This is an excerpt of a 2,058-word article in the March 14, 2022 issue of THE DARK REPORT. The full article is available to members of The Dark Intelligence Group
CEO SUMMARY: Despite multiple investigations citing more than 60 deficiencies, including some that caused immediate jeopardy to patient safety according to state inspectors, the Valencia Branch Laboratory (VBL) never closed. The California Department of Public Health said the state lab now meets all current compliance requirements. But questions linger about whether more stringent action should have been taken.
ONE IMPORTANT QUESTION ABOUT CALIFORNIA’S STATE-OWNED COVID-19 TESTING LABORATORY is this: Why was the lab never sanctioned or closed after state and federal inspectors found more than 60 deficiencies—including deficiencies putting patient safety in immediate jeopardy—during three separate inspections in February, March, and May 2021?
In a 123-page report that the California Department of Public Health (CDPH) issued on Feb. 17 last year, officials reported finding 37 deficiencies at the COVID-19-specific testing lab, known as the Valencia Branch Laboratory (VBL), including deficiencies that could put patients at risk of harm.
Two months later on April 22, in a 43-page report, state inspectors identified 14 deficiencies, 10 of which were identical to those found during the February inspection.
Then on May 6, inspectors from the Centers for Medicare and Medicaid Services (CMS) issued a 21-page report identifying 12 deficiencies, seven of which were violations that state inspectors had found. All three reports (two from state inspectors and one from CMS) cited deficiencies in lab administration and leadership, and in the clinical laboratory’s analytical processes.
Clinical laboratory directors and pathologists aware of these findings by state and federal lab inspectors wonder why this state-owned laboratory seemed to have avoided the harsh sanctions that would shut down most other labs in the country.
Lab professionals immediately recognized the conflict of interest in the fact that officials from the California Department of Health Services were inspecting VBL, the lab owned by the State of California.
Even before state inspectors issued their reports, Julie Watts, an investigative reporter for CBS13 in Sacramento, had reported on failures at the lab shortly after it opened in October 2020. On Feb. 8, 2021, Watts broke her story: “Asleep at Lab: Whistleblower Allegations from Inside CA’s Billion-Dollar COVID Lab.”
On Dec. 30, 2021, CBS13 broadcast a 30-minute special report that was the culmination of a 14-month investigation by the station into the COVID 19 lab’s operations that prompted state and federal investigations.
The report resulted in two new state laws and put a spotlight on some of what Watts called the “public health failures” at the lab. She also reported that regulators allegedly tried to hide those failures.
Despite the findings that Watts uncovered in her reporting, and the deficiencies that state and federal inspectors found, the lab has remained open even as state officials have downplayed the inspection findings and allegedly misconstrued some of the allegations from whistleblowers, CBS13 and other local media organizations reported.
Perhaps even more surprising is the fact that shortly after the CDPH issued its first two reports last year, officials renewed the state’s $1.7 billion contract with PerkinElmer to run Valencia Branch Laboratory under automatic renewal provisions in the contract, according to CalMatters, a nonprofit news organization.
‘Immediate Jeopardy’ Found
On Nov. 22, 2021, when CDPH issued a report on the lab’s inspections, Watts noted in a broadcast that inspectors from CDPH confirmed the allegations from whistleblowers at VBL.
Watts based her reporting on interviews she’d done earlier with laboratory staff members, she explained. (See “Major CLIA Deficiencies Found at California’s COVID-19 Lab Facility,” TDR, Nov. 29, 2021, and “Whistleblowers Disclose Issues in California’s COVID Lab,” March 1, 2021.)
The CDPH’s Nov. 22 report included a letter dated April 23, 2021, from CDPH director and state public health officer Tomás Aragón, MD, DrPH, to pathologist Adam Rosendorff, MD, the CLIA laboratory director at VBL.
The letter explained that inspectors from CDPH’s Laboratory Field Services (LFS) division conducted a complaint inspection at the lab on Feb. 7, 2021, during which state officials identified deficiencies putting patient safety in immediate jeopardy.
As defined under California regulations, the term “immediate jeopardy” means that “the laboratory’s non-compliance with one or more condition-level requirements has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or to the health and safety of the general public.”
Statement of Deficiencies
CDPH’s LFS division concluded its inspection on April 22 when it issued a “Form 2567: Statement of Deficiencies” letter. The report identified deficiencies in five areas: lab administration, lab leadership, and three analytical processes found in every lab: pre-analytical, analytical, and post-analytical.
So serious were the deficiencies, the lab could have faced civil money penalties for each day of noncompliance or per violation, exclusion from ownership or operation of such labs, and revocation or suspension of the lab’s public health certificate. Those penalties could have been imposed within 21 days of the date of the letter.
Any sanctions or enforcement actions could only be rescinded when state inspectors had verified compliance, the letter noted.
Rosendorff, VBL’s CLIA director, had 10 calendar days to “provide this office with a credible allegation of compliance and acceptable evidence documenting that the immediate jeopardy has been removed and that action has been taken to correct all of the condition-level deficiencies in question,” the Form 2567: Statement of Deficiencies letter stated.
On the CDPH website, however, the agency includes statements saying the laboratory now complies with state standards. But as of March 2022, those statements do not explain how the lab became compliant with state inspection requirements.
The statements also make clear the immediate jeopardy status is no longer in place, but they do not explain how VBL reversed that status.
In response to questions from The Dark Report, the CDPH did not provide details on how VBL responded to the deficiencies, but did reiterate that the lab meets state and accreditation standards.
“The Valencia Branch Lab underwent multiple thorough inspections by both Laboratory Field Services and the College of American Pathologists,” the CDPH’s press office told The Dark Report. “After multiple visits to the laboratory and numerous correspondences, these inspections have both been closed with no sanctions imposed and with full accreditation by CAP.”
CDPH updated the public about the VBL situation through online questions and answers. The first question was whether state officials would close the lab due to the LFS inspection report. In response, the update said, “PerkinElmer is confident these deficiencies will be quickly remedied to avoid any impact on the laboratory’s license … and the laboratory … has worked to make numerous improvements since the onsite inspection.”
Another question in the update addressed whether the immediate jeopardy designation meant LFS would revoke the license. In response, CDPH said, “PerkinElmer is confident these deficiencies will be quickly remedied to avoid any impact on the laboratory’s license.”
Public Access to Report
A third question asked when the final report would be available to the public. In response, CDPH said, “The report will be made available mid-March [of 2021] once PerkinElmer has had a chance to respond to the deficiencies and LFS has had the opportunity to review the responses.”
There does not appear to be a report on the website that shows how PerkinElmer responded to the deficiency reports.
CDPH’s online updates also noted the first inspection of the lab was done on Dec. 8 and 9, 2020, meaning it was completed within the first few weeks of the lab’s opening.
In addition, the update noted that the CDPH’s Laboratory Field Services wrote a report and had an exit conference with lab leaders on Feb. 17, 2021, and had asked those lab managers to respond to the written report two days later.
The update also noted that PerkinElmer had sought accreditation from the College of American Pathologists “so that Californians have no doubt about the quality of the services at the laboratory.”
The Valencia Branch Laboratory had its initial accreditation inspection on Feb. 19, 2021, and state officials announced that the CAP inspected the lab one month later. After those inspections, the lab received full accreditation, CDPH announced.
The question of whether politics played any role in determining the lab’s compliance with the CLIA regulations is worth asking for several reasons.
First, as Watts reported on Nov. 22, “CDPH issued a summary that downplayed the findings and misconstrued some whistleblower allegations.” When CBS13 broadcast its report, Watts noted that the actual inspection records told a different story from the one CDPH noted in its summary.
Second, the California state inspection reports raise questions about VBL that have gone unanswered. One of the most significant unanswered questions is how VBL staff brought the lab into compliance after the initial state report noted the lab’s severe deficiencies. Another is whether the inspectors confirmed the whistleblower allegations that Watts reported.
Third, why have state officials never publicly revealed that a team of inspectors from CMS inspected the lab in May 2021?
Fourth, most lab directors know that the official title of the CMS 2567 report is “Statement of Deficiencies and Plan of Correction (POC)” because these reports list the deficiencies on the left side of each page and require lab officials to provide a plan to correct each failure on the right side. The two CDPH reports use the same format, raising the question of why there has been no public record to date that the VBL officials have provided plans of correction for the 61 deficiencies inspectors identified in the two state reports.
CMS said it inspected the lab in May 2021. In response to a question from The Dark Report, a CMS spokesperson sent a copy of the 21-page CLIA inspection report dated May 6, 2021, showing 12 deficiencies.
When asked if CMS received a response from the VBL about the deficiencies that the agency’s CLIA inspectors cited in the May 6, 2021 report, a spokesperson told The Dark Report on Feb. 4, 2022, “Yes, CMS received a response. However, CMS has not made a determination regarding the approval of the CDPH VBL’s allegation of compliance and is not able to release additional details at this time.”
CDPH told The Dark Report that CMS certified VBL as fully compliant on Feb. 28, 2022.