Greenstein v. Com., Dept. of Health

• Decision Date: 01 July 1986
• Citation: 512 A.2d 739,98 Pa.Cmwlth. 445
• Parties: Sidney GREENSTEIN, Sidney Greenstein, M.D., Associates, Internal Medicine and Cardiology, Petitioner, v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF HEALTH, Respondent.
• Court: Pennsylvania Commonwealth Court

Page 739

512 A.2d 739

98 Pa.Cmwlth. 445

Sidney GREENSTEIN, Sidney Greenstein, M.D., Associates Internal Medicine and Cardiology, Petitioner, v. COMMONWEALTH of Pennsylvania, DEPARTMENT OF HEALTH, Respondent.

Commonwealth Court of Pennsylvania.

Argued April 10, 1986.

Decided July 1, 1986.

Charles W. Bowser, James P. Cousonis, Pechner, Dorfman, Rounick & Cabot, Philadelphia, for petitioner.

William H. Wood, Thomas E. Wood, Carolyn B. McClain, Ruth M. Seigal, Christine S. Dutton, Department of Health, Harrisburg, for Pennsylvania Blue Shield.

Before MacPHAIL and PALLADINO, JJ., and BARBIERI, Senior Judge.

MacPHAIL, Judge.

Sidney Greenstein, M.D. (Petitioner) petitions for review of the Department of Health's (Department) approval of Pennsylvania Blue Shield's (PBS) termination of Petitioner as a participating doctor.

The issue presented is whether Petitioner was entitled, under constitutional due process or the Administrative Agency Law (Law), ¹ to a hearing before the Department.

Petitioner was a participating PBS doctor in Philadelphia, Pennsylvania. The "Participating Doctor's Agreement with Pennsylvania Blue Shield" (Agreement), which Petitioner signed, provided, in pertinent part:

I will perform services for Blue Shield Subscribers, make reports to Blue Shield concerning such services and accept compensation therefor, as provided for in the Blue Shield Regulatory Act, as heretofore or hereafter reenacted or amended, and the By-laws, the applicable Rules and Regulations, the applicable Subscription Agreements or Master Contracts, and the applicable Fee Schedules or Prevailing Fee Program, all as heretofore or hereafter adopted or entered into by Blue Shield under authority of said Regulatory Act, with any required governmental approval.

....

This Agreement shall continue in effect until terminated by me by giving thirty (30) days' prior written notice to Blue Shield; or until terminated by Blue Shield with the approval of the Pennsylvania Department of Health.

PBS received several complaints from its subscribers alleging that Petitioner had charged them fees in excess of the PBS allowance. Section B(19) of PBS's "Regulations for Participating Doctors" (Regulations) requires that:

In the event any Participating Doctor has received, either from PBS or from the subscriber, an amount in excess of the amount determined by PBS to be payable to him with respect to covered services performed for the subscriber, such excess amount shall be returned promptly to PBS, or to the subscriber, as the case may be.

After investigating each complaint, PBS determined that Petitioner had in fact received an amount from each of the complaining patients in excess of the amount determined to be payable with respect to covered services. In each case, PBS notified Petitioner that he could not, pursuant to the Agreement, charge its subscribers in excess of the allowed amounts. Petitioner eventually refunded overcharges to four of the six complainants. PBS reimbursed those subscribers to whom Petitioner refused to make refunds.

By letter dated April 2, 1984, PBS informed Petitioner that refusing to return all excess payments violated the Agreement and would no longer be tolerated. PBS further stated that "[i]n the absence of a change in your position on this matter or your resignation, we will refer your case to the Medical Review Committee [ (MRC) ] ² at the May 1, 1984 meeting." Petitioner responded by letter conceding that he had charged some of his patients who were PBS subscribers in excess of PBS allowed amounts but that his overcharging was justified: Petitioner averred that his prevailing fee profile ³ was inadequate to compensate him for laboratory work performed in his office. He further stated that he was willing to work for an amicable resolution and expressed his desire for an "open hearing" before the MRC. By letter dated April 25, 1984, PBS acknowledged Petitioner's alleged justification but stated:

As noted in your letter, due to your dissatisfaction with your profiles, you routinely charge subscribers in excess of the Blue Shield allowance for covered services performed in the office. As a participating doctor with Pennsylvania Blue Shield, you have agreed to accept the Blue Shield allowance for covered services. Your contractual agreement precludes your charging subscribers in excess of this amount.

In accordance with the By-Laws, the MRC issued a complaint against Petitioner and scheduled a hearing to determine Petitioner's status as a participating doctor.

Counsel for Petitioner requested a continuance of the hearing, which was granted. The hearing was subsequently rescheduled for November 8, 1984 at 1:15 p.m. Neither Petitioner nor his counsel appeared at the hearing. PBS presented the testimony of PBS's Manager of Private Business Utilization Review as well as PBS's Professional Service and Review Representative to support its position that Petitioner should be removed from the PBS roster of participating doctors. Several documents substantiating the subscribers' complaints against Petitioner, PBS's actions with regard thereto, and Petitioner's responses were introduced into evidence.

At the conclusion of the hearing, the MRC moved to suspend Petitioner as a participating doctor. The MRC chairman issued a certificate in support of the termination, and copies of the hearing transcript, notice of hearing and certificate were forwarded to the Department with PBS's request that the Department approve the termination pursuant to Section 6324(a) of the Professional Health Services Plan Corporations Act (Act). ⁴ Section 6324(a) of the Act states:

(a) Admission to plan.--Every health service doctor practicing within the area covered by any professional health service corporation shall have the right, on complying with such regulations as the corporation may make with the approval of the Department of Health, to register with such corporation for such general or special professional health services as he may be licensed to practice, within that area, but the corporation may, with the approval of the Department of Health, refuse to place the name of any health service doctor on its register. Any professional health service corporation may, with the approval of the Department of Health, remove from its register the name of any health service doctor after due notice and opportunity for hearing for cause satisfactory to the corporation.

(Emphasis added.) The Department formally approved the recommended termination on March 11, 1985. ⁵

Petitioner filed the instant petition for review asserting that he should have been afforded "some kind of hearing" before the Department, the agency with the authority to approve or disapprove the termination. He argues that the termination deprives him of his property interest, remaining a participating PBS doctor, and that therefore constitutional procedural due process guarantees apply.

One is entitled to a due process hearing where, by state action, he suffers the loss of a protected property interest. Arnett v. Kennedy, 416 U.S. 134, 164, 94 S.Ct. 1633, 1649, 40 L.Ed.2d 15 (1974); Levine v. Department of Education, 79 Pa.Commonwealth Ct. 357, 468 A.2d 1216 (1984). "Property interests are not created by the Constitution, 'they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law ....' " Cleveland Board of Education v. Loudermill, 470 U.S. 535, ----, 105 S.Ct. 1487, 1491, 84 L.Ed.2d 494, 501 (1985), quoting Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). Petitioner contends that Section 6324(a) of the Act creates such an interest. We disagree. Section 6324(a) of the Act does not require PBS to maintain a doctor, once accepted, forever on its register: it permits PBS, for cause satisfactory to PBS, to remove a doctor from its register. It is not the Department which determines whether a doctor's participation with PBS may be terminated. Section 6324(c) of the Act expressly requires that determination be made solely by health care providers:

All matters, disputes, or controversies relating to the professional health services rendered by the health service doctors, or any questions involving professional ethics, shall be considered and determined only by health service doctors as selected in a manner prescribed in the bylaws of the professional health service corporation. (Emphasis added).

See also Section 1, Article X of the By-Laws. Whether there is cause satisfactory to PBS is a determination to be made by Petitioner's peers participating with PBS, not the Department. We conclude that Petitioner does not have a protected property interest in remaining a participating doctor and that constitutional due process considerations do not apply to the case at bar.

Petitioner also argues that the Department's approval constitutes an adjudication for purposes of the Law which requires a hearing to be held. An adjudication is defined as "[a]ny final order, decree, decision, determination or ruling by an agency affecting personal or property rights, privileges, immunities, duties, liabilities or obligations of any or all of the parties to the proceeding in which the adjudication is made." 2 Pa.C.S. § 101. Section 504 of the Law provides that "[n]o adjudication of a Commonwealth agency shall be valid as to any party unless he shall have been afforded reasonable notice of a hearing and an opportunity to be heard." 2 Pa.C.S. § 504. ⁶ "The essential elements of due process in administrative proceedings are notice and the opportunity to be heard and to defend in an orderly proceeding adapted to the nature of the case, before a tribunal with jurisdiction over the matter." Wojciechowski v. Unemployment Compensation Board of Review, 47 Pa.Commonwealth Ct. 116, 119, 407 A.2d 142, 143 (1979).

It is not disputed that Petitioner herein had both notice...