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                              Justin Camillo and ACN Medical Labs, DAB CR5861 (2021)
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Justin Camillo and ACN Medical Labs, DAB CR5861 (2021)








  
  
    

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





Justin Camillo and ACN Medical Labs,
(CLIA ID No. 26D2147784),
Petitioner,

v.

Centers for Medicare & Medicaid Services.
Docket No. C-19-747Decision No. CR5861April 29, 2021

        
              
    

      DECISION

Petitioner ACN Medical Labs was a clinical laboratory, located in Chesterfield, Missouri, that was certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 42 U.S.C. § 263a.  Petitioner Justin Camillo was the laboratory director.  The Centers for Medicare and Medicaid Services (CMS) determined that the laboratory failed to meet multiple condition-level requirements for CLIA certification and imposed sanctions, including revoking the lab’s CLIA certificate.

Petitioners appealed.  CMS has filed motions to dismiss and, in the alternative, for summary judgment.  Petitioners responded with their own motion for summary judgment.

For the reasons discussed below, I decline to dismiss Petitioners’ appeal.

I also find that CMS has come forward with evidence establishing facts showing that Petitioner ACN did not comply with Medicare conditions of certification and is entitled to judgment as a matter of law.  Petitioners have not presented admissible evidence of specific facts showing that a dispute of material fact exists.  Thus, the undisputed evidence establishes that Petitioner ACN was not in compliance with all Medicare conditions of certification, and CMS was authorized to impose sanctions.  I therefore grant CMS’s motion for summary judgment and deny Petitioners’.

Page 2

Background

**Statutory and regulatory background.**In order to ensure the accuracy and reliability of laboratory tests and thus the health and safety of those tested, CLIA creates a federal certification process for laboratories that perform clinical diagnostic tests on human specimens.  Public Law No. 100-578, *amending* section 353 of the Public Health Service Act, *codified at* 42 U.S.C. § 263a; *see*H.R. Rep. No. 100-899 at 8, *reprinted in* 1988 U.S.C.C.A.N. 3828, 3829.

To be certified, a laboratory must meet the conditions of certification set out in the statute and regulations.  42 U.S.C. § 263a(f); 42 C.F.R. part 493.  A condition represents a major division of laboratory services or required environmental protections.  Each condition is broken down into more detailed standards that laboratories must meet to be compliant with the overall condition.  42 C.F.R. § 493.2; *Victor Valley Comty. Hosp./ Clinical Lab. and Tomasz Pawlowski, M.D.*, DAB No. 2340 at 4 (2010); *White Lake Family Med., P.C.*, DAB No. 1951 at 2-3 (2004); *RNA Labs*, DAB No. 1820 at 3 (2002).  If standard-level deficiencies are of such character as to adversely affect the health and safety of patients, the lab is not in compliance with the overall condition.  42 C.F.R. § 488.24(b).  Thus, noncompliance with even one standard, if sufficiently serious, may justify finding a condition-level deficiency.  *RNA Labs*, DAB No. 1820 at 3; *Edison Med. Labs Inc.*, DAB No. 1713 at 2-3 (1999).

The statute gives the Secretary of Health and Human Services broad enforcement authority, which the Secretary has delegated to CMS.  CMS or its designee conducts periodic inspections to determine a laboratory’s compliance with CLIA requirements.  42 C.F.R. § 493.1777.  If it determines that a lab does not comply with one or more CLIA conditions, CMS may suspend or revoke its CLIA certificate (principal sanction), and it may impose alternative sanctions (directed plan of correction, state monitoring, civil money penalty).  42 U.S.C. §§ 263a(h)(2), 263a(i)(1); 42 C.F.R. §§ 493.1804(b)(1), 493.1806, 493.1807; *The Malaria & Rheumatic Disease Research Inst., Inc.*, DAB No. 2872 at 4 (2018) (citing *Ward Gen. Practice Clinic*, DAB No. 1624 at 2 (1997)); *HRT Laboratory, Inc.*, DAB No. 2118 (2007).

**CMS’s determination**.  Here, on December 17, 2018, the Missouri Department of Health & Senior Services (state agency) completed a complaint investigation/survey at the ACN lab and found multiple condition-level deficiencies, specifically:

42 C.F.R. § 493.801 (Tag D2000 – enrollment and testing of samples);
	42 C.F.R. § 493.1250 (Tag D5400 – analytic systems), including standard-level violations of 42 C.F.R. §§ 495.1251(b), 493.1252(a), 493.1252(b), 493.1253(b)(1), 493.1253(b)(2), 493.1256(d)(10), (g), and 493.1283(a);Page 3

42 C.F.R. § 493.1403 (Tag D6000 – labs performing moderate complexity testing; and Tag D6014 – lab director for labs performing moderate complexity testing), including standard-level violations of 42 C.F.R. § 493.1407(e)(3)(iii), (e)(5), (e)(8), and (e)(11);
	42 C.F.R. § 493.1409 (Tag D6033 – technical consultant for labs performing moderate complexity testing), including standard-level violations of 42 C.F.R. § 493.1411;
	42 C.F.R. § 493.1421 (Tag D6063 – testing personnel for labs performing moderate complexity testing), including standard-level violations of 42 C.F.R. § 493.1423(b)(1)-(4)(i);
	42 C.F.R. § 493.1441 (Tag D6076 – lab director for labs performing high complexity testing), including standard-level violations of 42 C.F.R. § 493.1443;
	42 C.F.R. § 493.1447 (Tag D6108 – technical supervisor for labs performing high complexity testing), including standard-level violations of 42 C.F.R. § 493.1449;
	42 C.F.R. § 493.1459 (Tag D6141 – general supervisor for labs performing high complexity testing); and
	42 C.F.R. § 493.1487 (Tag D6168 – testing personnel for labs performing high complexity testing).CMS Ex. 1; CMS Ex. 2 at 1-2.  CMS concluded that the lab’s deficiencies posed immediate jeopardy to patient health and safety.  CMS Ex. 2 at 1; *see* 42 C.F.R. § 493.2 (defining immediate jeopardy as “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.”).

In a letter, dated December 31, 2018, CMS advised Petitioners of the survey findings and its conclusion that the lab’s deficiencies posed immediate jeopardy.  The notice also advised Petitioners of proposed sanctions, including suspending and revoking the lab’s CLIA certificate, cancelling all Medicare and Medicaid payments, and imposing a civil money penalty (CMP) of $19,787 for each day of noncompliance.  CMS Ex. 2 at 1-2.

CMS gave Petitioners ten days (or until January 10, 2019) to submit a credible allegation of compliance and acceptable evidence documenting that the immediate jeopardy had been removed and that action had been taken to correct the condition-level deficiencies.

Page 4

CMS Ex. 2 at 2.  The letter explained the type of information and documentation required and warned that, if the lab failed to correct, CMS would impose the proposed sanctions.  CMS Ex. 2 at 3.

Petitioners submitted a plan of correction, dated January 7, 2019, which CMS determined was unacceptable.  CMS Exs. 3, 4.  In a letter, dated March 1, 2019, CMS detailed the plan’s multiple problems and advised Petitioners that the lab’s CLIA certificate would be revoked effective May 1, 2019, and that the CMP of $19,787 per day would continue until the lab met all condition-level requirements or its CLIA certification was revoked.  CMS Ex. 4 at 15.

The March 1 letter also advised Petitioners of their appeal rights, citing the governing regulations:  42 C.F.R. § 493.1844(a)(1)-(2) and 42 C.F.R. §§ 498.40 through 498.78.  CMS Ex. 4 at 15-16.  The letter warned:

The request for hearing must contain a statement as to the specific issues and findings of fact and conclusions of law in this determination with which the laboratory disagrees and the basis for the laboratory’s contention that the specific issues and/or findings and conclusions are incorrect.

CMS Ex. 4 at 16.

In a follow-up letter, dated March 14, 2019, CMS imposed additional sanctions and directed a plan of correction.  CMS Ex. 5.  Thereafter, Petitioners withdrew from the lab’s accrediting program and closed the lab.  CMS Ex. 6.

**The appeal**.  In a letter dated April 29, 2019, Petitioners appealed CMS’s determination “that the plan of correction and rebuttal of alleged violations was not a credible allegation of compliance.”  The appeal also listed Petitioners’ multiple grievances against one of the surveyors, the survey process generally, and CMS’s review process.  It did not mention any of the cited deficiencies.

CMS now files its motion to dismiss or, in the alternative, motion for summary judgment and memorandum in support (CMS Br.).  Petitioners counter with their own motion for summary judgment (P. Br.).

**Exhibits.**  With its motion and brief, CMS submits ten exhibits (CMS Exs. 1-10).  With their response, Petitioners submit three exhibits (P. Exs. 1-3), including a handwritten statement from Steven Howard (P. Ex. 3).

CMS objects to my admitting P. Ex. 3 for several reasons:  1) it is untimely, and Petitioners have not shown good cause for its late submission, as required by my

Page 5

prehearing order (Acknowledgment and Pre-hearing Order at 4 ¶ 3 (May 8, 2019)); 2) although Petitioners effectively ask me to accept the written statement as witness testimony, it was not presented “in the form of an affidavit made under oath or as a written declaration” signed by the witness under penalty of perjury, as required by my pre-hearing order (Acknowledgment and Pre-hearing Order at 5 ¶ 7); and 3) the statement is irrelevant.

Any one of CMS’s objections justifies my not admitting the statement.  Petitioners have had ample opportunity to respond to CMS’s objections by showing good cause for the late submission and by substituting a conforming declaration.  They have not done so.  Moreover, I agree with CMS that the proposed testimony is irrelevant.  In it, Mr. Howard alleges surveyor bias, based on experiences unrelated to this case.  And even if his charges related to surveyor performance here, the Departmental Appeals Board has repeatedly rejected, as irrelevant, attacks based on surveyor bias or survey performance.  *Liberty Lab., Inc.*, DAB No. 2562 at 3 (2014).  For all of these reasons, I find P. Ex. 3 inadmissible.

Issues

As a threshold matter, I first consider CMS’s motion to dismiss:  Does Petitioners’ appeal raise an issue that I have the authority to review?

I then consider whether summary judgment is appropriate in this case.

On the merits, the sole issue before me is:  Did Petitioner comply with all CLIA conditions of certification?

Because I find at least one condition-level deficiency, CMS may impose sanctions (42 C.F.R. § 493.1804(b)), and its choice of sanctions, including the amount of a civil money penalty, is not an initial determination reviewable in this forum.  42 C.F.R. § 493.1844(c)(4).

Discussion

***1. Embedded in Petitioners’ submissions are challenges to CMS’s determinations that are reviewable in this forum; I therefore decline to dismiss this case.1***

A CLIA-certified laboratory may request a hearing to challenge an “initial determination.”  42 C.F.R. § 493.1844(a).  Initial determinations include:  revocation of the lab’s CLIA certificate; imposition of alternative sanctions (which includes CMPs);

Page 6

and cancellation of the lab’s approval to receive Medicare payments.  42 C.F.R. § 493.1844(b).  CMS mails notice of an initial determination to the affected party, setting forth the basis for and the effect of its determination and the party’s right to a hearing.  42 C.F.R. § 498.20(a)(1); *see* 42 C.F.R. §§ 498.3, 498.5.

The affected party may then challenge the determination by filing an appropriate hearing request within sixty days of its receiving the notice.  42 C.F.R. § 498.40.  The request for hearing *must* identify the specific issues and the findings of fact and conclusions of law with which the affected party disagrees and must specify the bases for contending that the findings and conclusions are incorrect.  42 C.F.R. § 498.40(b).

Notwithstanding the apparently uncompromising language of the regulation, the Board has instructed Administrative Law Judges to “exercise [their] discretion” to accept as “adequate to preserve” a right to hearing requests that fail to “[i]dentify the specific issues and the findings of fact and conclusions of law with which the affected party disagrees” and fail to “[s]pecify the basis for contending that the findings and conclusions are incorrect.”  *Carlton at the Lake*, DAB No. 1829 (2002); *Alden Nursing Ctr. – Morrow*, DAB No. 1825 (2002).  The specificity missing from a party’s initial hearing request may then be supplied through subsequent record development.  But a petitioner must eventually satisfy the regulation by articulating the bases for its appeal.

Here, Petitioners’ hearing request addresses none of the December 17, 2018 deficiency findings.  Instead, it appeals CMS’s determination that “the plan of correction and rebuttal of alleged violations was not a credible allegation of compliance.”  The request also attacks the surveyors as biased and alleges a conspiracy between the state and CMS to violate the civil rights of Petitioners and others.  These are not issues that I have the authority to review.  The determination to reject a plan of correction is not listed as an initial determination and is therefore not reviewable.  42 C.F.R. §§ 498.3(b), 498.5; *HRT Lab.,*DAB No. 2118 at 11; *Hermina Traeye Mem. Nursing Home*, DAB No. 1810 at 13 (2002) (in affirming the termination of a provider, the “ALJ properly concluded that he lacked authority to adjudicate the question of whether [CMS] abused its discretion in deciding to reject the [plan of correction].”).

Nor may I review attacks leveled against the surveyors or the conduct of the survey.  C*omprehensive Prof’l Home Visits*, DAB No. 1934 at 13 (2004) (“‘[T]he appeals process is not intended to review the conduct of the survey but rather to evaluate the evidence of compliance regardless of the procedures by which the evidence was collected.’ . . .  Consequently, the arguments concerning the surveyor’s alleged attitude and knowledge of program requirements are unavailing.” (quoting *Beechwood Sanitarium*, DAB No. 1906 at 44 (2004))); *see Nightingale Home Healthcare, Inc.*, DAB No. 2784 at 11 (2017) (“[E]vidence about the survey process is not relevant where the provider ‘has not shown how any alleged defects in the conduct of the survey . . . undercut or impeach the evidence of noncompliance offered by CMS.’”);  *Angel Kidney Care of Inglewood, Inc.*,

Page 7

DAB No. 2795 at 10-11 (2017) (holding that an ALJ’s de novo evaluation of objective evidence corrects any alleged surveyor bias).  I have no authority to review Petitioners’ Constitutional challenges.

Although their hearing request plainly does not meet the regulation’s specificity requirements and fails to raise an issue that I have the authority to review, consistent with the Board’s decisions in *Carlton at the Lake* and *Alden Nursing*, Petitioners had additional opportunities to assert a reviewable basis for their appeal.  Petitioners’ subsequent submissions repeat the allegations of the hearing request:  that the surveyors and CMS reviewers are biased against Petitioner Camillo and his labs (P. Br. at 1-3); and that CMS wrongfully rejected their plans of correction.  P. Br. at 3-4.

Although much of Petitioners’ submission is jumbled and difficult to parse out, I find in it challenges to some of CMS’s specific findings:  that it was not enrolled in a proficiency testing program; that it lacked policies and procedures; that its staff were not qualified for their positions; that it was not following manufacturers’ instructions for storing specimens before testing.2
  Those challenges are reviewable, and I therefore decline to dismiss this appeal.  However, as discussed below, Petitioners submit virtually no admissible evidence to support their challenges.

***2. CMS is entitled to summary judgment because the undisputed evidence establishes that the laboratory did not comply with each and every condition of certification.***3

**Summary judgment**.  Summary judgment is appropriate if a case presents no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law.  *Bartley Healthcare Nursing and Rehab.*, DAB No. 2539 at 3 (2013) (citing*Celotex Corp. v. Catrett*, 477 U.S. 317, 322-25 (1986)); *Ill. Knights Templar Home*, DAB No. 2274 at 3-4 (2009), and cases cited therein.

Page 8

The moving party may show the absence of a genuine factual dispute by presenting evidence so one-sided that it must prevail as a matter of law or by showing that the non‐moving party has presented no evidence “‘sufficient to establish the existence of an element essential to [that party’s] case, and on which [that party] will bear the burden of proof at trial.’”  *Livingston Care Ctr. v. Dep’t of Health & Human Servs.,*388 F.3d 168, 173 (6th Cir. 2004) (quoting *Celotex Corp. v. Catrett*, 477 U.S. at 322).  To avoid summary judgment, the non-moving party must then act affirmatively by tendering evidence of specific facts showing that a dispute exists.  *Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,*475 U.S. 574, 586 n.11 (1986); *Vandalia Park,*DAB No. 1939 (2004); *Lebanon Nursing & Rehab. Ctr.,*DAB No. 1918 (2004); *Crestview Parke Care Ctr*., DAB No. 1836 at 5 (2002).

Here, Petitioners’ appeal survives CMS’s motion to dismiss because it raises issues that are reviewable in this forum.  However, to prevail, it must provide more than general denials and unsupported assertions; it must identify *specific* *evidence* demonstrating a material fact is in dispute.  *Shah v. Azar*, 920 F.3d 987, 995 (5th Cir. 2019); *Forsyth v. Barr*, 19 F.3d 1527, 1533 (5th Cir. 1994); *Pearsall Nursing & Rehab.*, DAB No. 2692 at 7 (2016) (affirming summary judgment where Petitioner “refers broadly to ‘the evidence presented in [its] [r]esponse,’” but “identifies no specific evidence relevant to the material facts.”); *Ill. Knights Templar*, DAB No. 2274 at 4 (finding that the non‐moving party must furnish admissible evidence of a dispute concerning a material fact); *Livingston Care Ctr*., DAB No. 1871 at 5 (2003),*aff’d*,*Livingston Care Ctr. v. Dep’t of Health & Human Servs.,*388 F.3d 168.  The non-moving party must also show more than “‘some metaphysical doubt as to the material facts.’”  *W. Tex. LTC Partners, Inc.*, DAB No. 2652 at 6 (2015), *aff’d, W. Tex. LTC Partners, Inc. v. U.S. Dep’t. of Health & Human Servs.*, 843 F.3d 1043 (5th Cir. 2016); *1866ICPayday.com L.L.C.*, DAB No. 2289 at 3 (2009) (quoting *Matsushita Elec. Indus. Co.*, 475 U.S. at 587).

Petitioners have proffered very little in the way of evidence.  In determining whether summary judgment is appropriate, I nevertheless examine that evidence and draw all *reasonable* inferences in the light most favorable to them.  *Brightview Care Ctr.*, DAB No. 2132 at 2, 9 (2007); *Livingston Care Ctr.*, 388 F.3d at 172; *Guardian Health Care Ctr.,*DAB No. 1943 at 8 (2004); *see also Brightview*, DAB No. 2132 at 10 (entry of summary judgment upheld where inferences and views of non-moving party are not reasonable).  However, drawing factual inferences in the light most favorable to the non‐moving party does not require that I accept the non-moving party’s legal conclusions.  *W. Tex. LTC Partners*, DAB No. 2652 at 6-7, 14-15; *cf. Guardian Health Care*, DAB No. 1943 at 11 (“A dispute over the conclusion to be drawn from applying relevant legal criteria to undisputed facts does not preclude summary judgment if the record is sufficiently developed and there is only one reasonable conclusion that can be drawn from those facts.”); *see Green Valley Health Care & Rehab. Ctr.*, DAB No. 2947 at 8 (2019) (quoting*Johnson v. Perez*, 823 F.3d, 701, 705 (D.C. Cir. 2016) (noting that a genuine factual dispute does not exist “when a putatively disputed body of evidentiary

Page 9

material could not, even assuming a sympathetic factfinder, reasonably support a finding crucial to the nonmoving party’s legal position.”).

Instead of actual evidence, Petitioners rely on the allegations of compliance asserted in the lab’s plan of correction.  *See*CMS Ex. 3.  Even a credible allegation of compliance (and no evidence suggests that these were credible) does not demonstrate that the lab complied with the conditions of certification.  *Malaria & Rheumatic Disease Research Inst.*, DAB No. 2872 at 14-15.

***a. Petitioner ACN did not comply with section 493.801—a condition of certification – because it was not enrolled in an approved proficiency testing program.***

A laboratory that holds a CLIA certificate may perform moderate and high complexity tests, but must participate in a proficiency testing program, as outlined in 42 C.F.R. part 493, subpart H.  Part 493 mandates that each laboratory enroll in an approved program that meets the specific criteria set out in subpart I of part 493.  42 C.F.R. § 493.801.  Failing to demonstrate that it participated in an approved proficiency testing program for any test the laboratory performs constitutes non-compliance with section 493.803(a).  *Malaria & Rheumatic Disease Research Inst.*, DAB No. 2872 at 13-14.
CMS determined that ACN was not enrolled in a proficiency testing program and presents evidence to establish that fact.  CMS Ex. 1 at 1-2 (Tag D2000); CMS Br. at 7, 13; CMS Ex. 7 at 2 (Sutterer Decl. ¶ 12).  Petitioners concede that the lab was not enrolled in a proficiency testing program, but assert that it should not have been required to enroll because the lab began testing in October 2018, when no testing events were scheduled for chemistry or immunology.  P. Br. at 4; *see* P. Ex. 2 at 1.

It is undisputed that the lab began testing patient specimens on October 15, 2018.  CMS Ex. 7 at 2 (Sutterer Decl. ¶ 10); CMS Ex. 8 at 20; P. Br. at 4.  It is also undisputed that, as of December 17, 2018, the lab had not enrolled in a proficiency testing program.  Petitioners cite no authority (and I am aware of none) for the proposition that it was not required to enroll in a program until the actual testing events began.  P. Br., *passim*.  Petitioner ACN is no different than any other new laboratory that begins to operate between proficiency testing events (which probably includes most new labs).  The regulation is unambiguous:  all CLIA-certified labs must enroll.  There is no “new lab” exception to this requirement.

That the lab was new is an ongoing theme in Petitioners’ defenses.  They offer no support for their argument that a new lab should not be subject to all of the CLIA requirements.  Those requirements are in place to protect the health and safety of those tested, and individuals whose samples are tested in a new lab need the protections afforded by CLIA just as much as those whose samples are tested in more established labs.

Page 10

Petitioner ACN’s failure to enroll in a proficiency testing program puts it out of compliance with section 493.803, and this condition-level deficiency, by itself, justifies CMS imposing sanctions.  42 C.F.R. § 493.1806(a); *Malaria & Rheumatic Disease Research Inst.*, DAB No. 2872 at 4; *Ward Gen. Practice Clinic*, DAB No. 1624 at 2.

***b. Because Petitioner ACN did not adequately monitor and evaluate its analytic systems, it did not comply with section 493.1250 – a condition of certification.***

With limited exceptions not applicable here, a lab that performs non-waived testing must meet pertinent analytic systems requirements.  It must monitor and evaluate the overall quality of its analytic systems and correct identified problems for each specialty and subspecialty of testing performed.  42 C.F.R. § 493.1250.  Among the standard-level requirements ACN did not meet:

**42 C.F.R. § 493.1251(b) (Tag D5403)**.  The lab must have a written procedure manual for all the tests, assays, and examinations it performs.  The manual must be available to, and followed by, laboratory personnel.  Among other requirements, the manual must include instructions for collecting and preparing specimens, the reportable range for test results, and reference intervals (normal values).  “Reference intervals” (normal values) refers to the range of values deemed normal for a physiologic measurement in healthy people. 42 C.F.R. § 493.2; CMS Ex. 10 at 2 (Collins Decl. ¶ 8.a.i).

Lab staff apparently produced some documents, but fell short of producing the comprehensive manual that was required.  According to Petitioners, the “manuals in question” were not at the lab at the time of the survey; they were with Steven Howard and Petitioner Camillo, “being reviewed and modified.”  Petitioners argue that they were not required to keep the manuals at the lab because no testing occurred on the day of the survey.  P. Br. at 4 ¶ 2.   The regulations say otherwise:  “A laboratory must have all records and data accessible and retrievable within a reasonable time frame, *during the course of the inspection*.”  42 C.F.R. § 493.1773(c) (emphasis added).

The surveyors nevertheless reviewed what staff identified as the lab’s written procedures, although the record suggests that these were not part of a proper manual.  In any event, the procedures produced were inadequate.  They did not contain cutoff values – the value indicating a positive versus negative result – for seven analytes4
 in the drug screen panel.  ACN’s lab consultant confirmed that the cutoff values were not there and explained that the lab’s procedure manual was in “progress.”  CMS Ex. 7 at 3 (Sutterer Decl. ¶ 12.b.i); CMS Ex. 9 at 2 (Roling Decl. ¶ 9.a.i).

Page 11

Here, Petitioners do not present evidence, such as testimony from the lab consultant, that suggests a dispute about this.  Indeed, they agree that their procedure manual was not in the lab and that it was not in a final form.  Nevertheless, they characterize the surveyor notes on this issue as inconsistent (P. Br. at 5 ¶ 10); however, they do not cite to the notes, point out any specific inconsistencies, or explain why such purported inconsistencies would relieve the lab of the regulatory requirement.

Petitioners also rely on their plan of correction, claiming that the lab had cutoff values for these analytes and that staff gave one of the surveyors package inserts with the approved cutoff values.  P. Br. at 5 ¶ 10; CMS Ex. 3 at 2.  Multiple pages of package inserts do not satisfy the requirement that the manual provide specific ranges and reference intervals for each analyte.  As CMS noted when it rejected Petitioners’ plan of correction, “Exhibit #5 [the lab’s submission] consists of 29 pages of package inserts, which contain multiple cutoff values for specific analytes.”  Petitioners were required to “indicate specifically where in Exhibit #5 the cutoff values, in use at ACN Labs, approved by the laboratory director, for each analyte are located.”  CMS Ex. 4 at 4.
In any event, Petitioners have proffered none of the underlying documents, and their unsupported assertions that the documents exist are insufficient to establish a dispute of material fact that would preclude my entering summary judgment.  *Ill. Knights Templar*, DAB No. 2274 at 4.

**42 C.F.R. § 493.1252(a) (Tag D5411) and (b).**  The laboratory must test its systems, and the testing must follow the manufacturer’s instructions, in a manner that provides results within the lab’s stated performance specifications for each test system.  42 C.F.R. § 493.1252(a).

The lab must “define criteria for those conditions that are essential” for:  proper storage of reagents and specimens; accurate and reliable test system operation; and test result reporting.  The criteria must be consistent with the manufacturer’s instructions.  Testing conditions must be monitored and documented and, if applicable, include:  water quality, temperature, humidity, and protecting equipment from fluctuations and interruptions in electrical current that adversely affect patient test results and test reports.  42 C.F.R. § 493.1252(b).

CMS determined that ACN staff were not following the manufacturer’s instructions as required.  The surveyors observed three patient specimens for Patient “B” that were stored at room temperature.  One of those samples, which was to be tested for ALP (alkaline phosphatase, an enzyme related to liver disease or bone disorder), had been collected four days earlier.  CMS Ex. 7 at 3 (Sutterer Decl. ¶ 12.b.ii.1).  According to the manufacturer’s instructions, ALP is stable for four days when refrigerated, after which it should be frozen.  CMS Ex. 8 at 43.  The lab consultant confirmed that the sample had been “taken out” that morning.  CMS Ex. 7 at 3 (Sutterer Decl. ¶ 12.b.ii.1).

Page 12

Petitioners submitted to CMS as part of its plan of correction (but not here) test results and claimed that testing on the specimens had been conducted before the survey began, on December 13 or 14.  CMS Ex. 3 at 2; P. Br. at 5.  But the test results Petitioners produced were for different patients.  None were for Patient B.  CMS Ex. 4 at 5.  CMS asked Petitioners to produce evidence that Patient B was successfully tested for ALP.  *Id*.  It has not done so.

The surveyors also determined that lab staff did not follow the manufacturer’s instructions for storing and using a creatinine reagent (for testing kidney function).  According to the manufacturer, the refrigerated product was stable for seven days after opening.  CMS Ex. 8 at 21, 42.  ACN’s lab consultant acknowledged that staff continued to use a product that had been open for more than seven days.  CMS Ex. 7 at 3 (Sutterer Decl. ¶ 12.b.ii.2); CMS Ex. 8 at 16.

Again, Petitioners offer no evidence challenging CMS’s assertion that the lab consultant admitted using the reagent more than seven days after it was opened.  Instead, Petitioners deny that staff used the reagent after its expiration date, which was not the deficiency cited, and generally accuse the surveyors of failing to ask the right questions.  Petitioners admit that the lab director put expired reagents back into the analyzer, but insist that he did so for a legitimate purpose.  Petitioners submit no evidence in support of their assertions – neither the lab consultant nor the lab director offered testimony – but they argue that the burden is on CMS to submit “undisputable proof” that expired reagents were used.  P. Br. at 4.

It is not the surveyor’s job to figure out why a lab’s operations appear to be sub-standard.  If staff want to explain the lab’s less-than-adequate performance, they are free to do so.  But it is the *lab’s* responsibility to establish that, despite its evident deficiencies, it meets the conditions of certification.  *See* *Hillman Rehab. Ctr.*, DAB No. 1611 at 8 (1997);*Batavia Nursing & Convalescent Ctr.*, DAB No. 1904 (2004), *aff’d. Batavia Nursing & Convalescent Ctr. v. Thompson*, 129 F. App’x 181 (6th Cir. 2005); *Emerald Oaks*, DAB No. 1800 (2001).

**42 C.F.R. § 493.1253(b)(1) (Tag D5421)**.  Before reporting patient test results, a lab that introduces an unmodified FDA-cleared or approved test system must:  i) demonstrate that it can obtain performance specifications for accuracy, precision, and reportable range of test results for the test system, comparable to those established by the manufacturer; and ii) verify that the manufacturer’s intervals (normal values) are appropriate for the lab’s patient population.

Lab staff were unable to show verification of normal values for two of their analyzers (UniCel Dx1 600 immunoassay analyzer and DxC 700 AU chemistry analyzer).  The lab consultant confirmed that the lab had no such verifications.  CMS Ex. 10 at 2 (Collins

Page 13

Decl. ¶ 8.a.i).  Petitioners concede that the lab had not verified normal values but claim, again without support, that it was not required to do so because it was a new lab and lacked sufficient data.  P. Br. at 6; CMS Ex. 3 at 3.

I have already explained that there are no “new lab” exceptions to the regulatory requirements.  At a minimum here, ACN was required to produce its “initial comparative studies performed during validations.”  CMS Ex. 4 at 6.  It has produced no such documentation.

**42 C.F.R. § 493.1253(b)(2) (Tag D5423)**.  A lab that modifies an FDA-cleared or approved test system must, before reporting patient test results, establish, for each test system, performance specifications for:  i) accuracy; ii) precision; iii) analytical sensitivity; iv) “analytical specificity to include interfering substances”; v) reportable range of test results for the test system; vi) reference intervals (normal values); and vii) any other performance characteristic required for test performance.

Because, contrary to the manufacturer’s instructions, the lab used creatinine reagent for more than seven days after it was opened (as discussed above under section 493.1252(b)(2)), ACN was required to verify the information called for in section 493.1253(b)(2).  It has not.  CMS Ex. 7 at 4 (Sutterer Decl. ¶ 12.b.iv).

**42 C.F.R.****§ 493.1256(d)(10), (g) (Tag D5469)**.  Labs must monitor the accuracy and precision of the complete analytic process.   Unless CMS approves an alternative procedure, this means that the lab must (among other requirements) establish or verify the criteria for acceptability of all control materials.  Specifically, it must record statistical parameters and the lot numbers for control materials; it must document all procedures performed.

The lab staff performed a chemistry quality control on October 15, October 25, and October 29, 2018.  CMS Ex. 8 at 23-25.  On each date, 23 analytes were flagged for unacceptable quality control.  No lot numbers were recorded for any of the quality control measures; none of the quality controls established acceptable ranges for the control materials; no documentation showed that the lab obtained acceptable quality control results using any additional controls for the analytes.  *Id.*; CMS Ex. 9 at 2-3 (Roling Decl. ¶ 9.a.ii).  The lab consultant could not provide a list of patients tested.  CMS Ex. 9 at 2-3 (Roling Decl. ¶ 9.a.ii).

Petitioners submit no documents or affidavits to counter CMS’s determination, but claim that “they were looking into the reasoning for the red flagged results” and that the lab director’s own review and evaluation “showed perfect control.”  P. Br. at 5.  Again, such unsupported assertions are insufficient to establish a dispute of material fact that would preclude my entering summary judgment.  *Ill. Knights Templar*, DAB No. 2274 at 4.

Page 14

**42 C.F.R. § 493.1283(a)** **(Tag D5787)**.  Finally, the lab must maintain an information or record system that includes:  1) the positive identification of the specimen; 2) the date and time the lab received the specimen; 3) the condition and disposition of specimens that do not meet the lab’s criteria for acceptability; and 4) the records and dates of all specimen testing, *including the identity of the personnel who performed the test(s)*.

In reviewing the lab’s data and patient test reports, the surveyors found nothing that identified the personnel who performed certain tests (DxC700 AU and Unicel Dx1 600).  The lab consultant confirmed that the lab could not identify who had performed those tests.  CMS Ex. 7 at 4 (Sutterer Decl. ¶ 12.b.vi); *see* CMS Ex. 8 at 35-36.

I found no response to this in Petitioners’ submissions.  The lab’s plan of correction suggests that it is not required to identify who performed the tests.  CMS Ex. 3 at 4.  This position is simply inconsistent with the regulation.

Thus, the undisputed evidence establishes that ACN lab did not meet multiple standards for monitoring and evaluating the overall quality of its analytic systems.  These standard‐level deficiencies were very serious.  They were of such character as to affect adversely the health and safety of its patients, which puts the lab out of compliance with a condition of certification.

CMS determined that the lab did not meet multiple other conditions of certification.  However, I decline to review all of them.  So long as I find that the lab did not meet one condition, I must affirm CMS’s determination to impose sanctions.  An ALJ need not consider all of the deficiencies cited, so long as the deficiencies she affirms support the sanctions imposed.  *See* *Perry Cnty. Nursing Ctr. v. U.S. Dep’t of Health & Human Services*, 603 F. App’x 265, 271 (5th Cir. 2015) (agreeing that the regulations require ALJs to review only those findings that are material to the outcome of a case); *Claiborne‐Hughes Health Ctr. v. Sebelius*, 609 F.3d 839, 847 (6th Cir. 2010); *Rockcastle Health and Rehab. Ctr.*, DAB No. 2891 at 23-24 (2018); *Carrington Place of Muscatine*, DAB No. 2321 at 20-21 (2010); *Senior Rehab. & Skilled Nursing Ctr.*, DAB No. 2300 at 6 n.5 (2010), *aff’d Senior Rehab. & Skilled Nursing Ctr. v. Health & Human Servs.*, 405 Fed. App’x 820 (5th Cir. 2010).

Because ACN lab did not meet at least two conditions of certification, CMS was authorized to impose sanctions, and, as noted above, the regulations limit my authority to review those sanctions.  In any event, Petitioners present no arguments or evidence showing that the sanctions imposed were improper.

Page 15

Conclusion

I deny CMS’s motion to dismiss.

I grant CMS’s motion for summary judgment and deny Petitioners’.  The undisputed evidence establishes that Petitioner ACN was not in compliance with all Medicare conditions of certification, and CMS was therefore authorized to impose sanctions.


          /s/
        Carolyn Cozad Hughes

                      Administrative Law Judge
      1. My findings of fact/conclusions of law are set forth, in italics and bold, in the discussion captions of this decision. back to note 1
                      2. Contrary to my order that it be double-spaced, the document is single-spaced.  See Acknowledgment and Pre-hearing Order at 4 ¶ 3.  The font is very small.  The assertions (which, for the most part, do not rise to the level of actual argument) are not well‐organized and are often hard to follow. back to note 2
                      3. Even if summary judgment were not appropriate, an in-person hearing would serve no purpose, and the case could be resolved on the written record.  Responding to my initial order, CMS listed three witnesses; Petitioner has not asked to cross-examine any of them and has therefore waived its right to cross-examine.  See Acknowledgment and Pre‐hearing Order at 6 ¶ 8.  And, as already discussed, the “testimony” of Petitioners’ sole witness is inadmissible.  An in-person hearing would therefore serve no purpose.  back to note 3
                      4. An analyte is “a substance or constituent for which the laboratory conducts testing.”  42 C.F.R. § 493.2. back to note 4 Back to top
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