Do the doctors, nurses, and other health professionals who review Medicaid treatment plans for the New York Department of Health get state-funded legal defense and indemnification if they are sued?

Plain-English summary

The New York Department of Health uses outside health-care consultants (physicians, respiratory therapists, audiologists, podiatrists, and others) to review Medicaid prior-authorization requests. The Department's Medicaid Management Information Systems (MMIS) staff sends requests to the consultants, who advise on whether the requested service is within the scope of Medicaid benefits and appropriate for the patient's diagnosis. Consultants are paid hourly by voucher with no payroll deductions. Some have set schedules; some are called as needed.

The Health Commissioner asked whether these consultants are eligible for state defense and indemnification under Public Officers Law § 17 (the standard framework for state employees).

The AG answered in two layers.

First, the consultants are independent contractors. Public Officers Law § 17 defines "employee" as a person in the service of the state but expressly excludes independent contractors. The hourly-voucher payment, lack of payroll deductions, lack of direct supervision and control, and reliance on the consultants' independent professional judgment all point to independent-contractor status (a conclusion the AG had reached in similar contexts in 1975 Op Atty Gen 59, 60).

That would normally end the inquiry: independent contractors do not get § 17 protection. But there is a second layer.

Public Health Law § 14 extends § 17 coverage to specifically listed licensed health-care professionals providing consultation to the Department in connection with patient treatment. The statute lists professions by Education Law article: medicine (Art 131); physician's assistants and specialists (131-B); dentistry (133); physical therapy (136); pharmacy (137); nursing (139); optometry (143); occupational therapy (156); dietetics and nutrition (157); speech-language pathology and audiology (159); and respiratory therapy (164).

The AG concluded the Medicaid review work fits within § 14's scope: it is "consultation in connection with professional treatment authorized under [the consultant's] license at the request of the department," provided "to patients receiving care or professional consultation from the department." A second-opinion review of a treatment plan is a consultation that benefits the patient by ensuring the proposed care is appropriate for the diagnosis. The legislative history of L 1979 ch 442 (which created § 14) confirms the broad purpose: ensuring that the Department can recruit needed health-care professionals by extending § 17 protection to them even though they are not direct state employees.

The limit: § 14 covers only the listed professions. Podiatrists, as the Commissioner specifically asked about, are not on the list and so are not covered. The only way to add a profession is through legislative action (as the Legislature did in L 1995 ch 505 when it added physician's assistants, dietitians, and respiratory therapists, and L 1982 ch 601 when it expanded beyond the original three categories of L 1979 ch 442).

Currency note

This opinion was issued in 1997. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Why aren't the consultants state employees?

The AG points to several markers of independent-contractor status: hourly voucher payment with state Comptroller pre-audit, no payroll deductions for taxes or benefits, no direct supervision or control by the Department over the substance of the consultant's opinion, and reliance on the consultant's independent professional judgment. Each indicator points the same direction.

Why does Public Health Law § 14 exist as a separate framework?

Because state agencies often need to obtain professional consultation from people who, for licensure or business reasons, cannot or do not want to be on the state payroll. Without § 14, those consultants would not be covered by § 17 (the basic state-employee defense and indemnification statute). The Legislature created § 14 to fill the gap and ensure consultants can be recruited without their personal exposure becoming a deal-breaker.

What professions are on the § 14 list as of this opinion?

Per the AG's reading of the statute as amended through 1995: medicine (Art 131); physician's assistants and specialists (131-B); dentistry and dental hygiene (133); physical therapy and physical therapist assistants (136); pharmacy (137); nursing (139); optometry (143); occupational therapy (156); dietetics and nutrition (157); speech-language pathology and audiology (159); respiratory therapy and respiratory therapy technicians (164).

Why are podiatrists excluded?

Education Law Art 141 governs podiatry. The Legislature has not included Art 141 in Public Health Law § 14. The exclusion is by legislative choice, not by accident. The Legislature could add podiatrists by amendment.

Does coverage extend to consulting work outside Medicaid review?

The AG reads § 14 broadly to cover "professional treatment or consultation in connection with professional treatment authorized under [the consultant's] license at the request of the department." That language is not limited to Medicaid review; it covers a wide range of consultation activities the Department might request. The specific Medicaid review at issue here is one example.

What about consultants of other state agencies (not the Department of Health)?

Public Health Law § 14 is specific to the Department of Health. Other agencies that use health-care consultants would need their own statutory framework or would have to rely on the direct § 17 framework (which only covers actual employees, not independent contractors).

Background and statutory framework

Public Officers Law § 17 is the general defense-and-indemnification statute for state employees. § 17(1) defines "employee" to include persons in the service of the state by election, appointment, or employment, plus state-sponsored volunteers, but expressly excludes independent contractors. § 17(2) provides the duty to defend; § 17(3) provides the indemnification scheme.

Public Health Law § 14 was added by L 1979 ch 442. The original version covered physicians, dentists, and nurses. L 1982 ch 601 added many of the other professions. L 1995 ch 505 added physician's assistants (Art 131-B), dietitians (Art 157), and respiratory therapists (Art 164). The statute provides that POL § 17 "shall apply to" the listed health-care professionals providing professional treatment or consultation at the Department's request.

The independent-contractor doctrine for distinguishing employees from contractors looks at indicia such as payment method, supervision and control, exclusivity, and reliance on independent professional judgment. The AG opinion relies on 1975 Op Atty Gen 59 as a prior application of these indicia.

Citations

• Public Officers Law § 17 (state employee defense and indemnification).
• Public Health Law § 14 (extending § 17 to listed health-care consultants).
• Education Law Art 131 (medicine).
• Education Law Art 131-B (physician's assistants and specialists; added to § 14 by L 1995 ch 505).
• Education Law Art 133 (dentistry).
• Education Law Art 136 (physical therapy).
• Education Law Art 137 (pharmacy).
• Education Law Art 139 (nursing).
• Education Law Art 143 (optometry).
• Education Law Art 156 (occupational therapy).
• Education Law Art 157 (dietetics and nutrition; added by L 1995 ch 505).
• Education Law Art 159 (speech-language pathology and audiology).
• Education Law Art 164 (respiratory therapy; added by L 1995 ch 505).
• Education Law Art 175 (podiatry; not included in § 14).
• L 1979 ch 442 (original enactment of Public Health Law § 14).
• L 1982 ch 601 (expansion of § 14 coverage).
• L 1995 ch 505 (added 131-B, 157, 164 to § 14).
• 1975 Op Atty Gen 59 (prior independent-contractor analysis).

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/97-F1_pw.pdf

Original opinion text

EDUCATION LAW, ART 131, 131-B, 133, 136, 137, 139, 143, 156, 157, 159, 164, 175; PUBLIC HEALTH LAW § 14; PUBLIC OFFICERS LAW § 17; L 1995 CH 505; L 1982 CH 601; L 1979 CH 442. The health care professionals listed in section 14 of the Public Health Law providing consultation to the Department of Health concerning the appropriateness of treatment plans for Medicaid patients are entitled to defense and indemnification by the State on the terms and conditions of Public Officers Law
§ 17.
January 22, 1997
Barbara A. DeBuono, M.D., M.P.H.
Commissioner
Department of Health
Corning Tower
Empire State Plaza
Albany, NY 12237

Formal Opinion
No. 97-F1

Dear Commissioner DeBuono:
Your counsel has requested an opinion as to whether certain consultants employed by the Department of Health are eligible for defense and indemnification under section 17 of the Public Officers Law. He has explained that these consultants include physicians of various specialties and people from other licensed health care disciplines, such as respiratory therapists, audiologists and podiatrists. The Department's concern is whether or not these consultants are covered by section 17 when advising your program staff on particular requests for goods and services to be paid for by Medicaid. When the Department receives requests for particular services which require prior approval under Medicaid requirements, the requests are sent to the Department's Office of Health Systems Management Medicaid Management Information Systems (MMIS) review staff. Each request is reviewed to determine whether the items or services requested fall within the scope of Medicaid benefits and to determine whether they are appropriate for the diagnosis of the particular patient. The consultants assist MMIS in making these determinations. Your counsel explained that the consultants participating in the program are paid on an hourly basis upon submittal of State vouchers and that no deductions are made from their payments. Some consultants provide services on a set schedule while others only provide services when MMIS requests their assistance.

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You request an opinion of the Attorney General as to whether health care consultants employed by the Department to inform MMIS of the appropriateness of plans or courses of treatment for individual Medicaid beneficiaries are eligible for defense and indemnification under the terms and conditions of section 17 of the Public Officers Law. Section 17 of the Public Officers Law provides for defense and indemnification of an "employee" which in part is defined to mean: any person holding a position by election, appointment or employment in the service of the state . . . or a volunteer expressly authorized to participate in a state-sponsored volunteer program, but shall not include an independent contractor. It seems clear from your counsel's letter that the consultants are independent contractors. They are paid on an hourly basis by voucher, permitting pre-audit by the State Comptroller prior to payments by the State. This is the typical means by which contractors are paid for their services. Further, no deductions are made from payments to these consultants for items such as withholding taxes, fringe benefits and retirement contributions. These are other indicia that the consultants are independent contractors rather than employees of the State. Also, counsel's letter indicates that these consultants provide independent opinions regarding the appropriateness of a proposed treatment plan. Thus, in the performance of their duties, these consultants are not subject to direct supervision and control by the Department, which is another indicator of independent contractor status. 1975 Op Atty Gen 59, 60. Based on all of the above factors, we conclude that the consultants are independent contractors. Therefore, to be eligible to receive defense and indemnification by the State they must fall within the provisions of section 14 of the Public Health Law which provides: The provisions of section seventeen of the public officers law shall apply to any physician, dentist, nurse or other health care professional who is licensed to practice pursuant to article one hundred thirty-one, one hundred thirty-one-B, one hundred thirty-three, one hundred thirty-six, one

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hundred thirty-seven, one hundred
thirty-nine, one hundred forty-three, one hundred fifty-six, one hundred fifty-seven, one hundred fifty-nine, or one hundred sixty-four of the education law and who is rendering professional treatment or consultation in connection with professional treatment authorized under such license at the request of the department, or at a departmental facility, including clinical practice provided pursuant to a clinical practice plan established pursuant to subdivision fourteen of section two hundred six of this chapter, to patients receiving care or professional consultation from the department while rendering such professional treatment or consultation . . .. Section 14 was added by Chapter 442 of the Laws of 1979 and initially applied to any physician, dentist or nurse. L 1979 ch 442. The section was amended by Chapter 601 of the Laws of 1982 to add many of the other health care professionals who are now listed in the provision, as quoted above. The legislative history of the original enactment indicates that a broad application was intended: Patient care and consultation in connection with patient care are frequently provided by doctors, dentists, and nurses at department facilities or under the direction of the department, but because such professionals are not employees of the department they are not covered by Public Officers Law § 17. However, the department has difficulty obtaining the services of such health care professionals because of the uncertainty of the relationship. Bill Jacket, L 1979 ch 442, Memorandum in Support of Assembly 7221; see also, June 20, 1979 Letter from Senator Tarky Lombardi, Jr. to the Counsel to the Governor regarding Senate 5580. We believe that section 14 of the Public Health Law provides section 17 coverage for the services provided, as described in your counsel's letter, but only as to the health care professionals who are specifically listed in that section. In informing the Health Department as to the appropriateness of the treatment plan, the health care professional is providing

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"consultation in connection with professional treatment authorized under . . . [his or her] license at the request of the department". Public Health Law § 14. Further, we view this consultation as falling within section 14's requirement that it be provided "to patients receiving . . . professional consultation from the department . . .". The review by these health care consultants of the appropriateness of the proposed course of treatment for a Medicaid patient is a second opinion as to whether the treatment is appropriate for the diagnosis and, therefore, directly benefits the patient. Since the review by these consultants is required for Medicaid patients, the consultation is being provided to patients receiving professional consultation from the Department as required by section 14 of the Public Health Law. As indicated by the legislative history of the original enactment, the broad purpose of section 14 is to provide defense and indemnification to health care professionals providing patient care and consultation in connection with patient care at Department facilities or under the direction of the Department. Thus, we conclude that the services provided by the consultants fall within section 14. Section 14 is, however, specific in its coverage of health care professionals. It provides defense and indemnification only to physicians, dentists, nurses or other health care professionals licensed to practice under Education Law Articles 131 - medicine; 131-B - physician's assistants and specialists; 133 - dentistry and dental hygiene; 136 - physical therapy and physical therapist assistants; 137 - pharmacy; 139 - nursing; 143 - optometry; 156 - occupational therapy; 157 - dietetics and nutrition; 159 - speech-language pathologists and audiologists; and 164 - respiratory therapists and respiratory therapy technicians. Thus, not every health care specialty is covered by section

14. For example, among the professions cited by your counsel in
    his request for an opinion, podiatrists have not been included in section 14's coverage. In order to add to the list of health care professionals receiving defense and indemnification under section 14, an act of the Legislature would be required. The Legislature took such action when it added health care professionals licensed to practice under Education Law Articles 131-B, 157 and 164 by enacting Chapter 505 of the Laws of 1995.

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We conclude that the health care professionals listed in section 14 of the Public Health Law providing consultation to the Department of Health concerning the appropriateness of treatment plans for Medicaid patients are entitled to defense and indemnification by the State on the terms and conditions of Public Officers Law § 17. Very truly yours,

DENNIS C. VACCO
Attorney General