Ramanadhan v. Wing

• Decision Date: 12 August 1997
• Citation: 174 Misc.2d 11,662 N.Y.S.2d 393
• Parties: , 1997 N.Y. Slip Op. 97,458 In the Matter of Aruna R. RAMANADHAN, Petitioner, v. Brian J. WING, as Acting Commissioner of the New York State Department of Social Services, Respondent.
• Court: New York Supreme Court

Page 393

662 N.Y.S.2d 393

174 Misc.2d 11, 1997 N.Y. Slip Op. 97,458

In the Matter of Aruna R. RAMANADHAN, Petitioner, v. Brian J. WING, as Acting Commissioner of the New York State Department of Social Services, Respondent.

Supreme Court, New York County.

Aug. 12, 1997.

Jacobson & Goldberg (Mark L. Furman, of counsel), for petitioner.

Dennis C. Vacco, Attorney-General (Carmen Torrent, of counsel), for respondent.

BEVERLY S. COHEN, Justice.

In this CPLR article 78 proceeding, the petitioner, a medical doctor, challenges on constitutional grounds a determination of the New York State Department of Social Services ("the Department") dated November 26, 1996 ("the Determination"). The determination imposed a fine of $102,000 and suspended the doctor from participating in the New York State Medicaid Provider Program ("Medicaid"). This action was taken without a hearing. Petitioner also asks for injunctive relief barring the Department from suspending her from participation prior to the hearing, or staying her exclusion from Medicaid. Petitioner also argues that the determination is arbitrary and capricious and the penalty imposed is so disproportionate to the offense as to shock the conscience.

The Department opposes the petition on the grounds that the doctor has failed to exhaust administrative remedies and that the regulations pursuant to which the doctor was suspended have been approved by the courts. The petition is granted in part and denied in part for the reasons that follow. The motion for injunctive relief is granted.

Petitioner is a pediatrician practicing in a clinic in the Inwood section of upper Manhattan, where there is a shortage of doctors. Her patient population is comprised of poor children and their adult parents and caretakers, one hundred percent of whom are insured by Medicaid. Petitioner's husband operates a pharmacy across the street from the clinic.

On November 9, 1995, the Department issued a Notice of Proposed Agency Action stating that petitioner had engaged in unacceptable practices as defined in 18 NYCRR 515.2. Specifically, petitioner was charged with providing and submitting claims for medical services and prescriptions that were false, not medically necessary, and not supported by adequate records documenting their necessity.

Petitioner was given an opportunity to refute the charges in writing, and did so on December 20, 1995.

On November 26, 1996, the Department issued the Determination. Petitioner's contract with Medicaid was terminated and she was excluded from Medicaid for three years effective on December 19, 1996. The effective date of her exclusion was extended until December 25, 1996. The Determination advised petitioner that she could request a Special Administrative Hearing.

Petitioner requested a hearing by letter dated December 5, 1996. On the return date of the petition herein, Jan. 16, 1997, this court granted a temporary restraining order staying respondent from excluding petitioner from Medicaid pending determination of this petition. On January 21, 1997, petitioner's name was published by respondent on a list of providers excluded from Medicaid. Her name was subsequently removed from the list on a date that does not appear in the record.

The hearing originally was scheduled for March 6, 1997, but the parties advised the court that it was adjourned to April 29, 1997, four months after the effective date of petitioner's suspension. The reason for the adjournment was that one of the Department's witnesses was unavailable. Petitioner agreed to the adjournment because of the stay granted by this Court. The parties have advised the court that two more adjournments were granted. The second adjournment was granted to May 15, 1997 because petitioner was ill. On May 15, 1997, one day of testimony was taken. The hearing was then adjourned for three months until August 14, 1997.

After the date of submission, the Court gave the parties an opportunity to submit additional information. The Court requested that the parties advise the Court in writing of the reason for the adjournment of the hearing. The court also asked the parties by letter to specify what rules and regulations supported petitioner's contentions concerning the consequences of exclusion from Medicaid.

The exclusion of a doctor from the Medicaid program for misconduct produces grave professional consequences. The Federal government requires that all State Medicaid programs contain a provision that the State will provide information and access respecting sanctions taken against doctors by Medicaid to the State licensing authority, any peer review organizations, any private accreditation entity, and to the agencies administering Federal health care programs. [42 U.S.C. § 1396r-2(a)(1) and (2); 42 C.F.R. § 455.17] When Medicaid initiates the exclusion of a doctor, it is required to notify other State agencies, the State medical licensing board, the public, beneficiaries, and everyone entitled to notice of an exclusion from Medicare pursuant to 42 C.F.R. §§ 1001.2005 and 1001.2006. [42 C.F.R. § 1002.212] An exclusion from Medicaid requires reporting of the facts and circumstances of the exclusion to the appropriate State or local agencies responsible for licensing and certification of doctors [42 C.F.R. § 1001.2005], and notice of the exclusion "as appropriate" to:

(1) Any entity in which the excluded individual ... is known to be serving as an employee, administrator, operator, or in which the individual or entity is serving in any other capacity and is receiving payment for providing services ...

(2) State Medicaid Fraud Control Units;

(3) Utilization and Quality Control Peer Review Organizations;

(4) Hospitals, skilled nursing facilities, home health agencies and health maintenance organizations;

(5) Medical societies and other professional organizations;

(6) Contractors, health care prepayment plans, private insurance companies and other affected agencies and organizations;

(7) The State and Area Agencies on Aging established under title III of the Older Americans Act; and

(8) Other Departmental operating divisions, Federal agencies, and other agencies or organizations, as appropriate.

[42 C.F.R. § 1001.2006]

Exclusion from Medicaid is a ground for which proceedings may be commenced to exclude the doctor from Medicare. [42 U.S.C. § 1320a-7(b)(5); 42 C.F.R. § 1001.601]

The petitioner has submitted evidence demonstrating that the MetLife Empire Plan automatically terminates contracts with physicians who have been excluded by Medicaid. [See Letter of Jacobson & Goldberg by Mark Furman, Esq., to Court, dated April 8, 1997 and annexed Letter from MetraHealth Services Corp., dated January 14, 1997]

Once a doctor is excluded from Medicaid a hospital cannot be reimbursed by Medicaid for any services or medicines ordered by the excluded doctor, with the exception of a 30 day period in which the doctor may continue to treat patients admitted prior to the exclusion. [18 NYCRR 515.5]

If a hospital takes any action affecting for more than 30 days a doctor's clinical privileges at a hospital, the hospital is required by Federal statute to report it to the State board responsible for licensing physicians [42 U.S.C. § 11133(a) ] and to the United States Secretary of Health and Human Services [42 U.S.C. § 11134(b) ]. This sort of data is required to be reported not less than monthly and is stored and disseminated [42 U.S.C. § 11134]. Every hospital is required to check the data for each physician who applies to be part of its medical staff or for admitting privileges. [42 U.S.C. § 11135(a)(1) ] Hospitals must also check the data relating to their staff members and doctors with admitting privileges once every two years. [42 U.S.C. § 11135(a)(2) ] There is a presumption that hospitals have knowledge of the information concerning physicians reported to the Secretary, whether or not the hospital obtains it. [42 U.S.C. § 11135(b) ]

A final administrative determination to exclude a doctor from Medicaid, when no appeal is pending, constitutes professional misconduct. [Education Law 6530(9)(c) ] Once a final administrative appeal is decided adversely to the doctor, the Office of Professional Misconduct imposes a penalty after a hearing in which the doctor is not permitted to present evidence on any issue except the penalty to be imposed. [Public Health Law 230(10)(p) ] Although petitioner argues that the Determination could result in an automatic penalty by the Office of Professional Misconduct, that would only happen after the final hearing is held before the Department.

The threshold issue to be determined is whether petitioner cannot maintain this proceeding because she has not exhausted her administrative remedies. Respondent's position is that an Article 78 proceeding is premature because the hearing presently scheduled is the final step in the administrative process.

However, the exhaustion of remedies rule does not apply to petitioner's due process claim. There is no requirement of exhaustion of remedies where an agency's action is challenged as unconstitutional, as it is here. [Watergate II Apartments v. Buffalo Sewer Authority, 46 N.Y.2d 52, 57, 412 N.Y.S.2d 821, 385 N.E.2d 560]

The exhaustion of remedies rule does apply to petitioner's challenge to the Determination on the grounds that it is arbitrary and capricious and that the penalty is disproportionate to the offense. Therefore, the court will not rule on those issues.

Turning to the constitutional issue raised, petitioner alleges that the hearings are not conducted day to day until conclusion, that a backlog at the Department frequently causes the hearings to take months or even a year, and that a written decision usually is issued months after the conclusion of the hearing. [Petition, paragraph 14] Respondent denies these allegations in its answer, but no other evidence is submitted to rebut petitioner's allegations regarding the wait for a...