Two urgent care centers in East Hawai‘i fined $2.19 million for operating clinical labs without state permits

The State of Hawaiʻi has ordered Hilo Urgent Care Center and Kea‘au Urgent Care Center to stop clinical laboratory operations due to not having required permits since they opened, according to the Hawai‘i Department of Health Office of Health Care Assurance.

Both centers, which are operated by the limited liability company Hilo Urgent Care Center, are in violation of state law. The Kea‘au location also is in violation of federal law for operating without a federal Clinical Laboratory Improvement Amendment certificate, also known as CLIA, the Department of Health said in a news release.

The Department of Health told Big Island Now on Thursday that the laboratory director failed to notify the state when the Hilo Urgent Care Center began offering expanded clinical lab services at its Hilo location and when the Kea‘au Urgent Care Center began offering clinical lab services.

“Federal regulations require applicants to follow state licensing laws, and applicants attest to that during the process,” the Department of Health stated in an email. “Unfortunately, there is no centralized system to identify unpermitted labs unless they submit an application or are reported through a complaint.”

In this case, state officials were responding to a complaint against the labs, according to the Department of Health.

During an inspection on March 25, a state health inspector confirmed Hilo Urgent Care was illegally operating a clinical lab without a state of Hawaiʻi clinical laboratory permit since it opened in June 2003. This center has been assessed a $730,000 penalty.

It also was confirmed that Kea‘au Urgent Care Center was illegally operating without the required state and federal permits since it opened in July of 2008. This center has been assessed a $1.46 million penalty.

Jeffrey Portnoy, an attorney who represents the urgent care centers, said Hilo Urgent Care has a federal permit and was unaware that its satellite clinic in Kea‘au also needed one.

Portnoy said the clinics were unaware that they needed a state permit as well as a federal permit until the inspection in March.

Since then, Portnoy said the company obtained a federal permit for its lab in Kea‘au and has also applied for the state permits. He said the company is waiting for approval.

Portnoy said the clinics had a meeting scheduled for Monday with a hearings officer to discuss how they would proceed in addressing the state permits. He added there was an agreement with the state deputy attorney general that the state would hold off on the cease and desist order until that meeting.

“Why the state chose to put this [press release] out, I don’t know, but it’s a violation of the agreement,” Portnoy said.

Portnoy said the state’s release of the cease and desist order to the media is unprofessional and absurd.

“The Department of Health should be helping my clients, not hurting them,” he said.

Portnoy said the state should look at their failure for not identifying the clinics’ lack of these state permits in the first place.

“They’re not interested in the health and welfare of the Big Island,” Portnoy said. “It (fines) will put the clinics out of business. How does that help the Big Island?”

The clinics have been operating and providing services to the East Hawai‘i community for more than 20 years. According to the Department of Health, laboratories are not routinely contacted unless internal audits, requests by the Centers for Medicare and Medicaid or complaints are received.

In this case, because the laboratories had not applied for state permits, the issue came to light only after a complaint was filed and investigated, the Department of Health said.