On Appeal from the United States District Court for the Eastern District of Pennsylvania Civil No. 85-3097.
Before: ADAMS, WEIS, and HIGGINBOTHAM, Circuit Judges.
This case requires us to consider what process the state of Pennsylvania is constitutionally required to furnish when terminating a medical provider's participation in the Medicaid program. The district court rejected an osteopathic physician's due process claim, declaring that he lacked a property interest in his continued role in the program, and that even if he was entitled to constitutional protection, he received all of the process due. Because we agree that the provider received all of the process that was due, we will affirm.
Medicaid is a joint federal-state program that makes available medical care for poor people. In Pennsylvania, Medicaid is operated as the Medical Assistance Program (MAP), and administered by the State Department of Public Welfare (DPW) pursuant to 62 Cons. Pa. Stat. Ann. § 401 et seq. Under the program, the state contracts with individual providers and institutions to perform services for eligible recipients.
Appellant Arnold Ritter is a licensed osteopathic physician in Pennsylvania. Since 1982, he has served as a MAP provider under a standard agreement with the DPW. Ritter's practice is heavily dependent on MAP-reimbursed patients; he estimates that 99% of his patients are MAP recipients.
In 1984, a peer review committee examined Ritter's medical records, and concluded that he had been providing medically unnecessary treatment for patients suffering from obesity, and that the drugs he prescribed were potentially dangerous. The committee also found that Ritter had billed DPW for methods of treatment that were "inappropriate to the diagnosis," and that he had failed to maintain adequate records.
Gerald Radke, deputy secretary of DPW for medical assistance, sent a letter dated January 18, 1985 to Ritter, informing him that on the basis of the review committee's findings, the agency planned to terminate his provider agreement within thirty days and to preclude his reenrollment in the program for at least five years. The letter also stated that DPW would seek restitution for the improperly prescribed treatment. The letter offered Ritter the opportunity to respond within thirty days "by documents and written argument against [the Department's proposed] action."
On February 1, Ritter's counsel submitted a four-page letter defending his medical practices and disputing the charges of the peer review committee. The Deputy Secretary, however, was not persuaded. On April 15, he informed Ritter that the Department, upon consideration of his letter, had nonetheless determined that termination was warranted. Ritter was barred as a provider effective April 30. Under DPW regulations, Ritter was further advised, he could file for an administrative hearing with the Office of hearings and Appeals. The request for a hearing, however, would not stay the termination date, although if his appeal was successful, Ritter would be eligible for reimbursement for any services performed after the date of termination.
Ritter then petitioned for an administrative hearing in accordance with DPW regulations. he also filed a § 1983 action in the district court, contending that his termination from the MAP without a prior hearing violated his right to procedural due process. The suit sought damages for the alleged violation, as well as injunctive relief prohibiting the defendants from terminating his provider agreement until the state's procedures were brought into compliance with constitutional standards.
The defendants filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6), asserting that the facts averred in the complaint did not establish a constitutional violation. On October 7, 1985 the district court granted the motion to dismiss, and declined to allow leave to amend. Noting that under Pennsylvania law public employees generally are employed at will, and thus may be dismissed without cause, the court concluded that a MAP provider similarly had no property interest in his continued participation in the program.
On October 17, Ritter filed a motion for leave to submit an amended complaint, to which he attached a proposed amendment setting forth the state law basis for his asserted property interest in his status as a provider. The district court denied the motion for leave to amend on April 17, 1986 on the ground that even if Ritter did enjoy a property interest in his status as a provider, thus invoking the protection of the ...