NYS Health Facilities Association v. Sheehan

APPELLATE DIVISION
THIRD DEPARTMENT
Health Law

New York Law Journal

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Justice Thomas Mercure

The Office of the Medicaid Inspector General (OMIG), an independent office in the state Department of Health, detects and investigates Medicaid fraud. Under CPLR Article 78, New York State Health Facilities Assoc. Inc. (Facilities)—a trade group representing Medicaid-participant residential health care facilities—sought a writ prohibiting OMIG from auditing patient review instruments (PRIs) detailing care levels. PRIs are used to determine Medicaid reimbursement rates. The Third Department affirmed dismissal of Facilities' petition. Facilities did not show OMIG exceeded its jurisdiction, or violated or misapplied its enabling statute. Rather, its arguments amounted to claims that OMIG arbitrarily disregarded regulations, or that OMIG's interpretation of the Public Health Law—to the extent it provided OMIG was not bound by department regulations on PRI auditing methodology—was affected by error. Despite its claim that the statutory grant to OMIG of independent authority to audit PRIs violated the single state agency requirement, OMIG was created as an office "within" the department, and OMIG conceded that it remains under the supervision of the agency, which has authority to overturn or modify audit disallowances.

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