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Mednik v. State Dep't of Health Care Services

June 30, 2009

GEORGE MEDNIK, PLAINTIFF AND APPELLANT,
v.
STATE DEPARTMENT OF HEALTH CARE SERVICES, DEFENDANT AND RESPONDENT.



APPEAL from a judgment of the Superior Court of Los Angeles County, Dzintra Janavs, Judge. Affirmed. (Los Angeles County Super. Ct. No. BS095695).

The opinion of the court was delivered by: Epstein, P. J.

CERTIFIED FOR PUBLICATION

In this appeal, we consider whether the procedural protections appellant George Mednik received in connection with his temporary yet lengthy exclusion from participation as a Medi-Cal provider satisfied the requirements of due process. Mednik contends the length of his exclusion from participation amounts to a debarment, and that he has not been accorded the fair hearing before an impartial arbiter to which he is entitled.

Although we agree with Mednik‟s assertion that he has a liberty interest at stake in this matter, we conclude that the process afforded him by the time judgment was rendered in this case was constitutionally adequate. We therefore affirm the judgment denying Mednik‟s petition for writ of mandate, without prejudice to Mednik pursuing the matter in the trial court with a new petition for writ of mandate based on actions or inaction subsequent to the judgment.

FACTUAL AND PROCEDURAL SUMMARY

Mednik is a licensed physician; he specializes in radiology. From at least 1994 until the events underlying this action, Mednik provided services to beneficiaries of the Medi-Cal system and was reimbursed for such services by respondent California Department of Health Services (the Department).*fn1

Medicaid is a cooperative federal-state program by which the federal government provides funds to participating states for the purpose of administering medical assistance to eligible persons. (42 U.S.C. § 1396 et seq.) Since California has opted to participate in the federal program, its program must conform to federal Medicaid statutes and regulations. (Mission Community Hospital v. Kizer (1993) 13 Cal.App.4th 1683, 1689.) California participates in Medicaid through the Medi-Cal program, and has designated the Department as the agency responsible for its administration. (Welf. & Inst. Code, §§ 10740, 14000 et seq.)*fn2

Medical professionals wishing to receive reimbursement for services provided through Medi-Cal must enroll in the Medi-Cal program and receive a Medi-Cal "provider number." (Cal. Code Regs., tit. 22, §§ 51000.7, 51000.20.) During his years as a MediCal provider, Mednik had up to 10 individual provider numbers, apparently for different service locations. By 2004, seven of the individual provider numbers had been deactivated.*fn3 Accordingly, this appeal concerns only three provider numbers: 00A523460, 00A523461, and 00A523462.

The Department periodically requires categories of providers to apply for reenrollment in order to continue to participate in Medi-Cal. (§§ 14043.26; Cal. Code Regs., tit. 22, § 51000.55.) Mednik was among the providers selected for reenrollment in early 2003. His reenrollment application packet was received by the Department in June 2003.

While Mednik‟s reenrollment application was pending, a fraud inspector filed a complaint against Mednik with the Department‟s investigations branch. The complaint alleged that the investigator made two unannounced visits to one of Mednik‟s offices and found it lacking the ultrasound equipment necessary for Mednik‟s radiology practice. Apparently, the investigations branch opened an investigation in April 2004 on the basis of this complaint, apart from the investigation being conducted by the Department‟s medical review branch in connection with Mednik‟s reenrollment application.

By letter dated September 1, 2004, the Department notified Mednik that his provider numbers were temporarily being suspended and deactivated, effective September 22, 2004, pursuant to section 14043.36. The letter also stated that payment due under those numbers was being withheld pursuant to section 14107.11. The letter explained that these steps were being taken because Mednik was under investigation for fraud, abuse, or willful misrepresentation, and that the suspension and withholding of payment would continue for the pendency of the investigation. The letter also described the evidence that formed the basis for the investigation.*fn4 It informed Mednik that he could submit a written appeal to the Department in accordance with the procedures set forth in section 14043.65.

On October 4, 2004, the Department notified Mednik by letter that his application for reenrollment had been denied, pursuant to section 14043.36, Health and Safety Code section 100185.5, and California Code of Regulations, title 22, section 51000.50. Additionally, Mednik was informed that he would be ineligible to reapply for enrollment for three years from the date of denial, pursuant to section 14043.65, subdivision (b). The reason for the denial was stated to be the Department‟s ongoing investigation into alleged healthcare fraud and abuse. Mednik was again informed that he could appeal under the procedures in section 14043.65.

In accordance with the Department‟s procedures, Mednik filed a written appeal with the Office of Administrative Hearings and Appeals (OAH) challenging each allegation of the September 1 letter. He requested review of the temporary suspension and deactivation of his provider numbers (hereafter, temporary suspension), the withholding of payments due (withholding), and the denial of his application for reenrollment as a Medi-Cal provider (denial of reenrollment).

In a written opinion dated February 3, 2005, an OAH hearing officer found in favor of the Department. The hearing officer summarized Mednik‟s arguments refuting the allegations of the September 1 letter and the evidence presented by the Department to support those allegations. He then set forth the relevant statutory provisions and identified the issues to be decided: "whether the Department was in receipt of reliable evidence of fraud or willful misrepresentation at the time the withhold of payments was placed and whether the Provider was under investigation for fraud or abuse of the MediCal Program at the time he was suspended from the Program." The hearing officer concluded, "Based on the documentation submitted to the record, the Department has shown it [sic] in receipt of reliable evidence indicative of fraud, abuse or willful misrepresentation by the Provider under the Medi-Cal Program. The Department‟s numerous findings and submissions indicate that the Provider may have intentionally billed for services not rendered, may have rendered substandard services, and may have billed for excessive services. [¶] . . . [¶] Concerning the Department‟s action to suspend the Provider from the Medi-Cal Program, the Department is justified based on the current investigation of the Provider for fraud or abuse of the Medi-Cal Program." The denial of Mednik‟s application for reenrollment was likewise upheld. The Department informed Mednik it was adopting the hearing officer‟s finding as its final decision.

On March 21, 2005, Mednik filed a petition for writ of mandate (Code Civ. Proc., § 1085) in Los Angeles County Superior Court. In subsequent supporting briefs, he contended that the Department‟s investigator had engaged in intimidation and harassment, the OAH hearing officer had failed to consider the evidence Mednik presented, and the findings on administrative appeal were arbitrary, capricious, and lacking evidentiary support, amounting to a denial of due process. He also objected to the length of the investigation, arguing it was an abuse of discretion and denial of due process for the Department to exclude him from the program for what was then almost two years, with no end in sight. The trial court denied Mednik‟s petition. In a written tentative ruling, subsequently adopted as the court‟s statement of decision, the trial court found that the hearing officer had considered all the evidence and that his findings were supported by sufficiently reliable evidence. The court also concluded that Mednik‟s allegations regarding the investigator did not bear on the issue of the reliability of the evidence, and that the length of the Department‟s investigation was neither unreasonable nor an abuse of discretion, given the voluminous medical records and other evidence under review.

Judgment in favor of the Department was entered July 19, 2006. This timely appeal follows.

DISCUSSION

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