Al-Shaikh v. State Department of Health Care Services (Mar. 27, 2018, A147939) __ Cal.App.5th __ [2018 WL 1281674]
Dr. Raad Al-Shaikh sought writ relief in the trial court from a final decision by the Department of Health Care Services (DHCS) denying his application to continue as a Medi-Cal provider in his new office location because his percentage-based fee arrangement with a third-party billing service allegedly violated federal law. The trial court dismissed Dr. Al-Shaikh’s petition as moot because DHCS had approved his application as soon as he cited an Office of the Inspector General (OIG) publication stating the fee arrangement he used did not violate federal law. The trial court then denied Dr. Al-Shaikh’s motion for attorney fees under Code of Civil Procedure section 1028.5 for prevailing over an adverse administrative decision, finding DHCS did not act without substantial justification because it reasonably believed the fee arrangement was illegal. Dr. Al-Shaikh appealed the denial of fees in pro per.
The Court of Appeal reversed, holding that DHCS had acted without substantial justification because, as the state agency responsible for implementing Medicaid and Medi-Cal, it had an obligation to know the law, which in this case was neither unclear nor disputed. The court rejected DHCS’s argument that its unfamiliarity with the law was excused by the OIG publication appearing within a massive federal register. The court observed that the OIG publication had been published for over a decade and was prepared with the same formality accompanying formal rulemaking; no regulatory body or court had questioned the publication, which had been heavily publicized and cited in health care industry reference manuals. Furthermore, because it took Dr. Al-Shaikh three years to secure provider approval at his new office location (decimating his practice), the discretion to award fees under section 1028.5 had to be exercised in favor of awarding him the full $7,500 in attorney fees authorized by the statute.
Prepared by H. Thomas Watson and Peder K. Batalden, Horvitz & Levy, LLP
California Society for Healthcare Attorneys
1215 K Street, Suite 800
Sacramento, CA 95814
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