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January 9, 1991


The opinion of the court was delivered by: Spatt, District Judge.


Plaintiff Sidney Gellman, M.D. ("Dr. Gellman"), moves for a preliminary injunction to restrain the defendant*fn1 from terminating Dr. Gellman's participation in Medicare and Medicaid programs until such time as he is afforded an administrative hearing and a decision thereon. Dr. Gellman also seeks to preliminarily enjoin the defendant from notifying any state agencies to terminate his participation in the Medicare program, and also from publishing or otherwise informing the public that Dr. Gellman has been excluded from the programs. For the reasons stated below, Dr. Gellman's motion is denied.


Dr. Gellman has been a licensed physician since 1956. He is a board-certified pathologist, and was Director of Pathology at Franklin General Hospital, Valley Stream, New York ("Franklin General"), from 1963 to 1989. Although no longer the Director, he is presently a staff pathologist at Franklin General.

In 1981, while still employed with Franklin General, Dr. Gellman became a Director of Sunrise Medical Laboratories ("Sunrise"), a private clinical laboratory. During his employment at Sunrise, Dr. Gellman performed laboratory work consisting of pathology and cytology evaluations. Although Sunrise allegedly possessed the requisite Department of Health permits to perform various laboratory work, it did not have the required permits for pathology and cytology studies. Similarly, Dr. Gellman had no such permits on his own.

In 1988, Dr. Gellman was charged with the violation of two misdemeanor criminal offenses: (1) violation of N.Y. Public Health Law § 574, for failure to obtain necessary permits; and, (2) violation of 10 N.Y.C.R.R. § 58-1.9, for removing certain specimens from Sunrise to his home for analysis. Dr. Gellman pled guilty to both counts on November 7, 1988. As a result, he was sentenced to a conditional discharge, fined $500 on each conviction, and referred to the New York State Department of Health ("DOH") for a review of the circumstances surrounding the convictions.

After a review of the convictions, the DOH took the following action: (a) imposed a $5,000 fine; and, (b) forced Dr. Gellman to resign the Directorships at both Franklin General and Sunrise. Dr. Gellman was also placed on three years probation by the Office of Professional Medical Conduct.

By letter dated January 5, 1990, the defendant notified Dr. Gellman that as a result of these convictions, he would be excluded from participation in the Medicare programs and any similar state health care programs, including Medicaid, pursuant to 42 U.S.C. § 1320a-7(a), the "mandatory" exclusion provision. The letter also afforded Dr. Gellman an opportunity to provide the defendant with any mitigating information that it should consider. Dr. Gellman ultimately submitted such information. On July 20, 1990 the defendant gave Dr. Gellman final notice of the determination to terminate his participation in Medicare and any similar state programs for a period of five years, effective twenty days from the date of the letter. This second notice, however, based the termination under 42 U.S.C. § 1320a-7(b), rather than subsection 7(a), which is the "permissive" exclusion provision.

Dr. Gellman commenced this action on August 20, 1990, pursuant to 42 U.S.C. § 405(g) and 1320a-7(f)(1), seeking to restrain and enjoin the defendant from excluding him from participating in the Medicare and related state programs prior to an administrative hearing and disposition. On August 20, 1990, Circuit Judge George C. Pratt, sitting by designation, signed an Order to Show Cause which scheduled the preliminary injunction hearing before this Court on August 22, 1990. Judge Pratt also denied Dr. Gellman's request for a Temporary Restraining Order.

In opposition, the defendant argues first, that the Court lacks subject matter jurisdiction over the action and requests dismissal under Fed.R.Civ.P. 12(h)(3); and second, even assuming jurisdiction exists, Dr. Gellman has failed to establish the traditional elements entitling him to a preliminary injunction.

This Court heard oral argument on the preliminary injunction application on August 22, 1990, at which time the parties stipulated that Dr. Gellman could continue as a Medicare provider and that he would be afforded the opportunity to submit a response to the defendant's final exhaustion notice dated July 20, 1990. This was done to ensure that Dr. Gellman had received the proper notice of the specific statutory provision under which he was being excluded, namely, 42 U.S.C. § 1320a-7(b). Thereafter, by letter dated October 30, 1990, the defendant notified Dr. Gellman that the original determination of suspension would stand. The parties appeared for a conference on November 16, 1990 before this Court, at which time additional briefing was requested on the issue of the Court's subject matter jurisdiction.

Concurrent with this action, Dr. Gellman is also attempting to exhaust his administrative remedies. At this time, the parties have made written submissions to the Secretary and a pre-hearing conference is scheduled for sometime in the near future. No final administrative determination has been made.


At the outset, the Court must first determine whether subject matter jurisdiction exists (see Fed.R.Civ.P. 12[h][3]; Republic of the Philippines v. Marcos, 806 F.2d 344, 352 [2d Cir. 1986], cert. dismissed sub nom. Ancor Holdings, N.V. v. Republic of the Philippines, 480 U.S. 942, 107 S.Ct. 1597, 94 L.Ed.2d 784, cert. denied sub nom. New York Land ...

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