Hawaii Island Urgent Care centers fined $2.19 million

The attorney representing the owner of the Hilo and Keaau Urgent Care centers on Thursday afternoon said his client is in the process of appealing a cease-and-desist order and fines of $2.19 million for performing clinical laboratory work without the required permits.

Honolulu attorney Jeff Portnoy said Dr. Edward Gutteling, who owns the clinics, was blindsided when the state Department of Health issued “an outrageous press release” Thursday announcing the fines and the cease-and-desist order.

“We’ve appealed this entire matter, and the matter is now before a hearings officer,” Portnoy told the Tribune-Herald. “We don’t have a hearing date yet. We’re still going through the preliminaries.

“Last Friday, we had a call with the hearings officer and the deputy attorney general assigned to this case. During that call, I brought up the cease-and-desist that we believed was inappropriate, that we were going to continue to test, and asked if we could have an agreement until we met again,” Portnoy said. “They confirmed that … we could continue until (today), which is when we were supposed to have another call with the hearings officer.

“And what have they done? They have outrageously issued this massive press release to do nothing other than to try to destroy my client’s business in complete (disregard) of the agreement that was reached a week ago.”

According to the DOH, both clinics are in violation of state law for operating clinical laboratories on Hawaii Island without a state clinical laboratory permit.

Keaau Urgent Care Center also is in violation of federal law for operating without a Clinical Laboratory Improvement Amendment certificate.

According to the DOH, an inspector on March 25 confirmed that Hilo Urgent Care was illegally operating a clinical laboratory without a state clinical laboratory permit since it opened in June 2003. It also reportedly confirmed that Keaau Urgent Care was illegally operating a clinical laboratory without a CLIA certificate and without a state clinical laboratory permit since it opened in July 2008.

Hilo Urgent Care was assessed a $730,000 penalty for failing to obtain a state clinical lab permit, and Keaau Urgent Care was fined $1.46 million for failing to obtain a clinical lab permit and CLIA certificate.

Portnoy said Gutteling and his staff “didn’t know they had to have” the state clinical certification to perform laboratory work.

“I guess the state didn’t care, either, as they operated for 22 years without one,” Portnoy said. He added his client thought the federal permit obtained by the Hilo facility would suffice for the Keaau clinic as a satellite facility of the Hilo clinic.

“All they have done is issued an outrageous press release, knowing that the matter has been appealed — they don’t mention that in the press release, do they? — notifying the media and ignoring completely the arrangement and the understanding that we reached a week ago. Having said that, where have they been for the last 22 years when my client is providing these essential services to a completely underserved community on the Big Island … ?”

In an email response to questions by the Tribune-Herald, the DOH acknowledged the clinics have 20 days after receipt of a cease-and-desist order to submit a written request for a hearing. The agency didn’t mention Portnoy’s claim that the clinics’ ownership has done so.

“If they do not request a hearing within that time frame, the order becomes final and enforceable,” the DOH said. “If they do request a hearing, the matter will proceed through the administrative hearing process as outlined in state law.”

The DOH also said federal regulations about clinical lab services require applicants “to follow state licensing laws, and applicants attest to that during the process.”

“Unfortunately, there is no centralized system to identify unpermitted labs unless they submit an application or are reported through a complaint. In this case, a complaint triggered the investigation that uncovered the violations,” the DOH said in its response.

According to Portnoy, his client applied for the state permit three months ago, and DOH has been “sitting on it.”

“They have been doing this testing since 2003. Where was the state and their enforcement provisions and their oversight? Completely asleep at the wheel,” Portnoy said. “And so now they try to justify it by showing up three months ago because somebody turned them in … we don’t know who, even though we’ve had a federal permit.

“We can fight the merits, and we’re going to, but … what they’ve done today is trying to destroy (the clinics’ ownership) while this matter is totally in dispute and while we had an agreement.”

The DOH said the cease-and-desist order and fines underscore its “commitment to ensuring that clinical laboratories operating in Hawaii meet the necessary regulatory standards to protect patient safety and public health.”

“While we rely on providers to follow the law in good faith, we also take our responsibility to thoroughly investigate complaints seriously,” the DOH said. “Patients deserve to have confidence in the accuracy and reliability of the laboratory testing they receive, and that starts with proper oversight and compliance.”

Both Portnoy and the DOH acknowledged a settlement — which the DOH said could include “corrective actions, reduced penalties or timelines for compliance” — is a possibility.

“That’s what we talked about in the first call with the hearings officer,” said Portnoy. “We turned the burner off for a week to give the state a chance to think about ways to look at a possible resolution. Nobody wants to fight. But in light of what happened (Thursday), they’re in for a fight, big time. If they want to try to drive my client out of business with these absurd fines, go ahead and try.

“… We’re going to go through the appeal process, which is what you’re supposed to do, and have the hearings officer decide the merits. That’s one thing. But (the press release) was outrageous — nothing but a publicity stunt to try and show us that they’re not as inept as they are, having not even checked on this for 22 years.”

Email John Burnett at jburnett@hawaiitribune-herald.com.