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A state appeals court has ruled that a New York City public hospital cannot be reimbursed by Medicaid for some $1.44 million in costs tied to the hospital's care for five severely ill undocumented immigrants—some of whose lives, says the city, were saved by the treatments.

The Appellate Division, First Department's decision opens a window on a little-discussed aspect of undocumented immigrants' lives in the United States, and on related health care system costs: What care can the undocumented receive that will be reimbursed under Medicaid, which uses a statutory and regulatory framework to restrict undocumented immigrants' reimbursable treatment to “emergency medical conditions” only.

In a lawsuit pitting the city against the state, the five undocumented immigrants involved had “severe” and arguably chronic medical conditions, according to a court filing lodged by the state defendants, including “AIDS, brain abscesses, cerebral edemas, seizure disorders, advanced ulcers and respiratory failure.”

The immigrants, who weren't named in court records, were hospitalized at the city's Coler post-acute long-term care hospital on Roosevelt Island for “up to several years,” added state defendants Howard Zucker, the state's health commissioner, and Dennis Rosen, the state's Medicaid inspector general, who were both sued by the city's Health and Hospitals Corporation, which runs the Coler facility as part of its sprawling health care network.

In the city's Article 78 petition seeking the right to be reimbursed for Coler's treatment of the immigrants, it said that “these patients were all profoundly ill and fequently on the brink of death … [and] it is undisputed that Coler provided these patients with  excellent, necessary, frequently life-saving medical care.”

However, said the petition, the state Office of the Medicaid Inspector General, which conducted a 2014 audit of certain Coler Medicaid reimbursements, “disallowed coverage for nearly all of [the care provided].”

Meanwhile, both the petition, which sought the vacating of both the audit findings and a state administrative law judge's decision affirming them, and the state's verified answer and petition explained that much of the lawsuit has focused on how “emergency medical conditions” is defined and whether certain kinds of treatments, such using intravenous antibiotics to treat an undocumented immigrants' life-threatening infections, can be reimbursed as “emergency medical condition” care.

First the OMIG audit, then state Administrative Law Judge John Harris Terepka, and now a First Department panel have found that there is no Medicaid coverage for a full two- to four-week course of infection-treating antibiotics, since once the undocumented patient's fever reduces, the emergency condition is gone, even if the antibiotics are supposed to be taken for longer.

The city's contentions, in arguing that the audit's findings were arbitrary, capricious and contrary to law, said the panel, “are largely premised on a misconstruction of the Medicaid framework as permitting reimbursement for treatment of emergency medical conditions—such as a course of antibiotics for an infection initially manifesting with a fever—even after the emergent condition—the fever—has subsided.”

The unanimous panel added that the state had “rationally construed the governing Medicaid statutory and regulatory framework as limiting reimbursable treatment for care for undocumented aliens' 'emergency medical conditions' to treatment for acute symptoms, not extending to treatment for chronic conditions not manifesting in acute symptoms,” citing 42 U.S.C. §1396b[v][3]; 42 C.F.R. 440.255[b][1]; Social Services Law §122[1][e]; 18 N.Y.C.R.R. 360-3.2[j][1][iii]; and Greenery Rehabilitation Group v. Hammon, 150 F.3d 226, 232-33 (2d Cir. 1998).

Moreover, said the panel in its June 13 opinion, “substantial evidence supports [the state's] determination that petitioner failed to meet its burden of presenting documentation showing that its care for 'emergency medical conditions' on the dates at issue was reimbursable.”

Panel Justices David Friedman, Rosalyn Richter, Peter Tom, Ellen Gesmer and Peter Moulton also wrote that “OMIG's peer reviewer explained his decisions whether to allow or disallow the hundreds of claims at issue, citing documentary evidence that he had examined.

“To the extent petitioner points to other evidence that might have supported different outcomes, it is unavailing,” the justices wrote, “as we 'may not weigh the evidence or reject the choice made by [OMIG] where the evidence is conflicting and room for choice exists,'” quoting Matter of Collins v. Codd, 38 N.Y.2d 269, 270-71 (1976).

The city's Health and Hospitals Corporation, which is the nation's largest public healthcare system and which is tasked with serving the financially needy, is represented by lawyers at Katten Muchin Rosenman.

Corporation spokesman Christopher Miller said Tuesday in a statement: “At NYC Health + Hospitals we are committed to our mission to care for all, without exception, and regardless of income, immigration or insurance status. The court's ruling is inconsistent with how New York cares for New Yorkers, regardless of their documentation status. We are disappointed in the decision and are considering our options on appeal.”

The state Attorney General's Office, which represents the health commissioner and the Medicaid inspector general, did not respond to requests for comment made Monday and Tuesday.

The Health and Hospitals Corporation's 2017 petition claimed, “The auditor's premises and conclusions were plainly arbitrary and inappropriate.”

It then contended that “in reaching its findings, OMIG rejected or disregarded DOH's own policies and publications, disowned its own nurse reviewer's work and did not make her available for cross-examination, ignored the application of sound auditing principles, and  accepted only the subjective findings of a single person, while at the same time rejecting Coler's carefully considered patient summaries, the testimony of four highly qualified Coler physicians, reams of medical evidence, and tens of thousand of pages of documents that supported Petitioner's position.”

But the state, in its 2017 verified answer and petition asking in part for the administrative law judge's determination to be upheld, noted that at the administrative law hearing, “OMIG presented documentary evidence and the testimonies of Joseph D'Agostino, OMIG's lead auditor; Stephanie Angerami, OMIG's management specialist; Ronald Bass, Bureau Director at DOH's Office of Health Insurance Programs (OHIP); and Dr, George Shelton, OMIG;s physician peer reviewer.”

The state also wrote that Dr. Shelton found that “all of the care petitioner billed to Medicaid was medically necessary, but only a small percentage of it constituted emergency treatment that would be payable by the Medicaid program for this group of undocumented individuals.”

Moreover, wrote the state, OMIG had noted in an audit report that Medicaid doesn't cover debilitating  conditions stemming from an initial event that later requires ongoing regimented care, and “'[s]uch debilitating conditions cannot be considered to be emergency in nature simply because the absence of medically necessary ongoing care would have serious health consequences for the individual.'”