Health Law Update

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The New York Court of Appeals recently ruled that the Office of the Medicaid Inspector General (OMIG) has discretion to exclude a physician from New York's medical assistance program (Medicaid) based solely on a consent order between the physician and the Board of Professional Medical Conduct (BPMC), regardless of whether the physician's license has been suspended or OMIG conducts an independent investigation. However, the rationale for excluding a physician must be clearly stated in the record.

In this case, BPMC reviewed misconduct charges against a physician involving the death of two of his non-Medicaid patients. The physician entered into a consent order with BPMC in which he agreed to plead no contest to misconduct charges and was placed on probation for 36 months. BPMC allowed the physician to continue practicing. OMIG subsequently excluded the physician from Medicaid based on its review of the consent order. The physician argued that OMIG must defer to BPMC and questioned OMIG's authority to impose "collateral consequences." The lower courts agreed and found that OMIG acted arbitrarily and capriciously in excluding the physician when he was still permitted to practice. Further, the lower courts concluded that OMIG was required to conduct an independent investigation, and ordered the physician be reinstated in the Medicaid program.

The New York Court of Appeals affirmed the decision of the lower courts, but did not agree with the court's rationale. Specifically, the appellate court found that OMIG has discretion to exclude a physician from Medicaid based on a BPMC consent order without a duty to independently investigate the underlying claims. Further, the court stated that OMIG's authority to consider a physician's misconduct isn't diminished if the misconduct occurred in connection with services furnished to non-Medicaid recipients. Federal Medicaid regulations require that states institute administrative procedures enabling them to exclude Medicaid providers for furnishing substandard services, regardless of whether those services were furnished to Medicaid recipients.

The case highlights that, despite a consent order that permits a physician to continue practicing medicine, there may be unintended collateral consequences in addition to those conditions agreed to in the consent order. Other licensing agencies, hospitals, health provider programs and Medicare and Medicaid frequently take separate actions against a physician after a consent order has been executed. Many physicians enter into misconduct settlements without fully anticipating the potential collateral consequences, or the impact they could have on the physician's ability to continue to practice.

Collateral Damage: Medicaid Inspector General Says You’re Fired!