The NYS Supreme Court, Appellate Division, Third Department, in its written decision, upheld the authority of the NYS Comptroller to audit Marvin Handler, MD. The audit primarily focused on whether Dr. Handler had routinely waved Empire Plan members’ out-of-pocket costs. MSSNY wrote an amicus brief urging the Appellate Division to hold that the Comptroller has no constitutional authority to audit private practice physician offices.
Apparently, the rationale of the Appellate Division is that if a doctor is routinely waiving the 20% co- payment, then in actuality, the doctor is inflating his actual charge. According to the Appellate Division, the amount sought in the claim is inflated when co-payments are routinely waived. This caused United to make an overpayment to the insured—which further leads the state to pay for the overpayments. United is reimbursed in full with state funds for all claims that United has paid. Thus, according to the Appellate Division, if United has overpaid claims to the insured, the state has overpaid claims to United.
As an example, if the doctor’s charge for procedure Z is $100 under the Empire Plan, the patient is responsible to pay the doctor a 20% co-payment or $20. The Empire Plan would be required to reimburse the patient $80. But, according to the court, if the doctor routinely forgives the $20 co-payment, then the doctor’s actual charge is $80, and the patient should be responsible to pay $16. The insurer would only be responsible to reimburse the insured $64, not $80.
The Appellate Division further held that the Comptroller’s audit was not a full performance audit of Dr. Handler, but was a limited audit to see if the doctor was routinely waiving co-payments. The Appellate Division held that the State Comptroller has the authority to conduct audits in order to ensure that the state did not overpay United Healthcare, and that in order to make such determination, the Comptroller had to examine non-participating providers’ billing records.
The ruling by the Appellate Division solely addresses the question of whether the Comptroller has the authority to audit the records of an out-of-network physician. Dr. Handler has raised a number of issues to contend that the Comptroller’s audit methodology was flawed.
For example, Dr. Handler argued that the Comptroller incorrectly concluded that he waived the collection of the co-payments, because the Comptroller’s audit merely looked at the ledgers to see if the medical practice collected the co-payments. Dr. Handler argued that the Comptroller’s audit methodology failed to consider the fact that he made efforts to collect, such as having staff make telephone calls or send letters to request the patient pay the co-payment amount(s). Dr. Handler argued that the fact that the doctor did not sue the patient to recover does not mean that the doctor did not make other reasonable efforts to collect.
The issues by which Dr. Handler challenged the accuracy of the Comptroller’s audit methodology are not addressed by the Appellate Division, but may be considered by the lower court in further proceedings.
At this time, it is unclear if Dr. Handler intends to appeal to the NYS Court of Appeals.