Koch v. Sheehan

• Decision Date: 23 March 2012
• Citation: 95 A.D.3d 82,940 N.Y.S.2d 734,2012 N.Y. Slip Op. 02188
• Parties: In the Matter of Eric J. KOCH, D.O., Petitioner–Respondent, v. James G. SHEEHAN, New York State Medicaid Inspector General, Respondent–Appellant.
• Court: New York Supreme Court — Appellate Division

2012 N.Y. Slip Op. 02188
940 N.Y.S.2d 734
95 A.D.3d 82

In the Matter of Eric J. KOCH, D.O., Petitioner–Respondent,
v.
James G. SHEEHAN, New York State Medicaid Inspector General, Respondent–Appellant.

Supreme Court, Appellate Division, Fourth Department, New York.

March 23, 2012.

[940 N.Y.S.2d 734]

Eric T. Schneiderman, Attorney General, Albany (Victor Paladino of Counsel), for Respondent–Appellant.

Brown & Tarantino, LLC, Buffalo (Susan A. Eberle of Counsel), for Petitioner–Respondent.

PRESENT: SCUDDER, P.J., CENTRA, PERADOTTO, LINDLEY, AND MARTOCHE, JJ.

Opinion by MARTOCHE, J.

[95 A.D.3d 83] Respondent, the New York State Medicaid Inspector General, appeals from a

[940 N.Y.S.2d 735]

judgment granting the CPLR article 78 petition, thereby vacating respondent's determination excluding petitioner from participating in the New York State Medicaid Program and reinstating petitioner retroactively to March 10, 2010 as a participating physician in the Medicaid Program. We are called upon to consider for the first time the scope of the authority of the Office of the Medicaid Inspector General (OMIG) insofar as it relates to physician conduct not involving Medicaid patients.

OMIG

The Department of Health (DOH) is the state agency responsible for administering the state's Medicaid Program ( see Social Services Law § 363–a; 18 NYCRR 504.1[d][12] ). Within the DOH, the OMIG was established in 2006 as an independent entity responsible for detecting and preventing fraud, waste, and abuse in the Medicaid Program (Public Health Law §§ 30, 30–a, 31, 32). Among other things, respondent is authorized to exclude enrolled health care providers from the Medicaid Program ( see § 32[6] ), and to “perform any other functions that are necessary or appropriate to fulfill the duties and responsibilities of the office in accordance with federal and state law” (§ 32[24] ).

In order to provide medical care, services, and supplies to Medicaid recipients and to receive Medicaid reimbursement, a person must enroll as a provider in the Medicaid Program ( see 18 NYCRR 504.1[b][1] ). The relationship between the DOH and the provider is an at—will contractual relationship, and there is no inherent entitlement to being a Medicaid provider ( see Matter of Bora v. New York State Dept. of Social Servs., 152 A.D.2d 10, 12–13, 547 N.Y.S.2d 956).

The federal Medicaid regulations permit the Office of the Inspector General to exclude a Medicaid provider who furnishes [95 A.D.3d 84] substandard services to patients, whether or not they are Medicaid patients ( see 42 CFR 1001.701 [a][2] ), and further require that the state agency have the same authority to do so ( see 42 CFR 1002.210). The DOH regulations provide several bases for terminating or excluding a provider from the Medicaid Program. Indeed, pursuant to 18 NYCRR 504.7(a), the provider's participation may be terminated by the DOH on 30 days' notice without cause. In certain circumstances, termination is mandatory, such as when the provider is excluded or terminated from participating in the federal Medicare program ( see 18 NYCRR 515.8[a][1] ), or when the provider's license is terminated, revoked or suspended ( see 18 NYCRR 504.7[d][1] ). In addition, the OMIG has the authority to exclude a provider for “unacceptable practices” within the meaning of 18 NYCRR 515.2. Such “unacceptable practices” include, among other things, the failure to meet professionally recognized standards for health care ( see 18 NYCRR 515.2[b] [12] ).

The regulations authorize the DOH to exclude a provider found to have committed professional misconduct, as follows:

“Upon receiving notice that a person has been found to have violated a State or Federal statute or regulation pursuant to a final decision or determination of an agency having the power to conduct the proceeding and after an adjudicatory proceeding has been conducted, in which no appeal is pending, or after resolution of the proceeding by stipulation or agreement, and where the violation resulting in the final decision or determination would constitute an act described as professional misconduct or unprofessional conduct by the rules or regulations of the State Commissioner of Education or the State Board of Regents, or

[940 N.Y.S.2d 736]

an unacceptable practice under this Part, or a violation of article 33 of the Public Health Law, the department may immediately sanction the person and any affiliate” (18 NYCRR 515.7[e] ).

The OMIG regularly receives, for its review, copies of consent agreements and orders from the Office of Professional Medical Conduct (OPMC). The Board of Professional Medical Conduct and the OPMC (collectively, OPMC) serve, respectively, as the investigatory and adjudicatory arms of the DOH concerning allegations of professional misconduct by physicians ( see Public Health Law § 230 et seq. ; Education Law § 6530). In the event that the OPMC enters into a consent agreement and order [95 A.D.3d 85] (Consent Order), the OMIG's Exclusions Unit reviews such Consent Orders to determine whether the provider should be allowed to continue as a Medicaid provider or should be excluded from the Medicaid Program.

The DOH Proceeding against Petitioner

Petitioner has been licensed to practice medicine in New York State since 2003, and has specialized in the field of internal medicine. The OPMC investigated petitioner's involvement in the care of two patients who were not receiving Medicaid, and ultimately filed a statement of charges alleging that petitioner failed to meet accepted standards of care in nine respects with regard to the two patients. Thus, petitioner was charged with committing misconduct under Education Law § 6530(3), erroneously referred to by the DOH in its Specifications of Charges as section 6230(3). Negotiations ensued, and petitioner entered into a Consent Order. According to the terms of the Consent Order, petitioner was pleading “no contest to the specifications, in full satisfaction of the charges” against him in exchange for an agreement to a specified penalty. He agreed to be placed on probation for a period of 36 months and to comply with various conditions. He further agreed that his failure to comply with any conditions of the Consent Order would constitute misconduct under Education Law § 6530(29). The Consent Order further provided that, if the OPMC did not adopt the Consent Order, none of the terms of the Consent Order would bind petitioner “or constitute an admission of any of the acts of alleged misconduct.” The OPMC adopted the Consent Order effective June 9, 2009.

The CPLR Article 78 Proceeding

On March 4, 2010, the OMIG issued a notice of immediate agency action, excluding petitioner as a provider from the Medicaid Program and placing him on the “OMIG list of persons disqualified from Medicaid.” According to the affidavit of a registered nurse in the OMIG, the Exclusions Unit regularly reviews penalties imposed by OPMC against health care...