Case Title: Kevin Glassman v. ProHealth Ambulatory Surgery Center, Inc.

Citation: 

Docket Number: 

State: new-york

Court: New York Appellate Court

Date: 2010-06-03T00:00:00Z

Document:
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This memorandum is uncorrected and subject to revision before
publication in the New York Reports.
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No. 105  
Kevin Glassman &c.,
            Respondent,
        v.
ProHealth Ambulatory Surgery 
Center, Inc. et al.,
            Appellants.
Evan H. Krinick, for appellants.
David M. Wirtz, for respondent.
New York State Association of Ambulatory Surgery
Centers, Inc.; Greater New York Hospital Association, amici
curiae.
MEMORANDUM:
The judgment appealed from and the October 2008 order
of the Appellate Division brought up for review should be
reversed, with costs, and the matter remitted to Supreme Court
for further proceedings in accordance with this memorandum.
Even assuming that the provision of the employment
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No. 105
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contract allowing defendant to collect fees emanating from
plaintiff's off-site anesthesiology services is inconsistent with
10 NYCRR 401.2 (b), which provides that "[a]n operating
certificate shall be used only by the established operator for
the designated site of operation," we conclude that the provision
is merely malum prohibitum and, therefore, enforceable in this
breach of contract action (see Lloyd Capital Corp. v Pat Henchar,
Inc., 80 NY2d 124, 127-128 [1992]; see also Charlebois v Weller
Assoc., 72 NY2d 587 [1988]).  Forfeitures by operation of law are
disfavored, and allowing parties to escape their contractual
obligations, freely entered into, "is especially inappropriate
where there are regulatory sanctions and statutory penalties in
place to redress violations of the law" (Lloyd Capital Corp., 80
NY2d at 128).
Here, Public Health Law § 2806 (1) (a) authorizes the
Department of Health to revoke, suspend, limit or annul an
ambulatory surgery center's operating certificate where it "has
failed to comply with the provisions of this article or rules and
regulations promulgated thereunder."  Additionally, the State
Board for Professional Medical Conduct has the power to impose
sanctions for fee-splitting arrangements that violate statutory
prescriptions (see Education Law § 6530 [19]; § 6531; see also
Public Health Law §§ 230, 230-a).  Neither agency has been
involved in this matter, nor has plaintiff identified an
overarching public policy that mandates voiding the contract (see
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No. 105
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generally Albany Med. Coll. v McShane, 66 NY2d 982 [1985], rearg
denied 67 NY2d 757 [1986]).  For this reason, Supreme Court shall
consider whether defendant is entitled, under the terms of the
agreement, to a set off derived from the funds, if any, held by
plaintiff, against the amount of recovery in this case.  We see
no reason to disturb the remaining conclusions of the courts
below.
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Judgment appealed from and the October 2008 Appellate Division
order brought up for review reversed, with costs, and case
remitted to Supreme Court, Nassau County, for further proceedings
in accordance with the memorandum herein.  Chief Judge Lippman
and Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones
concur.
Decided June 3, 2010