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GREENSPAN v. KLEIN

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY


December 23, 1977

BERNARD GREENSPAN, Plaintiff,
v.
ANN KLEIN, Individually and as Commissioner, Department of Institutions and Agencies, State of New Jersey, and GERALD J. REILLY, Individually and as Director, Division of Medical Assistance and Health Services, jointly, severally and in the alternative, Defendants

Per Curiam

Plaintiff, a physician provider, was suspended from the Medical Assistance Program of the State of New Jersey on the basis of an allegation of fraud. He brings this suit, seeking, among other things, a temporary and permanent injunction to restore him to the program. Plaintiff also asks this Court to declare Sections 10:49-1.18 and 10:49-63 of the New Jersey Administrative Code, N.J.A.C. 10:49-1.18, and 10:49-63, and the New Jersey Statutes 30:4D-1 et seq., N.J.S.A. 30:4D-1 et seq., unconstitutional.

The medicaid program of the State of New Jersey is state-administered and federally and state-funded. It is designed to assist certain indigent recipients with medical expenses. This program is administered by the Commissioner of the Department of Human Services through the Director of the Division of Medical Assistance and Health Services.

 The Division of Medical Assistance conducted an investigation of the medicaid billing practices of the plaintiff. The Division alleges that he had been submitting claims to the New Jersey Medicaid Program and receiving payment therefor for treatment which was either not rendered or was rendered by a nurse without his direct, personal supervision. As a result of the investigation the Director of the Division temporarily suspended plaintiff from participation in the medicaid program pending the outcome of an administrative hearing, should one be requested. The notice of suspension advised Greenspan that the suspension was "based upon a review conducted by this Division which indicates that you submitted claims and received payment for services not rendered by you." Additionally, plaintiff was advised that if a hearing was to be requested, the Director had to be notified no later than twenty days from the date of receipt of the notice of his suspension.

 Rather than requesting a hearing, plaintiff filed a complaint and obtained an order to show cause from this Court on March 10, 1976. A temporary restraining order was denied. The order to show cause directed defendants to advance its reasons why a motion for a preliminary injunction should not be granted as well as reinstatement of the plaintiff as a physician provider. The motion for a preliminary injunction was denied and it was pointed out to plaintiff that an application of that nature required the convening of a three-judge court. See 28 U.S.C. ยง 2281. Upon appeal the Court of Appeals vacated this order, remanded the case to this Court and directed that a three-judge court be convened, despite the fact that plaintiff did not make such a request in his pleadings. See, Greenspan v. Klein, 550 F.2d 856 (3rd Cir. 1977). This three-judge court was thereafter convened.

 The sole question presented is whether or not the statutes and the provisions of the administrative code involved are unconstitutional insofar as they deprive plaintiff of a pretermination hearing. N.J.A.C. 10:49-6.3(b) provides that, "[the] Director may suspend any provider of service prior to any hearing when, in his opinion, such action is necessary to protect the public welfare and the interests of the Medical Assistance Program."

 Plaintiff would appear to be in a contractual relationship with the State of New Jersey and the agencies administering this program, and thus it would seem that he has at least some property interest in his continuing participation in the medicaid program. The question which must be answered is whether or not he is entitled to a pretermination hearing or a post termination hearing. The time and nature of the hearing requires the weighing of the individual interest and the public interest. Case v. Weinberger, 523 F.2d 602 (2nd Cir. 1975). Due process, in a situation of this nature, does not require a hearing at the initial stage or at any specific point in the proceedings so long as a requisite hearing is held at some point. See Dixon v. Love, 431 U.S. 105, 52 L. Ed. 2d 172, 97 S. Ct. 1723 (1977).

  Plaintiff, in support of his position, directs our attention to Goldberg v. Kelly, 397 U.S. 254, 25 L. Ed. 2d 287, 90 S. Ct. 1011 (1969). That case, however, held that welfare recipients receiving financial aid under New York State's general Home Relief Program could not be terminated without a pretermination hearing because the discontinuance of welfare benefits prior to hearing endangered their very survival. As the court stated in Goldberg v. Kelly, supra, at 264:

 

[Thus] the crucial factor in this context -- a factor not present in the case of the blacklisted government contractor, the discharged government employee, the tax-payer denied a tax exemption, or virtually anyone else whose government entitlements are ended -- is that termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits. Since he lacks independent resources, his situation becomes immediately desperate. His need to concentrate upon finding the means for daily subsistence, in turn, adversely affects his ability to seek redress from the welfare bureaucracy.

 In the present case we note that the action of the Director of the Medicaid Program did not terminate the plaintiff's right to practice medicine. The Director simply terminated his right to participate in the program as a provider pending the outcome of a hearing.

 "[The] very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation." Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 6 L. Ed. 2d 1230, 81 S. Ct. 1743 (1961). We are of the view that the interest of the State of New Jersey in this program and in the integrity of its administration is vital. While it must be conceded that Dr. Greenspan is under a constraint which obviously will bring about some financial loss on his part, this interest cannot compete with the overriding public interest involved in the proper administration of the medicaid program in New Jersey. There is no "brutal need" as was present in Goldberg v. Kelly, supra, and other cases such as Hathaway v. Mathews, 546 F.2d 227 (7th Cir. 1976); Klein v. Matthews, 430 F. Supp. 1004 (D.N.J. 1976); Ross v. Wisconsin Dept. of Health and Social Services, 369 F. Supp. 570 (E.D.Wisc. 1973). Rather, as in Russi v. Weinberger, 373 F. Supp. 1349 (E.D.Va. 1974), we are dealing with a dispute between a practicing physician and the state government, which arose out of the alleged conduct of the physician.

 We think it is clear that the statutes and the provisions of the administrative code under attack are constitutional. The opportunity for a prompt post termination hearing satisfies the requirements of due process. Accordingly, the motions for a preliminary and permanent injunction are denied.

 The constitutionality of the statute and regulations having been resolved, the three-judge court is hereby dissolved. All remaining issues in the case should be presented to Judge Fisher.


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