Court Opinion

ID: 4084848
Source: CourtListenerOpinion
Date Created: 2016-10-07 23:56:22.554295+00
Date Added: 2024-06-11T14:06:38.516534
License: Public Domain

SUPREME COURT OF THE STATE OF NEW YORK
           Appellate Division, Fourth Judicial Department

319
KA 12-01189
PRESENT: SCUDDER, P.J., FAHEY, SCONIERS, AND MARTOCHE, JJ.

THE PEOPLE OF THE STATE OF NEW YORK, RESPONDENT,

                    V                                OPINION AND ORDER

MICHAEL MIRAN, DEFENDANT-APPELLANT.
(APPEAL NO. 1.)

THE PARRINELLO LAW FIRM, LLP, ROCHESTER (BRUCE F. FREEMAN OF COUNSEL),
AND CERULLI, MASSARE & LEMBKE, FOR DEFENDANT-APPELLANT.

ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL, ALBANY (JODI A. DANZIG OF
COUNSEL), FOR RESPONDENT.

     Appeal from a judgment of the Supreme Court, Monroe County
(Richard A. Dollinger, A.J.), rendered October 15, 2010. The judgment
convicted defendant, upon his plea of guilty, of offering a false
instrument for filing in the second degree.

     It is hereby ORDERED that the judgment so appealed from is
unanimously affirmed.

     Opinion by FAHEY, J.: In appeal Nos. 1 through 3, defendants
appeal from respective judgments convicting them of crimes related to
Medicaid and Medicare fraud. In doing so, defendants raise the issues
whether the Attorney General of the State of New York (hereafter,
Attorney General) has authority under Executive Law § 63 (3) to
prosecute defendants for crimes involving Medicare, and whether
Executive Law § 63 (3) is preempted by 42 USC § 1396b (q) (3). For
the reasons that follow, we agree with the People that Executive Law §
63 (3) empowers the Attorney General to prosecute crimes related to
Medicare fraud in connection with an authorized investigation of
Medicaid fraud. We further conclude that Executive Law § 63 (3) is
not preempted by 42 USC § 1396b (q) (3), and we thus conclude that the
judgment in each appeal should be affirmed.

                                  I

     Medicaid is a joint federal-state program established pursuant to
what is astutely described as a scheme of “unparalleled complexity”
(Roach v Morse, 440 F3d 53, 58 [internal quotation marks omitted]),
embodied in title XIX of the Social Security Act (42 USC § 1396 et
seq.) and implemented in this state by article 5, title 11 of the
Social Services Law and 18 NYCRR subpart 360-4. Medicaid is a state-
administered program, and the federal government reimburses the state
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                                                         KA 12-01189

for a percentage of costs incurred in the proper and efficient
administration of a Medicaid plan (see 42 USC § 1396b [a]; see also
Matter of Golf v New York State Dept. of Social Servs., 91 NY2d 656,
659). Medicare, in turn, is a federal healthcare program for the aged
and disabled, and is administered by the Department of Health and
Human Services (42 USC § 1395 et seq.).

     This case had its genesis in an investigation conducted by the
Attorney General into defendants’ submissions of false billing claims
to both the state Medicaid office and the federal Medicare office.
Briefly, defendant Michael Miran (Michael) is a clinical psychologist,
and defendant Esta Miran (Esta) is his wife. Defendant Michael Miran,
Ph.D. Psychologist, P.C. (Corporation) is an entity that Michael and
Esta co-founded, and through that body submitted false billing claims.
The parties agree that the Corporation was a Medicare provider and,
according to the People, Michael was an enrolled Medicaid provider.

     Defendants’ patients were so-called “dual eligibles,” i.e., their
indigent status entitled them to both Medicare and Medicaid coverage.
Pursuant to an agreement between the state and federal governments,
Medicare funded the majority of the medical costs for defendants’
patients, and Medicaid paid the applicable copayment. Defendants’
medical billing agent billed Medicare for relevant services rendered
and, after receiving payment from Medicare, charged Medicaid for the
unpaid amount using the Medicaid billing code closest to the relevant
Medicare billing code.

     That practice eventually attracted the attention of state
authorities. On April 26, 2002, years before this investigation
began, the Commissioner of Health (COH) requested that the Attorney
General investigate and prosecute Medicaid fraud (hereafter,
referral). That referral provided as follows:

          “Pursuant to Executive Law § 63 (3), I hereby
          request that you investigate and prosecute the
          alleged commission of any indictable offense or
          offenses arising out of any violation of the
          Public Health Law, the Social Services Law or any
          other applicable state law or any regulation
          promulgated thereunder relating to: (1) fraud in
          the administration of the Medicaid program; (2)
          the provision of medical assistance and the
          activities of providers of medical assistance
          under the state Medicaid plan; (3) the abuse or
          neglect of patients in health care facilities
          receiving payments under the Medicaid plan or the
          misappropriation of patients’ private funds in
          such facilities; and (4) the operation, management
          or funding of health-related entities and
          facilities subject to oversight by this Department
          . . .

          “In addition, I request that you prosecute any
          person or persons believed to have committed any
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                                                         KA 12-01189

          of the above crimes or offenses, and any crime or
          offense arising out of your investigation or
          prosecution or both, or properly joinable with the
          foregoing offenses in such prosecution . . .”1

     Following the referral, the state Medicaid Fraud Control Unit
(MFCU), which operates in the office of the Attorney General,
commenced the subject investigation against defendants. At some
point, the Attorney General learned of a simultaneous federal inquiry
into defendants’ activities by the Federal Bureau of Investigation
(FBI) and Office of Inspector General (OIG) and, on April 21, 2006,
the OIG acknowledged and granted the Attorney General’s request to
continue its adjudication of the matter.

     The subject investigation yielded a 31-count indictment, which
charged defendants with various crimes generally relating to false
statements in the medical records of certain Medicaid and Medicare
patients,2 as well as the larcenous receipt of payment through false
representations as to services provided to Medicaid and Medicare
participants. Defendants thereafter moved for dismissal of the
indictment on two grounds. By a motion in which Esta joined, Michael
and the Corporation sought an order dismissing the indictment on the
ground that the Attorney General “has not been authorized to
investigate or prosecute the charges in the Indictment pursuant to
Executive Law § 63 (3).” The People opposed the motion, contending
that the Attorney General has jurisdiction to investigate and
prosecute Medicaid fraud and related Medicare fraud based on the 1978
referrals of the COH and the CDSS, and the 2002 referral of the COH.

     In a second motion to dismiss, defendants collectively sought
“dismissal of the Indictment pursuant to the doctrine of Federal/State
‘Conflict Preemption.’ ” Specifically, defendants contended that 42
USC § 1396b (q) (3) is the controlling federal statute that gives
state MFCUs the power to investigate federal Medicare-related fraud to
a limited extent. Defendants further contended that Executive Law §
63 (3) conflicts with 42 USC § 1396b (q) (3), and that section 63 (3)
thus is nullified under the principle of conflict preemption.
Defendants did not, however, contend that section 63 (3) is expressly
preempted by 42 USC § 1396b (q) (3). In opposition to the second
motion to dismiss, the People, inter alia, contended that no express
or implied conflict exists between the statutes at issue.

     1
          The COH’s 2002 referral appears to have updated a 1978
referral of the COH given the assumption by the Department of
Health (DOH) of the duties as the single state agency
administering the state’s Medicaid program in 1996 (see L 1996,
ch 474, §§ 233-248). The Commissioner of the Department of
Social Services (CDSS) also referred to the Attorney General the
issue of Medicaid fraud in 1978.
     2
          Medicaid fraud was the subject of 25 of the 31 counts
of the indictment.
                                 -4-                           319
                                                         KA 12-01189

     By separate orders, County Court (Marks, J.) denied both motions,
reasoning that the People satisfied their burden of proof with respect
to Executive Law § 63 (3) by producing the 1978 and 2002 referrals of
the COH and CDSS requesting that the Attorney General investigate and
prosecute Medicaid fraud and rejecting defendants’ contention with
respect to preemption. The day after County Court denied the second
motion to dismiss, the parties appeared before Supreme Court
(Dollinger, A.J.) and entered respective guilty pleas, each in full
satisfaction of the indictment. Specifically, Michael pleaded guilty
to offering a false instrument for filing in the second degree (Penal
Law § 175.30), a lesser included offense of the indicted crime of
offering a false instrument for filing in the first degree (§ 175.35).
Esta, in turn, pleaded guilty to offering a false instrument for
filing in the first degree (id.), while the Corporation pleaded guilty
to grand larceny in the second degree (§ 155.40 [1]), which resulted
from the Corporation’s receipt of $257,946.93 of state and federal
funds to which it was not entitled. In its plea agreement, the
Corporation, inter alia, agreed to make restitution to the Medicaid
program in the amount of $114,647.21, and to the Medicare program in
the amount of $143,299.72. The respective plea agreements preserved
defendants’ right to raise the issues of preemption and compliance
with Executive Law § 63 (3) on their appeal from the judgments
convicting them upon their guilty pleas, and we are called upon to
address those issues herein.

                                  II

     We now turn to the merits, and address first the issue whether
the Attorney General had authority to investigate and prosecute
defendants under Executive Law § 63 (3). It is beyond argument that
the Attorney General “has no . . . general authority [to conduct
prosecutions] and is without any prosecutorial power except when
specifically authorized by statute” (People v Gilmour, 98 NY2d 126,
131 [internal quotation marks omitted]; see People v Cuttita, 7 NY3d
500, 507). Authority to investigate and prosecute is afforded to the
Attorney General by, inter alia, Executive Law § 63 (3), which
provides as follows:

          “Upon request of the governor, comptroller,
          secretary of state, commissioner of
          transportation, superintendent of financial
          services, commissioner of taxation and finance,
          commissioner of motor vehicles, or the state
          inspector general, or the head of any other
          department, authority, division or agency of the
          state, [the Attorney General shall] investigate
          the alleged commission of any indictable offense
          or offenses in violation of the law which the
          officer making the request is especially required
          to execute or in relation to any matters connected
          with such department, and to prosecute the person
          or persons believed to have committed the same and
          any crime or offense arising out of such
          investigation or prosecution or both, including
                                 -5-                            319
                                                          KA 12-01189

          but not limited to appearing before and presenting
          all such matters to a grand jury” (cf. General
          Business Law §§ 358, 692; Executive Law § 70-a).

     Unauthorized prosecutorial participation by the Attorney General
requires the dismissal of any indictment resulting therefrom (see
Gilmour, 98 NY2d at 135), and here defendants seek that relief. In
doing so, defendants do not dispute that the COH is “especially
required to execute” Medicaid provisions contained in the laws of this
state (Executive Law § 63 [3]), and instead contend that section 63
(3) prevents the Attorney General from prosecuting Medicare-related
offenses that are discovered during an investigation into potential
Medicaid fraud.

     We are thus presented with a question of statutory
interpretation, and in such instances

          “ ‘[i]t is fundamental that a court, in
          interpreting a statute, should attempt to
          effectuate the intent of the Legislature. The
          starting point is always to look to the language
          itself and where the language of a statute is
          clear and unambiguous, courts must give effect to
          its plain meaning’ ” (Pultz v Economakis, 10 NY3d
          542, 547, quoting State of New York v Patricia
          II., 6 NY3d 160, 162 [internal quotation marks,
          brackets and citations omitted]; see Lynch v
          Waters, 82 AD3d 1719, 1721).

     Applying those rules, we agree with the People that the Attorney
General’s investigation and prosecution of defendants was authorized
by the COH referral. Inasmuch as the DOH administers this state’s
Medicaid program (see Social Services Law § 363-a), there can be no
dispute that the COH referral permitted the Attorney General to
investigate Medicaid fraud. Moreover, what here was the Attorney
General’s concomitant investigation of Medicaid and Medicare fraud
with respect to defendants was permitted by way of the broad ambit of
the “arising out of” language in Executive Law § 63 (3), i.e., the
clause of that statute allowing the “prosecut[ion] [of] the person or
persons believed to have committed the same and any crime or offense
arising out of such investigation or prosecution” (emphasis added).

     Indeed, “courts . . . have uniformly construed [Executive Law §
63 (3)] as bestowing upon the Attorney [] General the broadest of
powers” (Matter of Mann Judd Landau v Hynes, 49 NY2d 128, 135), and
the phrase “ ‘arising out of’, in its most common sense, has been
defined as originating from, incident to or having connection with”
(People v Young, 220 AD2d 872, 874, lv denied 87 NY2d 909). The
location of that phrase in section 63 (3) makes it obvious that the
Attorney General may prosecute any crime (here, Medicare fraud)
connected to an authorized investigation (here, Medicaid fraud) (see
generally People v Zarro, 66 AD3d 1050, 1051-1052, lv denied 14 NY3d
894, reconsideration denied 15 NY3d 811; Young, 220 AD2d at 874).
Although this prosecution involved a joint effort between federal and
                                 -6-                           319
                                                         KA 12-01189

state authorities, nothing in section 63 (3) prohibits such
collaboration, and defendants’ further contention that this case had
no relation to Medicaid fraud is forfeited by their pleas (see People
v Plunkett, 19 NY3d 400, 405 [“appellate claims challenging what is
competently and independently established by a plea (are)
forfeited”]).

                                 III

     We next address the issue whether Executive Law § 63 (3) is
preempted by 42 USC § 1396b (q) (3). Initially, to the extent that
defendants rely on the theory of “express” preemption, i.e., that
Congress explicitly mandated preemption of state law through 42 USC §
1396b (q) (3), we conclude that such a theory is not preserved for our
review inasmuch as it was not raised by defendants before the motion
court. Nevertheless, under the circumstances of this case we exercise
our power to review that part of defendants’ contention with respect
to “express” preemption as a matter of discretion in the interest of
justice (see CPL 470.15 [6] [a]), particularly because the issue of
express preemption was raised by the People in opposition to
defendants’ second motion and thus was before the court in any event.

     Under the Supremacy Clause of the United States Constitution (see
US Const, art VI, cl 2), state law may be preempted “either by express
provision, by implication, or by a conflict between federal and state
law” (New York State Conference of Blue Cross & Blue Shield Plans v
Travelers Ins. Co., 514 US 645, 654). “[D]espite the variety of these
opportunities for federal preeminence, [however, courts] have never
assumed lightly that Congress has derogated state regulation, but
instead have addressed claims of [preemption] with the starting
presumption that Congress does not intend to supplant state law”
(id.).

     Thus, “[i]n preemption analysis, courts should assume that ‘the
historic police powers of the States’ are not superseded ‘unless that
was the clear and manifest purpose of Congress’ ” (Arizona v United
States, ___ US ___, ___, 132 S Ct 2492, 2501). “Congressional purpose
is the ‘ultimate touchstone’ in determining whether federal law
preempts a particular state action” (Smith v Dunham-Bush, Inc., 959
F2d 6, 8, quoting Allis-Chalmers Corp. v Lueck, 471 US 202, 208) and,
in searching for legislative intent to preempt, we must “examine the
statute’s express objectives, its structure, the plain meaning of its
language, and its interpretation by the courts” (id., citing FMC Corp.
v Holliday, 498 US 52). When the text of a federal statute “is
susceptible of more than one plausible reading, courts ordinarily
‘accept the reading that disfavors [preemption]’ ” (Altria Group, Inc.
v Good, 555 US 70, 77, quoting Bates v Dow Agrosciences LLC, 544 US
431, 449).

                                  A.

     Turning first to the issue of express preemption, we note that
such preemption occurs when Congress has explicitly mandated
preemption in the statute’s language (see Shaw v Delta Air Lines,
                                 -7-                           319
                                                         KA 12-01189

Inc., 463 US 85, 95; see also Brown v Hotel & Rest. Empls. &
Bartenders Intl. Union Local 54, 468 US 491, 500-501), and we conclude
that there is no “ ‘clear and manifest’ ” purpose on the face of 42
USC § 1396b (q) (3) to preempt state law (Arizona, ___ US at ___, 132
S Ct at 2501). That statute provides in relevant part that the phrase
“State medicaid fraud control unit” means

          “a single identifiable entity of the State
          government . . . [whose] function is conducting a
          statewide program for the investigation and
          prosecution of violations of all applicable State
          laws regarding any and all aspects of fraud in
          connection with (A) any aspect of the provision of
          medical assistance and the activities of providers
          of such assistance under the State [Medicaid] plan
          under this subchapter; and (B) upon the approval
          of the Inspector General of the relevant Federal
          agency, any aspect of the provision of health care
          services and activities of providers of such
          services under any Federal health care program . .
          . , if the suspected fraud or violation of law in
          such case or investigation is primarily related to
          the State [Medicaid] plan under this subchapter.”

     Defendants contend that express preemption exists here because
the last clause in 42 USC § 1396b (q) (3) expressly prohibits
prosecution in cases such as this, where the suspected fraud is not
“primarily related to” Medicaid. Without addressing the question
whether the suspect fraud primarily relates to Medicaid,3 we reject
that contention. Essentially, defendants posit that, in defining an
MFCU, Congress precluded such an entity from investigating Medicare
fraud unless such investigation was primarily related to state
Medicaid fraud. A mere negative implication in that language cannot
be deemed an explicit mandate with respect to the alleged preemption
of section 63 (3) (see Shaw, 463 US at 95). In other words, in the
absence of a clear reflection of a preemptive purpose (cf. Egelhoff v
Egelhoff ex rel. Breiner, 532 US 141, 146-150), defendants’ contention
with respect to express preemption fails. Defendants refer us to the
legislative history of 42 USC § 1396b (q) (3), including various
excerpts from the Congressional Record, in further support of their
contention with respect to express preemption, but such history is not
germane to this preemption analysis (see Cipollone v Liggett Group,
Inc., 505 US 504, 516; Smith, 959 F2d at 8 [preemption analysis turns
on “the statute’s express objectives, its structure, the plain meaning
of its language, and its interpretation by the courts”]). In any
event, that legislative history is unhelpful to defendants.

     3
          We reiterate here the point that 25 of the 31 counts in
the indictment involve Medicaid fraud.
                                 -8-                           319
                                                         KA 12-01189

                                  B.

     Turning next to the issue of conflict preemption, we note that
such preemption “occurs ‘when compliance with both state and federal
law is impossible, or when the state law “stands as an obstacle to the
accomplishment and execution of the full purposes and objective of
Congress” ’ ” (United States v Locke, 529 US 89, 109, quoting
California v ARC Am. Corp., 490 US 93, 100-101). We first address
what we refer to as the “impossibility” form of conflict preemption,
which occurs when compliance with both state and federal law is
impossible. Here, compliance with both the state law (Executive Law §
63 [3]) and federal law (42 USC § 1396b [q] [3]) at issue is possible,
and thus the impossibility form of conflict preemption does not apply
to this case.

     As noted, Executive Law § 63 (3) provides that,

          “[u]pon request of the . . . head of any . . .
          department, authority, division or agency of the
          state, [the Attorney General shall] investigate
          the alleged commission of any indictable offense
          or offenses in violation of the law which the
          officer making the request is especially required
          to execute or in relation to any matters connected
          with such department, and . . . prosecute the
          person or persons believed to have committed the
          same and any crime or offense arising out of such
          investigation or prosecution or both” (emphasis
          added).

Put simply, that statute allows the Attorney General to prosecute
crimes arising out of the investigation of Medicaid fraud, which is
precisely what occurred here.

     In the course of its investigation, the Attorney General also
complied with 42 USC § 1396b (q) (3). As noted, that statute provides
that the purpose of an MFCU is to

          “conduct[ ] a statewide program for the
          investigation and prosecution of violations of all
          applicable State laws regarding any and all
          aspects of fraud in connection with (A) any aspect
          of the provision of medical assistance and the
          activities of providers of such assistance under
          the State [Medicaid] plan under this subchapter;
          and (B) upon the approval of the Inspector General
          of the relevant Federal agency, any aspect of the
          provision of health care services and activities
          of providers of such services under any Federal
          health care program . . . , if the suspected fraud
          or violation of law in such case or investigation
          is primarily related to the State [Medicaid] plan
          under this subchapter.”
                                 -9-                           319
                                                         KA 12-01189

     Here, the Attorney General’s office acted as an MFCU in
investigating the subject Medicaid fraud, thus complying with part (A)
of section 1396b (q) (3). With respect to part (B) of that section,
the record establishes that the Attorney General continued in its role
as an MFCU as it investigated Medicare fraud related to the subject
Medicaid fraud with the permission of the OIG. We conclude that the
referral from the COH, which requested that the Attorney General
investigate Medicaid fraud, reflects that the “suspected fraud”
considered by section 1396b (q) (3) (B) was fraud committed against
New York State, and as such the “piggybacking” of the Medicare
investigation onto the Attorney General’s Medicaid investigation
complied with section 1396b (q) (3). Hence, as noted, the
“impossibility” form of conflict preemption does not apply here.

     We next address what we refer to as the “impediment” form of
conflict preemption, which occurs when the state law impedes
accomplishment and execution of the full purposes and objective of
Congress. That form of conflict preemption is also inapplicable here.

     The federal statutory scheme at issue requires that states
supervise their Medicaid programs by creating entities to prosecute
fraud (see 42 USC § 1396a [a] [61]). Section 1396b (a) (6) (B)
relieves part of a state’s financial burden in that respect by
providing for federal reimbursement of a portion of costs incurred by
states in complying with the requirement that states prosecute
Medicaid fraud, and section 1396b (q) (3) simply describes the
function of a state entity that investigates and prosecutes Medicaid
fraud and Medicare fraud in connection with Medicaid fraud. Executive
Law § 63 (3) considers the prosecutorial authority of the Attorney
General, and thus is unrelated to the federal statute at issue.
Indeed, we note that section 63 (3) appears to support the objectives
of the subject federal statute, and thus the impediment form of
conflict preemption has no application to this case.

                                  IV

     Accordingly, we conclude that each of the judgments on appeal
should be affirmed.

Entered:   April 26, 2013                       Frances E. Cafarell
                                                Clerk of the Court