Mihailescu v. Sheehan (Summary)

MEDICAID

Mihailescu v. Sheehan, No. 117072/08 (N.Y. Sup. Ct. June 24, 2009)

The New York Supreme Court granted relief to a physician setting aside a determination by the State Medicaid Inspector General ("Medicaid IG") which had denied her application for reinstatement as a Medicaid provider.

The physician entered into a consent agreement after charges had been filed against her for inappropriate sexual contact. The consent agreement included a 12-month suspension of her medical license, which would be reinstated if certain conditions were met, including completion of a physician-patient boundaries program and submission of an independent evaluation by a psychiatrist confirming that she was competent to practice. At the same time, the Medicaid IG immediately terminated the physician from the Medicaid program.

After the physician had served her suspension and complied with the other conditions, she reapplied for her license and it was reactivated. At the same time, the physician applied for reinstatement to the Medicare and Medicaid programs. While her application to Medicare was granted, her application to Medicaid was denied. Medicaid also advised the physician that she could not submit a new application for at least two years.

The physician argued that the Medicaid IG lacked the authority to deny her application because the position was created to "improve efforts to control fraud, waste and abuse." The court ruled that "given the obvious importance of avoiding duplicative Departmental work and potentially inconsistent intra-Departmental results, the legislature did not likely intend that the Medicaid IG in such a case might second-guess the Department by also investigating or evaluating whether the physician in question would present a potential danger to a sub-set of the patient population." The court further held that "in the face of such acknowledgement by Departmental staff who had directly and at length been involved in the review of [the physician’s] case, the IG’s perfunctory refusal to reinstate the [physician] hampered her return to employment and was therefore arbitrary and capricious."