In the Matter of Eric J. Koch, D.O., Respondent,v.James G. Sheehan,, Appellant.BriefN.Y.September 9, 2013 To be argued by: VICTOR PALADINO Time Requested: 15 minutes SUPREME COURT, ERIE COUNTY – INDEX NO. I-2010-6922 Court of Appeals of the State of New York IN THE MATTER OF ERIC J. KOCH, D.O., Respondent, -against- JAMES G. SHEEHAN, NEW YORK STATE MEDICAID INSPECTOR GENERAL, Appellant. BRIEF FOR APPELLANT BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General VICTOR PALADINO Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Appellant The Capitol Albany, New York 12224-0341 Telephone: (518) 473-4321 Facsimile: (518) 473-8963 Dated: December 18, 2012 Reproduced on Recycled Paper i TABLE OF CONTENTS PAGE Table of Authorities ............................................................................................. ii Preliminary Statement........................................................................................ 1 Questions Presented ............................................................................................ 3 Jurisdictional Statement..................................................................................... 4 Facts and Procedural History ............................................................................. 5 A. Statutory and Regulatory Background........................................... 5 B. Statement of Facts........................................................................... 8 C. This Proceeding.............................................................................. 11 Argument ............................................................................................... 13 Point I OMIG Acted Rationally And Within Its Authority In Excluding Petitioner, A Physician, From The Medicaid Program Based On A BPMC Consent Order That Allows Him To Continue To Practice Medicine........................................ 14 Point II OMIG Was Not Required To Conduct An Independent Investigation Before Excluding A Provider From the Medicaid Program Under 18 N.Y.C.R.R. § 515.7(e)..................... 21 Conclusion ............................................................................................... 25 Addendum .............................................................................................A. 1 ii TABLE OF AUTHORITIES PAGE CASES Blab, Matter of v. Sheehan (Sup. Ct. Alb. Co. Index No. 4275-10, Sackett, J., September 30, 2010) ........................................................................ 16n,17 Blossom View Nursing Home v. Novello, 4 N.Y.3d 581 (2005) ................................................................................. 20 Bora, Matter of v. New York State Dept. of Social Servs., 152 A.D.2d 10 (3d Dep’t 1989)................................................................... 6 County of Monroe, Matter of v. Kaladjian, 83 N.Y.2d 185 (1994) ............................................................................... 13 Halliday, Matter of v. State of New York Off. of the Medicaid Inspector Gen., (Sup. Ct. Alb. Co. Index No. 2575-10, Connolly, J., July 2, 2010) .......................................................................................... 16n HMP Pharm. Corp., Matter of v. Perales, 204 A.D.2d 639 (2d Dep’t 1994).............................................................. 13 Khawaja, Matter of v. Kaladjian, 207 A.D.2d 398 (2d Dep’t 1994)................................................................. 6 King, Matter of v. Office of the Medicaid Inspector Gen. (Sup. Ct. Alb. Co. Index No. 5364-10, Teresi, J., October 27, 2009) .................................................................................. 16n Liguori, Matter of v. Beloten, 76 A.D.3d 1156 (3d Dep’t 2010), lv. denied, 16 N.Y.3d 702 (2011) ................................................................... 19n,22-23 Mihailescu, Matter of v. Sheehan, 25 Misc. 3d 258 (Sup. Ct. N.Y. Co. 2009)............................... 16n,17,18,19 iii Table of Authorities (cont’d) PAGE CASES Napoli v. Sheehan (Sup. Ct. Erie County, May 25, 2010, Drury J., Index No. I2009-14524).......................................................................................... 16n Pearl, Matter of v. The Office of the Medicaid Inspector General (Sup. Ct. Alb. Co. Index No. 5702-08, Teresi, J., October 26, 2009) .................................................................................. 16n Peckham, Matter of v. Calogero, 12 N.Y.3d 424 (2009) ............................................................................... 13 Pekarsky, Matter of v. Commissioner of New York State Dep’t of Social Services, 257 A.D.2d 905 (3d Dep’t 1999)............................................................... 20 Samiento v. World Yacht Inc., 10 N.Y.3d 70 (2008) ................................................................................. 13 Vaynshelbaum v. Daines, 30 Misc. 3d 1227(A), 2011 WL 665725 (Sup. Ct. N.Y. Co. Feb. 17, 2011) ......................................................................................... 16n STATE STATUTES C.P.L.R. 5602(a)(1)(i) ................................................................................................ 4 7803(3) ............................................................................................... 13 Education Law § 6530 ............................................................................................ 8,15 PHL § 30 ................................................................................................. 5 §§ 30-36 ............................................................................................... 15 § 30-a(2) ................................................................................................. 5 § 31 ................................................................................................. 5 iv Table of Authorities (cont’d) PAGE STATE STATUTES PHL (cont’d) § 32 ................................................................................................. 5 § 32(6) .............................................................................................. 5,7 § 230 ................................................................................................. 8 §§ 230-230-d ............................................................................................... 15 Social Services Law § 303-a ................................................................................................. 5 L. 1996, ch. 474 §§ 233-248 ............................................................................................... 20 L. 2006, ch. 442 § 1 ............................................................................................... 20 STATE RULES AND REGULATIONS 18 N.Y.C.R.R. § 500.1(d) ................................................................................................. 5 § 504.1(a) ................................................................................................. 5 § 504.1(b)(1)................................................................................................ 6 § 504.1(d)(12).............................................................................................. 5 § 504.7(a) ................................................................................................. 6 § 504.7(d)(1)................................................................................................ 6 § 515.2 ............................................................................................ 6,17 § 515.2(b)(2)................................................................................................ 7 § 515.2(b)(6)................................................................................................ 7 § 515.2(b)(11).............................................................................................. 7 § 515.2(b)(12 ............................................................................................... 7 § 515.7 ............................................................................................... 14 § 515.7(e) ........................................................................................passim § 515.8(a)(1)................................................................................................ 6 PRELIMINARY STATEMENT The regulations of the New York State Department of Health authorize the Office of the Medicaid Inspector General (“OMIG”) to exclude a Medicaid provider from the Medicaid program based on a consent agreement entered into between the provider and the Board for Professional Medical Conduct (“BPMC”). See 18 N.Y.C.R.R. § 515.7(e). BPMC is a separate unit within the Department of Health responsible for adjudicating professional misconduct complaints lodged against physicians. Here, BPMC adopted a consent agreement in which petitioner Dr. Eric J. Koch pleaded no contest and agreed to 36 months’ probation regarding nine specifications of professional misconduct involving negligence on more than one occasion in the treatment of two elderly emergency room patients who subsequently died. Following its review of the consent agreement, OMIG determined that petitioner should be excluded from the Medicaid program. Despite the regulation authorizing OMIG to exclude petitioner in these circumstances, Supreme Court granted the petition, annulled OMIG’s determination and ordered petitioner’s reinstatement (Record [“R.”] 6-7). The Appellate Division, Fourth Department, affirmed 2 (R. 281-288), holding that it was arbitrary and capricious for OMIG to exclude petitioner from the Medicaid program when BPMC had permitted him to continue to practice. This Court granted the motion of the New York State Medicaid Inspector General1 for leave to appeal (R. 279-280). This Court should reverse the Appellate Division’s order and dismiss the petition. That Court’s decision is mistaken and undermines OMIG’s authority to exclude providers who, in OMIG’s judgment, are not qualified to provide medical care and services to Medicaid recipients. This is so even where BPMC has determined that a provider may continue to practice medicine generally. OMIG may properly determine that when the government is paying for medical care for its disadvantaged citizens, it may insist that providers possess more than the minimum level of competence necessary to avoid license suspension. The Appellate Division also erred in concluding that OMIG was required to conduct an independent investigation before excluding a provider under section 515.7(e). The purpose of this regulation is to authorize OMIG to exclude a provider based on BPMC’s determination 1 James C. Cox is now the Medicaid Inspector General. 3 without having to duplicate the process that has already resulted in the BPMC determination of professional misconduct. The Appellate Division’s decision, in imposing an independent investigation requirement not found in the language of the regulation, effectively nullifies section 515.7(e). Accordingly, this Court should reverse. QUESTIONS PRESENTED 1. Did OMIG act rationally and within its authority in excluding a physician from the Medicaid program under 18 N.Y.C.R.R. § 515.7(e) based on a BPMC consent order in which the physician pleaded no contest to charges of professional misconduct and agreed to 36 months’ probation during which he was permitted to practice medicine? 2. Must OMIG conduct an independent investigation before excluding a provider from the Medicaid program under 18 N.Y.C.R.R. § 515.7(e), which expressly permits exclusion based on a BPMC determination, including a stipulation or agreement? 4 JURISDICTIONAL STATEMENT By order entered October 18, 2012, this Court granted the Medicaid Inspector General leave to appeal the Appellate Division’s order (R. 280). This Court had jurisdiction to do so under C.P.L.R. 5602(a)(1)(i). This proceeding originated in the Supreme Court. The Appellate Division’s order finally determined the proceeding and is not appealable as of right. The Appellate Division affirmed Supreme Court’s judgment (R. 281), which vacated and annulled OMIG’s determination and directed OMIG to reinstate petitioner to the Medicaid program retroactive to March 10, 2010 (R. 7). The Fourth Department’s order thus disposes of all of the claims between the parties in the proceeding. The question of the rationality of OMIG’s determination to exclude petitioner based on the BPMC consent order is preserved. It was raised in the petition and its supporting papers (R. 8-9, 25-29), OMIG’s answering papers (R. 99-101, 130-132, 180-184), and in the parties’ Appellate Division briefs. 5 FACTS AND PROCEDURAL HISTORY A. Statutory and Regulatory Background The Department of Health is the state agency responsible for administering the state’s Medicaid program. See Social Services Law § 363-a; 18 N.Y.C.R.R. § 504.1(d)(12). OMIG is an independent office within the Department of Health that was established to “consolidate staff and other Medicaid fraud detection, prevention and recovery functions from the relevant governmental entities into a single office.” Public Health Law (“PHL”) § 30. The Legislature granted OMIG broad powers and responsibilities with respect to the prevention, detection, and investigation of fraud, abuse, or illegal acts perpetrated within the Medicaid program. PHL §§ 30–a(2), 31, 32. In particular, the Legislature authorized OMIG to exclude enrolled health care providers from the Medicaid program (R. 172). See PHL § 32(6). Medicaid’s goals include the provision of medically necessary, high quality care by qualified and responsible health care providers. See 18 N.Y.C.R.R. §§ 500.1(d), 504.1(a). Indeed, “[o]nly qualified and responsible persons may be enrolled as providers of care, services and supplies.” Id. § 504.1(a). In order to provide medical care, services, and 6 supplies to Medicaid recipients and to receive Medicaid reimbursement, a provider must enroll as a provider in the program. Id. § 504.1(b)(1). The relationship between the Department of Health and the provider is an at-will contractual relationship, and there is no entitlement to or property interest in being a Medicaid provider (R. 173). See Matter of Bora v. New York State Dept. of Social Servs., 152 A.D.2d 10, 12-13 (3d Dep’t 1989); Matter of Khawaja v. Kaladjian, 207 A.D.2d 398, 398 (2d Dep’t 1994). Department of Health regulations provide several bases for terminating or excluding a provider from the Medicaid program. Under the regulations, a provider’s participation can be terminated by either the provider or the Department of Health on 30 days notice without cause, under 18 N.Y.C.R.R. § 504.7(a). In certain circumstances, exclusion is mandatory, such as when Medicare excludes the provider (id. § 515.8[a][1]), or when the provider loses his license. Id. § 504.7(d)(1). In addition, OMIG has the discretion to exclude or sanction a provider for “unacceptable practices” under section 515.2. Unacceptable practices include, among other things, submission of false claims for payment, unacceptable recordkeeping, the provision of 7 excessive services, and the failure to meet professionally recognized standards for health care. Id. § 515.2(b)(2), (6), (11), (12). In addition, the regulation involved here, 18 N.Y.C.R.R. § 515.7(e), authorizes the Department of Health immediately to exclude a provider when there has been a final determination (including a stipulation or agreement) of, among other things, professional misconduct: 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 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. In the exercise, pursuant to PHL § 32(6), of the Department’s authority to exclude providers under this regulation, OMIG regularly receives for its review copies of consent agreements and orders from the 8 Office of Professional Medical Conduct (“OPMC”), a separate office within the Department of Health responsible for investigating and prosecuting complaints of professional misconduct by physicians before BPMC (R. 174, 177). See PHL § 230, et seq.; Education Law § 6530. OMIG’s Exclusion Unit reviews such consent agreements and orders to determine whether the provider should be allowed to continue as a Medicaid provider or should be excluded from the program (R. 177). B. Statement of Facts Petitioner is a medical doctor, licensed to practice medicine in New York State since September 2003, specializing in the field of internal medicine (R. 17). In May 2009, the BPMC adopted a consent agreement and order entered into by petitioner and the OPMC in which petitioner pleaded no contest to nine specifications of professional misconduct involving negligence on more than one occasion in the treatment of two patients. Under the consent order, petitioner was placed on probation for 36 months, subject to certain terms and conditions, including that he have a practice monitor in place and that he complete a continuing medical education program (R. 120-123, 127- 128). 9 A copy of the consent order and agreement was forwarded to OMIG’s Exclusion Unit and was reviewed by a registered nurse with extensive experience in evaluating the performance of health care professionals (R. 131). The consent order and agreement included uncontested allegations that petitioner had committed professional misconduct in the evaluation and treatment of two elderly emergency room patients who subsequently died (R. 124-126, 131-132, 135-136). In failing to meet the standard of medical care for patient A, a 79- year-old female treated in a hospital emergency room (R. 135), petitioner failed to timely consider whether the patient had a coexisting, clinically significant cardiac condition; failed to order an indicated cardiology consultation; and failed to timely review the results of a cardiac ultrasound (R. 124, 131, ¶ 11). Patient A died a few days later (R. 131, ¶ 11; 135). The charges to which petitioner pleaded no contest also alleged that he failed to meet the standard of care with respect to patient B, a 78-year-old female who presented in the emergency room with a history of hypertension, hyperthyroidism, renal failure and Reynaud’s disease (R. 132). Specifically, he failed to perform an indicated physical 10 examination; failed to examine the patient’s lower extremities; failed to observe an area of arrhythmia surrounding an ulcer on the patient’s lower shin and to diagnose the condition; failed to observe necrotic tips on the patient’s second and third toes and to diagnose this condition; failed to order indicated diagnostic tests; and failed to timely and appropriately treat the patient (R. 125, 132). Patient B died the next day (R. 136). The registered nurse concluded that petitioner’s conduct was so negligent that OMIG should exercise its discretion under 18 N.Y.C.R.R. § 515.7(e) to exclude him from participating as a provider in the Medicaid program (R. 132, ¶ 13). Her recommendation was adopted by the Exclusions Unit (id.). By letter notice dated March 4, 2010 (R. 106-107), OMIG advised petitioner that, effective five days from the notice, it was excluding him from the Medicaid program pursuant to 18 N.Y.C.R.R. § 515.7(e). The notice informed petitioner that he had thirty days to submit arguments and documentation objecting to the determination on the issues of (1) whether the determination was based on a mistake of fact, 11 (2) whether the “indictment/ conviction”2 resulted from billing for medical care, services, and supplies, and (3) whether the sanction imposed was reasonable (R. 106). The notice also explained that petitioner could request reinstatement into the Medicaid program pursuant to procedures described in Department regulations (R. 107). On July 1, 2010 – almost four months after the issuance of the March 4, 2010 notice – petitioner submitted written arguments and documentation objecting to the notice of exclusion (R. 36-40). By letter dated July 28, 2010 (after the commencement of this proceeding), OMIG denied petitioner’s administrative appeal as untimely (R. 226-227). Petitioner also applied for reinstatement to the Medicaid program on July 9, 2010 (R. 42-72), but the application was not acted on before Supreme Court issued its judgment ordering his reinstatement. C. This Proceeding On July 9, 2010, petitioner commenced this proceeding, arguing that OMIG’s determination was arbitrary and capricious and that the penalty imposed was excessive (R. 8-9, 25-29). Supreme Court granted the petition on August 24, 2010, without issuing a decision reflecting its 2 Here, there was no indictment or conviction. 12 reasoning. The order and judgment vacated and annulled OMIG’s determination and directed the agency to reinstate petitioner to the Medicaid program retroactive to March 10, 2010 (R. 7).3 The Appellate Division unanimously affirmed Supreme Court’s judgment, concluding that OMIG’s determination was arbitrary and capricious for two reasons. First, the Court concluded that OMIG’s determination was inconsistent with the BPMC consent order and agreement, which did not suspend petitioner’s medical license but was “akin to censure or reprimand with conditions” (R. 286) The Court reasoned that to “adopt respondent’s view would create an irrational result that would allow petitioner to continue to treat non-Medicaid patients, but be prohibited from treating Medicaid patients” (R. 286). Second, the Appellate Division concluded that OMIG’s determination was arbitrary and capricious because “there is no indication in the record that the OMIG investigated or independently evaluated 3 After OMIG appealed to the Appellate Division, the parties stipulated that OMIG would reinstate Dr. Koch to the Medicaid program retroactive to March 10, 2010, with such reinstatement effective during the pendency of the appeal. This stipulation was entered into in lieu of a motion to vacate the automatic stay, and the parties agreed that the stipulation does not preclude OMIG from excluding Dr. Koch from the Medicaid program if OMIG prevails at the conclusion of this proceeding. 13 petitioner, but instead it simply excluded him from the Medicaid Program based upon the Consent Order” (R. 287). ARGUMENT OMIG’s determination excluding Dr. Koch from the Medicaid program must be upheld because it was not arbitrary and capricious or affected by an error of law. Matter of County of Monroe v. Kaladjian, 83 N.Y.2d 185, 189 (1994); Matter of HMP Pharm. Corp. v. Perales, 204 A.D.2d 639 (2d Dep’t 1994); C.P.L.R. 7803(3). “If the court finds that the determination is supported by a rational basis, it must sustain the determination even if the court concludes that it would have reached a different result than the one reached by the agency.” Matter of Peckham v. Calogero, 12 N.Y.3d 424, 431 (2009). OMIG’s rational interpretation of its own regulations is entitled to deference. Samiento v. World Yacht Inc., 10 N.Y.3d 70, 79 (2008). Here, contrary to the Appellate Division’s reasoning, there is nothing irrational in requiring more than minimal competence from physicians whom the State is paying to serve New York’s disadvantaged patients. Nor is there anything irrational in OMIG’s application of the regulation that permits 14 it to exclude providers without an independent investigation based on a “stipulation or agreement” such as the OPMC consent agreement and order here. POINT I OMIG Acted Rationally And Within Its Authority In Excluding Petitioner, A Physician, From The Medicaid Program Based On A BPMC Consent Order That Allows Him To Continue To Practice Medicine OMIG did not act irrationally in excluding Dr. Koch from the Medicaid program based on the BPMC consent order and agreement. OMIG excluded Dr. Koch under 18 N.Y.C.R.R. § 515.7(e), which authorizes OMIG to exclude providers based on a BPMC proceeding resolved “by stipulation or agreement” where the violation resulting in the final determination would constitute professional misconduct. There is no dispute that petitioner’s conduct as alleged in the BPMC proceeding constituted professional misconduct involving negligence in the treatment of patients. Contrary to the Appellate Division’s conclusion, nothing in section 515.7 restricts OMIG’s authority to exclude providers to situations where the BPMC proceeding results in the suspension or revocation of the physician’s license. 15 The Appellate Division reasoned that to uphold OMIG’s determination “would create an irrational result that would allow petitioner to continue to treat non-Medicaid patients, but be prohibited from treating Medicaid patients” (R. 286). This mistaken conclusion ignores OMIG’s independent responsibility to ensure that the Medicaid program uses only providers who have demonstrated that they are qualified to provide medical care, services or supplies. The BPMC and OMIG operate under separate grants of statutory authority and each has its own mission and responsibility. See PHL §§ 30-36 (OMIG); §§ 230-230-d; Education Law § 6530 (BPMC). Even if the BPMC implicitly concluded that petitioner should be allowed to continue to practice medicine generally, OMIG is required by statute to determine whether, in its discretion, he should be allowed to continue to provide medical care to Medicaid patients. Exercising that discretion under 18 N.Y.C.R.R. § 515.7(e), OMIG rationally determined that petitioner’s uncontested acts of professional misconduct rendered him unqualified to participate in the Medicaid program. Contrary to the Appellate Division’s conclusion, it was rational for OMIG to determine that when the government is paying for medical care for its 16 disadvantaged citizens, it may rightfully insist that providers possess more than the minimum level of competence required to avoid license suspension. The Appellate Division correctly observed (R. 284-287) that there was a split among the trial courts that had considered the question of OMIG’s authority to exclude a physician from the Medicaid program based on a BPMC determination or consent order that does not suspend the physician’s license.4 The Appellate Division observed that the courts in both Halliday and Blab had upheld OMIG’s authority (R. 284- 285). In those case, as here, OMIG excluded from the Medicaid program a physician based on a BPMC consent order and agreement in 4 See Matter of Halliday v. State of New York Off. of the Medicaid Inspector Gen. (Sup. Ct. Alb. Co. Index No. 2575-10, Connolly, J., July 2, 2010) (upholding OMIG determination to exclude a provider); Matter of Blab v. Sheehan (Sup. Ct. Alb. Co. Index No. 4275-10, Sackett, J., September 30, 2010) (same); Vaynshelbaum v. Daines, 30 Misc. 3d 1227(A), 2011 WL 665725 at *9 (Sup. Ct. N.Y. Co. Feb. 17, 2011) (same); Matter of King v. Office of the Medicaid Inspector Gen. (Sup. Ct. Alb. Co. Index No. 5364-10, Teresi, J., October 27, 2009) (same); but see Matter of Mihailescu v. Sheehan, 25 Misc. 3d 258, 260 (Sup. Ct. N.Y. Co. 2009) (annulling OMIG determination); Napoli v. Sheehan (Sup. Ct. Erie County, May 25, 2010, Drury, J., Index No. I2009– 14524) (same); Matter of Pearl v. The Office of the Medicaid Inspector General (Sup. Ct. Alb. Co. Index No. 5702-08, Teresi, J., October 26, 2009). Copies of the unreported decisions upholding OMIG’s determinations are included in the attached Addendum to this brief (A. 1-24), and the unreported decisions annulling OMIG’s determination are reproduced in the record at R. 148-170, 262-276. 17 which the physician pleaded no contest to professional misconduct charges that did not involve the treatment of Medicaid patients or unacceptable practices under 18 N.Y.C.R.R. § 515.2. The court in Halliday held that OMIG had the authority under 18 N.Y.C.R.R. § 515.7(e) to sanction the petitioner based on the BPMC consent order and agreement (see addendum, A. 4-5). Likewise, the court in Blab, in upholding OMIG’s authority, reasoned that “OMIG was created to safeguard and protect the integrity of the Medicaid program and has the authority to exclude from the program providers who have engaged in professional misconduct” (A. 17). However, the Appellate Division adopted the contrary reasoning in Mihailescu, 25 Misc. 3d at 260 (R. 285-287). There the court annulled OMIG’s refusal to reinstate a physician who had been excluded from the Medicaid program. The court in Mihailescu observed that the BPMC, another unit within the Department of Health, is responsible for protecting both Medicaid and non-Medicaid patients. Given the interest in avoiding “duplicative” work and “potentially inconsistent intra-departmental results,” the court reasoned, the Legislature did not intend to allow OMIG to “second- 18 guess” the BPMC’s implicit determination that the physician may safely practice medicine under the conditions stipulated in the consent agreement. 25 Misc. 3d at 266. The Mihailescu court thus concluded that OMIG must defer to the conclusion of BPMC, its sister departmental unit, as to the proper penalty for the professional misconduct at issue. This reasoning is flawed, and the Appellate Division should not have adopted it. The conclusion that OMIG may not “second-guess” the BPMC but must “defer” to its determination as to the proper penalty effectively means that the BPMC’s determination is binding on OMIG when it determines whether to exclude a provider from the Medicaid program. But nothing in the statutes creating and empowering the BPMC and OMIG supports this conclusion. Under New York law, the BPMC plays no role in determining whether a health care provider should be excluded from the Medicaid program. So in imposing its own penalty, OMIG is not duplicating any work already performed by the BPMC. Nor is there anything inherently inconsistent in the two entities’ determinations. While the BPMC may have implicitly concluded that 19 Dr. Koch is qualified to practice medicine generally, OMIG rationally concluded that Medicaid providers must possess more than the minimum level of competence required to avoid license suspension. The exclusion of Dr. Koch from the Medicaid program does not preclude him from practicing medicine generally, and therefore does not nullify the BPMC’s determination allowing him to continue to practice while on probation.5 The court in Mihailescu emphasized that the OMIG and the BPMC are subunits of the same agency, the Department of Health, but that fact is irrelevant because the two subunits are performing separate functions. BPMC, acting as regulator, determines whether a physician should be permitted to offer his services to anyone, and thus whether members of the public should be permitted to purchase his services if they so choose. The Medicaid program, by contrast, pays for medical 5 The fact that OMIG’s determination might impair Dr. Koch’s ability to practice medicine and earn a living is not relevant to the question of OMIG’s authority but is relevant, if at all, only to the question whether the penalty imposed was excessive, which question the Appellate Division found “no need to address” (R. 287). In any event, under the circumstances, the penalty of exclusion was not excessive. See Matter of Liguori v. Beloten, 76 A.D.3d 1156, 1157-58 (3d Dep’t 2010) (doctor’s removal from list of eligible Workers’ Compensation providers following guilty plea to one specification of professional misconduct was not excessive), lv. denied, 16 N.Y.3d 702 (2011). 20 services furnished to the needy, and OMIG determines whether a physician is performing at a level that warrants the use of public funds to purchase his services. Those are two different decisions, and there is nothing irrational about permitting a physician to practice while choosing not to use his services. Indeed, historically the decisions were not both made by units of the Department of Health. The authority to administer New York’s Medicaid program, including the authority to exclude enrolled providers, was formerly vested in the former Department of Social Services (DSS), which promulgated 18 N.Y.C.R.R. § 515.7(e). See Matter of Pekarsky v. Commissioner of New York State Dep’t of Social Services, 257 A.D.2d 905 (3d Dep’t 1999). Responsibility for administering the Medicaid program was transferred in 1996 from DSS to the Department of Health, and the specific authority to exclude providers from the program was transferred in 2006 from the Department of Health to OMIG. See Blossom View Nursing Home v. Novello, 4 N.Y.3d 581, 591-92 (2005); L. 1996, ch. 474 §§ 233-248; L. 2006, ch. 442 § 1. There is no reason to think that transfer of exclusion authority from DSS to OMIG was designed to change the criteria for 21 decision. Although OMIG and BPMC are nominally under the umbrella of the same department, they operate under distinct grants of legislative authority, and their decisions serve distinct purposes. OMIG, in excluding a provider from the Medicaid program, does not duplicate or intrude on any authority exercised by the BPMC. Consequently, OMIG rationally determined that 18 N.Y.C.R.R. § 515.7(e) authorized it to exclude petitioner from the Medicaid program based on the BPMC consent order. POINT II OMIG Was Not Required To Conduct An Independent Investigation Before Excluding A Provider From the Medicaid Program Under 18 N.Y.C.R.R. § 515.7(e) Contrary to the Appellate Division’s conclusion, OMIG was not required to conduct an independent investigation of the allegations of professional misconduct before excluding Dr. Koch from the Medicaid program under 18 N.Y.C.R.R. § 515.7(e). Instead, OMIG properly relied on the BPMC consent order and agreement. By its terms, § 515.7(e) authorizes OMIG to exclude a provider based on a BPMC determination, including one resolved by stipulation or agreement, and does not 22 require OMIG to conduct an independent investigation. The Appellate Division’s conclusion here mistakenly nullifies this regulation. OMIG’s authority to exclude providers under section 515.7(e) is reasonable. This authority is triggered only when there has already been a final administrative determination that the provider has committed acts constituting professional misconduct (or other acts described in the regulation). The regulation rests on the commonsense ground that the findings underlying the BPMC action resulted from the process already afforded petitioner by BPMC and that OMIG may therefore rely on the results of that process in determining whether OMIG should take action to protect the Medicaid program and its patients. OMIG did offer petitioner the opportunity to challenge the exclusion through an administrative appeal, but petitioner did not timely invoke this remedy. But OMIG was not required by statute, regulation, or due process principles to redetermine the facts of the professional misconduct that formed the basis for the consent agreement and order. See Matter of Liguori v. Beloten, 76 A.D.3d 1156 (3d Dep’t 2010) (confirming a determination of the Chair of the 23 Worker’s Compensation Board removing a doctor from the list of eligible providers following his guilty plea to one specification of professional misconduct), lv. denied, 16 N.Y.3d 702 (2011). Instead, the regulation properly authorized OMIG to rely on the BPMC determination. In addition, contrary to the Appellate Division’s suggestion, OMIG did not reflexively exclude petitioner from the Medicaid program; rather, OMIG determined that exclusion was appropriate based upon a recommendation by a registered nurse with extensive experience in quality assurance reviews of health care professionals (R. 129). The nurse reviewed the findings in the consent agreement and order in which petitioner pleaded no contest to nine specifications of professional misconduct involving negligence on more than one occasion in the treatment of two patients, both of whom subsequently died (R. 131-132). The consent agreement and order established that petitioner failed to timely and appropriately treat the patients, in that he failed to order indicated tests and consultations and failed to perform indicated examinations or observe and diagnose specific conditions (R. 124-125, 131-132, 135-136). Given petitioner’s significant lapses in medical care, the nurse – whose recommendation was adopted by OMIG – made an 24 individualized determination that petitioner’s conduct was so negligent that his exclusion from the Medicaid program was warranted (R. 132). Accordingly, OMIG properly determined based on the BPMC consent order and agreement that petitioner should be excluded from the Medicaid program, and that determination should be confirmed. 25 CONCLUSION The Court should reverse the Appellate Division’s order and dismiss the petition. Dated: Albany, New York December 18, 2012 BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General VICTOR PALADINO Assistant Solicitor General of Counsel Respectfully submitted, ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Appellant By: _____________________________ VICTOR PALADINO Assistant Solicitor General Office of the Attorney General The Capitol Albany, New York 12224 Telephone (518) 473-4321 Reproduced on Recycled Paper