Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Civil Remedies Division
In the Case of:

Blanding Urgent Care Center
Laboratory,

DATE: September 30, 1996

Petitioner,

Docket No. C-95-171
Decision No. CR438

Vv.

Health Care Financing
Administration.

Vee eee eee eee

DECISION

I conclude that Petitioner, Blanding Urgent Care Center
Laboratory, is subject to revocation of its CLIA' certificate
for a one-year minimum mandatory period, and to concomitant
cancellation of Medicare? payments for laboratory services.

In reaching this conclusion, I determine that the word
"intentionally" is defined differently in CLIA for civil
violations than for criminal violations.

Procedural Background

Only civil violations are alleged in this case. In a letter
to Petitioner dated June 15, 1995, the Health Care Financing
Administration (HCFA) of the United States Department of
Health and Human Services (DHHS), proposed to revoke
Petitioner's CLIA certificate for one year, pursuant to 42
C.F.R. § 493.1840(b), and stated it would suspend
Petitioner's’ Medicare payments for all tests.

1 CLIA refers to the Clinical Laboratory
Improvement Amendments, enacted in 1988 (42 U.S.C.
§ 263a).

2? Medicaid payments for laboratory services are
also affected (42 C.F.R. § 493.1809).
2

HCFA's letter further informed Petitioner that the proposed
revocation was the consequence of Petitioner having
intentionally referred certain of its proficiency testing
samples, for 2nd quarter 1994 and 1st quarter 1995, to the
San Juan Hospital laboratory, rather than conducting the
tests at Petitioner. HCFA's letter added that the referral
was revealed through a survey conducted by the Utah
Department of Health, Division of Laboratory Services, on May
17, 1995.

In a letter dated August 10, 1995, Petitioner requested a
hearing, contending that Petitioner lacked the requisite
intent to warrant revocation of its CLIA certificate, with
regard to both the 2nd quarter 1994 and 1st quarter 1995
proficiency testing samples. Further, Petitioner contended,
with regard to the lst quarter 1995 proficiency testing
samples, it conducted the tests only in its own laboratory
and did not send the samples elsewhere.

Subsequently, the parties filed cross motions and briefs.?
The facts presented therein are assumed to be true for
purposes of this Decision. I find that no facts of
decisional significance are in dispute, and consequently
there is no need for an in-person hearing.

Based on the evidence in the written record and the law, in
light of the parties' written arguments, I affirm HCFA's
determination to revoke Petitioner's CLIA certificate for a
one-year minimum mandatory period, with concomitant
cancellation of Petitioner's Medicare payments for laboratory
services.

3° HCFA filed a Motion to Affirm with a supporting
brief (HCFA Br.). HCFA's submissions were accompanied by
HCFA Exhibits (HCFA Exs.) 1 through 10.

Petitioner filed a Motion to Reverse with a supporting
brief (P. Br.).

HCFA filed a Reply brief (HCFA R. Br.).
Petitioner filed a Sur-Reply brief (P. R. Br.).
Petitioner did not object to any of HCFA's exhibits, and

I admit HCFA Exs. 1 through 10 into evidence. Petitioner
did not submit any exhibits.
3
Issue
The issue is whether Petitioner intentionally referred its

proficiency testing samples to another laboratory for
analysis.

Factual Background

Proficiency testing is designed to determine a laboratory's
accuracy in performing testing for its patients. Each
laboratory enrolls in a proficiency testing program and is
sent specimens [proficiency samples] for testing,
approximately three times a year. The specimens are clearly
marked as proficiency testing samples, so the technician
receiving them knows they are test materials, not patients'
specimens. The laboratory that is being tested is required
to test the proficiency samples the same way it tests
patients' specimens.

On May 15, 1995, the Utah Department of Health, Division of
Laboratory Services (State PT agency)‘, began a survey of
Petitioner, a laboratory located in Blanding, Utah. The
State PT agency requested Petitioner's proficiency testing
records and was informed that those records were not
available at that time because they were stored at San Juan
Hospital. The technical consultant for Petitioner, Michael
LaGiglia, served also as the technical consultant and general
supervisor for the San Juan Hospital laboratory, which is
located in Monticello, Utah, approximately 22 miles from
Petitioner. Mr. LaGiglia informed the State PT agency that
Petitioner's records would be made available on the following
day, May 16, 1995. On May 17, 1995, the State PT agency
returned to Petitioner and examined the proficiency testing
(PT) records. HCFA Ex. 3.

2nd Quarter 1994 Proficiency Testing Samples

Review of Petitioner's 2nd quarter 1994 hematology
proficiency testing reports showed that the handwritten
results retained by Petitioner did not match the results that
had been reported to the PT agency. HCFA Ex. 3. The results
reported to the PT agency for Petitioner's 2nd quarter 1994
hematology proficiency testing matched an instrument printout
which could not have been created by the type and model of
instrument used at Petitioner, but in fact was created on an

4 The State PT agency is the entity that surveyed
Petitioner; Petitioner's proficiency testing results were
processed by a separate entity which I refer to as the PT
agency.
4

instrument such as that present and used in the San Juan
Hospital laboratory. . HCFA Ex. 3.

Mr. LaGiglia tested Petitioner's 2nd quarter 1994 hematology
proficiency testing samples both at Petitioner and at the San
Juan Hospital laboratory. P. Br. 3 - 4. The retesting of
Petitioner's 2nd quarter 1994 hematology proficiency testing
samples at the San Juan Hospital laboratory was done as an
"internal quality control measure." Mr. LaGiglia was unaware
that his retesting of Petitioner's 2nd quarter 1994
hematology proficiency testing samples at the San Juan
Hospital laboratory was prohibited by law. P. Br. 4, 14.

The test results on Petitioner's 2nd quarter 1994 hematology
proficiency testing samples from both Petitioner and the San
Juan Hospital laboratory were recorded at-Petitioner. Mr.
LaGiglia mistakenly submitted the results from the San Juan
Hospital laboratory as Petitioner's test results on the 2nd
quarter 1994 hematology proficiency testing samples. P. R.
Br. 7.

In explaining Petitioner's 2nd quarter 1994 hematology
proficiency testing results to the State PT agency on May 24,
1995, Mr. LaGiglia stated that proficiency testing samples
from Petitioner are brought back to San Juan Hospital and run
on a test machine that is different from the one present at
Petitioner, and the results are compared. According to Mr.
LaGiglia, it was the "practice" to compare Petitioner's
proficiency testing results with San Juan's proficiency
testing results before reporting the results to the PT
agency. HCFA Ex. 3.

1st Quarter 1995 Proficiency Testing Samples

Examination of Petitioner's lst quarter 1995 hematology
proficiency testing records by the State PT agency revealed
proficiency testing results logged in on a patient log sheet
that did not match the results reported to the PT agency.
HCFA Ex. 3.

Petitioner and the San Juan Hospital laboratory received
separate proficiency testing samples on approximately the
same date. The technical consultant analyzed San Juan
Hospital laboratory's sample at San Juan Hospital and
subsequently analyzed Petitioner's sample at Petitioner. The
technical consultant noticed that the white blood cell count
results obtained at Petitioner were dissimilar to those
obtained at San Juan Hospital. The technical consultant
assumed the discrepancy indicated that Petitioner's analyzer
needed to be recalibrated. The technical consultant
proceeded to recalibrate Petitioner's analyzer and performed
the tests again. The result that was obtained after
5

recalibration was closer to that of San Juan Hospital and was
reported to the PT agency. HCFA Ex. 2; P. Br. 4, 7; P..R.
Br. 5. .

Statute and Regulations
CLIA provides both civil sanctions and criminal sanctions:
Civil Sanctions

Any laboratory that the Secretary determines
intentionally refers its proficiency testing samples to
another laboratory for analysis shall have its
certificate revoked for at least one year and shall be
subject to appropriate fines and penalties as provided
for in section (h)* of this section.

42 U.S.C. § 263a(i) (4).

The implementing regulations regarding such civil
sanctions provide:

The laboratory must not send PT samples or portions
of samples to another laboratory for any analysis
which it is certified to perform in its own
laboratory. Any laboratory that HCFA determines
intentionally referred its proficiency testing
samples to another laboratory for analysis will
have its certification revoked for at least one
year. Any laboratory that receives proficiency
testing samples from another laboratory for testing
must notify HCFA of the receipt of those samples.

42 C.F.R. § 493.801(b) (4).

5 "Intermediate" civil sanctions, such as civil

money penalties, are found in 42 U.S.C. § 263a(h), and
are alternative remedies to the "principal" civil
sanctions of CLIA certificate suspension, revocation, or
limitation, found in 42 U.S.C. § 263a(i).
6

Adverse action based on improper referrals in
proficiency testing. If HCFA determines that a
laboratory has intentionally referred its
proficiency testing samples to another laboratory
for analysis, HCFA revokes the laboratory's CLIA
certificate for at least one year, and may also
impose a civil money penalty.

42 C.F.R. § 493.1840(b).
Criminal Sanctions

Any person who intentionally violates any requirement of
this section or any regulation promulgated thereunder
shall be imprisoned for not more than one year or fined
under Title 18, or both, except that if the conviction
is for a second or subsequent violation of such a
requirement such person shall be imprisoned for not more
than 3 years or fined in accordance with Title 18, or
both.

42 U.S.C. § 263a(1).

The implementing regulations regarding such criminal
violations provide:

Definitions. Intentional violation means knowing
and willful noncompliance with any CLIA condition.

42 C.F.R. § 493.2.
Section 353 also [p]rovides for imprisonment or
fine for any person convicted of intentional
violation of CLIA requirements.

42 C.F.R. § 493.1800(a) (3) (i)-
Criminal sanctions. Under section 353(1) of the
PHS [Public Health Service] Act, an individual who
is convicted of intentionally violating any CLIA
requirement may be imprisoned or fined.

42 C.F.R. § 493.1806(e).

Findings

1. Petitioner is a laboratory located in Blanding, Utah that
has been certified under-CLIA since 1993.
7

2. CLIA establishes requirements for all laboratories that
perform clinical diagnostic tests on human specimens. 42
U.S.C. § 263a; 42 C.F.R. § 493.1800.

3. Petitioner's technical consultant's reporting, by
mistake, to the PT agency the San Juan Hospital laboratory
results as Petitioner's test results, on Petitioner's 2nd
quarter 1994 hematology proficiency testing samples, is
irrelevant.

4. Petitioner's technical consultant knew he was retesting
Petitioner's 2nd quarter 1994 hematology proficiency testing
samples in the San Juan Hospital laboratory. HCFA Ex. 3; P.
Br. 4, 14. Thus, Petitioner's technical consultant's action
was deliberate, not inadvertent. Decision at 10 - 16.

5. Although Petitioner's technical consultant's retesting,
in the San Juan Hospital laboratory, of Petitioner's 2nd
quarter 1994 hematology proficiency testing samples, was done
as an “internal quality control measure," his motive is
irrelevant.

6. It is irrelevant that Petitioner's technical consultant
was unaware that his retesting, in the San Juan Hospital
laboratory, of Petitioner's 2nd quarter 1994 hematology
proficiency testing samples was prohibited by law.

7. Based on the dissimilarity between Petitioner's first
white blood cell count results from Petitioner's 1st quarter
1995 hematology proficiency testing samples, and those he had
obtained at the San Juan Hospital laboratory, Petitioner's
technical consultant recalibrated Petitioner's analyzer and
retested Petitioner's proficiency testing samples. HCFA Ex.
2; P. Br. 4, 7; P. R. Br. 5.

8. Petitioner's technical consultant knew he was
recalibrating Petitioner's analyzer and retesting
Petitioner's 1st quarter 1995 hematology proficiency testing
samples, based on the dissimilarity in results between the
first white blood cell counts obtained at Petitioner and
those he had obtained at the San Juan Hospital laboratory.
HCFA Ex. 2; P. Br. 4, 7; P. R. Br. 5. Thus Petitioner's
technical consultant's action was. deliberate, not
inadvertent. Decision at 10 - 16.

9. A laboratory that obtains analysis of its proficiency
testing samples from another laboratory violates 42 U.S.C.

§ 263a(i) (4) regardless of whether the laboratory reports to
the PT agency its own results or the results obtained from
the other laboratory.
8

10. Information gleaned from proficiency testing samples at
the San Juan Hospital caused Petitioner's technical
consultant to realize that Petitioner's analyzer needed
recalibration. Petitioner then recalibrated the analyzer and
retested Petitioner's proficiency testing samples after the
recalibration. P. Br. 4 - 5, 7; P. R. Br. 5; HCFA Ex. 2.

11. Petitioner violated 42 U.S.C. § 263a(i)(4) by
recalibrating its equipment and retesting its proficiency
testing samples based upon the results obtained from the
testing of separate proficiency testing samples at the San
Juan Laboratory, irrespective of whether Petitioner reported
the results or not.

12. It is irrelevant that Petitioner's technical consultant
was unaware that his recalibration of Petitioner's analyzer
and retesting of Petitioner's 1st quarter 1995 hematology
proficiency testing samples, based on the dissimilarity in
results between Petitioner's first white blood cell counts
and those he had obtained at the San Juan Hospital
laboratory, were prohibited by law.

13. A laboratory must not send proficiency testing samples
or portions of samples to another laboratory for any analysis
which it is certified to perform in its own laboratory. 42
C.F.R. § 493.801(b) (4).

14. A referral of proficiency testing samples to another
laboratory for analysis can occur where proficiency testing
samples are physically carried or transferred from one
laboratory to another for retesting. Decision at 19 - 23.

15. A referral of proficiency testing samples can occur
where the proficiency testing samples are not moved from the
laboratory, but are retested or otherwise rechecked based on
information gained from another laboratory. Decision at 19 -
23.

16. Petitioner referred both its 2nd quarter 1994 hematology
proficiency testing samples and its 1st quarter 1995
hematology proficiency testing samples to another laboratory,
in each case the San Juan Hospital laboratory, for analysis.

17. “Intentionally referred" [as in "intentionally referred"
its proficiency testing samples to another laboratory for
analysis] requires not specific intent, but general intent,
that is, an intent to act. No guilty knowledge, no
culpability, no scienter is required. Motive is irrelevant.
It is necessary merely that a person act deliberately, that
is, not inadvertently.
9

18. Petitioner's lack of "deliberate fraud" and lack of
"knowing and willful noncompliance with CLIA conditions,"
are irrelevant.

19. Petitioner's technical consultant's retesting, in the
San Juan Hospital laboratory, of Petitioner's 2nd quarter
1994 hematology proficiency testing samples, as an "internal
quality control measure," constitutes an intentional referral
of Petitioner's proficiency testing samples to another
laboratory for analysis.

20. Petitioner's technical consultant's recalibrating of
Petitioner's analyzer and retesting of Petitioner's 1st
quarter 1995 hematology proficiency testing samples, based on
the dissimilarity in results between Petitioner's first white
blood cell counts and those he had obtained at the San Juan
Hospital laboratory, constitutes an intentional referral of
Petitioner's proficiency testing samples to another
laboratory for analysis.

21. Petitioner, through the action of its technical
consultant, intentionally referred its proficiency testing
samples to another laboratory for analysis during 2nd quarter
1994, in violation of 42 U.S.C. § 263a(i) (4); 42 C.F.R. §
493.801(b)(4) and § 493.1840(b).

22. Petitioner, through the action of its technical
consultant, intentionally referred its proficiency testing
samples to another laboratory for analysis during 1st quarter
1995, in violation of 42 U.S.C. § 263a(i) (4); 42 C.F.R. §
493.801(b) (4) and § 493.1840(b).

23. The CLIA statute and applicable regulations require HCFA
to revoke a laboratory's CLIA certificate for at least one
year if the laboratory "intentionally refers" its proficiency
testing samples to another laboratory for analysis. 42
U.S.C. § 263a(i) (4); 42 C.F.R. § 493.801(b) (4) and §
493.1840(b).

24. Neither I nor HCFA has the discretion in this case to
revoke Petitioner's CLIA certificate for less than the
Mandatory minimum period of one year, or to substitute any
lesser sanction.

25. I affirm HCFA's one-year revocation of Petitioner's CLIA
certificate, with concomitant cancellation of Petitioner's
Medicare payments for laboratory services.
10
Discussion

Two words, "intentionally" and "referred," require careful
analysis in determining whether Petitioner intentionally
referred its proficiency testing samples to another
laboratory for analysis. The meaning of "intentionally"
impacts both the 2nd quarter 1994 PT, and the lst quarter
1995 PT. The meaning of "referred" impacts only the 1st
quarter 1995 PT.

I. Definitions of "Intentionally" under CLIA

[see Statute and Regulations above]

I conclude that "intentionally" is defined differently in
CLIA for civil violations than for criminal violations.

The word "intentionally" is found in both the civil section
of CLIA and the criminal section of CLIA:

civil:
Any laboratory that the Secretary determines
intentionally {emphasis added] its
proficiency testing samples to another laboratory
for analysis... .

42 U.S.C. § 263a(i) (4).

criminal:
Any person who intentionally (emphasis
added] any requirement of this section or any
regulation promulgated thereunder... .

42 U.S.C. § 263a(1).

Although the term "intentionally" is used in both the civil
and criminal sections of CLIA, the term need not be accorded
the same meaning in each of these sections. Upon careful
analysis, I conclude that the term "intentionally refers" as
it appears at 42 U.S.C. § 263a(i)(4) indeed does not have the
same meaning as the term “intentionally violates" which
appears at 42 U.S.C. § 263a(1). To begin with, the phrases
are different in that one contains the word "refers" and one
contains the word "violates." This is discussed more fully
below.

A. arguments
Background above]

Petitioner's arguments
11

Petitioner argues that "intentionally" [as in "intentionally
referred its proficiency testing samples to another
laboratory for analysis") means that a lab intended to report
another lab's PT results as its own. P. Br. 7, 13, 28.
Regarding the 2nd quarter 1994 PT, Petitioner maintains that
the referral was made to the San Juan Hospital laboratory for
internal quality control measures, and Mr. LaGiglia
mistakenly submitted the results obtained in the San Juan
Hospital laboratory to the PT agency as Petitioner's PT
results. Id. at 4, 14. Consequently, Petitioner argues,
HCFA is without authority to revoke Petitioner's CLIA
certificate because Petitioner did not manifest the requisite
intent.

Petitioner urges consistent construction of the term
"intentional" in the civil and criminal contexts, noting the
"draconian" outcome of revocation. Id. at 18 - 28.
Petitioner contends that the term "intentionally" in the
civil context of CLIA should require "the deliberate motive
of deceiving the testing agency by reporting the other labs's
(sic) proficiency testing results as its own." P. Br. 18.
Petitioner adds that "intentional" must be construed so that
criminal penalties cannot be meted out upon a mere showing of
“deliberate taking of action," without consideration of
motive. Id. at 17 - 18.

Petitioner argues further that, although it may have violated
some CLIA requirements, it did not do so knowingly and
willfully. The regulation at 42 C.F.R. § 493.2 defines
"intentional violation" as "knowing and willful noncompliance
with any CLIA condition." Petitioner contends that HCFA
accordingly must establish that Petitioner's violation was
knowing and willful, before HCFA can revoke Petitioner's CLIA
certificate.

HCFA's arguments

HCFA urges consideration of the definition of "intentionally"
{as in "intentionally referred its proficiency testing
samples to another laboratory for analysis") found in Long
Medical Laboratory _v. HCFA, DAB CR334 (1994), at 6. HCFA Br.
8 - 9. In Long, Administrative Law Judge Steven Kessel
determined that "intentionally" should be given its common
and ordinary meaning. Applying a dictionary definition of
that term, Judge Kessel concluded that "when one acts
intentionally, he or she acts deliberately," regardless of
motivation. HCFA Br. 8 - 9.

To Petitioner's stated objective of "quality control" as the
reason for referring its proficiency testing samples to the
San Juan Hospital laboratory, HCFA responds as follows:
12

regulations as written. I cannot disregard the
unambiguous limitations imposed by the regulations. I
adjudicate these cases under a delegation from the
Secretary of Health and Human Services. In this
capacity, I am required to follow all substantive rules
and regulations duly promulgated by the Secretary. See
Dyer_v. Secretary_of Health and Human Services, 889 F.2d
682, 685 (6th Cir. 1989).

There is no regulation which supports Petitioner's legal
arguments. The regulations I have considered are
dispositive on the issue of whether Petitioner may
challenge in this forum the merits of HCFA's decision to
ban nurse aide training and testing by Petitioner. For
example, the language of the regulation codified at 42
C.F.R. § 498.3(d)(1) does not leave me with any
discretion to grant Petitioner the hearing it requests.
The critical fact is that the Secretary of Health and
Human Services has declined to define the prohibition
against nurse aide training and competency evaluations as
a remedy or enforcement action subject to a hearing in
this forum. 42 C.F.R. §§ 498.3(c) (11), 488.406; FFCL 41,
43, 44, 45. Since HCFA has rescinded the two enforcement
actions imposed under 42 C.F.R. § 88.406, there is no
determination by HCFA subject to the hearing rights
specified in 42 C.F.R. Part 498. FFCL 40, 41, 45.
Therefore, Petitioner also cannot challenge the survey
findings which resulted in the ban on nurse aide training
and testing, and which resulted in HCFA's earlier (but
now rescinded) determination to impose two of the
enforcement actions specified in 42 C.F.R. § 488.406.
FFCL 46 - 48.

Petitioner complains that, without an on-the-merits
hearing on the survey findings, Petitioner is at risk for
suffering future harm of greater magnitude should HCFA
later find that Petitioner has provided substandard
quality of care in a total of three consecutive standard
surveys. However, Petitioner herein has other hearing
requests pending which challenge the substandard quality
of care findings from a later survey, a survey which
resulted in HCFA imposing a civil monetary penalty and
other appealable remedies against Petitioner. FFCL 36,
37. Also pending before me for hearing is another case
filed by Petitioner (DAB Docket No. C-96-273), wherein
Petitioner challenges, inter alia, the deficiencies found
during an "abbreviated standard survey" conducted on
February 12, 1996 and HCFA's imposition of a remedy
specified in 42 C.F.R. § 488.406. If Petitioner prevails
in its other action (DAB Docket No. C-96-350), there
would be no findings of substandard quality of care in
consecutive standard surveys; in such an event,
Petitioner would not need to fear sanctions resulting
from three consecutive surveys finding substandard
13

The Committee's investigation focused particularly on
proficiency testing because it is considered one of
(the] best measures of laboratory performance. It is
arguably the most important measure, since it reviews
actual test results rather than merely gauging the
potential for good results...

Proficiency testing is a method of externally validating
the level of a laboratory's performance. Proficiency
testing is not currently conducted by HHS, but is
conducted by private agencies. . . . The standard
testing methodology currently in use involves sample
test specimens being sent by mail to a laboratory by the
proficiency testing agency. The laboratory then
analyzes the samples and returns the results of the test
to the proficiency testing organization. The
proficiency testing organization typically calculates
the mean of the test results, determines an acceptable
range variation based on standard deviations from the
mean, and reports the results to the lab.

The major problems identified by the Committee were lax
Federal oversight and direction, lack of proficiency
testing for many analytes, inconsistent criteria for
acceptable laboratory performance, and improprieties by
laboratories in handling specimen samples.

A significant deficiency in the current proficiency
testing regime is its inability to-assure that
proficiency testing samples are treated like patient
specimens. Samples are mailed to laboratories, and
although proficiency testing organizations recommend
that tests be treated in the same manner as patient
samples, there was evidence that laboratories retest
samples repeatedly to ensure satisfactory results and
send proficiency testing samples out to other
laboratories for analysis. The only way to guarantee
that samples are treated by the same personnel, at the
same speed, using the same equipment as patient
specimens is though [sic] blind or on-site proficiency
testing. The committee learned, however, that such
testing can be quite expensive and may have to be used
with discretion to assure proper processing of
specimens.

H.R. No. 899, reprinted in 1988 U.S.C.C.A.N. at 3828, 3836,
3837.

Thus, Congress, in enacting CLIA, was concerned about, among
other things, laboratories that were sending their
proficiency testing samples to other laboratories for
analysis or retesting to ensure a satisfactory result. It is
14

within this context that Congress authored the prohibition on
intentional referrals of proficiency testing, at 42 U.S.C.
§ 263a(i) (4).

Cc. Definition of "intentionally," as_ in "intentionally
refers"

"Intentionally" is not defined in the CLIA statute, but some
assistance is found in the regulations. "Intentional
violation" is defined in the regulations as "knowing and
willful noncompliance with any CLIA condition." 42 C.F.R. §
493.2 ("Definitions").

The phrase "intentional violation" does not appear elsewhere
in the pertinent regulations, other than in the definitions
section, as just quoted, and as follows:

Section 353 also [p]rovides for imprisonment or fine for
any person convicted of intentional violation of CLIA
requirements.

42 C.F.R. § 493.1800(a) (3) (i).

The phrase "intentionally violating" appears in the pertinent
regulations, also solely in connection with criminal
sanctions:

Criminal sanctions. Under section 353(1) of the PHS
(Public Health Service] Act, an individual who is
convicted of intentionally violating any CLIA
requirement may be imprisoned or fined.

42 C.F.R. § 493.1806(e).

After careful study of the pertinent portions of the statute
and the regulations, I conclude that "intentional violation"
is defined by the regulations for the sole purpose of
clarifying the phrase "intentionally violates," which is
found in the CLIA statute only in the criminal section [42
U.S.C. §263a(1)]. The "knowing and willful" requirement
provided by the regulation is consistent with the element of
criminal offenses known as "scienter," "culpability," or
"guilty knowledge."

By providing a definition for "intentional violation", the
authors of the regulations have explicitly provided guidance
on how to interpret 42 C.F.R. § 493.1800(a)(3)(i) and §
493.1806(e). There is little doubt that, with respect to the
imposition of criminal sanctions, in determining whether
there was an intentional violation, the legal standard of
"knowing and willful" is to be applied.
15

Thus, I agree with Petitioner to the extent that criminal
penalties under CLIA cannot be meted out without a showing of
"knowing and willful noncompliance" with a CLIA condition. I
disagree with Petitioner's argument, however, that revocation
is such a severe penalty that a similar standard regarding
intent should apply to revocation as applies to criminal
penalties.

Criminal convictions, particularly for persons who work in
health care, trigger extremely serious consequences. It is
reasonable to require proof of specific intent before
subjecting a person to criminal penalties under CLIA. CLIA
has clearly delineated two distinct types of penalties -- the
first, directed at a laboratory and involving civil sanctions
(regarding the laboratory's CLIA certificate, civil money
penalties, costs and the like); -- and the second, directed
at a person and involving criminal penalties (imprisonment or
a fine or both). [See 42 C.F.R.- § 493.1806 for available
sanctions. ]

Under CLIA, a laboratory is subject to inspection and a
variety of civil penalties for failing to comply with CLIA
standards. 42 U.S.C. §263a(g), (h), (i). ("Principal
sanctions," such as suspension, revocation, and limitation of
the laboratory's CLIA certificate, are provided by 42 U.S.C.
§263a(i). "Intermediate" or "alternative sanctions," such as
directed plans of correction, civil money penalties, and
onsite monitoring costs, are provided by 42 U.S.C. §263a(h).]

In sharp contrast are the CLIA penalties that are criminal in
nature. 42 U.S.C. § 263a(1). The potential penalties
include imprisonment for up to one year and a fine or both.
Even more serious, a repeat offender can be imprisoned for up
to three years and fined or both.

The regulations go to the effort of defining "intentional
violation" to ensure that sufficient scienter is proved
before a person can be convicted of a criminal violation
under CLIA. The fact that "intentional violation" is
specifically defined in the regulations [42 C.F.R. § 493.2]
suggests that the definition is different from its common and
ordinary meaning, and in fact, it is.

Nowhere do the regulations define the term "intentionally
referred," which is contained in the regulations at 42 C.F.R.
§ 493.801(b) (4) and § 493.1840(b). "Intentionally refers" is
found in the statute at 42 U.S.C. § 263a(i)(4). Neither
Congress nor the Secretary chose to define or modify the word
"intentionally" in the context of "intentionally referred its
proficiency testing samples to another laboratory for
analysis." Where "intentionally" is not specifically defined
16

in the context of CLIA civil sanctions, one can infer that it
should be given its common and ordinary meaning.

This conclusion is in accordance with that of Administrative
Law Judge Steven Kessel in the case of Long Medical
Laboratory v. HCFA, DAB CR334 (1994). Although in Long
Petitioner admitted that it had intentionally referred
proficiency testing samples for testing, Judge Kessel
nonetheless determined that the word "intentionally" should
be given its common and ordinary meaning. As stated in Long,
"intention" is a determination to act in a certain way.
Long, at 6 (citing Webster's New Collegiate Dictionary, 1975
ed., at 601). When one acts "intentionally," he or she acts
deliberately, regardless of motivation. Long, at 6 - 9.
Accordingly, I find that "intentionally referred" [as in
"intentionally referred" its proficiency testing samples to
another laboratory for analysis) requires not specific
intent, but general intent, that is, an intent to act. No
guilty knowledge, no culpability, no scienter is required.
Motive is irrelevant. It is necessary merely that a person
act deliberately, that is, not inadvertently.

In current practice, where proficiency testing samples are
clearly marked, enabling the technician receiving them to
know they are test materials, not patients' specimens, it is
difficult to conceive of an inadvertent referral. If
proficiency testing samples are referred to another
laboratory for analysis, with the knowledge that they were
proficiency testing samples, the referral can be expected to
be intentional, that is, deliberate, not inadvertent.®

D. Further consideration of Petitioner's arguments
regarding definition of "intentionally," as in
“intentionally refers"

In further considering Petitioner's position regarding the
definition of "intentionally," as in "intentionally refers,"
I begin with Petitioner's philosophical arguments.
Petitioner asks for punishment to fit the "crime," stating
that revocation and its consequences are "wildly
disproportionate" penalties in relation to Petitioner's
conduct, where there was no intent to deceive, no motive to
report falsely, no bad faith. P. R. Br. 1 - 4, 7 - 10, 12.

6 The inclusion by Congress of the word
"intentionally" in the civil context may well be more
significant in the case of "blind" proficiency testing,
in which the laboratory technicians cannot tell the test
samples from patients' specimens. ([Patients' specimens
of course may be referred to other laboratories. ]
17

"While Blanding [Petitioner] may have committed certain CLIA
violations, it was not attempting to defraud through a
pattern of improper referrals or seeking to conceal a
substandard facility by using another lab to perform its PT."
Id. at 9.

Petitioner shows that Congress provided a wide range of civil
sanctions, arguing that less culpable noncompliance should be
sanctioned less severely. Petitioner points out that
Congress, in drafting CLIA, was disturbed by the lack of a
flexible response to poor proficiency testing. P. Br. 10.
Petitioner states also that Congress pointed to the need for
lesser sanctions, including civil monetary penalties and
corrective action plans, where a laboratory has either made a
good faith effort to comply with the law or where the health
of patients is not in immediate danger. Petitioner contends
that, by imposing a one year revocation of its CLIA
certificate, HCFA is applying the most severe sanction
possible.’ Petitioner believes that, while it has made good
faith efforts to correct the problems with its testing, it is
being unduly penalized by HCFA's adherence to a rigid
enforcement method which is contrary to the intent of
Congress.

It is true that the alternative sanctions Congress provided,
the "intermediate sanctions," may be applied in countless
situations, whether or not those situations involve cheating
in proficiency testing. Even the principal sanctions of
suspension or limitation of a laboratory's CLIA certificate
may be less severe than a one-year minimum mandatory
revocation.

For example, failing to obtain satisfactory performance in
proficiency testing, that is, having unacceptable error
levels, may trigger a sanction less severe [or more severe]
than a one-year revocation. Failing to test proficiency
samples the same way a laboratory tests patients' specimens
(42 C.F.R. §§ 493.801, 493.801(b)] may be penalized by a
sanction less severe [or more severe] than a one-year
revocation [42 C.F.R. §§ 493.1812, 493.1814]. Engaging in
inter-laboratory communications pertaining to the results of
proficiency testing sample(s) before the date the laboratory
must report the results of its proficiency testing [42 C.F.R.
§ 493.801(b) (3)] may be penalized by a sanction less severe
{or more severe] than a one-year revocation [42 C.F.R. §§
493.1812, 493.1814]. In each of these situations, HCFA has
discretion to impose a sanction less severe or more severe
than a one-year revocation.

7 HCFA has imposed the minimum sanction specified
by 42 U.S.C. § 263a(i) (4).
18

But where intentional referral of a laboratory's proficiency
testing samples to another laboratory for analysis has
occurred, there is no possibility of a less severe sanction
than a one-year minimum mandatory revocation. The statute
itself specifies the sanction:

Any laboratory that the Secretary determines
intentionally refers its proficiency testing samples to
another laboratory for analysis shall have its
certificate revoked for at least one year... .

42 U.S.C. § 263a(i) (4).

Congress enacted an especially strong prohibition against
intentionally referring proficiency testing samples to
another laboratory for analysis, by requiring mandatory
revocation for at least one year as the sanction. . Clearly,
Congress wanted the practice to stop.

Petitioner argues that, in order for it to have committed an
“intentional referral" within the meaning of the statute and
the regulations, Petitioner must have referred its tests to

another laboratory with the intent of reporting such results
as its own. P. Br. 7, 13, 28.

Petitioner's construction is unreasonable. As HCFA points
out, Petitioner's interpretation of 42 U.S.C. § 263a(i) (4)
would make it almost impossible for HCFA to revoke a CLIA
certificate pursuant to that provision, because HCFA would be
required to prove a laboratory's “intent to submit another
lab's PT results as its own." HCFA R. Br. 9.

HCFA points out also that Petitioner's interpretation of 42
U.S.C. § 263a(i)(4) "would make it acceptable for a
laboratory to refer its proficiency testing to another
laboratory for analysis as long as it did not intentionally
report the second laboratory's results as its own. The
effect of such an interpretation would be to endorse cheating
on proficiency testing." HCFA R. Br. 3. “Indeed, Congress
did not require false reporting because it anticipated that
laboratories could simply retest their proficiency testing
samples to improve their test scores after receiving the
analysis from a second laboratory." Jd. at 4.

Petitioner's insistence that referral be with the "intent to
submit another lab's PT results as its own," is far too
narrow a view of what constitutes an intentional referral.
The statute requires revocation of a CLIA certificate where a
laboratory intentionally refers its proficiency testing to
another laboratory for analysis. 42 U.S.C. § 263a(i)(4). 42
C.F.R. § 493.801(b) (4) and § 493.1840(b). The statute does
19

not require also that a laboratory intentionally report the
second laboratory's results as its own. HCFA Br. 10.

HCFA need only establish a general intent to act, and not, as
Petitioner suggests, specific intent to report incorrect or
improper test results. It is highly improbable that, within
the framework of civil penalties against an entity, where no
loss of personal liberty is involved, Congress would require
specific intent in order to establish a CLIA violation under
the statute's civil penalty provisions. Here, a laboratory
is subject to civil administrative sanctions for failure to
comply with statutory requirements. (Even Petitioner
concedes that criminal sanctions traditionally require proof
of a greater degree of scienter and culpability on the part
of the defendant. P. Br. 17.)

Regardless of motivation, Petitioner acted with the requisite
general intent, that is, the intent to act, to trigger the
penalty provisions of CLIA. Petitioner acted deliberately,
that is, not inadvertently, in obtaining test results
elsewhere. It is cheating to look at another's answer on a
test, even if merely to confirm one's own answer. Anyone
looking at answers different from his own would likely
compare and analyze them before forming any intent about what
to do with the other answers.

In summary, two definitions of "intentionally" [as in
"intentionally referred its proficiency testing samples to
another laboratory for analysis") proposed by Petitioner must
be rejected:

The first definition that must be rejected is "knowing
and willful noncompliance," because that phrase is
applicable in CLIA only to criminal sanctions.

The second definition that must be rejected is "with the

intent to submit another lab's proficiency testing
results as its own."

I find that "intentionally" as found in the civil section of
CLIA means with general intent, regardless of motivation.

II. initi " a"
(see Factua] Background above]

As previously mentioned, the meaning of "referred" impacts
only Petitioner's 1st quarter 1995 PT.

(With regard to the 2nd quarter 1994 PT, Petitioner
acknowledges that Petitioner's 2nd quarter 1994 hematology PT
samples were physically carried from Petitioner to the San
20

Juan Hospital laboratory, where they were retested, as an
“internal quality control measure." Thus, Petitioner
acknowledges that Petitioner's 2nd quarter 1994 PT samples
were "referred" to another laboratory for testing. ]

A. Parties' arguments
Petitioner's arguments

Petitioner argues that it did not physically send its 1st
quarter 1995 PT samples to another laboratory for analysis --
these samples never left Petitioner-- and there consequently
was no referral, and no violation sufficient to warrant
revocation of Petitioner's CLIA certificate. P. Br. 7 - 8.

Petitioner argues further that regulatory language supports
its position [P. Br. 7 - 8]:

The laboratory must not send PT samples or portions of
samples to another laboratory for any analysis which it
is certified to perform in its own laboratory.

42 C.F.R. § 493.801(b) (4).
HCFA's arguments

HCFA contends that Petitioner is taking too narrow a view of
the word referral, and ignoring the context in which the word
is used within the CLIA statute and regulations. First, HCFA
states that Petitioner's argument regarding whether or not it
referred the lst quarter 1995 PT samples is irrelevant when
it is undisputed that Petitioner referred the 2nd quarter
1994 PT samples.

Second, HCFA argues that the facts regarding Petitioner's
handling of the 1st quarter 1995 PT samples constitute a
referral because the laboratory technician 1) tested
Petitioner's proficiency testing samples at Petitioner; 2)
compared the results to results he had obtained on PT samples
at the San Juan Hospital laboratory and realized the results
he had obtained on Petitioner's analyzer were erroneous; and
3) based on his discovery, recalibrated Petitioner's
analyzer; and 4) retested the samples at Petitioner on the
recalibrated analyzer and reported the results.

B. Definition of "referred"

HCFA's position is that a referral can occur without the
proficiency testing samples ever being physically sent to
another laboratory for analysis. In other words, Petitioner
did not have to move or transfer the samples physically from
Petitioner to another laboratory in order to commit a
21

"referral" to another laboratory for analysis, within the
meaning of the CLIA statute and regulations.

Petitioner concedes that Petitioner recalibrated its testing
equipment and retested the PT samples, as a result of
information the technician obtained from his testing of
samples that were sent to the San Juan Hospital laboratory
for proficiency testing. P. Br. 4, 7; P. R. Br. 5.

The word “refer" is defined by the Random House Colleg
Dictionary, revised ed. 1980, at 1108, as "to direct the
attention or thoughts of." The second definition is "to
direct to a person, place, etc., for information or anything
required."

Neither of these definitions would require Petitioner
physically to have sent the PT samples to the San Juan
Hospital laboratory (or to any other laboratory) for
analysis. Under either of these definitions, Petitioner's
recalibration of the equipment and retesting of the PT
samples at Petitioner, based on information, results, or
testing at another laboratory, suffices.

Were I to take Petitioner's argument to its logical
conclusion, it would render the entire concept of proficiency
testing meaningless. Under the scenario offered by
Petitioner, a laboratory, from information it received from
another laboratory, would be able to discover that its
equipment had to be recalibrated, recalibrate its testing
equipment, and retest the PT testing samples to enable it to
pass the proficiency test.

A cardinal rule of statutory construction is to interpret the
statute in such a way that no part is rendered meaningless.
Petitioner's interpretation of the word "referral" as not
including any proficiency testing sample that is not
physically removed from a laboratory for retesting would do
just that, that is, render meaningless the CLIA statutory
provisions prohibiting referrals.

Also, under Petitioner's definition, a referral would not
occur in an instance where a technician brought equipment to
a lab in order to retest a PT sample that had already been
tested on the laboratory's own equipment. Yet, this would be
a referral, irrespective of whether the PT sample ever left
the lab. The PT sample would be retested, and the results
would change or be reaffirmed based on information discovered
in the retesting.

In handling the 1st quarter 1995 PT samples, Petitioner's
technical consultant knew something was wrong when he did not
get similar results from Petitioner's and the San Juan
22

Hospital laboratory's proficiency tests. He inferred from
the discrepancy that something was wrong with Petitioner's
analyzer. He then recalibrated Petitioner's analyzer and re-
performed the proficiency testing, as a result of the
information he had obtained in the testing of PT samples at
the San Juan Hospital laboratory.

I find that, for a laboratory to have referred proficiency
testing samples to another laboratory for analysis, it need
not physically take or transfer its proficiency testing
samples to another laboratory. The facts involving
Petitioner's 1st quarter 1995 PT samples, where Petitioner,
in effect, received a second opinion from another laboratory
with regard to Petitioner's PT samples, are sufficient for me
to find that a referral of Petitioner's proficiency testing
samples occurred, within the meaning of the CLIA statute and
regulations. 42 U.S.C. § 263a(i) (4); 42 C.F.R. §
493.801(b) (4) and § 493.1840(b). Furthermore, when the
regulation cited by Petitioner is read as a whole, the
wording "(t)he laboratory must not send PT samples or
portions of samples to another laboratory ...." [42
C.F.R. § 493.801(b) (4)}] does not eliminate from consideration
the other ways in which referral may be accomplished.

To use the terms of the Dictionary definition, Petitioner
"directed" the samples "for information or anything
required," to another laboratory for analysis. By retesting
the samples based on information gleaned from the proficiency
testing at the San Juan Hospital laboratory, Petitioner
referred the samples. Thus, I find that Petitioner referred
its lst quarter 1995 PT samples to another laboratory for
analysis, despite the fact that these samples were not
removed from Petitioner.

III. HCFA Required to Revoke Petitioner's CLIA
Certificate for a One-Year Period

Petitioner acknowledges that its handling of CLIA samples was
not in accordance with CLIA standards. P. Br. 6. Petitioner
indicates that it has been diligent in its efforts to correct
the problems and that, in any event, the deficiencies
regarding its handling of PT samples do not warrant the
revocation of its CLIA certificate for one year. According
to Petitioner, Congress intended for a laboratory certificate
to be revoked only in instances of the most serious
misconduct. P. Br. 9.

The CLIA statute and applicable regulations require HCFA to
revoke a laboratory's CLIA certificate for at least one year
if the laboratory "intentionally refers" its proficiency
testing samples to another laboratory for analysis. 42
23

U.S.C. § 263a(i)(4); 42 C.F.R. § 493.801(b) (4) and 42 C.F.R.
§ 493.1840(b).

Neither I nor HCFA has the discretion in this case to revoke
Petitioner's CLIA certificate for less than the mandatory
minimum period of one year, or to substitute any lesser
sanction.

Conclusion
Petitioner intentionally referred its proficiency testing
samples to another laboratory for analysis during 2nd quarter
1994 and 1st quarter 1995. Accordingly, Petitioner's CLIA
certificate must be revoked for a one-year minimum mandatory

period, with concomitant cancellation of Petitioner's
Medicare payments for laboratory services.

/s/

Jill S. Clifton

Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Rolling Acres Care Center, Date: September 26, 1996
Petitioner,

Docket No. C-96-205
Decision No. CR437

-v-

Health Care Financing
Administration.

DECISION

Pending before me is the threshold issue of whether
Petitioner, a nursing home participating in the Medicare
and Medicaid programs, has a right to a hearing on the
decision of the Health Care Financing Administration
(HCFA), which prohibits Petitioner from participating in
any nurse aide training and competency evaluation
program.

Petitioner filed a request for hearing after having
received HCFA's notice letter dated October 19, 1995,
informing Petitioner of HCFA's determination that certain
actions adverse to Petitioner would take effect on
specified dates due to the results of surveys conducted
by the Ohio Department of Health (ODH) for HCFA.
Petitioner's hearing request challenged the survey
findings and HCFA's conclusion that certain alleged
deficiencies constituted substandard quality of care.
However, after another survey was conducted, HCFA
rescinded all of the earlier specified adverse actions
except for the prohibition against Petitioner conducting
nurse aide training and competency evaluations for a
period of two years, effective the date of the "extended
survey." The prohibition resulted from HCFA's
determination that Petitioner had provided a substandard
quality of care and was, therefore, subjected to an
“extended survey."

HCFA filed a motion to dismiss Petitioner's hearing
request on the grounds that the ban on nurse aide
training and competency evaluations is not appealable,
and the rescission of other remedies has eliminated
2

Petitioner's hearing rights on all other matters.' In
its brief in opposition to dismissal,” Petitioner stated
that it seeks a hearing "due to the denial of its ability
to participate in any fashion in the nurse aide
training/competency evaluation program . . . as the sole
and direct result of a unilateral finding of substandard
care by a single surveyor from the Ohio Department of

Health... ." P. Br. at 1. Petitioner alleges also
that the survey findings have placed it "on the road to
severe and automatic penalty." Id.

Recently, I decided that the regulations prohibit an
appeal of a ban on nurse aide training and competency
evaluations. Country Club Center, II, DAB CR433 (1996).
In said case as well as in Arcadia Acres, _Inc., DAB CR424
(1996), and University Towers Medical Pavilion, DAB CR436
(1996), I decided that a provider does not have the right
to a hearing where HCFA has found deficiencies but has
decided not to impose any enforcement actions or remedies
listed in 42 C.F.R. § 488.406. I reach the same
conclusion here for the same reasons. Therefore, I grant
HCFA's motion to dismiss the hearing request.

Findings of Fact and Conclusions of Law (FFCL)

Background facts and law

1. Petitioner is a 101-bed long-term care facility
located in North Lima, Ohio, which is certified as a
skilled nursing facility (SNF) under the Medicare program
and as a nursing facility (NF) under the Medicaid
program. P. Br., 2; P. Ex. 2; HCFA Br., 10; HCFA Ex. 12.

2. A SNF or a NF must not use as a full-time nurse aide
for more than four months any individual who has not
completed a state approved training and competency
evaluation program. Sections 1819(b) (5) (A) and
1919(b)(5) (A) of the Social Security Act (Act).

1 HCFA has filed a supporting brief (HCFA Br.),
13 exhibits (HCFA Ex. 1 through 13), and a reply brief
(HCFA Reply). I admit HCFA's exhibits for the purpose of
deciding the motion to dismiss.

2? Petitioner has filed a brief (P. Br.) and five
exhibits (P. Ex. 1 through 5). I admit Petitioner's
exhibits for the purpose of deciding the motion to
dismiss.
3

3. Under the Medicare and Medicaid programs, a nurse

aide training and competency evaluation program may be
approved for only a period of two years. 42 C.F.R. §

483.151(d).

4. To participate in the Medicare and Medicaid programs,
there is no requirement that a NF or SNF provide its own
nurse aide training and competency evaluation program.

5. NFs and SNFs which do not conduct their own nurse
aide training and competency evaluations must either hire
those nurse aides who are already trained and tested, or
send their aides for training at other facilities or at
vocational and technical schools with approved programs.
HCFA Ex. 10.

6. In the State of Ohio, there are 573 approved nurse
aide training programs, which train approximately 1,000
nurse aides each month. HCFA Ex. 10.

7. %In the State of Ohio, nurse aide competency
evaluations may be conducted at any licensed or certified
nursing facility which has not lost its approval to
perform such evaluations. HCFA Ex. 10.

8. Nurse aide testing is done every month at 10 regional
sites located throughout Ohio. HCFA Ex. 10.

9. If a nurse aide is employed by or has a job offer
from a facility, the Medicare and Medicaid programs will
issue reimbursement for the cost of training and
evaluating the aide, regardless of whether such services
were provided by the employing facility. 56 Fed. Reg.
48901, 48916 (1991).

10. In 1995, Petitioner was not approved to offer a
nurse aide training and competency evaluation program
because Petitioner had not applied for approval. HCFA
Ex. 10.

11. Petitioner does not conduct any nurse aide training
or competency evaluation program. P. Br., 3; HCFA Br.
20.

12. As a provider under the Medicare and Medicaid
programs, Petitioner is subject to three types of surveys
by HCFA or its agent:

a. standard surveys, which take place once
every 15 months;
4

b. extended surveys, which are conducted when
a facility is found to have provided
substandard quality of care under a standard
survey; and

c. surveys conducted due to complaints or
because HCFA has reasons to question a
facility's compliance.

P. Br., 2 (citing 42 U.S.C. §§ 1395i-3(g) (2) (A), 1395i-
3(g) (2) (B) (i), 1395i-3(g) (2) (D), 1396r(g) (2) (A),
1396 (g) (B)(i), 1396(g) (2) (D)).

13. The Act prohibits approval of a nurse aide training
and testing program offered by a NF or SNF if the
facility has been subject to an extended or partial
extended survey, as defined under section
1819(g) (2) (B) (i) of the Act, within the past two years,
unless the surveys find substantial compliance with
program requirements. Sections 1819(f) (2) (B) (iii) (I) (b)
and 1919(f) (2)(B) (iii) (I) (B) of the Act.

14. On July 24, 1995, ODH completed an annual standard
survey of Petitioner. P. Ex. 2; HCFA Ex. 1 at 1.

15. By letter dated August 3, 1995, ODH notified
Petitioner of the following information based on the July
24, 1995 survey:

a. that, Petitioner was not in substantial
compliance with participation requirements for
the Medicare and Medicaid programs and has been
cited for four deficiencies which constitute
substandard quality of care as defined in 42
C.F.R. § 488.301;

b. that, if Petitioner fails to submit an
acceptable plan of correction and achieve
substantial compliance by the deadlines
indicated in the notice letter, ODH would
recommend that HCFA impose two specified
remedies against Petitioner;

c. that, pursuant to 42 C.F.R. § 488.331,
Petitioner has the right use an informal
dispute resolution process to question the
deficiencies for which it has been cited; and

da. that, if Petitioner conducted a nurse aide
training and competency evaluation program and
has been subject to an "extended survey" or a
"partial extended survey" or a remedy specified
therein, Petitioner would not be able to
5

conduct any nurse aide training and competency
evaluations for a period of two years.

HCFA Ex. 3.

16. An “extended survey" means "a survey that evaluates
additional participation requirements subsequent to
finding substandard quality of care during a standard
survey." 42 C.F.R. § 488.301.

17. “Substandard quality of care" means "one or more
deficiencies related to participation requirements under
§ 483.13, [r]Jesident behavior and facility practices, §
483.15, [q]Juality of life, or § 483.25, [q]uality of care
of this chapter, which constitute either immediate
jeopardy to resident health or safety; a pattern of or
widespread actual harm that is not immediate jeopardy; or
a widespread potential for more than minimal harm, but
less than immediate jeopardy, with no actual harm." 42
C.F.R. § 488.301.

18. On August 11, 1995, Petitioner requested informal
dispute resolution under 42 C.F.R. § 488.331 to address
the citations from the July 24, 1995 survey. HCFA Ex. 5.

19. By letter dated August 24, 1995, ODH informed
Petitioner that, pursuant to the informal dispute
resolution process, ODH had decided not to change the
citations for any of the deficiencies found in the July
24, 1995 survey. HCFA Ex. 7.

20. On September 8, 1995, ODH completed a survey of
Petitioner due to a complaint of patient neglect and
found that one quality of care deficiency had remained
uncorrected from the July 24, 1995 survey. HCFA Ex. 4.

21. On September 13, 1995, Petitioner submitted a plan
of correction to address the deficiencies cited from the
July 24, 1995 survey. HCFA Br., 12.

22. On September 22, 1995, Petitioner submitted a plan
of correction to address the citations from the September
8, 1995 survey. HCFA Ex. 4.

23. On September 22, 1995, Petitioner submitted also a
request for informal dispute resolution under 42 C.F.R. §
488.331 to address the deficiency cited from the
September 8, 1995 complaint survey. HCFA Ex. 5.

24. On September 26, 1995, ODH completed its review of
the September 8, 1995 survey findings under the informal
dispute resolution process and affirmed the citation of
deficiencies from said survey. HCFA Ex. 6 at 4.
6

25. On September 28, 1995, ODH completed a revisit
survey and determined that Petitioner had corrected the
quality of care deficiencies from the July 24, 1995 and
September 8, 1995 surveys, but Petitioner was not in
substantial compliance with certification requirements
due to violations of a Life Safety Code Standard. HCFA
Ex. 8 at 7 - 8; HCFA Ex. 9; P. Ex. 2; HCFA Br., 12.

26. On or about October 12, 1995, Petitioner timely
submitted a plan of correction to address the citations
from the September 28, 1995 survey. HCFA Ex. 8 at 7 - 8;
HCFA Ex. 9.

27. By letter dated October 19,° 1995, HCFA notified
Petitioner as follows:

a. based on the results of the July 24, 1995
and September 28, 1995 surveys, HCFA was
imposing the remedies of:

1. denying Petitioner payments for new
admissions under the Medicare and Medicaid
programs effective November 10, 1995. P. Ex.
2; and

2. terminating Petitioner's Medicare and
Medicaid participation on January 26, 1996, if
substantial compliance has not been achieved by
then. Id.;

b. the survey completed on July 24, 1995 had
become an "extended survey," because said
survey found substandard quality of care. P.
Ex. 2; HCFA Br., 10;

c. in accordance with section
1819(f) (2) (B) (iii) (I) (b) of the Act, Petitioner
is prohibited from conducting any nurse aide
training and/or competency evaluation program
for two years from July 24, 1995. P. Ex. 2;

da. HCFA instructed ODH to conduct another
revisit survey to ascertain if substantial
compliance had been achieved based on
Petitioner's allegations. P. Ex. 2.

28. On November 9, 1995, ODH completed a follow-up
survey to verify Petitioner's compliance and determined
that Petitioner had corrected its deficiencies and come
into substantial compliance with program requirements.
HCFA Ex. 11.
7

29. As a consequence of the November 9, 1995 survey
results, HCFA accepted ODH's recommendation to rescind
the remedies described in FFCL 27a, above. Therefore,
neither the denial of payments for new Medicare and
Medicaid admissions nor the termination of Petitioner's
provider agreements took effect. HCFA Ex. 12.

30. On December 5, 1995, Petitioner submitted a request
for hearing, to contest the findings from the July 24,
1995 and September 28, 1995 surveys, and to contest
HCFA's October 19, 1995 determination to deny Medicare
and Medicaid payments for new admissions effective
November 10, 1995, to terminate Petitioner's
participation in the programs effective January 26, 1996,
and to prohibit Petitioner from conducting nurse aide
training and competency evaluations for two years from
July 24, 1995. Hearing Request.

Findings on Petitioner's asserted facts

31. HCFA's notice letter did not designate the
prohibition against conducting nurse aide training and
competency evaluations as one of the remedies for which
Petitioner may request a hearing. See P. Br., 7; P. Ex.
2.

32. Petitioner has adduced no support for its contention
that a notice dated October 18, 1995 informed Petitioner
that it could no longer serve as a testing site for nurse
aide evaluation programs. See P. Br., 3.

33. The record contains no fact supporting Petitioner's
allegation that it was serving as a test site for other
entities' nurse aide evaluation programs prior to HCFA's
imposition of the ban against Petitioner or that
Petitioner would be serving as a test site for such
programs absent the ban imposed by HCFA. See P. Br. 3,
6.

34. The record contains no fact supporting Petitioner's
contention that, as a result of the ban against
conducting nurse aide training and competency
evaluations, Petitioner has had "a valuable business
relationship severed, [and] has lost contact with nurse
aides whom it might desire to employ... ." P. Br., 3;
FFCL 4 - 11, 33, 34.

35. The record contains no fact supporting Petitioner's
fear that it might be found to have provided substandard
quality of care in three consecutive standard surveys,
which would then cause HCFA to deny payments under the
programs and ODH to impose state monitoring as remedies
under 42 C.F.R. § 488.414. P. Br., 10.
8

36. The two pages of a plan of correction submitted by
Petitioner for a June 2, 1996 survey (P. Ex. 5) are part
of another action pending before me, DAB Docket Number C-
96-350, in which Petitioner challenges the findings from
said survey and the resultant determinations by HCFA to
impose a civil monetary penalty as well as other
remedies.

37. In another action filed by Petitioner, DAB Docket
Number C-96-350, Petitioner is entitled to a hearing on
the merits of the June 2, 1996 survey and the resultant
civil monetary penalty already imposed by HCFA, as well
as any other issues specified by the regulations. 42
C.F.R. §§ 498.3(b), 488.438(e); FFCL 38, below.

Conclusions on Petitioner's right to a hearing

38. As relevant to the facts of this case, a NF or SNF
is entitled to a hearing to challenge HCFA's findings of
deficiencies only if HCFA has imposed a remedy or
enforcement action listed in 42 C.F.R. § 488.406 as a
result of the findings of deficiencies. 42 C.F.R. §
498.3(b) (12); Arcadia Acres, Inc.; Fort Tryon Nursing
Home, DAB CR425 (1996); University Towers Medical
Pavilion; Country Club Center, II

39. HCFA's rescission of previously imposed remedies
cancels any previously existing hearing rights to
challenge the rescinded remedy or its bases. Id.

40. Having previously decided to impose two remedies
listed in 42 C.F.R. § 488.406 (ban on payment for new
Medicare and Medicaid admissions and termination of

Petitioner's provider agreements) against Petitioner,
HCFA decided to rescind these two remedies. FFCL 29.

41. A loss of nurse aide training and competency
evaluations is not a remedy or enforcement action listed
in 42 C.F.R. § 488.406.

42. The regulations specifically state that, for NFs and
SNFs, the loss of nurse aide training and competency
evaluations programs is not an administrative
determination which is subject to the hearing rights or
other appeals procedures specified in 42 C.F.R. Part 498.
42 C.F.R. § 498.3(d) (11).

43. The fact that the ban on nurse aide training and
competency evaluations is sometimes called a "remedy"
(see citations at P. Br., 7) does not give rise to
hearing rights under 42 C.F.R. Part 498 of the
regulations. FFCL 41, 42.
9

44. Under the regulations, a provider wishing to
question the ban on nurse aide training and competency
evaluations only has the right to request participation
in the informal dispute resolution process available
under 42 C.F.R. § 488.331. FFCL 18, 23; 59 Fed. Reg.
56229 (1994).

45. There is no right to review under 42 C.F.R. Part 498
where HCFA finds that a provider has deficiencies but is
in compliance with the conditions of participation. 42
C.F.R. §§ 498.3(a), 498.3(d) (1).

46. Petitioner is not entitled to an evidentiary hearing
to dispute the two-year ban on conducting nurse aide
training and competency evaluations. FFCL 41 - 45.

47. Petitioner is not entitled to an evidentiary hearing
to dispute the deficiencies found during the surveys of
July 24, September 8, or September 28, 1995. FFCL 29,
38, 39, 44, 45.

48. I do not have the discretion to deviate from the
plain language of the regulations which preclude me from
hearing and deciding the merits of issues raised by
Petitioner in its request for hearing. See FFCL 30, 38 -
47.

Discussion

I have set forth an explanation of the regulatory
framework in Country Club Center, II, Arcadia Acres,
Inc., and University Towers Medical Pavilion. I adopt
and incorporate the rationale from those cases. I
summarize below the most significant legal principles in
the context of the arguments submitted by Petitioner.

In this as well as in all of the foregoing cases, the
disposition of a motion to dismiss filed by HCFA turned
on whether the hearings rights and procedures of 42
C.F.R. Part 498 were applicable to the determinations
challenged by the providers. A hearing before an
administrative law judge is part of the administrative
review and appeals process set forth at 42 C.F.R. Part
498. A provider's right to obtain a hearing or other
review under 42 C.F.R. Part 498 depends on whether it is
an “affected party" within the meaning of the
regulations. 42 C.F.R. §§ 498.20, 498.40. An “affected
party" means a provider or other entity that is affected
by an "initial determination or by any subsequent
determination or decision issued under this part [part
498 of 42 C.F.R.]) . . . ." 42 C.F.R. § 498.2.
10

In this case as well as in the foregoing cases, HCFA had
decided to rescind various remedies which were appealable
under 42 C.F.R. Part 498 prior to their effectuation.
Thus, I reached the same conclusion here as I had in the
other cases: when HCFA rescinds previously appealable
remedies, the provider loses the status of an "affected
party" because it no longer has an “initial
determination" or any subsequent determination that is
appealable under the regulations. Because the providers
in all these cases were attempting to secure hearings on
the merits of the survey findings issued by HCFA, I re-
emphasize here also that a provider's right to challenge
survey findings arises only when the findings have
resulted in the imposition of an appealable remedy
specified by regulation. This is the same conclusion
reached by Administrative Law Judge Steven Kessel in the
case of Fort Tryon Nursing Home.

As in the case of Country Club Center, II, HCFA
rescinded the previously appealable remedies but decided
to use the survey results as a basis for prohibiting
Petitioner from conducting any nurse aide training and
competency evaluation programs for a period of two years.
This prohibition is not a determination subject to review
under 42 C.F.R. Part 498. FFCL 41, 42. Therefore, as in
Country Club Center, I], Petitioner herein also cannot
obtain a hearing on the merits of the survey results
which led to the prohibition against providing nurse aide
training and competency evaluations.

Petitioner has requested a hearing to contest the
prohibition against providing nurse aide training and
competency evaluations by alleging that it has suffered
detriments or losses as a result of the prohibition.
However, Petitioner had not applied for approval to
provide nurse aide training and competency evaluations
prior to HCFA's imposing the prohibition for two years.
Nor is there evidence of record to support Petitioner's
contention that it was being used as a testing site for
other facilities' nurse aide training and evaluation
programs or that HCFA has prohibited Petitioner from
serving even as a test site. Nor has Petitioner proved
its contention that, due to HCFA's prohibition against
Petitioner's conducting a nurse aide training and
competency evaluation program, it has lost contact with
potential job applicants or has had to sever business
deals to serve as a test site. FFCL 4 - 11, 31 - 34.
Therefore, even if the loss of property rights or
interests were relevant to the issue of whether
Petitioner is entitled to a hearing under 42 C.F.R. Part
498, I would conclude that Petitioner has failed to
establish such losses.
11

To provide support for its hearing request, Petitioner
has cited certain language from the Federal Register to
show that the Department of Health and Human Services
considers the ban on nurse aide training and competency
evaluations to be a "remedy." P. Br., 7. Petitioner
argues that HCFA is playing "legal gymnastics" by arguing
against a hearing when the ban on nurse aide training and
competency evaluations is a remedy because it "looks like
a remedy, acts like a remedy, and walks like a remedy

+ +. +" Id. However, the issue has never been whether
the ban is a "remedy," but whether the ban is a remedy
which the regulations has designated as an appealable
remedy. See FFCL 38 = 47. Petitioner is well aware, as
demonstrated by its quotation from the Federal Register,
that the Secretary of Health and Human Services
intentionally made the informal dispute resolution
process the only means for challenging the denial or
withdrawal of the approval for conducting nurse aide
training and competency evaluations. P. Br., 8.°

Petitioner complains that HCFA is not providing
sufficient due process by permitting only an informal
dispute resolution proceeding when nurse aide training
and competency evaluations have been banned. P. Br., 9.
Whatever the merits of Petitioner's complaints on the due
process decisions made by the Secretary of Health and
Human Services, I am required to give effect to the

> Petitioner quoted thusly from the Federal

Register:

While the Act does not provide for any formal
appeals for denial or withdrawal of a NATCEP

(nurse aide training and competency evaluation
program), we believe that providers ought to

have some opportunity to challenge this
disapproval. Therefore, we expect providers to
appeal their NATCEP disapproval within the
timeframe established for dispute resolution

. . . We are limiting the appeals of these matters
to the informal dispute resolution process because
we do not believe the loss of a NATCEP is a remedy
of the same magnitude or type as other statutory
remedies for which a more formal appeals mechanism
is available. . . . We believe the informal dispute
resolution process satisfies essential elements of
due process here since a provider will have notice
of the intended denial of its NATCEP and the
opportunity to meet with agency officials to
challenge the findings that gave rise to the denial.

P. Br., 8 - 9 (quoting from 59 Fed. Reg. 56229 (1994))
(emphasis supplied by Petitioner) .
12

regulations as written. I cannot disregard the
unambiguous limitations imposed by the regulations. I
adjudicate these cases under a delegation from the
Secretary of Health and Human Services. In this
capacity, I am required to follow all substantive rules
and regulations duly promulgated by the Secretary. See
pyer_v. Secretary _of Health and Human Services, 889 F.2d
682, 685 (6th Cir. 1989).

There is no regulation which supports Petitioner's legal
arguments. The regulations I have considered are
dispositive on the issue of whether Petitioner may
challenge in this forum the merits of HCFA's decision to
ban nurse aide training and testing by Petitioner. For
example, the language of the regulation codified at 42
C.F.R. § 498.3(d) (1) does not leave me with any
discretion to grant Petitioner the hearing it requests.
The critical fact is that the Secretary of Health and
Human Services has declined to define the prohibition
against nurse aide training and competency evaluations as
a remedy or enforcement action subject to a hearing in
this forum. 42 C.F.R. §§ 498.3(c) (11), 488.406; FFCL 41,
43, 44, 45. Since HCFA has rescinded the two enforcement
actions imposed under 42 C.F.R. § 88.406, there is no
determination by HCFA subject to the hearing rights
specified in 42 C.F.R. Part 498. FFCL 40, 41, 45.
Therefore, Petitioner also cannot challenge the survey
findings which resulted in the ban on nurse aide training
and testing, and which resulted in HCFA's earlier (but
now rescinded) determination to impose two of the
enforcement actions specified in 42 C.F.R. § 488.406.
FFCL 46 - 48.

Petitioner complains that, without an on-the-merits
hearing on the survey findings, Petitioner is at risk for
suffering future harm of greater magnitude should HCFA
later find that Petitioner has provided substandard
quality of care in a total of three consecutive standard
surveys. However, Petitioner herein has other hearing
requests pending which challenge the substandard quality
of care findings from a later survey, a survey which
resulted in HCFA imposing a civil monetary penalty and
other appealable remedies against Petitioner. FFCL 36,
37. Also pending before me for hearing is another case
filed by Petitioner (DAB Docket No. C-96-273), wherein
Petitioner challenges, inter alia, the deficiencies found
during an "abbreviated standard survey" conducted on
February 12, 1996 and HCFA's imposition of a remedy
specified in 42 C.F.R. § 488.406. If Petitioner prevails
in its other action (DAB Docket No. C-96-350), there
would be no findings of substandard quality of care in
consecutive standard surveys; in such an event,
Petitioner would not need to fear sanctions resulting
from three consecutive surveys finding substandard
13

quality of care. At this time, Petitioner's fears of
having three consecutive standard surveys find
substandard quality of care are premature at best.

Conclusion

For the foregoing reasons, I conclude that I lack
jurisdiction to hear and decide Petitioner's challenge to
the two-year ban on nurse aide training and competency
evaluations imposed by HCFA. In addition, I conclude
that, as a matter of law, the case presents no appealable
issue within the purview of 42 C.F.R. § 498.3(b). Based
on the survey findings contested by Petitioner, HCFA has
made no resultant determination subject to a hearing and
adjudication by me; the request for hearing cannot
challenge the deficiencies simpliciter. Therefore, I
cannot reach the merits of the survey findings.

Accordingly, the case is hereby dismissed pursuant to 42
C.F.R. § 498.70(b) on the basis that Petitioner does not
have a right to a hearing.

/s/

Mimi Hwang Leahy

Administrative Law Judge


Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Civil Remedies Division

In the Case of:
Bernard Harmon, DATE: September 3, 1996
Petitioner,

Docket No. C-95-158
Decision No. CR435

-v-

The Inspector General.

DECISION

I conclude that I have no authority to hear and decide
Petitioner's July 3, 1995 request for a hearing.
Therefore, I dismiss Petitioner's request for a hearing.

I. Background

By letter dated December 13, 1993, Bernard Harmon, the
Petitioner herein, was notified by the Inspector General
(I.G.) of the U.S. Department of Health and Human
Services (HHS), that it had been decided to exclude
Petitioner for a period of five years from participation
in Medicare and Medicaid. The I.G.'s rationale was that
the exclusion is mandated by sections 1128(a)(1) and
1128(c)(3)(B) of the Social Security Act (Act) because
Petitioner had been convicted of a criminal offense
related to the delivery of an item or service under
Medicaid.

Petitioner, through counsel, filed a hearing request
dated January 6, 1994, and the case was assigned to me as
Docket Number C-94-051. By letter dated January 18,
1994, the I.G. imposed and directed a five-year exclusion
against C.D. Hearing Laboratories, Inc. (Docket Number C-
94-287), which Petitioner apparently owned at the time,
pursuant to section 1128(b) (8) of the Act. I
consolidated the two cases in February 1994.

In February 1994, pursuant to my Order and Schedule for
Filing Briefs and Documentary Evidence dated February 7,
1994, the I.G. filed a brief in support of a motion for
2

summary disposition accompanied by I.G. Exhibits (I.G.
Exs.) 1-9.

By letter dated April 4, 1994, Petitioner's counsel
withdrew the hearing requests as to Docket Nos. C-94-051
and C-94-287. He stated that Petitioners (i.e., Bernard
Harmon and C.D. Hearing Laboratories, Inc.) would not
oppose the imposed exclusion and that the "non-opposition
was being made without prejudice" since they were seeking
a request for a waiver from the State of New York. On
April 13, 1994, based on Petitioner's letter, I dismissed
both cases. Order Dismissing Cases, dated April 13,
1994.

By letter dated July 3, 1995, Petitioner, acting pro se,
requested a hearing to contest his December 1993 five-
year exclusion. This hearing request was assigned to me
as Docket Number C-95-158. Petitioner contended in his
letter that the withdrawal of his previous hearing
request was arranged by his attorney without his
knowledge or consent. Petitioner argued also that,
although he had pled guilty to the underlying charge,
there was no basis for the charge upon which his
conviction was based.

I issued an Order to Show Cause dated July 25, 1995, in
which I gave Petitioner a deadline by which to respond
and show to my satisfaction that he did not know or
consent to his attorney's withdrawal of the previous
hearing request and why, after all the time that has
elapsed since his exclusion and my dismissal, he should
have a hearing. The Order stated further that, if
Petitioner did submit a response, the I.G. would have
until October 5, 1995 to reply.

I received two letters in response to my Order to Show
Cause: a letter dated August 22, 1995 from Petitioner
and a letter dated August 16, 1995 from Mr. Finkelstein,
the attorney who had previously represented Petitioner in
the earlier actions (Docket Nos. C-94-051 and C-94-287).
In his letter, Petitioner again requested a hearing to
contest his December 1993 exclusion. Petitioner
contended that he did not believe he had been properly
represented by his criminal attorney. Petitioner argued
that he was innocent of the charges against him and was
unfairly convicted. He reiterated his contention that he
had not known of or consented to the withdrawal of his
earlier hearing request. Petitioner briefly set forth
his version of the circumstances of his criminal case and
alleged that he had never made any improper charges to
Medicaid.
3

In his letter dated August 16, 1995, Mr. Finkelstein
stated that Petitioner had informed him of his new
request for a hearing. He alleged that Petitioner may
not have fully understood the withdrawal of the earlier
cases. He stated that requests for a waiver from New
York State and also an attempt to set aside Petitioner's
guilty plea based upon legal malpractice were
unsuccessful. Mr. Finkelstein contended further that
Petitioner claimed he was never informed of the
consequences of pleading guilty by his criminal attorney
and that, "had he known that he would be excluded for
five years he never would have pleaded guilty to a
program-related crime but would have gone to trial. . .
." Mr. Finkelstein expressed his opinion that Petitioner
"was under the impression that he never, technically or
otherwise, consented to or understood what took place in
terms of my withdrawl [sic] of the previous hearing
request. Rather, he believed that the matter was being
held in abeyance pending the outcome of local proceedings
and that he would be given an opportunity to oppose the
exclusion at a later date if he saw fit." Mr.
Finkelstein requested that Petitioner be given a hearing.

Because the I.G. was not initially aware that Petitioner
had filed a submission since Petitioner had not served
the I.G., the I.G. requested an extension of one month to
submit a response. I granted the I.G.'s request.

The I.G. filed a Memorandum of Law seeking an order
dismissing Petitioner's request for a hearing. In its
Memorandum, the I.G. argued that Petitioner's request for
a hearing should be dismissed for untimeliness and
because it did not raise any issues which I have the
authority to hear and decide. The I.G. alleged that
Petitioner's July 3, 1995 hearing request was untimely
since it was filed almost seventeen months after
Petitioner received the I1.G.'s December 13, 1993
exclusion notice. The I.G. questioned the credibility of
Petitioner's contention that he did not know of or
consent to his counsel's withdrawal of his earlier
hearing request. The I.G. argued that Petitioner's
counsel's correspondence shows that Petitioner was
informed of his counsel's course of action and that in
hindsight Petitioner may not have fully understood the
significance of the withdrawal of his hearing request.

The I.G. contended further that Petitioner's request for
a hearing is a collateral attack upon his conviction,
which is prohibited under the regulations. The I.G.
asserted that Petitioner does not dispute that a basis
for his exclusion exists. Lastly, the I.G. argued that
the relevant regulations do not allow the reopening of
cases which have been dismissed.
4

I issued another Order to Show Cause dated April 18,
1996. I stated, inter alia, that, based on the letters
from Petitioner and Mr. Finkelstein, it appeared that
Petitioner admits that he pled guilty to a program-
related crime. I stated further that, even without
addressing the timeliness issue, there appeared to be
little doubt that Petitioner's exclusion for five years
is warranted under the regulations. I gave Petitioner
the opportunity to address the issue of the validity of
his exclusion, with a brief and documentation in support
of his arguments. I stated that, if I did not receive
anything from Petitioner by the deadline given, I would
decide the case based on what was then in the record
before me, which included the 1I.G.'s brief, with
accompanying exhibits, which was filed on February 28,
1994, in support of its motion for summary disposition in
the earlier consolidated action (Docket Nos. C-94-051 and
C-94-287). I stated further that although I did not
consider the I.G.'s brief in issuing the April 1994
dismissal order, I would consider it in this present
action.

Lastly, in the Order to Show Cause, I informed Petitioner
that, if he was seeking also a hearing on the five-year
exclusion against C.D. Hearing Laboratories, Inc., he
should state that in his response and include any
pertinent arguments and documentation.

Petitioner submitted three exhibits (P. Exs. 1-3), in
response to the Order to Show Cause. The I.G. has not
objected to the admission into evidence of the exhibits
submitted by Petitioner. In the absence of objection, I
admit into evidence P. Exs. 1-3.

I did not receive anything from the I.G. in response to
Petitioner's submission.

Petitioner has not objected to the admission into
evidence of the exhibits submitted previously by the I.G.
in 1994. In the absence of objection, I admit into
evidence I.G. Exs. 1-9.

I GRANT the I.G.'s motion to dismiss Petitioner's hearing
request. I have no authority to consider Petitioner's
arguments as they may relate to reopening, or to grant
him a new hearing in this case. For the reasons stated

1 petitioner did not respond to the portion of
the Order to Show Cause which requested him to clarify
his position with regard to the hearing request of C.D.
Hearing Laboratories, Inc. For this reason, my decision
addresses only the hearing request relating to Petitioner
himself.
5

below, Petitioner's 1995 request for a hearing is
dismissed.

II. Issue

The issue is whether I have authority to hear and decide
Petitioner's July 3, 1995 request to, in effect, reopen
his case and grant him a hearing.

III. Findings

1. By letter dated December 13, 1993, Petitioner was
notified by the I.G. that it had been decided to exclude
him for five years from participation in Medicare and
Medicaid as a result of his conviction of a criminal
offense related to the delivery of an item or service
under Medicaid.

2. Petitioner, through counsel, filed a hearing request
dated January 6, 1994, and the case was assigned to me as
Docket Number C-94-051.

3. By letter dated January 18, 1994, the I.G. imposed
and directed a five-year exclusion against C.D. Hearing
Laboratories, Inc. (Docket Number C~-94~-287), which
Petitioner apparently owned at the time, pursuant to
section 1128(b) (8) of the Act. I consolidated the two
cases in February 1994.

4. On April 13, 1994, based on Petitioner's letter dated
April 4, 1994, I dismissed both cases. Order Dismissing
Cases, dated April 13, 1994.

5. By letter dated July 3, 1995, Petitioner, acting pro
se, requested a hearing on the December 1993 five-year
exclusion. Petitioner's July 3, 1995 request is, in
effect, a request to reopen his case and grant hima
hearing.

6. The regulation at 42 C.F.R. § 1005.20(d) provides
that "Except as provided in paragraph (e) of this
section, unless the initial decision is appealed to the
DAB, it will be final and binding on the parties 30 days
after the ALJ serves the parties with a copy of the
decision. If service is by mail, the date of service
will be deemed to be 5 days from the date of mailing."

7. Inasmuch as a dismissal of a case is a disposition of
the matter, albeit not on the merits, I find that the
rationale of 42 C.F.R. § 1005.20(d) applies to
dismissals, as well as to decisions.
6

8. Under the rationale of 42 C.F.R. § 1005.20(d), once
an administrative law judge issues a dismissal of a case,
that dismissal becomes final and binding on the parties
30 days after the administrative law judge serves the
parties with a copy of the dismissal.

9. My dismissal became final and binding on May 18,
1994.

10. Petitioner made his July 3, 1995 request to reopen
his case more than one year after the date my dismissal
order became final.

11. I do not have authority to hear and decide the
merits of Petitioner's July 3, 1995 request for a hearing
under the regulations contained in 42 C.F.R. Part 1005.

12. Given that my dismissal of Petitioner's case has
become final, Petitioner has no right to a hearing at
this time.

13. In the alternative, if I were to reopen Petitioner's
case, I would conclude that the I.G. was required to
exclude Petitioner for five years as a matter of law
because Petitioner was convicted of a criminal offense
related to the delivery of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the
Act.

Iv. Discussion

The Part 1005 regulations contain no language relating
specifically to reopening or revising an administrative
law judge or an appellate panel decision, or a dismissal
of a case by an administrative law judge. See 42 C.F.R.
§§ 1005.4, 1005.20, 1005.21. The regulations provide
that, unless appealed, an administrative law judge
decision will become final and binding on the parties 30
days from the date that the administrative law judge
serves the parties with a copy of the decision. 42
C.F.R. § 1005.20(d). The regulations provide
additionally that a decision by an appellate panel will
become final and binding 60 days from the date that it
serves the parties with a copy of its decision. 42
C.F.R. § 1005.21(j).

A logical reading of 42 C.F.R. § 1005.20(d) is that it
permits the administrative law judge to consider
reopening and revising a decision during the 30-day time
period prior to the decision becoming final and binding,
or during the dates between the date of service of a
decision on the parties and the date of appeal of that
7

decision.? However, it is also logical to read the
regulations as precluding the administrative law judge
from reopening or revising a decision after that decision
becomes final and binding or after DAB appellate review
is sought. Keith 0. Irby, DAB CR427 (1996).

I note that the regulations cited above specifically
refer to decisions.’ Inasmuch as a dismissal of a case
is a disposition of the matter, albeit not on the merits,
I find the regulations cited above should be interpreted
to apply to dismissals as well. Thus, once an
administrative law judge issues a dismissal of a case,
under the rationale of 42 C.F.R. § 1005.20(d), it would
become final and binding on the parties 30 days after the
ALJ serves the parties with a copy of the dismissal.

As stated above, Petitioner made his original hearing
request in 1994. I dismissed Petitioner's hearing
request (as well as that of his company) on April 13,
1994, pursuant to the April 4, 1994 letter filed by his
counsel, Mr. Finkelstein.

By his letter dated July 3, 1995, Petitioner, now acting
pro se, is, in effect, seeking a reopening of his case
despite the fact that I dismissed the matter in April
1994. In her brief, the I.G. argued that Petitioner's
hearing request should be dismissed for untimeliness and
because it did not raise any issues which I have the
authority to hear and decide. The I.G. argued also,
among other things, that the relevant regulations do not
contain any provisions which permit the reopening of
cases which have been dismissed.

Because I am treating Petitioner's July 1995 request as a
motion to vacate my 1994 dismissal of his case, the
relevant issue is not whether this request was filed
timely in accordance with 42 C.F.R. § 1005.2(e), but
whether I have the authority under the regulations to now
reopen Petitioner's case. I conclude that I do not have
that authority.

2? I do not have authority to interpret
regulations which affect the handling of appeals at the
DAB. Therefore, I am making no decision concerning
whether an appellate panel might have authority to reopen
or revise its decision in a case, under 42 C.F.R. §
1005.21(3).

3 42 C.F.R. § 1005.20(a) provides that "[t]he ALJ
will issue an initial decision, based only on the record,
which will contain findings of fact and conclusions of
law."
8

Applying the rationale of 42 C.F.R. § 1005.20(d) to
dismissals, it is logical to conclude that my dismissal
of the cases concerning Petitioner and his company became
final and binding on the parties 30 days from the date
they were served. Petitioner does not allege, nor do the
facts support, that he filed his July 1995 request within
30 days of receipt of my April 1994 dismissal.
Petitioner's July 1995 request to reopen my April 13,
1994 dismissal order is thus out of time. Accordingly, I
am without authority under the regulations to hear and
decide Petitioner's July 1995 request to, in effect,
reopen my dismissal of his case. Given that the
dismissal has become final, Petitioner has no right toa
hearing at this time. Therefore, I grant the I.G.'s

. motion and dismiss Petitioner's July 3, 1995 hearing
request.

Furthermore, to the extent that Petitioner misunderstood
the withdrawal of his hearing request and its
consequences, it appears that any such misunderstanding
occurred between Petitioner and his counsel, Mr.
Finkelstein. The dismissal order I issued was
unequivocal and stated that the cases (i.e., the two
cases concerning Petitioner and his company) were
dismissed. If Petitioner had a question about the nature
of the dismissal, it was incumbent upon him or his
counsel to raise such questions upon receiving the order.
I agree with the I.G. that "the remedy lies between
counsel and petitioner." I.G. Memorandum of Law, at 3.

Although I gave Petitioner the opportunity to address the
validity of his exclusion by submitting documentation in
support of his arguments (Order to Show Cause, dated
April 18, 1996), for the reasons stated above, I have
since determined that I lack authority to reopen the
record in this case and grant Petitioner a hearing on the
merits.

However, in the alternative, were I to consider
Petitioner's case on the merits, I would find that the
I.G. properly excluded him for five years from
participation in the Medicare and Medicaid programs
pursuant to sections 1128(a)(1) and 1128(c) (3) (B) of the
Act, for the reasons stated below.

It is undisputed that Petitioner pled guilty to the crime
of offering a false instrument for filing in the second
degree, and that the State court accepted the plea. I.G.
Ex. 2. Petitioner was thus convicted of a criminal
offense within the meaning of sections 1128(a)(1) and
1128(i) of the Act.
9

Petitioner, in pleading guilty, admitted at the
sentencing proceeding that he had filed a false Medicaid
claim form with a fiscal agent for New York State
Medicaid. I.G. Ex. 2 at 6. Petitioner admitted that the
claim form falsely stated the acquisition cost of a
hearing aid that he dispensed. Id. It has been
previously determined that financial misconduct directed
at Medicare or Medicaid, in connection with the delivery
of items or services under the program, constitutes a
program-related offense invoking mandatory exclusion.
Jack W. Greene, DAB CR19 (1989), aff'd DAB 1078 (1989),
aff'd sub nom. Greene v. Sullivan, 731 F. Supp. 835, 838
(E.D. Tenn. 1990). Thus, the criminal offense which
provided the basis for Petitioner's conviction
constitutes a criminal offense related to the delivery of
an item or service under Medicaid, within the meaning of
section 1128(a)(1) of the Act.

V. Conclusion

I lack authority to reopen Petitioner's case because the
dismissal of his case has become final and binding.
Therefore, I grant the I.G.'s motion to dismiss. In the
alternative, were I to consider Petitioner's case on the
merits, I would conclude that the I.G. was required to
exclude Petitioner for five years as a matter of law
because Petitioner was convicted of a criminal offense
related to the delivery of an item or service under
Medicaid, within the meaning of section 1128(a)(1) of the
Act.

/s/

Joseph K. Riotto
Administrative Law Judge