In Matter of Koch v. Sheehan, the New York Court of Appeals held that the Office of Medicaid Inspector General (“OMIG”) may remove a physician from the Medicaid program based solely on a consent order between the physician and the Bureau of Professional Medical Conduct (“BPMC”), even if BPMC does not suspend the physician’s license and OMIG does not conduct its own investigation.

The BPMC is the adjudicatory arm of the Office of Professional Medical Conduct (“OPMC”), the authority within the New York State Department of Health (“DOH”) charged with investigating complaints of physician misconduct.  OPMC sends the results of its investigations to OMIG, the DOH agency responsible for policing the Medicaid program.

In Koch, the petitioner-physician entered into a consent order with BPMC pleading “no contest” to charges that his care and treatment of two elderly patients failed to meet accepted standards of care.  He agreed to a 36-month probation, but BPMC allowed him to continue practicing medicine.  OMIG, however, removed him from the Medicaid program, without any further investigation and even though BPMC did not impose a suspension of his license.  The Appellate Division annulled the OMIG determination on the grounds that it was arbitrary and capricious for OMIG to bar petitioner-physician from Medicaid when BPMC allowed him to continue his practice, and that OMIG had to conduct an independent investigation before taking such action.

The Court of Appeals held, however, that OMIG is authorized to exclude a physician from the Medicaid program regardless of the sanctions imposed by BPMC, and OMIG is not required to conduct an independent investigation or develop additional evidence before making its decision.  Nevertheless, the Court held that the OMIG decision was arbitrary and capricious, but for a different reason than the Appellate Division.  The Court held that OMIG’s basis for finding the BPMC consent order sufficient to terminate Medicaid participation was not in the administrative record.  Thus, while OMIG has the power to exclude a doctor from Medicaid based solely on a BPMC consent order, and does not have to defer to the BPMC’s decision to allow a doctor to continue practicing, in this instance the administrative record did not have sufficient reasoning to support OMIG’s decision.

The takeaway from this case is supplied by the Court of Appeals itself:  “When resolving charges of professional misconduct with BPMC, physicians and their attorneys should be mindful that a settlement with BPMC does not bind OMIG.”