In the Matter of Eric J. KOCH, D.O., Respondent,
James G. SHEEHAN, New York State Medicaid Inspector General, Appellant.
[Copyrighted Material Omitted]
[976 N.Y.S.2d 5] Eric
T. Schneiderman, Attorney General, Albany (Victor Paladino, Barbara D. Underwood and Andrew D. Bing of counsel), for appellant.
Brown & Tarantino, LLC, Buffalo (Susan A. Eberle of counsel), for respondent.
Kern Augustine Conroy & Schoppmann, P.C., Westbury (Donald R. Moy of counsel), for Medical Society for the State of New York, amicus curiae.
805 We hold that the Office of the Medicaid Inspector General (OMIG or the agency) is authorized to remove a physician from New York's medical assistance (Medicaid) program in reliance solely on a consent order between the physician and the Board for Professional Medical Conduct (BPMC), regardless of whether BPMC chooses to suspend the physician's license or OMIG conducts an independent investigation ( see 18 NYCRR 515.7[e] ). OMIG has a responsibility to insure that scarce Medicaid dollars are spent on quality medical care for Medicaid recipients, who are often unable to vote with their feet. The agency may therefore properly decide that when the government is paying for the medical care of disadvantaged citizens, providers must possess more than the minimum level of competence necessary to avoid license suspension ( see generally Matter of Medicon Diagnostic Labs. v. Perales, 74 N.Y.2d 539, 545, 549 N.Y.S.2d 933, 549 N.E.2d 124  [" the agency charged with the responsibility of administering the medicaid program has inherent authority to protect the quality and value of services rendered by providers in that program" ] ). Indeed, federal law requires, as a condition of receipt of federal funding, that states institute administrative procedures enabling them to exclude Medicaid providers for furnishing substandard services, regardless of whether those services were supplied to Medicaid recipients ( see 42 CFR 1002.210, 1001.701[a] ).
In this litigation, Supreme Court annulled OMIG's determination to terminate petitioner physician's participation in the Medicaid program on the basis of a BPMC consent order, and directed his reinstatement. In the consent order, petitioner physician pleaded no contest to charges of professional misconduct
and agreed to 36 months' probation. Upon OMIG's appeal, the Appellate Division affirmed, holding that it was arbitrary and capricious for the agency to bar petitioner physician from treating Medicaid patients when BPMC permitted him to continue to practice; and that OMIG was required to conduct an independent investigation before excluding a physician from Medicaid on the basis of a BPMC consent order ( see 95 A.D.3d 82, 940 N.Y.S.2d 734 [4th Dept.2012] ). We subsequently granted OMIG permission to appeal (19 N.Y.3d 813, 2012 WL 4936625  ).
We disagree with the Appellate Division's rationale, but affirm because OMIG's determination was arbitrary and capricious for another reason. Specifically, OMIG did not explain why the BPMC consent order in this case caused it to exercise its discretion pursuant to 18 NYCRR 515.7(e) to exclude petitioner physician from the Medicaid program.
The Office of Professional Medical Conduct (OPMC) comprises an investigatory [998 N.E.2d 806] [976 N.Y.S.2d 6] arm (also called the Office of Professional Medical Conduct) and an adjudicatory arm, the BPMC. OPMC is the authority within the Department of Health (DOH) charged with investigating complaints of physician misconduct, and BPMC imposes sanctions if misconduct is found to have occurred. Frequently, BPMC will enter into a consent order with the physician under investigation, as happened here. OMIG, also housed within DOH, is responsible for policing New York's Medicaid program. The ...