In the Matter of the Application of THE NEW YORK AND PRESBYTERIAN HOSPITAL, Petitioner,
CITY OF NEW YORK MAYOR'S OFFICE.OF CONTRACT SERVICES and MARLA SIMPSON as Director of the Mayor's Office of Contract Services, Respondent For a Judgment Pursuant to CPLR Article 78, Index No. 100667/12
DORIS LING-COHAN, J.:
Petitioner The New York and Presbyterian Hospital (the Hospital) brings this Article 78 proceeding against respondents City of New York Mayor's Office of Contract Services (MOCS) and Maria G. Simpson (Simpson) for an order and judgment: 1) declaring the inclusion of the Caution Notification concerning the Hospital in the Caution File of the Vendor Information Exchange System (VENDEX) system an abuse of discretion, contrary to law, without rational basis, and "arbitrary and capricious"; and 2) ordering respondents to remove the Caution Notification from the Caution File of the VENDEX system and place a curative statement in the system stating that the Caution Notification was erroneous.
As explained further below, the VENDEX system is a database maintained by the City to provide information regarding prospective vendors pursuing City contracts. The information contained therein may affect a vendor's ability to be awarded a City contract.
The Hospital alleges that, on October 6, 2011, respondents posted a Caution Notification based solely on a press release issued by the office of the United States Attorney for the Southern District of New York relating to the settlement of a previously sealed federal False Claims Act lawsuit. United States ex rel Nicoli Reynolds v Dr. Erik Goluboff, 05 Civ 9804 (LSB) (Reynolds litigation). That Caution Notification stated in pertinent part:
On October 5, 2011, the U.S. Attorney's Office for the Southern District of New York filed and simultaneously settled a civil health care fraud lawsuit against The Trustees of Columbia University in the City of New York ("Columbia"), New York Presbyterian Hospital ("Presbyterian Hospital"), and Dr. Erik Goluboff. The settlement requires Columbia to pay $995, 000 in civil damages to the federal government under the False Claims Act. The Complaint alleges that between 2003 and 2009, Dr. Goluboff violated Medicare regulations by conducting diagnostic tests that were medically unnecessary, billing Medicare for those tests in such a way as to generate improper and excessive reimbursement amounts, and billing Medicare for more procedures than he was physically able to perform in a single day. The Complaint also alleges that Columbia and Presbyterian Hospital were aware of Dr. Goluboffs fraudulent practices, failed to stop these practices, and caused his claims to be submitted to Medicare. Columbia and Presbyterian Hospital thus continued to benefit financially from the fraud and did not stop it, even after learning of what Columbia described internally as "alarming compliance issues" with Dr. Goluboff.
Petition, ¶ 35.
The whistleblower litigation was initially filed in 2005 by an employee of the Hospital, Nicoli Reynolds. Reynolds alleged that Dr. Goluboff, who was employed by Columbia and had admitting privileges at the Hospital, was engaged in fraudulent Medicare billing. The United States entered the litigation in October 2011, simultaneously filing its complaint-in-intervention and settlement agreement, in which the United States agreed to seek dismissal with prejudice of both Reynold's Qui Tarn complaint and its own complaint. The Stipulation and Order of Settlement and Dismissal of the action was signed by the court on October 4, 2011.
The Hospital contends that the City posted the notification without advising the Hospital in advance or providing the Hospital with the opportunity to comment on the caution notification. According to the Hospital, had the City inspected the Stipulation and Order settling the case, which was publicly available on-line, it would have learned the following details of the settlement:
a."[T]his stipulation is [not] an admission of liability by Defendants..." (2nd recital, p. 3);
b.That payment of the entire $995, 000 was to be made by Columbia; that no payment of any kind was to be made by the Hospital (par. 2); and
c."[I]rrespective of what is alleged in the First Amended Qui Tarn Complaint, Relator [Reynolds] warrants that, as of the date of this agreement, she has no knowledge of any violations of law or other misconduct on the part of the Hospital, its ...