanction, except when the laboratory fails to correct such deficiencies within 12 months after the last day of inspection. 42 C.F.R. § 493.1816(b).

CLIA provides that a laboratory’s certificate may be suspended, revoked, or limited only after reasonable notice and opportunity for hearing to “the owner or operator of the laboratory . . . .” 42 U.S.C. § 263a(i)(1). The Secretary’s regulations provide that a laboratory or prospective laboratory dissatisfied with an initial determination listed in 42 C.F.R. § 493.1844(b) is entitled to a hearing before an ALJ. 42 C.F.R. § 493.1844(a), (f). The hearing procedures of 42 C.F.R. pt. 498, subpt. D are applicable pursuant to 42 C.F.R. § 493.1844(a)(2). The “suspension, limitation or revocation of the laboratory’s CLIA certificate . . . because of noncompliance” is an initial determination that triggers a right to a hearing before an ALJ. 42 C.F.R. § 493.1844(b)(1). The imposition of an alternative sanction, such as a CMP, is also an initial determination that triggers a right to request a hearing. 42 C.F.R. § 493.1844(b)(3), (f)(1). The CMS choice of alternative sanctions to impose, including the amount of a CMP to impose per day or per violation, is not subject to ALJ review. 42 C.F.R. § 493.1844(c)(4), (6) and (7). Generally, when a hearing is requested revocation of a CLIA certificate is not effective until after a hearing decision is issued by the ALJ. 42 C.F.R. §§ 1840(d)(1), (e); 493.1844(d)(2). My decision is final unless one of the parties requests and receives review by the Departmental Appeals Board (Board). 42 C.F.R. § 493.1844(d)(4).

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

No person who has owned or operated a laboratory which has had its certificate revoked may, within 2 years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this section. . . .

42 U.S.C. § 263a(i)(3).

The implementing regulations do not include any express provision implementing or imposing this two-year prohibition against an offending owner or operator. However, the regulations provide that CMS may suspend, limit, or revoke a laboratory’s CLIA certificate if it finds that the owner or operator has, “[w]ithin the preceding two-year period, owned or operated a laboratory that had its CLIA certificate revoked. (This provision applies only to the owner or operator, not to all of the laboratory’s employees.).” 42 C.F.R. § 493.1840(a)(8).

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

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

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

42 C.F.R. § 493.2. The “stated criteria” for a laboratory director to be considered an operator are those criteria described in the introductory sentence of the above-quoted section, *i.e.*, whether a person oversaw all facets of the operation of the laboratory and bore primary responsibility for the safety and reliability of the results of specimen testing performed in the laboratory. *Sentinel Med. Labs., Inc.*, DAB No. 1762 at 13 (2001), *aff’d*,*Teitelbaum v. Health Care Financing Admin.*, 32 F. App’x 865 (9th Cir. 2002), *reh’g denied*, No. 01-70236 (9th Cir. May 22, 2002); *Sol Teitelbaum, M.D.*, DAB No. 1849 at 8 n.7 (2002). It is a condition-level requirement that a CLIA-certified laboratory have a qualified laboratory director who is required to assume oversight and responsibility for the laboratory and the results of its testing. 42 C.F.R. §§ 493.1403, 493.1405, 493.1407, 493.1441, 493.1443, and 493.1445. Thus, the regulations create a rebuttable presumption that a laboratory director is an operator of the laboratory within the meaning of the regulations and CLIA.

**Page 8**

The allocation of the burden of proof in an appeal of CMS’s sanctions is described 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 Med. Labs., Inc.*, DAB No. 1713 (1999) (*Hillman*burden of proof applicable in CLIA appeals), *aff’d*,*Edison Med. Lab., Inc. v. Health Care Financing Admin.*, 250 F.3d 735 (Table) (3rd Cir. 2001). CMS has the burden of coming forward with 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 that it was not out of compliance with the conditions placed at issue by CMS in its prima facie case. Regarding the imposition of sanctions, the issue to be resolved by the ALJ is not whether CMS properly exercised discretion in imposing either principal or alternative sanctions, but rather, whether a basis existed for the imposition of sanctions under governing statutory and regulatory authorities based upon the evidence before the ALJ, *i.e.*, the ALJ resolves these issues de novo. *Rustom Ali, Jahan Ferdous, & Scottsdale Med. Lab.*, DAB No. 2016 at 20 (2006) (citing*Emerald Oaks*, DAB No. 1800 at 16 (2001)).

**B. Issues**

Whether there is a basis for the revocation of Petitioner’s CLIA certificate and the imposition of a CMP;

The effective date of revocation of Petitioner’s CLIA certificate; and

The effective period of the CMP.

**C. Findings of Fact, Conclusions of Law, and Analysis**

My conclusions of law are set forth in bold text followed by my findings of fact and analysis. I have carefully considered all the evidence and the arguments of both parties, though not all may be specifically discussed in this decision. I discuss in this decision the credible evidence given the greatest weight in my decision-making.9 I also discuss any evidence that I find is not credible or worthy of weight. The fact that evidence is not specifically discussed should not be considered sufficient to rebut the presumption that I considered all the evidence and assigned such weight or probative value to the

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credible evidence that I determined appropriate within my discretion as an ALJ. There is no requirement for me to discuss the weight given every piece of evidence considered in this case, nor would it be consistent with notions of judicial economy to do so. Charles H. Koch, Jr., *Admin. L. & Prac.*§ 5:64 (3d ed. 2013).

Surveyor Sabino alleges in the statement of deficiencies for the survey completed on January 7, 2016, that Petitioner violated three conditions for CLIA certification. CMS Ex. 1. A single violation of a CLIA condition is an adequate basis for the imposition of sanctions. 42 C.F.R. § 493.1806(a). In this case, it is necessary to consider only the alleged violation of the CLIA condition established by 42 C.F.R. § 493.1230 (Tag D5200), which the surveyor found was based on three standard-level violations. CMS Ex. 1 at 4-11. The specific allegations under Tag D5200 are that Petitioner violated the condition-level requirement of 42 C.F.R. § 493.1230 because Petitioner failed to:
                            - Follow the written laboratory policy and procedure for assessing employee competency, cited as a violation of 42 C.F.R. § 493.1235 (Tag D5209);
                            - Twice annually verify the accuracy of a test or procedure not listed in 42 C.F.R. pt. 493, subpt. I, cited as a violation of 42 C.F.R. § 493.1236(c)(1) (Tag D5217); and
                            - Follow its policies and procedures to monitor, assess, and correct any problems identified in the laboratory systems, cited as a violation of 42 C.F.R. § 493.1239(a) (Tags D5291).

CMS Ex. 1 at 4. The three standard-level violations are discussed first followed by further discussion of why the three standard-level violations result in a condition-level violation and a basis for revocation of Petitioner’s CLIA certificate and the imposition of alternative sanctions.

The parties stipulated to a number of facts that provide background for understanding the alleged violations in this case. Banerjee operated this laboratory in his medical practice office and it was issued a CLIA certificate November 25, 2014. Jt. Stip. ¶¶ 3-4. Banerjee was the owner and W. Nguyen became laboratory director on October 15, 2015. Jt. Stip. ¶¶ 2, 5. The laboratory consisted of one BioLis 24i desktop analyzer. The only testing done was urine drug test screening of Banerjee’s patients to determine their compliance with prescribed medication and whether they were taking illicit substances. Jt. Stip. ¶¶ 4, 6. When Petitioner’s staff completed testing a urine sample, the sample was sent to an outside reference laboratory for confirmation and to more specifically identify any substances detected. The reference laboratory was also used to identify additional substances for which Petitioner did not screen. The reference laboratory findings were treated as valid in the event of a conflict with Petitioner’s findings. Jt. Stip. ¶ 8.

**Page 10**

**1. Petitioner violated the standard-level requirement of 42 C.F.R. § 493.1235 (Tag D5209) to follow its written policies and procedures to assess the competency of its employee who conducted high complexity testing.**

Subpart M of 42 C.F.R. pt. 493 establishes the qualifications and responsibilities for personnel for laboratories conducting non-waived testing. The qualification requirements for testing personnel conducting non-waived, high complexity testing are established by 42 C.F.R. § 493.1489. A laboratory is required to have a sufficient number of testing personnel who meet the requirements of 42 C.F.R. § 493.1489 to handle the volume and complexity of the testing performed. 42 C.F.R. § 493.1487.

The standard established by 42 C.F.R. § 493.1235, the standard Surveyor Sabino alleged was violated, requires:

As specified in the personnel requirements in subpart M, the laboratory must establish and follow written policies and procedures to assess employee and, if applicable, consultant competency.

This provision specifically focuses upon testing “competency” and not determining whether an employee or consultant meets the qualification requirements established by 42 C.F.R. pt. 493, subpt. M. The standard of 42 C.F.R. § 493.1235, requires that a laboratory ensure that testing personnel who meet the qualifications for testing personnel under 42 C.F.R. § 493.1489, are also competent to perform their duties which are established by 42 C.F.R. § 493.1495. The regulations establish the following duties for testing personnel:

The testing personnel are responsible for specimen processing, test performance and for reporting test results.

(a) Each individual performs only those high complexity tests that are authorized by the laboratory director and require a degree of skill commensurate with the individual’s education, training or experience, and technical abilities.

(b) Each individual performing high complexity testing must—

(1) Follow the laboratory’s procedures for specimen handling and processing, test analyses, reporting and maintaining records of patient test results;

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(2) Maintain records that demonstrate that proficiency testing samples are tested in the same manner as patient specimens;

(3) Adhere to the laboratory’s quality control policies, document all quality control activities, instrument and procedural calibrations and maintenance performed;

(4) Follow the laboratory’s established policies and procedures whenever test systems are not within the laboratory’s established acceptable levels of performance;

(5) Be capable of identifying problems that may adversely affect test performance or reporting of test results and either must correct the problems or immediately notify the general supervisor, technical supervisor, clinical consultant, or director;

(6) Document all corrective actions taken when test systems deviate from the laboratory’s established performance specifications; and

(7) Except as specified in paragraph (c) of this section, if qualified under § 493.1489(b)(5), perform high complexity testing only under the onsite, direct supervision of a general supervisor qualified under § 493.1461.

42 C.F.R. § 493.1495. Therefore, 42 C.F.R. § 493.1235 requires that a laboratory have policies and procedures to ensure that testing personnel are competent to perform their duties or responsibilities. Surveyor Sabino alleges that Petitioner had the required policy and procedure but failed to follow the policy and procedure to assess employee competency. CMS Ex. 1 at 4-5.

**a. Facts**

Beginning in November 2014 and through the survey completed January 7, 2016, Petitioner was a laboratory 100 percent owned and operated by Banerjee in his practice office. Petitioner had one BioLis 24i desktop analyzer. Jt. Stip. ¶¶ 1-2, 4; P. Ex. 20; P. Ex. 21; Sabino Decl. I at 2 ¶ 5. According to Banerjee, the BioLis was the only piece of laboratory equipment; it was used only one day per week to perform urine screens for prescribed and illicit substances; and Petitioner did not generate any significant profit doing testing. P. Ex. 20. According to Surveyor Sabino, Mohammed Attaelmannan was listed in CMS records as Petitioner’s laboratory director prior to October 2015. Sabino Decl. I at 2-3 ¶¶ 8-9. In October 2015, W. Nguyen became Petitioner’s laboratory

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director. Jt. Stip. ¶ 5; W. Nguyen Decl. at 2 ¶ 5. Beginning in 2016, Firas Tamary was Petitioner’s technical consultant. Tamary Decl. at 2 ¶ 2. Petitioner was notified by letter from the state agency dated October 28, 2015, that a survey would begin on November 9, 2015. CMS Ex. 2 at 23. W. Nguyen was Petitioner’s laboratory director, clinical consultant, and technical and general supervisor when the survey began on November 9, 2015. Thuy Nguyen (T. Nguyen) was Petitioner’s only testing personnel at the time of the survey and she was described as a part-time employee doing high complexity testing. CMS Ex. 2 at 4, 31, 95-96; P. Ex. 5; Sabino Decl. I at 8 ¶ 31.

Petitioner had a policy titled “Quality Assessment” (QA policy). CMS Ex. 2 at 127, 129; Sabino Decl. I at 3 ¶ 10, 8 ¶ 31. The stated purpose of the QA policy was to “improve the reliability, efficiency, and quality of laboratory service.” CMS Ex. 2 at 127. To promote that purpose, Petitioner established the following six goals:
                            - Evaluate the quality and efficiency of the laboratory service.
                            - Evaluate the effectiveness of written procedures and policies.
                            - Identify problems in our laboratory and take corrective actions.
                            - Assure that accurate and reliable test results are obtained and reported to the physicians in a timely manner.
                            - Assure that laboratory personnel are adequately trained and that their performance is periodically evaluated.
                            - Revise laboratory procedures and policies when necessary.

CMS Ex. 2 at 127 (emphasis added). Petitioner’s policy required ensuring that laboratory personnel were adequately trained based on periodic evaluation of their performance. CMS Ex. 2 at 127. The laboratory director was charged with overseeing corrective action to ameliorate any problems identified by a periodic review. CMS Ex. 2 at 127. The policy required Petitioner to follow-up and reevaluate corrective actions to ensure they were effective, and Petitioner was to keep written records of quality reviews, findings, and actions. CMS Ex. 2 at 127.

Petitioner’s QA policy included a section titled “Personnel Assessment.” CMS Ex. 2 at 129; Sabino Decl. at 8-9 ¶¶ 31-32. Petitioner’s policy stated that “[h]iring . . . appropriately qualified personnel is essential for maintaining the highest standards of quality” and required that new employees be “fully qualified by education, training, and experience” according to minimum CLIA standards. CMS Ex. 2 at 129. The policy

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required that each new employee participate in “an orientation period reviewing policies, procedures, instrumentation, and QC/QA [I infer quality control and/or quality assessment] in the laboratory.” CMS Ex. 2 at 129. The policy provided that “[a]n employee may not test in areas of the laboratory until training has been completed *and competency reviewed* by the Laboratory Director or qualified designee.” CMS Ex. 2 at 129 (emphasis added). Petitioner’s policy required documentation of orientation training and retention of the documentation “in the employee’s personnel file.” CMS Ex. 2 at 129. The policy provided that “[a] documented competency evaluation is conducted at the end of the first three months (or six months) of employment and annually thereafter.” CMS Ex. 2 at 129. The policy is very specific that no employee was to conduct testing until training was completed and competency reviewed. The policy is confusing because it provides for competency review at the end or either three or six months, but not confusing on the requirement that competency must be reviewed before testing was performed. CMS Ex. 2 at 129. The policy also required that both qualifications and competency be documented in employee files. CMS Ex. 2 at 129.

Petitioner hired T. Nguyen in October 2015.10 A document titled “Certification of Training” dated “November 2015” states that Petitioner’s laboratory technician from 2014 to 2015, Jacqueline Le, “provided 40 hours of hands-on training to Thuy Nguyen on the Bio[L]is 24i . . . during the month of October 2015.” CMS Ex. 2 at 95; CMS Ex. 7 at 56; P. Ex. 1A. Le certified that T. Nguyen was “proficient to act as the laboratory technician independently,” but she did not describe the training she gave beyond stating that it was performed on Petitioner’s sole testing instrument. CMS Ex. 2 at 95; CMS Ex. 7 at 56; P. Ex. 1A. Le also did not state how she evaluated T. Nguyen’s competency. W. Nguyen also signed the certification of training, attesting that T. Nguyen “was trained under [his] supervision and has the qualification and competency to be the laboratory technician going forward.” CMS Ex. 2 at 95; CMS Ex. 7 at 56; P. Ex. 1A. W. Nguyen failed to list any details of T. Nguyen’s training or state how her competency was established other than referring to her qualifications and the training she received.

A separate document, a “Laboratory Competency Evaluation” form with T. Nguyen’s name, listed her as a “lab tech” hired on October 17, 2015, and contained a detailed list of various duties that might be expected of her. CMS Ex. 2 at 97-98; P. Ex. 1B. Those duties are broken into six primary categories: specimen collection/handling, rapid kit

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testing, instrument testing, miscellaneous testing, reference laboratory, and miscellaneous. CMS Ex. 2 at 97-98; P. Ex. 1B. Three columns follow each specific duty, the first is a space to label T. Nguyen as “C=Competent,” “N=Needs Improve,” or “N/A=Not App,” the second is a space for the reviewer’s initials, and the third is a space for comments, including abbreviations such as “O=Observation,” “T=Written Test,” “D=Discussion,” “R=Records Review,” “B=Blind Samples Testing,” and “QC=QC Review.” CMS Ex. 2 at 97; P. Ex. 1B at 1. At the bottom of the form is space for the reviewer to list additional duties reviewed and to make additional comments or notes, along with a signature line for the laboratory director or technical supervisor. CMS Ex. 2 at 98; P. Ex. 1B at 2. W. Nguyen’s signature appears at the bottom of the form with the date “11/9/15” but that date is lined-through multiple times and above it is written “10/15/15.” CMS Ex. 2 at 98; P. Ex. 1B at 2. None of the blanks for entries on the form are completed except the signature line and date. CMS Ex. 2 at 98; P. Ex. 1B at 2. Petitioner asserted in its various plans of correction that T. Nguyen’s training was completed before she began testing but conceded the documentation of the training and her competency “was not fully completed” before she began testing specimens. CMS Ex. 3 at 3; CMS Ex. 4 at 39; CMS Ex. 7 at 3; CMS Ex. 9 at 2; Banerjee Decl. II at 11-12 ¶ 25-28.

After the survey was completed, Petitioner sent Surveyor Sabino another version of the “Laboratory Competency Evaluation” form for T. Nguyen on about June 8, 2016, and again on about July 27, 2016. CMS Ex. 3 at 1-2; CMS Ex. 5 at 52-53, 428-29; CMS Ex. 7 at 1, 57-58.11 This version of the form bears the exact same signature as the version Petitioner provided during the survey; however, the blocks following the listed duties are

**Page 15**

completed and indicate T. Nguyen was competent to perform the required duties that actually applied to her position. An unknown individual, whose initials are “UMC,” initialed the fields as the reviewer and commented “D,” the shorthand for “Discussion,” in the comments field for each listed duty. CMS Ex. 5 at 52-53, 428-29; CMS Ex. 7 at 57-58. No person with the initials “UMC” is listed on the Laboratory Personnel Report completed by W. Nguyen on October 15, 2015. CMS Ex. 2 at 4.

Petitioner represents in its various plans of correction that the form submitted to the surveyor in about June 2016 is simply a revised and fully completed version of the “Laboratory Competency Evaluation” form Petitioner initially provided to the surveyor. CMS Ex. 3 at 2; CMS Ex. 4 at 39-40; CMS Ex. 7 at 3; CMS Ex. 9 at 2. Petitioner’s representation is that the completed form is a record of the actual competency evaluation done approximately eight months before. I do not find this representation credible. The individual who revised and completed the competency evaluation form, “UMC,” clearly is not W. Nguyen or Banerjee, and “UMC” indicates that T. Nguyen was assessed as competent in all pertinent duties based solely on “[d]iscussion.” CMS Ex. 5 at 52-53. Furthermore, no person with the initials “UMC” was disclosed by Petitioner as one of its laboratory personnel. CMS Ex. 2 at 4. Based on these facts, I find it more likely than not that the updated information contained in the second version of the form was created after the survey and does not reflect the competency evaluation of T. Nguyen before she began laboratory testing as required by Petitioner’s policy and procedure. While the form submitted in June 2016 bears the same date and signature of W. Nguyen as the copy obtained during the survey, the additional information not on the original form was clearly added after the original copy was obtained by the surveyor.

Banerjee admits in his declaration signed and filed December 5, 2017 (Banerjee Decl. II), that the “Laboratory Competency Evaluation” form T. Nguyen provided to Surveyor Sabino at that time of the survey was incomplete. Nonetheless, he asserts that T. Nguyen was competent and her competency had been assessed by Le and W. Nguyen before she was permitted to test. However, as already noted, Le and W. Nguyen attested to her training but did not state how T. Nguyen’s competency was evaluated. Banerjee asserts that T. Nguyen conducted testing on proficiency test samples and scored 100 percent and that fact is further support of her competency. Scores of 100 percent on proficiency test samples are certainly consistent with T. Nguyen having some level of competence, assuming she performed the proficiency testing. However, whether she could demonstrate competence is not the focus. The focus is whether Petitioner adopted and implemented policies and procedures to ensure its testing personnel were competent. Banerjee asserts that in addition to proficiency testing precision studies, accuracy studies, carry-over studies, and patient correlation studies also indicated T. Nguyen was competent to test. Banerjee Decl. II at 11-13 ¶¶ 25-30. Again, the question is not whether T. Nguyen could demonstrate competence, the question is whether Petitioner adopted and implemented policies to ensure she was. The fact Petitioner did not have a completed “Laboratory Competency Evaluation” form before T. Nguyen began testing

**Page 16**

and the absence of testimony as to how and when T. Nguyen’s competency was actually tested (rather than when training was delivered); prevent Petitioner from meeting its burden to show it implemented its policy to assess T. Nguyen’s competency. W. Nguyen, whose signature appears on the laboratory evaluation for T. Nguyen (CMS Ex. 2 at 98; CMS Ex. 5 at 52-53, 428-29; CMS Ex. 7 at 57-58; P. Ex. 1B at 2), does not attest to having evaluated her competency or that she was determined to be competent before she was permitted to engage in testing. W. Nguyen Decl. Petitioner did not present a declaration or affidavit from Le, T. Nguyen, or an individual with the initials UMC that attested that T. Nguyen’s competency was evaluated or how prior to her beginning testing.

Thus, I find that it is more likely than not based on the evidence before me that the “Laboratory Competency Evaluation” form for T. Nguyen sent to Surveyor Sabino on about June 8, 2016 and July 27, 2016, does not reflect an assessment of T. Nguyen’s competence before she began testing for Petitioner. CMS Ex. 5 at 52-53, 428-29; CMS Ex. 7 at 57-58. I conclude that the completed form is not credible evidence that T. Nguyen’s competency was properly evaluated as required before she began laboratory testing. I conclude that Banerjee’s declaration is not sufficiently credible in light of the altered “Laboratory Competency Evaluation” form and the absence of testimony of Le, T. Nguyen, and W. Nguyen. Finally, I find that the evidence fails to show it is more likely than not that T. Nguyen’s competency was assessed prior to her doing testing in violation of Petitioner’s policy and procedure. There is no dispute that T. Nguyen was conducting testing during the period of the survey. CMS Ex. 2 at 4, 31; Banerjee Decl. II at 3 ¶ 3, 12-13 ¶ 29.

**b. Analysis**

CLIA regulations require that Petitioner “establish and follow written policies and procedures to assess employee and, if applicable, consultant competency.” 42 C.F.R. § 493.1235. Neither Surveyor Sabino nor CMS alleges that Petitioner failed to establish the required policies and procedures. Instead, the allegation is that Petitioner failed to follow its written policies and assess the competency of T. Nguyen before she began testing. CMS Ex. 1 at 5-6; CMS Br. at 4-6. Surveyor Sabino alleged in the statement of deficiencies (SOD) for the survey completed on January 7, 2016, that Petitioner violated the regulatory standard because Petitioner adopted policies and procedures for assessing its employees’ competency but then failed to follow its policies and procedures because it allowed its testing person, T. Nguyen, to test without the required assessment of her competency. CMS Ex. 1 at 4-5.

I have found that Petitioner hired T. Nguyen to conduct testing in mid‐October 2015. At some time after she was hired, T. Nguyen began testing human specimens using Petitioner’s limited equipment. Petitioner’s QA policy required it to, among other things, provide T. Nguyen training and to assess her competence before she was permitted to

**Page 17**

begin testing. CMS Ex. 2 at 129. Petitioner has produced evidence that training occurred in the form of the Certificate of Training executed by Le with the attestation of W. Nguyen. CMS Ex. 2 at 95. However, the “Laboratory Competency Evaluation” provided by Petitioner during the survey is not completed to show T. Nguyen’s competency was evaluated before she began testing. CMS Ex. 2 at 97-98; P. Exs. 1A, 1B.

Petitioner submitted copies of a completed “Laboratory Competency Evaluation” as part of its plans of correction. CMS Ex. 3 at 2, CMS Ex. 4 at 39-40, CMS Ex. 7 at 3, CMS Ex. 9 at 2. Petitioner’s representation was that the completed form recorded the actual competency evaluation of T. Nguyen done approximately eight months before. The representation is not credible. The individual who revised and completed the competency evaluation form, “UMC,” clearly is not W. Nguyen or Banerjee. Furthermore, “UMC” indicates that T. Nguyen was assessed as competent in all pertinent duties based solely on “[d]iscussion.” CMS Ex. 5 at 52-53. Furthermore, no person with the initials “UMC” was disclosed by Petitioner as one of its laboratory personnel. CMS Ex. 2 at 4. Based on these facts, I find it more likely than not that the updated information contained in the second version of “Laboratory Competency Evaluation” form was created after the survey and does not reflect the competency evaluation of T. Nguyen before she began laboratory testing as required by Petitioner’s policy and procedure. While the form submitted in June 2016, bears the same date and signature of W. Nguyen as the copy obtained during the survey, the additional information not on the original form was clearly added after the original copy was obtained by the surveyor. Petitioner provided no testimony by W. Nguyen, T. Nguyen, or Le that T. Nguyen’s competency was actually evaluated or when any evaluation took place. Petitioner’s evidence shows T. Nguyen received training only.

Based on the facts I have found, I conclude that CMS has made a prima facie showing that Petitioner violated 42 C.F.R. § 493.1235 because Petitioner failed to document the competency evaluation of T. Nguyen. Thus, Petitioner is unable to prove by a preponderance of the evidence on the record before me T. Nguyen’s competency was actually evaluated before she began testing. I have found that Banerjee’s testimony and the “Laboratory Competency Evaluation” form that was sent to Surveyor Sabino as part of the plans of correction are simply not credible evidence. Petitioner has failed to rebut the prima facie showing. 

Banerjee specifically states that if Petitioner failed to perform training or competency evaluation it would be a condition-level deficiency. Banerjee Decl. II at 13 ¶ 30. I agree with the essence of Banerjee’s comment that testing personnel who are both trained and evaluated as competent are essential for ensuring the reliability of human specimen testing. Petitioner cannot prove that it did the required competency evaluation of T. Nguyen and, therefore cannot prove that she was competent to conduct testing.

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Accordingly, I conclude that Petitioner violated the standard-level requirement of 42 C.F.R. § 493.1235.

**2. Petitioner violated the standard-level requirement of 42 C.F.R. § 493.1236(c)(1) (Tag D5217) to evaluate proficiency testing performance.**

The regulation requires that:

(c) At least twice annually, the laboratory must verify the accuracy of the following:

(1) Any test or procedure it performs that is not included in subpart I of this part.

Subpart I of 42 C.F.R. pt. 493 lists the requirements for proficiency testing programs for nonwaived testing. Surveyor Sabino alleges in the SOD that Petitioner failed to verify the accuracy of its testing of the carisoprodol analyte at least twice each year. Surveyor Sabino found that Petitioner enrolled in a proficiency testing program to verify twice annually the accuracy of its urine drug screen panel. However, Surveyor Sabino found that Petitioner could not provide evidence that its testing of the carisoprodol analyte was verified twice each year. CMS Ex. 1 at 6-8.

The evidence shows Petitioner began testing for carisoprodol on about June 3, 2015. The proficiency testing program in which Petitioner was enrolled did not offer testing for carisoprodol and carisoprodol is not listed in 42 C.F.R. pt. 493, subpt I. Therefore, Petitioner needed to verify the accuracy of its test or procedure for carisoprodol at least twice each year using some alternative method. The survey ended January 7, 2016. Petitioner should have verified its test for carisoprodol at least once during the seven months between starting testing for carisoprodol and the end of the survey, but Petitioner has failed to present sufficient evidence to show it did so.

**a. Facts**

I find by a preponderance of the evidence that Petitioner began testing for carisoprodol on about June 3, 2015. The evidence of record does not show Petitioner stopped testing for carisoprodol before the survey ended in January 2016. The evidence shows that Petitioner continued testing carisoprodol at least through October of 2016. CMS Ex. 3 at 3, CMS Ex. 5 at 39.

Petitioner’s testing specialty is toxicology, a subspecialty of chemistry. CMS Ex. 2 at 26; W. Nguyen Decl. at 3 ¶ 7. According to a plan of correction from Petitioner that is signed by W. Nguyen and dated July 11, 2016, Petitioner began testing for carisoprodol

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on June 3, 2015. CMS Ex. 4 at 40; CMS Ex. 7 at 5, 42. W. Nguyen’s recollection is consistent with Petitioner’s other plans of correction that also list June 3, 2015, as the date Petitioner began testing for carisoprodol. CMS Ex. 3 at 3; CMS Ex. 7 at 5; CMS Ex. 9 at 4. The June 3, 2015 start date of carisoprodol testing is also consistent with evidence documenting that Petitioner tested patient samples for carisoprodol in July, August, and September 2015 (CMS Ex. 2 at 74, 76, 77, 79, 81, 82, 84, 86; Sabino Decl. I at 10 ¶ 39). There is some conflicting evidence regarding the start of testing for carisoprodol. Surveyor Sabino states in his declaration based on notes he took during the survey that Petitioner’s staff told him they started testing carisoprodol two months prior to the start of the survey, which would have been September 2015. Sabino Decl. I at 10 ¶ 38; CMS Ex. 2 at 8.12 However, I accept Petitioner’s admissions in its plans of correction (CMS Ex. 3 at 1, 2; CMS Ex. 4 at 40) that testing for carisoprodol actually began June 3, 2015, as being credible and entitled to more weight than the reports of staff to Surveyor Sabino.

There is no dispute that Petitioner’s third party, commercial proficiency testing program did not include proficiency testing for carisoprodol. CMS Ex. 2 at 121-22; CMS Ex. 3 at 3; CMS Ex. 5 at 54-55; CMS Ex. 7 at 59-60; P. Ex. 1H. Petitioner was enrolled in proficiency testing with the American Proficiency Institute (API). Petitioner concedes that API did not offer proficiency testing for carisoprodol. CMS Ex. 2 at 121-22; CMS Ex. 3 at 3; CMS Ex. 4 at 40; CMS Ex. 7 at 4; CMS Ex. 9 at 3; CMS Ex. 23 at 4. Petitioner’s staff also told Surveyor Sabino during the survey that the API proficiency testing did not include carisoprodol. Sabino Decl. I at 11 ¶ 40.

Petitioner’s QA policy established Petitioner’s procedure when third party proficiency testing was not available for an analyte. Petitioner’s QA policy in a section on “Proficiency Testing” provides that Petitioner will enroll in an approved proficiency testing program for each regulated analyte it tested to ensure its testing methodologies, systems, and instruments met standards of accuracy and precision. CMS Ex. 2 at 134-35, 144. The policy provided that “[w]hen proficiency testing specimens are not available

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from an approved proficiency testing program, split sample testing with another laboratory or instrument manufacturer will be arranged.” CMS Ex. 2 at 144. The policy also contained standards for split sample analysis,13 including the following:

Select a laboratory using the same instrumentation, methodology, reagents, etc. as your laboratory. If the same instrumentation, methodology, reagents, etc. are not used, establish bias values for the analyte prior to testing. A CLIA approved laboratory should be selected as the comparison lab when available.

* * * *

Treat each specimen in the same manner as a patient’s specimen.

Perform required quality control.

Record results on the tests logs and save instruments printouts. Documentation should include collection date and time, testing date and time, test results, testing personnel, and any required corrective actions associated with the testing.

* * * *

Results should be reviewed by the Laboratory Director and/or Technical Supervisor, General Supervisor and laboratory staff.

CMS Ex. 2 at 146.

There is no evidence that Petitioner actually conducted split sample testing for carisoprodol prior to the survey despite having been testing for carisoprodol since June 3, 2015. Surveyor Sabino states that during the survey, Petitioner’s staff told him that they tested for carisoprodol but did not conduct split sample testing to verify Petitioner’s test

**Page 21**

results for carisoprodol. Sabino Decl. I at 10-11 ¶¶ 38‐ 42. Staff’s reported statements to Surveyor Sabino are consistent with Petitioner’s plans of correction that all show Petitioner began conducting confirmatory testing for carisoprodol after the survey and planned to do such testing every six months thereafter. CMS Ex. 3 at 3; CMS Ex. 4 at 40; CMS Ex. 7 at 4-5, 42; CMS Ex. 9 at 3-4, 41.

Petitioner admitted in a plan of correction sent to Surveyor Sabino dated June 8, 2016, that carisoprodol was not listed as an analyte in Petitioner’s original CLIA application; that commercial proficiency testing for carisoprodol was not available through Petitioner’s proficiency test provider; and Petitioner elected to evaluate its proficiency with carisoprodol every six months using a confirmatory laboratory testing approach by which Petitioner compared its positive results to the results of the laboratory used for comparison. Petitioner does not state in the plans of correction specifically when the confirmatory testing approach was adopted by Petitioner. CMS Ex. 3 at 3; CMS Ex. 4 at 40. However, Petitioner presented evidence dated October 21, 2016, 10 months after the survey was completed on January 7, 2016, comparing the results of Petitioner’s testing for the carisoprodol analyte with the results of testing by another laboratory. P. Ex. 1E at 23. Therefore, I find it more likely than not that Petitioner adopted and implemented the comparative testing approach14 well after the survey was completed.

Petitioner admits that no split sample testing of the carisoprodol analyte had been done at the time of the survey. Petitioner asserts that no split sample testing was done because, while Petitioner tested for carisoprodol, it reported no results. P. Reply at 11. Banerjee asserts that Petitioner ran tests for carisoprodol for research only and Petitioner reported no results for carisoprodol. Banerjee testified in his declaration that Petitioner was just doing confirmation testing of samples that it compared with results obtained by another laboratory – the laboratory Petitioner used to confirm its testing on all other analytes. Banerjee testified that carisoprodol could not be reported because Petitioner’s carisoprodol testing was not verified and there was no proficiency testing available. Banerjee Decl. II at 14 ¶ 32. Banerjee concedes that Petitioner was testing human samples for carisoprodol, which is consistent with records from Petitioner’s testing equipment from November 14, 2015. P. Ex. 1D. It is the testing of human samples that triggers the application of CLIA and the CLIA regulations and not the reporting of the results of the testing. 42 U.S.C. § 263a(b); 42 C.F.R. §§ 493.1, 493.2, 493.1230 (“Each laboratory that performs non-waived testing must meet the applicable general laboratory systems requirements in §§ 493.1231 through 493.1236 . . . .).” Banerjee’s testimony is insufficient to meet Petitioner’s burden to establish that verification of carisoprodol

**Page 22**

testing was being done twice each year because he does not state when the comparison testing process began or provide any documentation, and the evidence shows that the comparative testing method was not adopted until October 2016, well after the survey ended.15

**b. Analysis**

Petitioner was required to, “[a]t least twice annually, . . . verify the accuracy of . . . [a]ny test or procedure it performs that is not included in [42 C.F.R. pt. 493,] subpart I . . . .” 42 C.F.R. § 493.1236(c)(1). Subpart I of 42 C.F.R. pt. 493 lists proficiency testing programs by specialty and subspecialty. Proficiency testing procedures and analytes for toxicology, Petitioner’s testing specialty (CMS Ex. 2 at 26) are listed at 42 C.F.R. § 493.937, which requires three test events per year. Carisoprodol is not an analyte listed in the regulation. Consequently, 42 C.F.R. § 493.1236(c)(1) required Petitioner to verify the accuracy of its test for carisoprodol at least twice a year. Surveyor Sabino alleged in the SOD that Petitioner violated this standard by failing to verify the accuracy of the analyte carisoprodol at least twice annually. CMS Ex. 1 at 7. The evidence shows that Petitioner began testing for carisoprodol June 3, 2015. Petitioner has not shown that during the seven months between June 3, 2015 and the end of the survey on January 7, 2016, it conducted any proficiency testing of the carisoprodol analyte.

I conclude that CMS has made a prima facie showing that Petitioner violated 42 C.F.R. § 493.1236(c)(1) because Petitioner failed to verify its testing of the carisoprodol analyte at least one time between June 3, 2015 and the completion of the survey on January 7, 2016.

Petitioner asserts that it “had no obligation to enroll in any proficiency testing or [conduct] split sample testing” for carisoprodol because it “did not report Carisoprodol at the time of inspection” and the requirement for split sample testing “is only for reported

**Page 23**

analytes.” P. Reply at 11. In support of this argument, Banerjee states in his second declaration that Petitioner ran carisoprodol “for research use only and this is why it was not reported on [Petitioner’s] final report.” Banerjee Decl. II at 14 ¶ 32 (emphasis omitted). Petitioner’s defense lacks merit. Testing of human samples triggers the application of CLIA and the CLIA regulations and not the reporting of the results of the testing. 42 U.S.C. § 263a(b); 42 C.F.R. §§ 493.1, 493.2, 493.1230 (“Each laboratory that performs non-waived testing must meet the applicable general laboratory systems requirements in §§ 493.1231 through 493.1236 . . . .).” Petitioner’s argument ignores the plain language of the regulation, which requires laboratories like Petitioner to twice annually “verify the accuracy of . . . *[a]ny* test or procedure it performs that is not included in [42 C.F.R. pt. 493,] subpart I . . . .” 42 C.F.R. § 493.1236(c)(1) (emphasis added). No exception exists for tests a laboratory conducts but for which the laboratory does not report the results.16 Accordingly, I conclude that CMS has made a prima facie showing of a violation of 42 C.F.R. § 493.1236(c)(1), and Petitioner has failed to rebut the prima facie showing or establish a defense to the violation.

**3. Petitioner violated the standard-level requirement of 42 C.F.R. § 493.1239(a) (Tag D5291), general laboratory systems quality assessment.**

The regulation requires:

(a) The laboratory must establish and follow written policies and procedures for an ongoing mechanism to monitor, assess, and, when indicated, correct problems identified in the general laboratory systems requirements specified at §§ 493.1231 through 493.1236.

Surveyor Sabino alleges in the SOD that Petitioner failed to establish and follow written policies and procedures as required by 42 C.F.R. § 493.1239(a). Surveyor Sabino cited as examples Petitioner’s failure to assess employee competency described above under

**Page 24**

Tag D5209 and Petitioner’s failure to verify the accuracy of its testing for the carisoprodol analyte described above under Tag D5217. CMS Ex. 1 at 8-9.

**a. Facts**

The facts found under Conclusions of Law 1 through 2 are applicable to Conclusion of Law 3. The record also contains the following additional pertinent facts.

Petitioner’s QA policy included a section titled “Laboratory Incidents Management and Errors,” the purpose of which was “to provide a process for the identification and investigation of issues, true cause analysis, development of corrective action plans, and communication of the findings and the actions for all Incidents and Errors.” CMS Ex. 2 at 133. Petitioner’s policy defines “incidents” as activities “that may result in, or have the potential to result in, death or serious adverse outcomes for either patients or laboratory staff.” CMS Ex. 2 at 133. “Error” is defined as “[t]he failure of a planned action to be completed as intended, or the use of a wrong plan to achieve the aim.” CMS Ex. 2 at 133. A potential incident is defined as “[s]ystemic non-compliance of [sic] established laboratory policies and procedures that potentially cause errors in all phases of laboratory testing.” CMS Ex. 2 at 133. Examples of incidents listed include “[s]ystemic non-compliance with established laboratory policies and procedures across several laboratory activities.” CMS Ex. 2 at 133. The laboratory director, technical consultant, or qualified staff were responsible for reviewing incidents and errors, and they were required to investigate any incidents “immediately” and identify the root cause of the incident. CMS Ex. 2 at 133. The policy establishes 10 standards and guidelines for investigation. The policy requires that those responsible for corrective action “[e]nsure corrective actions” resolve the identified problem. CMS Ex. 2 at 134.

I find that Petitioner had a policy as required by 42 C.F.R. § 493.1239(a).17

**b. Analysis**

The regulation requires Petitioner to “establish and follow written policies and procedures for an ongoing mechanism to monitor, assess, and, when indicated, correct problems identified in the general laboratory systems requirements” established by 42 C.F.R. §§ 493.1231 through 493.1236. 42 C.F.R. § 493.1239(a). Surveyor Sabino alleged in the SOD that Petitioner violated this standard by failing to follow its own policies and procedures for monitoring, assessing, and correcting problems identified in

**Page 25**

its general laboratory systems. CMS Ex. 1 at 8. In particular, the surveyor’s findings focused on Petitioner’s failure to monitor, assess, and correct the problems related to (1) Petitioner’s failure to follow its policies and procedures for documenting employee competency in violation of 42 C.F.R. § 493.1235, and (2) its failure to verify the accuracy of its carisoprodol testing twice annually in violation of 42 C.F.R. § 493.1236(c)(1). CMS Ex. 1 at 8-9.

Based on the facts I have found related to Petitioner’s QA policy and its violations of 42 C.F.R. §§ 493.1235 (Tag D5209), and 493.1236(c)(1) (Tag D5217) under Conclusions of Law 1 and 2, I conclude that CMS has made a prima facie showing that Petitioner violated 42 C.F.R. § 493.1239(a). Petitioner violated 42 C.F.R. § 493.1235 because it failed to follow its policy to evaluate and document the competency of T. Nguyen before she began testing. Petitioner violated 42 C.F.R. § 493.1236(c)(1) because it failed to verify the accuracy of its testing for the carisoprodol analyte using the split sample methodology adopted by Petitioner in its QC policy. It is clear that prior to the survey, Petitioner did not identify either error. Self-identification and correction of such errors is the purpose for the policy required by 42 C.F.R. § 493.1239(a). The noncompliance with CLIA standards as discussed under Conclusions of Law 1 and 2 (42 C.F.R. §§ 493.1235 (Tag D5209) and 493.1236(c)(1) (Tag D5217), respectively) show that, while Petitioner had the policy required by 42 C.F.R. § 493.1239(a), Petitioner did not use or follow the policy to identify and correct the two deficiencies.

Petitioner’s failure to identify and correct the two violations of CLIA standards clearly violated Petitioner’s QA policy. At a minimum, its systemic failure to follow two portions of its QA policy pertaining to completely different laboratory systems (personnel competence assessment and testing accuracy verification) constituted two “potential incidents,” according to Petitioner’s own definition of that term (CMS Ex. 2 at 133). Such failures plainly posed at least a risk of potential error in all phases of laboratory testing, both generally as the failures related to testing personnel and specifically as the failures related to carisoprodol testing. Two systemic failures amount to actual “incidents,” given that Petitioner lists as an example of an incident “[s]ystemic non-compliance with established laboratory policies and procedures across several laboratory activities.” CMS Ex. 2 at 133. Yet Petitioner’s staff followed none of the investigation standards and guidelines applicable in either situation. No staff identified or reported the incidents or the potential for incidents as required. The laboratory director did not investigate the incidents or potential incidents or document any relevant facts, findings, or conclusions. It took an independent survey by the state agency to reveal Petitioner’s failings and cause Petitioner to attempt corrective action. It was only after the survey began and the laboratory’s CLIA certificate was at risk that the laboratory director took some of the steps called for by Petitioner’s policy such as: evaluating the impact of the incident; determining whether Petitioner should continue testing; and developing a plan of correction evidenced by the various plans of correction Petitioner generated in response to the survey.

**Page 26**

Petitioner does not dispute that it took no action to identify or correct the noncompliance identified under Tags D5209 and D5217. P. Reply at 11; Banerjee Decl. II at 13-15 ¶¶ 31-36. Petitioner argues that there was no noncompliance under Tags D5209 and D5217 to correct and, therefore, its policy required by 42 C.F.R. § 493.1239(a) was simply not triggered. P. Reply at 11. Petitioner complains that it took Surveyor Sabino five months to inform Petitioner of the alleged noncompliance rather than simply informing Petitioner at the survey exit interview. Petitioner implies that Surveyor Sabino made up the allegations, which Petitioner asserts are not supported by the evidence. P. Reply at 11. Petitioner’s arguments are meritless. The preponderance of the evidence shows that Petitioner was in violation of the CLIA standards established by 42 C.F.R. §§ 493.1235 and 493.1236(c)(1). The violations should have been obvious to Banerjee, W. Nguyen, and Attaelmannan if they actually exercised the oversight and control of the laboratory required. Had Petitioner implemented the incidents management section of its QA policy, it should have quite easily detected and corrected its violations of 42 C.F.R. §§ 493.1235 and 493.1236(c)(1). Petitioner’s cavalier attitude toward its regulatory obligations, evidenced by its denial that certain clearly-applicable obligations actually apply to it, is especially concerning because it shows why Petitioner continued to fail to achieve compliance with CLIA requirements.

Petitioner failed to comply with its QC policy and identify, investigate, and correct its failure to evaluate the competency of T. Nguyen and to conduct split sample testing for carisoprodol. Accordingly, I conclude that CMS has made a prima facie showing that Petitioner violated 42 C.F.R. § 493.1239(a), because it had the required policy but failed to follow that policy. Petitioner has failed to rebut the prima facie showing.

**4. Collectively, Petitioner’s violations of the standard-level requirements of 42 C.F.R. §§ 493.1235, 493.1236(c)(1), and 493.1239(a) were serious and had the potential to adversely affect patient test results and patient care.**

**5. Petitioner violated the condition-level requirement of 42 C.F.R. § 493.1230 (Tag D5200), general laboratory systems.**

**6. There is a basis for revocation of Petitioner’s CLIA certificate and imposition of a CMP.**

**a. Facts**

The facts set forth under Conclusions of Law 1 through 3 are applicable to Conclusions of Law 4 through 6. The record also contains the following additional pertinent facts.

**Page 27**

Surveyor Sabino’s education, experience, and qualifications as a laboratory surveyor are set forth in his declaration and his resume. Sabino Decl. I at 1 ¶¶ 1-3; CMS Ex. 29. Surveyor Sabino has a bachelor of science degree in molecular, cell, and developmental biology and is licensed in California as a clinical genetic molecular biologist. Sabino Decl. I at 1 ¶ 3; CMS Ex. 29 at 3. Beginning in January 2009 and continuing for five years through January 2014, Surveyor Sabino worked as a full-time clinical laboratory scientist. Sabino Decl. I at 1 ¶ 3; CMS Ex. 29 at 2-3. Thereafter, for just over two years, Surveyor Sabino worked for the state agency full-time as a CLIA surveyor, performing or assisting with over 80 CLIA surveys during that time. Sabino Decl. I at 1 ¶ 2; CMS Ex. 29 at 1-2. Beginning in May 2016, Surveyor Sabino began working for CMS full‐time as a medical technologist. Sabino Decl. I at 1 ¶ 1; CMS Ex. 29 at 1. Petitioner does not specifically challenge Surveyor Sabino’s education, experience, or qualifications. Petitioner waived the right to question Surveyor Sabino about his qualifications by waiving the right to a hearing. I find that Surveyor Sabino is well‐qualified to render opinions about general laboratory systems and laboratory compliance with the requirements of CLIA based on his knowledge, skill, experience, training, and education. *See*Fed. R. Evid. 702.18

In his declaration, Surveyor Sabino elaborates upon the basis for citing Petitioner for a condition-level violation of 42 C.F.R. § 493.1230. CMS Ex. 1 at 4. Surveyor Sabino opined that Petitioner’s violations of 42 C.F.R. §§ 493.1235 (Tag D5209), 493.1236(c)(1) (Tag D5217), and 493.1239(a) (Tag D5291) “together presented a serious problem that had the potential to adversely affect patient test results.” Sabino Decl. I at 8 ¶ 30. He states that Petitioner’s failure to maintain adequate documentation of testing personnel training and competency “called into question whether [Petitioner’s] laboratory technician had received proper training” as evidenced by competency evaluation and “could lead to the reporting of inaccurate test results” in the event the technician did not receive such training. Sabino Decl. I at 8 ¶ 30. He also states that Petitioner’s failure to verify the accuracy of its carisoprodol testing twice annually and its further failure to detect and correct this failure could lead Petitioner to “return test results that are inaccurate for the analytes not so verified.” Sabino Decl. I at 8 ¶ 30. I find Surveyor Sabino’s opinions are supported by the evidence of record, credible and worthy of being given weight. I find fully credible Surveyor Sabino’s opinion that Petitioner’s violations of 42 C.F.R. §§ 493.1235, 493.1236(c)(1), and 493.1239(a) “presented a serious problem that had the potential to adversely affect patient test results.” Sabino Decl. I at 8 ¶ 30.

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Petitioner attacks Surveyor Sabino’s credibility in a variety of ways by, e.g., pointing out he lacks experience in toxicology, claiming he does not know the definition of reagent or the difference between qualitative, semi-quantitative, and quantitative testing, asserting that he lacks understanding about the “analytical phase of the equipment in the lab” and that he does not know what CLIA requirements apply to Petitioner, among other things. P. Reply at 6-7. However, none of Petitioner’s attacks affects the credibility or weight of Surveyor Sabino’s opinions regarding the potential adverse effects on patient test results posed by Petitioner’s violations of 42 C.F.R. §§ 493.1235 (Tag D5209), 493.1236(c)(1) (Tag D5217), and 493.1239(a) (Tag D5291). In fact, Surveyor Sabino’s credibility is bolstered by the fact that Petitioner agrees with CMS that “[a]llowing laboratory personnel without properly documented training and competence to test patient samples creates a risk of laboratory error that could adversely impact the accuracy of test results” and that failing to perform split sample testing on an analyte “increases the chances of error.” P. Reply at 10-11.

Petitioner argues throughout its pleadings that there was no harm or potential for harm. While T. Nguyen may have been 100 percent accurate in all her testing; Petitioner’s test results for carisoprodol may have always been correct; and even though Petitioner never relied upon its own test results but sent all samples out for comparison testing; it is accurate testing and the mitigation or avoidance of the risk for patient harm that is the end to be served by requiring development and implementation of the policies required under the CLIA regulations. 42 C.F.R. § 493.1804(a). Even though no actual harm occurred in this case based on the regulatory violations I have found, that fact is no defense for Petitioner. Indeed, whether or not actual harm occurred is not recognized as a basis for the imposition of principal or alternative sanctions under the regulations. 42 C.F.R. § 493.1804(b)(1). Whether or not a deficiency poses immediate jeopardy19 is a factor in the choice of sanctions, but not whether or not actual harm occurred. 42 C.F.R. § 493.1804(d).

W. Nguyen testified in his declaration that in preparing the plans of correction Petitioner’s team “did not identify any situations or events of actual or potential patient harm.” W. Nguyen Decl. at 5 ¶ 13. W. Nguyen clearly has the expertise necessary to

**Page 29**

develop his opinion. However, he does not state the actual bases for his opinion. He states that no situations or events of actual or potential patient harm were identified, but he does not state the facts upon which his opinions are based. Despite his expertise, the absence of evidence of the basis for his opinions causes them to be entitled to lesser weight. Further, his opinion regarding the potential for harm is clearly inconsistent with Banerjee’s admission that testing by laboratory testing personnel who have not had their competency evaluated and testing for analytes without verification of the accuracy of the testing methodology and equipment do pose a risk for potential harm. P. Reply at 10-11. I give little weight to W. Nguyen’s testimony that there was no potential harm due to Petitioner’s noncompliance.

**b. Analysis**

For a laboratory to obtain a CLIA certificate to perform testing on human specimens, it must comply with the conditions of CLIA. 42 C.F.R. § 493.1. Laboratories that perform at least one of the high complexity tests as described in 42 C.F.R. § 493.17(a), must obtain a CLIA certificate for high complexity testing and meet the requirements 42 C.F.R. pt. 493, subpt. K, among others. 42 C.F.R. § 493.25(a)-(b). One of the condition-level requirements in subpart K is that, with an exception not applicable here, “[e]ach laboratory that performs nonwaived testing must meet the applicable general laboratory systems requirements in [42 C.F.R.] §§ 493.1231 through 493.1236 . . . [and t]he laboratory must monitor and evaluate the overall quality of the general laboratory systems and correct identified problems as specified in [42 C.F.R.] § 493.1239 for each specialty and subspecialty of testing performed.” 42 C.F.R. § 493.1230. It is undisputed that Petitioner performs only nonwaived testing and tests of high complexity within the meaning of 42 C.F.R. § 493.17. Jt. Stip. ¶ 7; CMS Ex. 2 at 26. Thus, Petitioner is subject to the condition-level requirement established by 42 C.F.R. § 493.1230.

On its face, the language of 42 C.F.R. § 493.1230 suggests that a laboratory violates this condition any time the laboratory fails to meet any of the standard-level requirements established by 42 C.F.R. §§ 493.1231 through 493.1239. However, that reading of 42 C.F.R. § 493.1230 would be inconsistent with the regulatory distinction between condition-level deficiencies, which are a basis for imposing principal and alternative sanctions (42 C.F.R. §§ 493.1806(a)), and standard-level deficiencies, which are not a basis for imposing sanctions unless the laboratory fails to correct the deficiencies within 12 months of the conclusion of the survey (42 C.F.R. § 493.1816(b)). No regulation specifies the precise relationship between standard-level and condition-level deficiencies or specifies how to determine when standard-level deficiencies rise to the level of a condition-level deficiency. When the regulations were promulgated, “[s]everal commenters want[ed] condition level deficiency and lower level deficiency to be more clearly delineated. They were also unclear about the relationship between ‘elements,’ ‘standards’ and ‘conditions.’” 57 Fed. Reg. 7218, 7221 (Feb. 28, 1992). The agency responded somewhat unhelpfully, stating:

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

*Id.*

Perhaps in recognition of this ambiguity, CMS has issued interpretive guidance to assist surveyors in determining whether a surveyed laboratory’s standard-level deficiencies also constitute condition-level deficiencies. CMS Pub. 100-07, State Operations Manual (SOM), Appendix C - Survey Procedures and Interpretive Guidelines for Laboratories and Laboratory Services (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_c_lab.pdf).20 The version of the SOM in effect at the time of the survey and when CMS issued the November 22, 2016 notice of sanctions instructs surveyors to “consider a condition out of compliance as a result of one or more deficiencies if, in your judgment, the deficiency(ies) constitutes a significant or serious problem that adversely affects patient test results/patient care, or has the potential for adversely affecting patient test results/patient care.” SOM, App. C (Rev. 140; eff. May 29, 2015). The SOM also instructs surveyors that “[w]hen [a laboratory’s] deficient practice is of such a serious nature that correction is a condition for allowing the laboratory to continue with patient testing, cite the most appropriate condition . . . .” *Id.* Under the SOM, then, the key distinction between condition-level and standard-level deficiencies is that a condition-level deficiency represents a “significant or serious problem.” *Millennium Clinical Labs., Inc.*, DAB CR1212 (2004).

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The SOM leaves to the surveyor’s judgment the determination of whether one or more deficiencies are significant or serious enough to cite as a condition-level deficiency, and that judgment is subject to challenge before me. *Id.*

The surveyor alleged in the SOD that Petitioner violated the condition found at 42 C.F.R. § 493.1230 due to the severity of Petitioner’s violations of the standards found at 42 C.F.R. §§ 493.1235 (Tag D5209), 493.1236(c)(1) (Tag D5217), and 493.1239(a) (Tag D5291). CMS Ex. 1 at 4. In his initial declaration, Surveyor Sabino further expresses that, in his opinion, Petitioner’s violations of 42 C.F.R. §§ 493.1235 (Tag D5209), 493.1236(c)(1) (Tag D5217), and 493.1239(a) (Tag D5291) posed a “serious problem” that could “adversely affect patient test results.” Sabino Decl. I at 8 ¶ 30.

Based on Petitioner’s standard-level violations and Surveyor Sabino’s opinion about the seriousness of those violations, I conclude that CMS has made a prima facie showing that Petitioner violated 42 C.F.R. § 493.1230 because Petitioner’s standard-level violations were serious and had the potential to adversely impact patient test results and patient care. The facts underpinning Petitioner’s standard-level violations comport with Surveyor Sabino’s opinion that those violations were serious. Especially serious was Petitioner’s failure to identify and correct its regulatory violations and violations of its own QA policy. Not only did Petitioner not correct those violations, it has maintained throughout this proceeding that it was not even subject to a CLIA requirement (i.e., that it verify the accuracy of its carisoprodol testing, 42 C.F.R. § 493.1236(c)(1)) that clearly applies to it. Petitioner’s glaring failures bring into question its ability to even identify, much less correct, other problems it had with following the general laboratory systems requirements specified at 42 C.F.R. §§ 493.1231 through 493.1236, as required by its QA policy and 42 C.F.R. § 493.1239(a). Without any assurance that Petitioner could avoid such problems in the first instance, evidenced by its violations of 42 C.F.R. §§ 493.1235 and 493.1236(c)(1), Petitioner’s failures also bring into question its ability to generate test results free from any errors introduced by noncompliance with any or all of the requirements specified at 42 C.F.R. §§ 493.1231 through 493.1236. I conclude it is reasonable to infer from Petitioner’s failures that Petitioner’s serious noncompliance with 42 C.F.R. §§ 493.1235, 493.1236(c)(1), and 493.1239(a) not only could adversely affect patient test results, it also had the potential to adversely affect patient care and cause actual patient harm through the potential reporting of inaccurate, unreliable results. This inference is particularly reasonable given that the purpose of CLIA is to ensure the accuracy and reliability of laboratory tests, which “is vital to the public health of all Americans.” H.R. Rep. No. 100-899, at 8, 18 (1988), *reprinted in* 1988 U.S.C.C.A.N. 3828, 3829, 3839. The possibility that Petitioner’s results were inaccurate or unreliable could harm its patients, particularly those who test positive, perhaps falsely, for controlled substances like cocaine, methamphetamine, methadone, or other substances for which Petitioner tested.

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As already noted, Petitioner concedes that if it violated 42 C.F.R. §§ 493.1235 and 493.1236(c)(1), those violations would have the potential for adverse effects on patient test results. P. Reply at 10-11. Petitioner did violate both those provisions, and it follows that Petitioner’s failure to correct those deficiencies violated 42 C.F.R. § 493.1239(a) and that all three of those deficiencies had the potential for adverse effects on patient test results.

Petitioner persists in its argument that its deficiencies did not harm any patients or even pose any risk of patient harm. P. Br. at 6-7; P. Reply at 8-9, 22-23. Petitioner makes three arguments in support of this position. 

Petitioner first argues that its deficiencies could not have posed a risk of harm to patients because its test results were “merely used for initial screening purposes” and that an independent laboratory “always verified” its test results. P. Br. at 6; P. Ex. 1 at 3. Dr. Banerjee supports this argument in his second declaration, stating that Petitioner “refers ALL samples out to reference labs for confirmatory testing.” Banerjee Decl. II at 17 ¶ 38 (emphasis deleted). Dr. Banerjee’s declaration is consistent with documents provided by Petitioner and Surveyor Sabino’s understanding of Petitioner’s practice, which he formed based on information provided to him by Petitioner’s staff. CMS Ex. 5 at 43; Sabino Decl. I at 2 ¶ 5, 12 ¶¶ 46-47. This argument suffers from two defects. First, Petitioner cannot guarantee that, simply because it later obtained confirmation testing of its initial screening tests from another laboratory, its own initial screening, which might be inaccurate,21 could not or would not be used for treating patients. Confirmatory testing did not completely eliminate the risk of adverse effects on patient care that could arise from Petitioner’s potentially inaccurate and unreliable test results. Thus, it is largely irrelevant that Petitioner referred all samples out for confirmatory testing. Second, the evidence shows that Petitioner’s results actually were used to treat patients. In his second declaration, Dr. Banerjee states that he makes treatment decisions “using all available results,” including Petitioner’s results and the confirmatory laboratory results. Banerjee Decl. II at 24 ¶ 57. Thus, the risk of Petitioner’s potentially

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inaccurate and unreliable test results adversely affecting patient care remained even with confirmatory testing.

Next, Petitioner argues that no patients were at risk because it consistently received 100% scores in proficiency testing for the analytes that Petitioner actually sent for proficiency testing. Petitioner avers that the successful proficiency testing, conducted by a “non-biased independent” organization, “proves conclusively that [Petitioner’s] results and . . . methods are incredibly accurate and valid.” P. Reply at 8-9. This argument suffers from the same defects as Petitioner’s first argument. In addition, as already discussed, Petitioner did not conduct proficiency testing for carisoprodol testing, even though it tested patient samples for carisoprodol. Thus, Petitioner cannot cite successful proficiency testing as a safeguard against errors in its carisoprodol testing.

Finally, Petitioner argues that no patients were at risk because if they were, CMS would have ordered Petitioner to stop testing but CMS did not do so. P. Br. at 7; P. Reply at 22-23. The fact that CMS did not immediately force Petitioner to stop testing is consistent with the facts that Surveyor Sabino did not declare immediate jeopardy and CMS did not find that continued testing would pose a significant hazard to the public health which should have provoked action in accordance with 42 C.F.R. § 493.1812(c). In this case, Surveyor Sabino did not find immediate jeopardy and 42 C.F.R. § 1812(c) does not apply to permit CMS to take action in federal court to stop all testing. Rather, under 42 C.F.R. § 493.1814, condition-level noncompliance was found and CMS took the action permitted by that regulation.

After reviewing Petitioner’s factual assertions and arguments, I am not persuaded that it is more likely than not that Petitioner’s standard-level violations were not serious or that they did not pose a risk of patient harm. To the contrary, the evidence and reasonable inferences drawn therefrom demonstrate that Petitioner’s standard-level violations were serious and had the potential to adversely affect both patient test results and patient care. Therefore, I conclude that CMS has made a prima facie showing of a condition-level violation of 42 C.F.R. § 493.1230, and Petitioner has failed to rebut the prima facie showing. Accordingly, I conclude that CMS had a basis to revoke Petitioner’s CLIA certificate and impose a CMP. 42 C.F.R. § 493.1806(a)-(c).

**7. Petitioner’s CLIA certificate is revoked effective the date of this decision.**

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). Pursuant to 42 C.F.R. § 493.1844(h)(2) the effective date of the revocation is the date given in the CMS notice, which must be “at least 15 days after the date of the notice” if the laboratory’s deficiencies do not pose immediate jeopardy. However, pursuant to 42 C.F.R. § 493.1840(e)(1) CMS does not

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actually revoke a CLIA certificate until after an “ALJ hearing” upholds the revocation. After an ALJ decision, CMS may decide to revoke a CLIA certificate even if CMS did not previously suspend or limit the CLIA certificate. Pursuant to 42 C.F.R. § 493.1844(d)(2), absent a determination of immediate jeopardy, “suspension, limitation, or revocation of a CLIA certificate is not effective until after a hearing decision by an ALJ is issued.” The regulations are clear enough. Accordingly, I conclude that the effective date of the revocation of Petitioner’s CLIA certificate is the date of this decision.

The revocation notice supplied to Petitioner by CMS in this case is consistent with my understanding of the regulations. In the notice, CMS informed Petitioner that revocation of Petitioner’s CLIA certificate would be “effective **January 21, 2017**,” but elsewhere states that if Petitioner requested a hearing to challenge the revocation, the revocation “will become effective following the administrative hearing decision, if [CMS’s] determination of non-compliance is upheld.” CMS Ex. 10 at 4. I have concluded that Petitioner had a condition-level deficiency affording CMS a basis to revoke Petitioner’s CLIA certificate. Consistent with the regulations and the CMS notice, Petitioner’s CLIA certificate is revoked effective the date of this decision. 42 C.F.R. § 493.1844(d)(2)(i).

**8. The CMP is effective December 7, 2016 through March 2, 2017.**

My August 24, 2018 Order Directing Supplemental Briefing, directed the parties to brief two issues related to the CMP in this case: when did the CMP go into effect or begin to accrue; and when did the CMP cease? I address these questions in turn***. ***

***a. When did the CMP go into effect?***

There is some possible confusion in the regulations about when a per-day CMP imposed against a laboratory goes into effect. When a laboratory’s condition-level deficiency or deficiencies do not pose immediate jeopardy, 42 C.F.R. § 493.1834(f)(1)(ii) provides that a CMP begins accruing 15 days after CMS notifies the laboratory of CMS’s intent to impose the CMP. The regulations also provide that “[t]he effective date of an alternative sanction (*other than a civil money penalty*) is not delayed because the laboratory has appealed and the hearing or the hearing decision is pending.” 42 C.F.R. § 493.1844(d)(1) (emphasis added). The express exclusion of CMPs from 42 C.F.R. § 493.1844(d)(1) strongly implies that the effective date of a CMP *is* delayed when a laboratory appeals and a hearing decision remains pending.22 The regulatory history bolsters this reading of

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the regulation, stating in relevant part that CMS “does not actually impose the [CMP] until . . . after a hearing decision that upholds imposition of the penalty is issued.” 57 Fed. Reg. 7218, 7228-29 (Feb. 28, 1992). However, reading the regulations to delay the effective date of CMPs to the date the hearing decision is issued would in many cases nullify the CMP, as the CMP would become effective the same day that the laboratory’s CLIA certificate is revoked, which would simultaneously terminate the CMP.23 42 C.F.R. §§ 493.1810(d)(2), 493.1814(c), 493.1834(f)(2)(iii). This reading of the regulations could, in many cases, result in the perverse outcome that laboratories who opted not to appeal sanctions would receive only a 35 percent reduction in the CMP, 42 C.F.R. § 493.1834(e)(2)(iii), while laboratories who opted to appeal would avoid the CMP in its entirety when suspension or revocation is approved by an ALJ. Furthermore, reading the regulations to delay the effective date of a CMP until an ALJ decision is issued would undermine one of the primary purposes of sanctions, which is to “motivate laboratories to comply with CLIA requirements . . . .” 42 C.F.R. § 493.1804(a)(3).

To avoid an absurd result, I decline to adopt the view that CMPs do not become effective until the date of the ALJ decision following a laboratory’s appeal. I conclude that the better reading of these regulations, considered as a whole, is that a CMP becomes effective 15 days after CMS notifies the laboratory of CMS’s intent to impose the CMP, as provided by 42 C.F.R. § 493.1834(f)(1)(ii). I further conclude that 42 C.F.R. § 493.1844(d)(1) is best read to mean that, when a laboratory appeals the imposition of sanctions, CMS will not attempt to enforce or collect the CMP until after the hearing decision is issued as provided by 42 C.F.R. § 493.1834(g)(1)(ii). Although the CMP would potentially continue accruing under 42 C.F.R. § 493.1834(f)(2) while the laboratory’s appeal is pending, CMS cannot demand payment of the CMP until after the CMP is upheld by an ALJ decision.

CMS sent a notice of sanctions to Petitioner on November 22, 2016. CMS Ex. 10 at 1; Jt. Stip. ¶ 15.b. It specifically warned Petitioner that the CMP was “effective **December 7, 2016** . . . .” CMS Ex. 10 at 4 (emphasis in original). I conclude that the CMP began accruing effective December 7, 2016, 15 days after the CMS November 22, 2016 notice of intent to impose the CMP. 42 C.F.R. § 493.1834(f)(1)(ii).

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***b. When did the CMP cease?***

The regulation governing CMPs imposed against laboratories states that a CMP continues in effect until one of three things happen: 

(i) The laboratory’s compliance with condition level requirements is verified on the basis of the evidence presented by the laboratory in its credible allegation of compliance or at the time or revisit.

(ii) Based on credible evidence presented by the laboratory at the time of revisit, CMS determines that compliance was achieved before the revisit. (In this situation, the money penalty stops accruing as of the date of compliance.)

(iii) CMS suspends, limits, or revokes the laboratory’s certificate of compliance, registration certificate, certificate of accreditation, or certificate for PPM procedures.

42 C.F.R. § 493.1834(f)(2)(i)-(iii). Nothing in the regulation confers authority on CMS to end a CMP before one of these three events occurs. 

The record does not contain any evidence that either of the first two conditions listed in 42 C.F.R. § 493.1834(f)(2)(i) or (ii) occurred. The parties agree on this point, albeit for different reasons. CMS Supp. Br. at 3; P. Supp. Br. at 10. Arguably, the CMP has run continuously since December 7, 2016 through the pendency of this appeal, as Petitioner’s CLIA certificate has not yet been suspended, limited, or revoked.24 However, CMS states that “the CMP is an appropriate alternative sanction that served a remedial purpose during the period of time that CMS continued to work with [Petitioner] in its attempts to return to compliance between December 7, 2016 and March 2, 2017.” CMS Br. at 17. CMS goes further in its supplemental brief, recognizing prior ALJ decisions that have disallowed CMPs after determining those CMPs “did not serve the purpose of incentivizing a laboratory to return to compliance.” CMS Supp. Br. at 3-4 (citing *Rustom*

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*Ali*, DAB CR 1280 (2005)). On the logic of these prior decisions, CMS concedes that the CMP at issue here “would accrue through March 2, 2017,” because it no longer served a remedial purpose beyond that date. CMS Supp. Br. at 4.25 Although, as noted, the regulations do not authorize CMS to end a CMP prematurely, I will not look behind CMS’s concession that no remedial purpose would be served by extending the CMP beyond March 2, 2017. Based on the CMS concession, I conclude that the CMP no longer served a remedial purpose beyond March 2, 2017, and therefore ceased accruing after that date. Consequently, I conclude that the CMP is effective from December 7, 2016 through March 2, 2017.

Pursuant to 42 C.F.R. § 493.1844(c)(4) the CMS determination to impose a CMP and the amount of the CMP imposed per day or per instance are not reviewable. Although not an issue for which I requested supplemental briefing, Petitioner argues in its supplemental brief that “imposition of a CMP of $5,936 is without basis” because, in Petitioner’s view, that amount exceeds the maximum CMP authorized for condition-level deficiencies that do not pose immediate jeopardy. P. Supp. Br. at 8, 11. This argument fails for two reasons. First, as already noted, the amount of a CMP is not an initial determination subject to my review in this proceeding. 42 C.F.R. § 493.1844(c)(4). Second, the amount of $5,936 per day is at the top of the range of CMPs authorized by regulation. 42 C.F.R. § 493.1834(d)(2)(ii) (“For a condition level deficiency that does not pose immediate jeopardy, the range is $50–$3,000 as adjusted annually under 45 CFR part 102 per day of noncompliance or per violation.”); 45 C.F.R. § 102.3 (adjusting penalty range for 42 C.F.R. § 493.1834(d)(2)(ii) to $99-$5,936 for CMPs assessed in 2016); *see also* 81 Fed. Reg. 61,538, 61,547 (Sept. 6, 2016).

**9. Due to the revocation of Petitioner’s CLIA certificate, Petitioner’s owner and operator, Banerjee, and Petitioner’s laboratory director W. Nguyen, are prohibited from owning, operating, or directing a laboratory subject to CLIA for two years effective the date of this decision pursuant to 42 U.S.C. § 263a(i)(3). **

**a. Facts**

At all times relevant to this proceeding, Banerjee has been Petitioner’s sole owner and operator. W. Nguyen became Petitioner’s laboratory director beginning October 15, 2015. Jt. Stip. ¶¶ 2, 5; W. Nguyen Decl. at 2-4 ¶¶ 5, 10; P. Ex. 7 at 1 (W. Nguyen’s

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resume states he became laboratory director and consultant in August 2015); P. Ex. 11 at 2; P. Ex. 20 at 2 ¶ 3. Mohammed Attaelmannan26 was listed in CMS records as Petitioner’s laboratory director prior to October 2015, and during part of the period covered by the survey from January 16, 2015 through January 7, 2016. Sabino Decl. I at 2 ¶ 8-9; CMS Ex. 1 at 1-9, CMS Ex. 2 at 2.

The CMS notice imposing sanctions in this case dated November 22, 2016, was addressed to W. Nguyen as Petitioner’s Director. CMS Ex. 10 at 1. The notice advised Petitioner and W. Nguyen of the right to request an ALJ hearing. The notice also advised that the two-year prohibition of 42 U.S.C. § 263a(i)(3) applied to Petitioner’s owner and “laboratory director at the time of the survey.” CMS Ex. 10 at 6. There is no evidence CMS notified Attaelmannan of the imposition of sanctions; that as a laboratory director during the period examined by the survey he too may be subject to the two-year prohibition; or that he had the right to challenge the determination of CMS to revoke Petitioner’s CLIA certificate.

**b. Analysis**

CLIA provides that “[n]o person who has owned or operated a laboratory which has had its certificate revoked may, within 2 years of the revocation of the certificate, own or operate a laboratory for which a certificate has been issued under this section.” 42 U.S.C. § 263a(i)(3). As discussed in section II.A of this decision, the regulations create a rebuttable presumption that a laboratory director is an operator of the laboratory within the meaning of the regulations and CLIA. 42 C.F.R. §§ 493.2, 493.1403, 493.1405, 493.1407, 493.1441, 493.1443, and 493.1445. 

The Secretary’s regulations and 42 U.S.C. § 263a(i)(3) do not provide any due process such as notice and an ALJ hearing related to the application of the two-year prohibition. However, the Board has favorably commented upon prior ALJ decisions that have concluded that a laboratory director, if an operator and allegedly subject to 42 U.S.C. § 263a(i)(3), must be given notice and an opportunity for a hearing to challenge the revocation of the laboratory’s CLIA certificate. *Sentinel Med. Labs, Inc.* DAB No. 1762 at 11 n.6. I agree that if a laboratory director is treated as an operator subject to 42 U.S.C. § 263a(i)(3) that laboratory director must be given notice and the opportunity

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to challenge the revocation of the laboratory CLIA certificate based on the same rationale discussed in detail in my decision in *James Bryant, MD*, DAB CR1080 (2003). 

CMS failed to notify Attaelmannan of the revocation of Petitioner’s CLIA agreement; the possible application to him of the two-year prohibition of 42 U.S.C. § 263a(i)(3); and the right to challenge the revocation. Accordingly, I conclude Attaelmannan is not subject to the two year prohibition of 42 U.S.C. § 263a(i)(3).

Banerjee, Petitioner’s sole owner and operator, is subject to the two-year ban on owning or operating a laboratory subject to CLIA due to the revocation of Petitioner’s CLIA certificate. Petitioner has offered no evidence to rebut the presumption that W. Nguyen, Petitioner’s laboratory director during the period covered by the survey, was also an operator of Petitioner. CMS notified Petitioner and W. Nguyen of the imposition of sanctions and the application of 42 U.S.C. § 263a(i)(3). I conclude that W. Nguyen is also subject to the two-year prohibition.

**10. Other defenses and issues raised by Petitioner are without merit or are not within my authority to decide.**

Petitioner argues that CMS has no legal basis to impose sanctions on Petitioner because Petitioner’s CLIA certificate expired on November 25, 2016, prior to the effective date of the proposed revocation. P. Br. at 7; P. Supp. Br. at 2, 5, 9-10. This argument ignores pertinent regulations. Generally, a laboratory’s registration certificate is valid for two years. 42 C.F.R. § 493.45(e)(1). However, the laboratory’s registration certificate can remain effective beyond the two-year period. Of relevance here, if the laboratory timely requests a hearing to challenge CMS’s action to suspend or revoke its registration certificate based on a finding that it is not in compliance with CLIA conditions of participation, the laboratory “retains its registration certificate or reissued registration certificate until a decision is made by an administrative law judge . . . .” 42 C.F.R. § 493.45(g). 

Petitioner’s registration certificate was issued on November 25, 2014. P. Ex. 4. Therefore, the certificate was still valid on November 22, 2016, when CMS notified Petitioner of its intent to impose sanctions on Petitioner based on its findings that Petitioner was not in compliance with CLIA conditions of participation. Petitioner timely requested a hearing to challenge CMS’s action and thereby retained its registration certificate pending my decision. 42 C.F.R. § 493.45(g). The registration certificate thus remained valid during the pendency of this case. Consequently, Petitioner’s argument that CMS was without authority to impose sanctions because Petitioner’s registration certificate expired is without merit.

Petitioner submitted a significant amount of evidence and argument that purportedly demonstrates that Surveyor Sabino, the state agency, and CMS were biased against

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Petitioner and acted “capriciously.” W. Nguyen Decl. at 5-6 ¶¶ 14-16; Banerjee Decl. II; P. Br. at 3-6, 8; P. Reply at 2, 5-7, 20-23. Petitioner and Dr. Banerjee also allege various inaccuracies in Surveyor Sabino’s declarations and attack his survey methods and credibility. Banerjee Decl. II; P. Br. at 3-6, 8; P. Reply at 2, 5-7, 9, 13, 21-23. CMS argues that these allegations are both irrelevant as a legal matter and meritless as a factual matter. CMS Br. at 18. At most, Petitioner’s allegations of surveyor bias and survey irregularities might impact how much weight should be assigned to Surveyor Sabino’s declarations. Otherwise, allegations of possible bias and irregularities are of no relevance as I review the allegations of noncompliance de novo and I am not bound by the findings of the surveyor, the state agency, or CMS related to whether not there is a basis for the imposition of sanctions. As the foregoing discussion shows, I have determined during my de novo review that Petitioner did not comply with a CLIA condition of participation, and there is a basis for the sanctions imposed on Petitioner by CMS. To the extent I relied at all on Surveyor Sabino’s declarations and documents he generated during the survey, I relied only on statements and documents that either were not subject to dispute or were corroborated by Petitioner’s documents and testimony and were therefore credible and entitled to weight. I conclude that Petitioner’s accusations of surveyor bias and survey irregularities, whether well founded or not, simply are irrelevant.

Petitioner also argues that, pursuant to 42 C.F.R. §§ 493.1812, 493.1814, and 493.1816, it was entitled to a 12-month period to correct its standard or non-immediate jeopardy condition-level deficiencies before CMS could revoke its CLIA certificate. P. Reply at 5; P. Supp. Br. at 2-3, 7. Petitioner misreads the regulations. In a case like this, where a condition-level deficiency that does not pose immediate jeopardy exists, the applicable regulation is 42 C.F.R. § 493.1814. This regulation explicitly permits CMS to take immediate action against a laboratory’s CLIA certificate, including suspending, limiting, or revoking the certificate, when the laboratory has condition-level deficiencies that do not pose immediate jeopardy, subject to the laboratory’s right to receive proper notice of the action. 42 C.F.R. §§ 493.1814(a)(2), 493.1844(h); 42 C.F.R. § 493.1806(a), (b) (providing that CMS may suspend, limit, or revoke a laboratory’s CLIA certificate if the laboratory “is out of compliance with one or more CLIA conditions”). CMS is not required to take such action immediately, but if it does not, it must impose alternative sanctions, such as a directed plan of correction or CMP, on the laboratory. 42 C.F.R. §§ 493.1814(a)(3); 493.1806(c). CMS has discretion to impose only alternative sanctions for condition-level noncompliance that does not pose immediate jeopardy, but only for 12 months. If the laboratory does not correct all condition-level deficiencies within 12 months, then CMS is required to impose principal sanctions. 42 C.F.R. § 493.1814(b). Far from giving the laboratory the right to a 12-month correction period, the regulation limits CMS’s discretion in imposing alternative sanctions for condition-level deficiencies that do not pose immediate jeopardy. If a laboratory has only standard-level deficiencies, which is not Petitioner’s case, sanctions are not imposed initially, but the laboratory must correct the deficiencies within 12 months or CMS is required to impose principal sanctions. 42 C.F.R. § 493.1816.

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Finally, in its request for relief from the sanctions proposed by CMS, Petitioner raises arguments that could construed to request equitable relief. P. Br.; P. Reply. I do not have authority to provide equitable relief. *See US Ultrasound*, DAB No. 2302 at 8 (2010). Broadly read, Petitioner’s arguments could also be construed invoke the principle of equitable estoppel, which if available at all, is available only in cases where the non-federal party shows both “‘that the traditional elements of estoppel are present (i.e., a factual misrepresentation by the government, reasonable reliance on the misrepresentation by the party seeking estoppel, and harm or detriment to that party as a result of the reliance)’ and that the government’s employees or agents engaged in ‘affirmative misconduct.’”*Southlake Emergency Care Ctr.*, DAB No. 2402 at 8 (2011) (quoting *Oaks of Mid City Nursing & Rehab. Ctr.*, DAB No. 2375 at 31 (2011)). Petitioner has failed to demonstrate that it reasonably relied to its detriment on any alleged misrepresentations by the surveyor, the state agency, or that there was any affirmative misconduct by the government employees or agents.

### III. Conclusion

For the foregoing reasons, Petitioner’s CLIA certificate is revoked, effective the date of this decision and CMS may proceed to collect the CMP imposed. Sanjoy Banerjee, MD and William Nguyen, MD are subject to the two-year prohibition of 42 U.S.C. § 263a(i)(3).

Keith W. SickendickAdministrative Law Judge

                                              1. References are to the 2016 revision of the Code of Federal Regulations (C.F.R.), which was in effect at the time of the November 22, 2016 CMS notice of sanctions, unless otherwise indicated.  The 2016 revision of 42 C.F.R. pt. 498 was unchanged from the 2015 revision in effect at the time of the survey. 
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                                                  2. On June 29, 2017, CMS filed an amended version of CMS Ex. 20, and that is the version I admit as evidence and consider in making this decision.  CMS also filed with its prehearing brief appendices A, B, and C, which are extracts from CMS policy, the regulations, and a Board decision.  Appendices A, B, and C were submitted in support of the CMS brief; they were not marked and offered as evidence and are not admitted as such. 
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                                                  3. Departmental Appeals Board Electronic Filing System (DAB E-File). 
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                                                  4. Counsel should ensure that all documentary evidence including affidavits and declarations are properly marked and offered as exhibits for ease of reference as required by the Civil Remedies Division Procedure (CRDP) § 14(c) and the Prehearing Order. 
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                                                  5. Petitioner failed to properly mark its exhibits as required by the CRDP § 14(c).  Prehearing Order at 2-3.  However, Petitioner’s incorrect marking of its exhibits posed little risk for confusion and no corrective action was required.  Petitioner filed no document marked P. Ex. 23. 
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                                                  6. Petitioner refers to some of the declarations as affidavits but none are sworn before an officer authorized to administer an oath such as a notary, which is generally required for an affidavit.  The declarations are treated as declarations as they are executed substantially in the form required by 28 U.S.C. § 1746 by stating that they are executed subject to penalty for perjury. 
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                                                  7. I infer the objection is to Banerjee Decl. II rather than Banerjee Decl. I because the objection refers to paragraph 104 and Banerjee Decl. I has only 9 paragraphs.  I find no specific objection by CMS to Banerjee Decl. I, and I find no reason not to admit and consider Banerjee Decl. I. 
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                                                  8. Pub. L. No. 100-578, § 2, 102 Stat. 2903, 2903-15 (1988) (amending sec. 353 of the Public Health Service Act, Pub. L. No. 78-410, 102 Stat. 682 (1944) (as added by the Clinical Laboratory Improvement Act of 1967, Pub. L. No. 90-174, § 5, 81 Stat. 533, 536-39 (1967))) (codified at 42 U.S.C. § 263a).  
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                                                  9. “Credible evidence” is evidence that is worthy of belief.  Black’s Law Dictionary 596 (8th ed. 2004).  The “weight of evidence” is the persuasiveness of some evidence compared to other evidence.  Id. at 1625. 
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                                                  10. The evidence shows Petitioner hired T. Nguyen on either October 15 or 17, 2015.  CMS Ex. 2 at 4, 31 (Laboratory Personnel Report dated October 15, 2015 listing T. Nguyen); CMS Ex. 2 at 97 (Laboratory Competency Evaluation lists her date of hire as October 17, 2015).  The exact date she was hired has no impact on the outcome in this case. 
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                                                  11. CMS Ex. 3 at 1 contains two emails from Petitioner’s former laboratory director, Mohammed Elmannan (aka Mohammed Attaelmannan) to Surveyor Sabino.  The remaining 14 pages of CMS Ex. 3 are Petitioner’s plan of correction and a resume or curriculum vitae of W. Nguyen.  CMS Ex. 3 at 2-15.  The email dated June 8, 2016, refers to “over 100 pages of supporting documentation (too large for email)” that were mailed to the surveyor.  CMS Ex. 3 at 1.  CMS Ex. 5 consists of 470 pages of documents and there is no dispute those documents are from the records of Petitioner.  When the records were obtained by CMS or the surveyor is not evident from the face of the documents, and Surveyor Sabino did not state when the documents in CMS Ex. 5 were received from Petitioner in either of his declarations.  Because many of the documents in CMS Ex. 5 are dated after the survey (e.g., CMS Ex. 5 at 38-40, 43-45, 48, 50, 247, 252-59, 269-302, 317-18, 320-44, 358, 360, 362, 364, 366, 408, 422-27, 442-46) I infer that they were  received as part of Petitioner’s plan of correction on or about June 8, 2016, or later based on the dates on some of the documents.  On July 27, 2016, Petitioner sent Surveyor Sabino another copy of a plan of correction by email.  CMS Ex. 7 at 1. 
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                                                  12. Surveyor Sabino states in his declaration that Petitioner’s staff told him they were reporting test results for carisoprodol.  Sabino Decl. I at 10 ¶ 38.  Petitioner seizes Surveyor Sabino’s statement and submits evidence and argument in an attempt to damage Surveyor Sabino’s credibility.  Banerjee Decl. II at 14 ¶ 31-33; P. Reply at 9, 11.  However, as discussed in more detail hereafter, it is the testing for carisoprodol not the reporting of the results of that testing that is subject to CLIA and whether Petitioner was actually reporting carisoprodol results need not be resolved.  Furthermore, Petitioner has presented no testimony of staff that they did not tell Surveyor Sabino that the results of carisoprodol testing were not being reported. 
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                                                  13. Split sample testing involves splitting a test sample.  One part is tested by the laboratory, the other part is sent to another laboratory with similar instruments to conduct the same testing.  The results are then compared to determine whether the first laboratory’s test results are valid.  Sabino Decl. I at 11 ¶ 41. 
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                                                  14. The evidence does not show how the comparative approach Petitioner used in October 2016 differs from split sample testing. 
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                                                  15. Petitioner presented reports of analysis of the accuracy of testing performed by Petitioner’s BioLis 24i equipment.  P. Ex. 1E at 1-22.  Petitioner also presented evidence dated October 21, 2016, 10 months after the survey was completed on January 7, 2016, comparing the results of Petitioner’s testing for the carisoprodol analyte with the results of testing by another laboratory.  P. Ex. 1E at 23.  The evidence does not show and Petitioner does not argue that the results reflected in P. Ex. 1E at 23 were obtained through split sample testing, the methodology Petitioner adopted as part of its QC policy and procedure to be used when no commercial proficiency testing was available.  Petitioner also does not assert that the comparative testing approach started before October 2016. 
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                                                  16. Only “[r]esearch laboratories that test human specimens but do not report patient specific results for the diagnosis, prevention or treatment of any disease or impairment of, or the assessment of the health of individual patients” are not required to have CLIA certificates.  42 C.F.R. § 493.3(a), (b)(2).  Petitioner has not shown that it was a CLIA-exempt research laboratory, and it offers no basis to conclude that a non-research laboratory that is otherwise subject to CLIA certification requirements may avoid those requirements as to some of its testing simply because that testing is purportedly for research use only. 
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                                                  17. I render no opinion on the adequacy of Petitioner’s policy as that issue is not raised by the allegations of the surveyor in the SOD. 
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                                                  18. The Federal Rules of Evidence, while not binding in this forum, provide useful guidance. 
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                                                  19. “Immediate jeopardy means a situation in which immediate corrective action is necessary because the laboratory’s noncompliance with one or more condition level requirements has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or to the health or safety of the general public.  This term is synonymous with imminent and serious risk to human health and significant hazard to the public health.”  42 C.F.R. § 493.2.  Immediate jeopardy is not alleged in this case. 
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                                                  20. Although the SOM does not have the force and effect of law, the provisions of the Act and regulations as interpreted in the SOM clearly do have such force and effect.  Ind. Dep’t of Pub. Welfare v. Sullivan, 934 F.2d 853 (7th Cir. 1991); Northwest Tissue Ctr. v. Shalala, 1 F.3d 522 (7th Cir. 1993).  Thus, while the Secretary may not seek to enforce the provisions of the SOM, he may seek to enforce the provisions of the Act or regulations as interpreted by the SOM. 
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                                                  21. Indeed, it appears that Petitioner’s confirmatory testing revealed some errors in Petitioner’s testing.  CMS Ex. 20 at 19-21.  Petitioner does not explain why it persisted in testing urine specimens but then sending them out for confirmation, unless Petitioner intended to rely on its results at least until confirmation could be obtained.  It is also not revealed whether Petitioner was billing for both its test and the confirmatory test; if not, it is difficult to imagine why Petitioner incurred expenses associated with running even its minimal laboratory, unless the results of its testing were actually useful for some purpose other than generating revenue. 
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                                                  22. Petitioner advocates this interpretation of 42 C.F.R. § 493.1844(d)(1).  P. Supp. Br. at 8. 
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                                                  23. This case offers a prime example of such an absurd result.  If I read the regulations to delay the effective date of the CMP to the date of my decision, the CMP in this case would be a nullity, because the termination of Petitioner’s CLIA certificate is effective the date of this decision and termination ends the accrual of the CMP. 
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                                                  24. Petitioner takes the position that the CMP, if authorized at all, would cease on January 21, 2017, because, in Petitioner’s view, that is the effective date of the revocation of its CLIA certificate.  P. Supp. Br. at 8, 10-11.  Although January 21, 2017 was the effective date CMS originally proposed to terminate Petitioner’s CLIA certificate (Jt. Stip. ¶ 15; CMS Ex. 10 at 4), as I have already discussed and concluded Petitioner’s CLIA certificate is revoked effective the date of this decision, not earlier. 
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                                                  25. A very reasonable concession, given that even a per-day CMP of $5,936 lasting from December 7, 2016 through March 2, 2017, or 86 days, totals more than half a million dollars and is likely to bankrupt Petitioner and become uncollectible. 
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                                                  26. Surveyor Sabino notes in his declaration that Attaelmannan used various names in submitting paperwork to CMS and the state agency, including Mohammed Elmannan, Mohammed A. Elmannan, Mohammed Attaelmannan, Mohammed Attaelmannan Ph.D., El Mannan Mohammed, Mohammed A. Atta Elmannan, and Mohammed Atta Elmannan.  Sabino Decl. II at 2 ¶ 7. 
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