Koch v. Sheehan (Summary)

LICENSURE ACTION / MEDICAID EXCLUSION

Koch v. Sheehan, 2013 N.Y. Slip Op. 06804 (N.Y. Oct. 22, 2013)

The Court of Appeals of New York affirmed a lower court’s determination that the state Office of the Medicaid Inspector General (“OMIG”) acted arbitrarily and capriciously when terminating a physician’s participation in Medicaid following the physician’s entrance into a consent order with the Bureau of Professional Misconduct (“BPMC”) involving two professional misconduct charges.  The court disagreed with the lower court’s reasoning, however.

The lower court had held that it was arbitrary and capricious for the OMIG to terminate the physician from participation in Medicaid based solely on the consent order, since the BPMC allowed the physician to continue practicing pursuant to that consent order.  The lower court held that the OMIG would have to conduct its own independent investigation before deciding to exclude the physician.

The court of appeals disagreed.  It held that the OMIG had clear statutory authority to use its discretion to exclude an individual from the Medicaid program based on the individual’s plea of no contest to professional misconduct charges, without any necessity for the OMIG to conduct an independent investigation.  The court noted, however, that exclusion by the OMIG is not automatic for all physicians who enter into a consent order with the BPMC.  Rather, the OMIG is expected to use its discretion when deciding whether to exclude a physician based on a BPMC consent order.  Accordingly, it is necessary for the OMIG to document the exercise of its discretion in cases where it chooses to exclude.  Applying those conclusions to the case at hand, the court held that it was arbitrary and capricious for the OMIG to exclude this physician from the Medicaid program on the basis of the BPMC consent order without explaining why it was relying on the consent order to reach the decision to exclude.