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Physician Can Be Removed from Medicaid Program Irrespective of Action Taken by Bureau of Professional Medical Conduct

In a full-fledged opinion by Judge Read, with two concurring judges, the Court of Appeals determined that the Office of Medicaid Inspector General (OMIG) is authorized to remove a physician from New York’s Medicaid program based on a consent order between the physician and the Bureau of Professional Medical Conduct (BPMC) regardless of whether BPMC chooses to suspend the physician:

In this litigation, Supreme Court annulled OMIG’s determination to terminate petitioner-physician’s participation in the Medicaid program on the basis of a BPMC consent order, and directed his reinstatement.  In the consent order, petitioner-physician pleaded no contest to charges of professional misconduct and agreed to 36 months’ probation.  Upon OMIG’s appeal, the Appellate Division affirmed, holding that it was arbitrary and capricious for the agency to bar petitioner-physician from treating Medicaid patients when BPMC permitted him to continue to practice; and that OMIG was required to conduct an independent investigation before excluding a physician from Medicaid on the basis of a BPMC consent order … .  We subsequently granted OMIG permission to appeal (19 NY3d 813 [2012]).

We disagree with the Appellate Division’s rationale, but affirm because OMIG’s determination was arbitrary and capricious for another reason.  Specifically, OMIG did not explain why the BPMC consent order in this case caused it to exercise its discretion pursuant to 18 NYCRR 515.7 (e) to exclude petitioner-physician from the Medicaid program. * * *

When resolving charges of professional misconduct with BPMC, physicians and their attorneys should be mindful that a settlement with BPMC does not bind OMIG, as petitioner-physician discovered in this case.  Matter of Koch, DO v Sheehan…, 153, CtApp 10-22-13

 

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New Medicaid Reimbursement Procedures Did Not Violate State Administrative Procedure Act

The Third Department affirmed Supreme Court and determined that a modified Medicaid reimbursement procedure for the school supportive health services program (SSHSP) did not violate the State Administrative Procedure Act because the new administrative directives (referred to as Q & A’s) were not new rules triggering the requirements of the Act:

The documentation and reimbursement eligibility requirements reflected in the challenged Q & As were not required to be promulgated as rules under the State Administrative Procedure Act.  For purposes of rule-making notice and filing requirements (see State Administrative Procedure Act § 202), a rule is defined as “the whole or part of each agency statement, regulation or code of general applicability that implements or applies law, or prescribes . . . the procedure or practice requirements of any agency, including the amendment, suspension or repeal thereof” (State Administrative Procedure Act § 102 [2] [a]).  Expressly excluded from the definition are “rules concerning the internal management of the agency which do not directly and significantly affect the rights of or procedures or practices available to the public” (State Administrative Procedure Act § 102 [2] [b] [i]), and “forms and instructions, interpretive statements and statements of general policy which in themselves have no legal effect but are merely explanatory” (State Administrative Procedure Act § 102 [2] [b] [iv]).  The Court of Appeals has recognized “that there is no clear bright line between a ‘rule’ or ‘regulation’ and an interpretative policy” (Cubas v Martinez, 8 NY3d 611, 621 [2007]).  Courts have previously found administrative directives to be interpretive statements when they rely on and constitute reasonable interpretations of existing regulations or statutes, or merely address the type of documentation needed to establish whether a predetermined test of eligibility has been met … .  Board of Education of the Kiryas Joel Village Union Free School District, 516336, 3rd Dept 10-17-13

 

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Statutory Moratorium On Rate Appeals Applied Retroactively to All Appeals Prior to April, 2015

The Fourth Department reversed Supreme Court and determined that a 201/2011 statutory moratorium on Medicaid reimbursement rate appeals filed by nursing homes applied retroactively to all appeals filed before April, 2015:

We agree with respondents that section 2808 (17) (b) and (c) [Public Health Law] apply retroactively to petitioners’ rate appeals.  The seminal case on whether statutes are to be applied retroactively is Majewski v Broadalbin-Perth Cent. Sch. Dist. (91 NY2d 577, 584), which provides, in relevant part, that “[i]t is a fundamental canon of statutory construction that retroactive operation is not favored by courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it” (see generally McKinney’s Cons Laws of NY, Book 1, Statutes § 51 [b]).  We conclude that the language of the statute requires that it be applied retroactively.  Public Health Law § 2808 (17) (b) states that, for the period from April 1, 2010 through March 31, 2015, “the [C]ommissioner shall not be required to revise certified rates of payment . . . for rate periods prior to April [1, 2015], based on consideration of rate appeals filed by residential health care facilities” in excess of the monetary cap.  While there is no explicit statement that the moratorium and cap shall apply to rate appeals filed before April 1, 2010, the statute specifically states that no revisions are required for any period before April 1, 2015 where the revision would emanate from a rate appeal filed by a residential health care facility.  In our view, the necessary implication of that language is that the statute applies to any rate appeal seeking a revision for any period before April 1, 2015, including any revisions resulting from rate appeals filed before the statute took effect. * * *

Inasmuch as the moratorium applies retroactively to petitioners’ rate appeals, petitioners do not have a clear legal right to relief, and their [Article 78 mandamus] petition must be denied… . Matter of Woodside Manor Nursing Home… v Shah…, 862, 4th Dept 10-4-13

 

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Five-Year Look-Back Applied/Pension Properly Included in Determining Applicant’s Income In Spite of Unexplained Cessation of Payments

The Fourth Department confirmed the Department of Social Service’s determination that transfers of property within the five-year look-back period were properly taken into account in imposing a penalty period before the applicant, who was in a nursing home, was eligible to for Medicaid. The court agreed that a gift made during the look-back period was at least partially motivated by qualifying for Medicaid and the applicant’s pension payments, which stopped at some point for unknown reasons, were properly considered in determining the applicant’s income (noting that the department was not obligated to determine why the payments, which presumably were for life, stopped).  In explaining the relevant law, the court wrote:

“In determining the medical assistance eligibility of an institutionalized individual, any transfer of an asset by the individual . . . for less than fair market value made within or after the look-back period shall render the individual ineligible for nursing facility services” for a certain penalty period (Social Services Law § 366 [5] [d] [3]).  The look-back period is the “sixty month period[] immediately preceding the date that an [applicant] is both institutionalized and has applied for medical assistance” (§ 366 [5] [d] [1] [vi]).  Where an applicant has transferred assets for less than fair market value, the burden of proof is on the applicant to “rebut the presumption that the transfer of funds was motivated, in part if not in whole, by . . . anticipation of future need to qualify for medical assistance” (…see generally § 366; 18 NYCRR 360-4.4).  Matter of Donvito… v Shah…, 663, 4th Dept 7-19-13

 

Residential Health Care Facility’s Medicaid Reimbursement Disallowed with Respect to Certain Operating Costs

The Third Department upheld the determination of the Department of Health’s Office of Inspector General which disallowed certain operating costs of petitioner (a residential health care facility) used to compute Medicaid reimbursement rates.  Matter of Odd Fellow & Rebekah Rehabilitation and Health Care Center, Inc v Commissioner of Health…, 515687, 3rd Dept, 6-6-13

 

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Attorney General’s Medicaid Fraud Control Unit Was Authorized Under Both State and Federal Law to Prosecute a Case Stemming from the Provision of Federal Medicare Services

In a full-fledged opinion by Justice Fahey, the Fourth Department determined that the Attorney General’s Medicaid Fraud Control Unit was authorized, pursuant to Executive Law 63, to prosecute the defendants, who provided federal Medicare services exclusively but received payment from both Medicare and Medicaid.  In addition, the Fourth Department determined that the federal statute which created the state Medicaid Fraud Control Units, and which allows the state Medicaid Fraud Control Units to prosecute federal Medicare violations only where the prosecution as a whole is “primarily related to the state [Medicaid] plan,” did not preempt Executive Law 63 as it was applied in this case.  People v Miran, KA 12-01189, 319, 4th Dept, 4-26-13

 

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Assets Allegedly Wrongly Appropriated by Fiduciary Deemed “Asset-Transfers” for Purpose of Qualifying for Medicaid 

Pursuant to a power of attorney granted to Williams, petitioners’ decedent’s assets were transferred to joint accounts with Williams and decedent on the accounts.  Some of the funds were used by Williams for personal purposes.  When decedent applied for Medicaid benefits to pay for nursing home care, the benefits were denied by the Department of Health because it was determined that certain assets had been transferred for the purpose of qualifying for Medicaid.  Petitioners brought an Article 78 proceeding arguing that Williams wrongly appropriated the assets and, therefore, the assets were not transferred to qualify for Medicaid.  In upholding the Department of Health’s asset-transfer finding, the Third Department wrote:

In this regard, petitioners contend that Williams breached her fiduciary duty to decedent and engaged in self-dealing, thus establishing that “the assets [in question] were transferred exclusively for a purpose other than to qualify for medical assistance” and invoking the exception set forth in Social Services Law § 366 (5) (e) (4) (iii) (B). Although there arguably is evidence in the record that could support such a conclusion, given the existence of the joint checking accounts and the powers conferred upon Williams with respect to financial transactions, substantial evidence supports the Department of Health’s conclusion that petitioners failed to overcome the presumption that the stocks were sold and “the proceeds were transferred – at least in part – in order to qualify for Medicaid” … .Petitioners’ related assertion – that decedent lacked the mental capacity to manage his finances – is equally unavailing, as the record does not establish that decedent was incapacitated at the time the power of attorney was granted or the  joint accounts at issue  were  established. Under such circumstances, substantial evidence supports the Department of Health’s determination that petitioners  did  not  demonstrate  their entitlement to the claimed exception.  Matter of Conners… v Berlin …, 515536, 3rd Dept, 4-11-13

 

 

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