The First Department, over a two-justice dissent, determined the language of the written notice to petitioner from the Office of the Medicaid Inspector General (OMIG) did not allow the OMIG to seek the higher of two estimated overpayment reimbursement amounts. The terms of the final audit report (FAR) required a lower payment if the findings were not challenged, and a higher payment if the findings were challenged at a hearing. Petitioner did not request a hearing to challenge the findings, but did not make payment arrangements within the time allowed. The OMIG then notified petitioner it would withhold future reimbursement to pay off what was owed. Although the written notice of the withholding stated the lower amount would be withheld, petitioner was informed orally by OMIG the higher amount would be withheld:
Petitioner seeks to limit its Medicaid reimbursement overpayment liability, in connection with a final audit report [FAR] issued by respondent (OMIG), to the “lower confidence limit” amount of $1,460,914 set forth in the FAR. The FAR states that, although OMIG did not waive any available remedies, if petitioner did not remit payment or arrange a payment plan within 20 days, OMIG would withhold a percentage of Medicaid billings to “liquidate the lower confidence limit amount.” In the alternative, if petitioner challenged OMIG’s findings at a hearing, OMIG would seek to recover at the hearing the FAR’s higher point estimate of overpayments, which was $1,857,401. * * *
The actual FAR language states that, in the event a settlement is not reached within 20 days, OMIG will begin withholding “to recover payment and liquidate the lower confidence amount, interest, and/or penalty, not barring any other remedy at law” (emphasis added). FAR expressly states that if a settlement is not reached, OMIG will begin withholding to collect “the lower confidence amount” of $1,460,914. Thus, contrary to the dissent’s interpretation, the FAR expressly states that in the event there is no settlement, OMIG will withhold the lower confidence limit. West Midtown Mgt. Group, Inc. v State of New York, 2016 NY Slip Op 06111, 1st Dept 9-21-16
MEDICAID (OVERPAYMENT REIMBURSEMENT, OFFICE OF MEDICAID INSPECTOR GENERAL COULD NOT SEEK REIMBURSEMENT OF OVERPAYMENTS IN AN AMOUNT HIGHER THAN SPECIFICALLY INDICATED IN ITS WRITTEN NOTICE)