July/August 2008
A recent administrative law hearing involving Doctors Lab, an independent rural reference laboratory in Pleasant Hill, Louisiana, and the Centers for Medicare and Medicaid Services (CMS) highlights the question of whether CMS has the authority to issue a stop testing order as part of a directed plan of correction.
Doctors Lab provides laboratory testing services to about 40 nursing homes, as well as various hospices, home health agencies, behavioral centers, and long-term psychiatric facilities in northwest and central Louisiana.
On June 1, 2007, a COLA surveyor conducted its semi-annual survey of Doctors Lab, noting only minor clinically insignificant issues. In July, the Louisiana Department of Health and Hospitals (LDHH) conducted its validation survey. The surveyor told the lab owner and director, Donna Poimboeuf, that he had found deficiencies that might result in an immediate jeopardy situation and advised her to voluntarily cease all testing until the deficiencies could be addressed.
The lab stopped testing as advised, corrected the deficiencies, and faxed documentation to the state authorities. The lab’s counsel, Ray Shepard, an attorney with Duane Morris in Baltimore, notified the state that unless there were additional concerns, testing would resume at Doctors Lab. The state acknowledged receipt of the documentation submitted by the lab, requested additional information on a few items, and thanked the lab for correcting the issues identified during the survey. According to Shepard, the state official never indicated that resumption of testing at Doctors Lab was considered by LDHH to be a problem.
Two days later, on August 29, the state official faxed a letter to Poimboeuf saying LDHH had found condition-level deficiencies and was recommending that principle sanctions be imposed by CMS. During a subsequent phone call, the state official told Poimboeuf that the August 29 letter was a form letter that should be ignored since Doctors Lab had already taken corrective action.
Notice of Sanctions
No further communication occurred until Doctors Lab received a CMS Notice of Sanctions letter on Oct. 24, 2007. Enclosed with the letter was CMS Form 2567, which for the first time gave notice to Doctors Lab of the specific deficiencies being alleged. CMS advised the lab to take immediate action to remove the jeopardy and directed it to submit a plan of correction (POC) and an allegation of compliance (AOC) by November 5. CMS also imposed a directed plan of correction and told the lab to cease patient testing for the subspecialties of chemistry, coagulation tests, hematology, and urinalysis.
After receiving the letter, Poimboeuf and Shepard spoke with the CMS representative and were advised that as long as the items identified in the CMS Form 2567 were being addressed and documented, the lab could continue its operations.
Doctors Lab submitted its POC and AOC on Nov. 5, 2007. On Jan. 9, 2008, LDHH conducted a revisit survey. On March 13, 2008, CMS notified Doctors Lab that its CLIA certificate would be suspended effective March 18, 2008, along with its right to receive reimbursement from Medicare and Medicaid. According to the notice of sanctions, CMS decided to impose the primary sanction of suspension in part because the laboratory continued testing despite the cease testing order imposed as part of the directed plan of correction. Doctors Lab requested a hearing before an administrative law judge (ALJ) on March 17 and stopped all testing as of March 18.
During the April hearing, the director of LDHH admitted she had made a number of mistakes, including recommending that CMS impose sanctions without first reviewing the corrective action that the lab had taken following the state survey, according to Shepard. Upon hearing this, the CMS representative at the hearing requested a settlement that would reinstate the lab’s CLIA certificate retroactive to March 18, allow it to resume testing, and receive reimbursement from Medicare and Medicaid.
One of the issues raised during the hearing was whether a directed plan of correction can include an order to stop testing, explains Shepard. The order essentially amounts to a temporary suspension of a CLIA certificate. "There is a regulatory argument that would reason that CMS does not have the authority to issue a stop testing order as part of a directed plan of correction," says Shepard. "CMS either has to suspend you or not. It can’t give you the opportunity to correct the problem and at the same time issue a suspension. That’s an important distinction because once CMS has issued a suspension, you have certain statutory rights, including the right to a hearing within 60 days."
Because CMS and the lab settled this case, there was no ruling on the issue of whether CMS has the authority to issue a stop testing order as part of a directed plan of correction, but Shepard believes this issue is ripe for review.
"I think one of the reasons CMS wanted to settle was because it didn’t want a precedent set that it could not issue a stop testing order as part of a directed plan of correction," notes Shepard. Based on the questions asked by the administrative law judge at the hearing, Shepard believes the judge was inclined to rule against CMS on this issue.
"The question remains," says Shepard, who hopes the issue will be resolved during future cases.
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