Khan v. Department of Healthcare & Family Services

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Appellate Court Date: 2021.10.13

13:09:54 -05'00'

Khan v. Department of Healthcare & Family Services, 2020 IL App (1st) 191212

Appellate Court GOWHAR KHAN, M.D., Plaintiff-Appellant, v. THE

Caption DEPARTMENT OF HEALTHCARE AND FAMILY SERVICES

and FELICIA F. NORWOOD, Director of Healthcare and Family

Services, Defendants-Appellees.

District & No. First District, Sixth Division

No. 1-19-1212

Filed November 20, 2020

Rehearing denied December 14, 2020

Decision Under Appeal from the Circuit Court of Cook County, No. 18-CH-2921; the

Review Hon. Moshe Jacobius, Judge, presiding.

Judgment Affirmed.

Counsel on Alan Rhine, of Chicago, for appellant.

Appeal

Kwame Raoul, Attorney General, of Chicago (Jane Elinor Notz,

Solicitor General, and Carson R. Griffis, Assistant Attorney General,

of counsel), for appellees.

Panel JUSTICE HARRIS delivered the judgment of the court, with opinion.

Presiding Justice Mikva and Justice Griffin concurred in the judgment

and opinion.

OPINION

¶1 Plaintiff Gowhar Khan, M.D., appeals from an order of the circuit court affirming the

decision of defendant Felicia Norwood, Director of defendant Department of Healthcare and

Family Services (Department), following an evidentiary hearing by a Department

administrative law judge (Judge), to deny plaintiff’s application for reinstatement from

suspension as a Medicaid provider and to recover and withhold payment for services plaintiff

rendered during his suspension. In 2014, defendants had suspended plaintiff for one year, a

decision this court affirmed. Khan v. Department of Healthcare & Family Services, 2016 IL

App (1st) 143908.

¶2 On appeal, plaintiff contends that the Director’s decision was erroneous because (1) a

suspension cannot last more than a year, (2) certain evidence was erroneously admitted as

business records in the Department hearing, (3) suspension of a physician as a Medicaid vendor

does not prohibit the physician from treating patients who are on Medicaid, and (4) plaintiff

could not prevent his Medicaid patients from filling prescriptions. For the reasons stated below,

we affirm the Director’s decision.

¶3 I. JURISDICTION

¶4 Plaintiff applied to the Department for reinstatement as a Medicaid vendor, which the

Director denied on February 20, 2018, pursuant to the Judge’s recommended decision

following a 2017 hearing. Plaintiff filed a complaint for administrative review in the circuit

court on March 6, 2018. 735 ILCS 5/3-103 (West 2018) (complaint for administrative review

to be filed within 35 days of service of the administrative decision). The circuit court affirmed

the Director’s decision in January 2019 and denied plaintiff’s motion to reconsider on May 30,

2019. Plaintiff filed his notice of appeal on June 14, 2019. Id. § 3-112 (circuit court judgment

in administrative review appealable “as in other civil cases”). Accordingly, this court has

jurisdiction over this matter pursuant to article VI, section 6, of the Illinois Constitution (Ill.

Const. 1970, art. VI, § 6) and Illinois Supreme Court Rules 301 (eff. Feb. 1, 1994) and 303

(eff. July 1, 2017) governing appeals in civil cases.

¶5 II. BACKGROUND

¶6 On January 31, 2014, the Director adopted a May 2013 recommended decision and

suspended plaintiff from the Medicaid program for one year for providing medical care in the

Medicaid program that was of grossly inferior quality, placed patients at risk of harm, and was

in excess of patients’ needs. Khan, 2016 IL App (1st) 143908, ¶¶ 4-5. The recommended

decision recommended plaintiff’s suspension for one year, pursuant to section 140.17 of the

Social Services title of the Illinois Administrative Code. 89 Ill. Adm. Code 140.17 (1992).

Neither it nor the Director’s decision adopting it directed or required plaintiff to correct the

deficiencies underlying his suspension. We affirmed. Khan, 2016 IL App (1st) 143908, ¶¶ 1,

35.

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¶7 In January 2015, plaintiff applied for reinstatement as a Medicaid provider.

¶8 In June 2015, the Department gave plaintiff notice of its intent to deny his application and

seek $77,870 in civil penalties. The Department alleged that he, while suspended as a Medicaid

provider, ordered goods or services for Medicaid patients “for which payment will be, has been

made or has been rejected in whole or in part by the Department,” in violation of 89 Ill. Adm.

Code 140.32(a)(1) (2013). “In addition to billing the Department for services, [plaintiff]

prescribed drugs which the Department made payments for pharmacy claims during” his

suspension. “The total number of prescriptions the Department paid during the period of

suspension was 217 for 62 recipients in the amount of $25,956.80,” with the civil penalty being

three times that amount. The Department also alleged that plaintiff

“failed to provide information to establish that he could reasonably be expected to meet

the written requirements of the Department, including those set forth in the Program

Handbooks and the Department’s manuals, bulletins and releases or to establish that

[he] is fit to participate in the Program or that, after reviewing the activities which

served as the basis for the earlier suspension and all previous actions and conduct

involving [plaintiff], the application should not be approved,”

said activities including the aforesaid section 140.32 violation.

¶9 Also in June 2015, plaintiff requested a hearing on the allegations.

¶ 10 The Department amended its notice in September 2015, adding an allegation that plaintiff

contracted with a particular managed care organization (Organization) to provide services to

Medicaid patients in January 2014, after an administrative law judge recommended his

suspension but before the Director adopted the recommendation and suspended him, and upon

his representations to the Organization that he was a Medicaid vendor in good standing and

had not been investigated or disciplined by any government agency. The Department also

alleged that plaintiff provided services or ordered goods and services for the Organization’s

patients while he was suspended. A copy of plaintiff’s agreement with the Organization was

attached, dated January 2, 2014, signed by plaintiff on February 1, 2014, and accepted by the

Organization in March 2014.

¶ 11 Just before the administrative hearing commenced in October 2017, the Department

withdrew its prayer for civil monetary penalties.

¶ 12 A. Department Hearing

¶ 13 At the hearing, Department employee Jeremy McClung, a computer analyst with the

Department’s Inspector General office, testified that he worked with the data that the

Department retains in the course of administering the Medicaid program, including “claims”

or billing electronically submitted by Medicaid providers for services performed or drugs

prescribed. The Department keeps claims data in a standard computer system, with each claim

assigned a number representing in part the date the claim was submitted, and it does so in the

ordinary course of its business overseeing the Medicaid program including its obligation to

review the payments it made to Medicaid providers for services rendered to Medicaid patients.

¶ 14 Regarding plaintiff, McClung was asked for the records of his Medicaid claims after the

date his suspension took effect, except for claims where Medicare was the primary payer rather

than Medicaid. McClung then produced two reports of the claims or bills under plaintiff’s

provider number, one of all claims held by the Department and the other of all claims rejected

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by the Department. For each such claim, the two reports reflected in part plaintiff’s provider

number, which Medicaid patient was covered, on what date service was provided, what service

was provided, the amount of payment sought, and by whom it was sought. Some claims were

on both reports because they were rejected, then corrective action was taken—that is, the

Department told the claimant why it rejected the claim, and the claimant provided more

information—and then the Department held the claim. McClung also produced two reports

listing all prescriptions that plaintiff wrote for Medicaid patients and all such prescriptions

where the Department rejected the pharmacy’s claim or bill. McClung produced all four reports

in the ordinary course of the Department’s business using standard computer equipment, and

each report was an accurate reflection of the data entered into Department records.

¶ 15 On cross-examination, McClung testified that he had no input on Department decisions to

pay or reject claims and that he did not contact any of the providers for the claims at issue.

Though he created the reports in 2017 based on data going back to 2014, the computer had not

changed. He denied that the Department computer system was obsolete, as it was “constantly

updated.” McClung based his computer queries on service dates after plaintiff’s suspension

date, the service date for a prescription being the date it was filled. While he could have queried

based on the dates prescriptions were written, he did not because “we base it off service date.”

He acknowledged that, if a prescription authorizes refills, Department records would show the

original prescription date and that plaintiff may have written a prescription months before a

pharmacy filled it.

¶ 16 On redirect examination, McClung testified that the data for a claim would change if the

processing or disposition of the claim itself changed, as when a claim is rejected or resubmitted.

¶ 17 The Department’s exhibits—the reports produced by McClung—were admitted over

plaintiff’s objections of insufficient foundation of trustworthiness. Plaintiff argued regarding

the prescription reports that the pharmacists did not testify to the accuracy of the information.

Exhibit 1 was “Held Bills for” plaintiff, exhibit 2 was “Other Rejected Bills for” plaintiff,

exhibit 3 was “Paid Pharmacy Bills for” plaintiff, and exhibit 4 was “Rejected Pharmacy Bills

for” plaintiff.

¶ 18 Plaintiff testified that he was still a licensed physician though suspended from the Medicaid

program. He learned of his suspension on February 4, 2014, in an e-mail message from his

counsel, and neither he nor anyone in his office submitted Medicaid bills thereafter. Plaintiff

opined that he has a moral and ethical duty to treat his patients if they seek treatment and that

he cannot simply ignore a patient. He did not direct his patients to any pharmacy, bill for

pharmacy services, or control pharmacy billing.

¶ 19 On cross-examination, plaintiff reiterated that he did not submit any bills to the Department

while he was suspended. He acknowledged that he could refer patients to other physicians

instead of abandoning them but explained that it is difficult to find Medicaid vendors to accept

referrals. He told Medicaid patients not enrolled in a managed care organization that he could

not treat them. He had contracts with managed care organizations predating his suspension, so

he was required to treat those patients, and he served them because he was not directed

otherwise by the organizations.

¶ 20 B. Judge’s Recommendation

¶ 21 The Judge issued his recommended decision in December 2017. After reciting the

procedural history, the Judge found:

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“[T]he issues presented are 1) whether the Department properly denied [plaintiff’s]

reapplication to the Program because he provided services to Program recipients while

he was suspended; 2) whether the Department is entitled to recoup money paid for

services rendered by [plaintiff] to Program recipients after January 31, 2014, the date

on which [he] was suspended; and 3) whether [plaintiff] should be excluded from the

Program.”

¶ 22 After reciting the relevant Department rules and the hearing evidence, the Judge found that

plaintiff “provided services and ordered goods for the benefit of Program recipients after

January 31, 2014,” when he was suspended and thereby “violated the terms of his suspension

under Section 140.32,” which “would warrant termination from the Program.” The Judge

found that the “Department paid $5,162.25 for prescriptions that [plaintiff] ordered while

suspended” and “withheld $30,125 for bills submitted under [plaintiff’s] provider number

while suspended.” The Judge recited that the “Department may deny an application to

participate in the Program if the applicant violated Section 140.32” or “engaged in actions that

would warrant termination from the Program.” The Judge addressed the issues presented: “The

record establishes that the Department properly denied [plaintiff’s] application and *** is

entitled to recoup overpayments from [him]. The record does not establish that [he] should be

excluded from the Program, however.”

¶ 23 The Judge rejected plaintiff’s claim that the Department’s “exhibits were improperly

admitted because they rely on the business records of other entities” with an insufficient

foundation for their accuracy; that is, that the business records of Medicaid payees “do not

become Department business records merely because the records have been transferred to the

Department.” Plaintiff’s “suppositions that computers and technology are not inherently

reliable” could not by themselves overcome the Department rule that its computer records

accurately reflect the Department’s payments and the basis for payment unless shown

otherwise. 89 Ill. Adm. Code 104.255 (1981). Moreover, even absent that rule, the Judge found

plaintiff’s proposition unsupported because the Department did not offer into evidence any

records that had not come from the Department’s records kept in the ordinary course of its

business.

¶ 24 The Judge also rejected plaintiff’s assertion that, under section 140.19(d) of the Social

Services title of the Illinois Administrative Code (89 Ill. Adm. Code 140.19(d) (2013)), he

must “be reenrolled unless there is a finding that he has not corrected the deficiencies that

caused his suspension,” which was providing inferior care. While the Department must adhere

to its rules, another rule provided that an application to be a Medicaid provider can be rejected

if the applicant engaged in activity sufficient to be terminated, suspended, or excluded as a

provider. 89 Ill. Adm. Code 140.14(a) (2013). The Judge found the latter rule applicable

beyond an initial or original application. Because plaintiff admitted to performing services for

Medicaid patients under his contract with the Organization while suspended and because

Department records showed that he ordered prescriptions during his suspension, the record

showed that he violated Department rules and the provisions of his suspension, so that the

Department had sufficient grounds to deny his application.

¶ 25 The Judge rejected plaintiff’s claim that, while claims were submitted under his provider

number while he was suspended, he did not cause the Department to be billed. “[T]he

submitted claims in this case must have been certified either by [plaintiff], his employee whom

he authorized to submit such claims, or an alternate payee, the actions for whom [plaintiff] is

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jointly and severally liable.” See 89 Ill. Adm. Code 140.24(e) (2014). The Department records

in its exhibits created a rebuttable presumption that the Department paid claims as reflected in

those records, and plaintiff did not rebut the presumption. Omitting $375 paid on a claim

submitted on the day of plaintiff’s suspension, the exhibits showed $30,125 paid, and the Judge

found that the Department properly withheld that sum. Of the 217 prescriptions at issue, the

Judge found that 126 prescriptions were written after plaintiff’s suspension and that the

Department paid $5162.25 on those prescriptions, so it should recover that sum.

¶ 26 Lastly, the Judge found it unnecessary to exclude plaintiff from the Medicaid program

because denying his application would have the same effect of barring him from reapplying

for a year. 89 Ill. Adm. Code 140.19 (2013).

¶ 27 C. Director’s Decision

¶ 28 Plaintiff filed exceptions to the Judge’s recommended decision. He argued that the

Department was disregarding its rule that suspensions are for only a year. He also argued that

the Department hearing was unfair because Department rules waived evidentiary requirements

for Department records only. Relatedly, he argued that the admission of Department records

was erroneous because the claims or bills were submitted by Medicaid providers “and merely

stored by the Department” and because computers are fundamentally unreliable for storing

information. He argued that he did not bill the Department but that claims were made by

pharmacies and managed care organizations. “It was not proved that Dr. Khan designated any

pharmacy or MCO as an alternative payee” so that the Judge’s reference to alternative payees

and joint liability was unsupported by evidence. He argued that the Department should not

have considered claims after he was suspended on January 31. 2014, but before he had notice

of the suspension on February 4. Lastly, plaintiff argued that the Department was

misinterpreting the term “vendor” in its rules and that “he should not have to submit an

application to become a vendor” when he was suspended for a year from January 31, 2014.

¶ 29 The Department filed a response to plaintiff’s exceptions. It argued that the Judge was not

disregarding a Department rule on one-year suspensions but applying other rules: (1) that an

application to be a Medicaid vendor can be denied for activity that would be grounds for

termination, suspension, or exclusion and (2) that a suspended vendor cannot provide services,

or order goods and services, for a Medicaid patient nor be an independent contractor for a

vendor. The first of those rules applied to applications other than initial applications because

“[t]he Department may deny an application to participate in the [Medicaid] Program if the

vendor has engaged in activities which constitute grounds for termination, suspension or

exclusion.” 89 Ill. Adm. Code 140.14(a) (2013). Relatedly, the Department argued that the

Judge properly recited and applied the definition of a vendor. The Department argued that the

hearing was not unfair because the Department rule on admitting Department records has

foundational requirements that the Department met here and created a rebuttable presumption

that plaintiff did not rebut. The Department also argued that the Judge did not err in finding

that plaintiff performed services for Medicaid patients while suspended, because (1) all claims

must be certified by a vendor, trusted employee, or specifically designated alternate payee,

with the vendor and alternate payee being jointly and severally liable (89 Ill. Adm. Code

140.20(b) (2018); 89 Ill. Adm. Code 140.24(e) (2014)) and (2) plaintiff did not rebut the

presumption that the Department paid claims as reflected in its records. The Department argued

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that there was no authority for plaintiff’s claim that he should not be responsible for claims

after his suspension until he had notice of his suspension.

¶ 30 Plaintiff replied in support of his exceptions. He argued that the Judge did not apply the

rule limiting suspensions to one year because he did not cite or mention it and that any conflict

of rules should result in the more specific rule being applied, which he argued was the rule

providing for the reinstatement of a suspended vendor unless the vendor does not correct the

deficiencies underlying the suspension. Lastly, plaintiff argued that the Department does not

generate claims or bills and thus did not generate the records at issue.

¶ 31 The Director sent plaintiff’s counsel a letter on February 20, 2018, stating that she reviewed

the Judge’s recommended decision, plaintiff’s exceptions, and the response and reply. The

Director found the Judge’s recommendation to be warranted and formally adopted it as the

final decision of herself and the Department. In addition to denying plaintiff’s application,

“[t]his means the Department is entitled to recover the sum of $5,162.25 from your client and

withhold $30,125 in payments to your client.”

¶ 32 D. Circuit Court Review

¶ 33 Plaintiff filed a complaint for administrative review in the circuit court in March 2018. He

alleged that the Director “failed to properly apply the law and in so doing misinterpreted the

applicable rules” including 89 Ill. Adm. Code 140.17 (1992). He also alleged that the

Department “evidentiary hearing was improperly and unfairly conducted due to the admission

of exhibits, including but not limited to the admission into evidence of documents that were

submitted by other vendors and not prepared by the” Department. Lastly, he alleged that the

Director’s decision was contrary to the manifest weight of the evidence and was arbitrary,

capricious, and contrary to law, “including the fact that the Department is seeking to recoup

from Dr. Khan funds paid to pharmacies for medications actually provided to patients when

Dr. Khan did not receive any portion of the payment for the medications.”

¶ 34 The Department and Director appeared in the circuit court and filed the Department record

regarding plaintiff’s application.

¶ 35 Plaintiff filed a memorandum of law in support of his complaint, reiterating his arguments

from his exceptions to the Judge’s recommended decision.

¶ 36 Defendants filed a response in support of the Director’s decision, reiterating the

Department’s arguments below and arguing that plaintiff “admitted to seeing patients and

writing prescription[s] during his suspension.”

¶ 37 Plaintiff filed a reply, arguing that the pharmacies who submitted claims were not his

alternative payees and reiterating his arguments that (1) claims are not admissible as

Department records because they are generated by vendors rather than the Department and

(2) the Department was misapplying the term “vendor.”

¶ 38 The circuit court issued its order affirming the Director’s decision in January 2019. After

describing the Department proceedings, the court addressed plaintiff’s challenges in his

administrative complaint.

¶ 39 As to plaintiff’s claim that he had to be reinstated after a year’s suspension unless he did

not remedy the issues underlying his suspension, which were not the grounds for the Director’s

decision at issue, defendants argued that the Department rules provide for suspension or

revocation of a vendor for not complying with the conditions of suspension including being a

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vendor, ordering goods or services from a vendor that the Department will pay for, and being

an independent contractor for a vendor. The Judge had agreed with the Department, and the

circuit court similarly found the Department’s interpretation of its rules “to be the more logical

and comprehensive one.” The rule on one-year suspensions does not require the Department

to disregard new violations of its rules merely because the original grounds for suspension do

not persist, the court found. The court found no conflict between rules, as plaintiff argued, but

merely different rules applicable under different circumstances.

“Under Dr. Khan’s narrow interpretation of Section 19, the Department would only

have the authority to discipline vendors who commit the same violation again and

again. For vendors such as Dr. Khan, who commit multiple, varying violations, the

Department would be forced to reinstate them at the end of their initial one-year

suspension and could never seek to have them terminated or suspended for their new

violation. This is clearly not what the Department intended when it promulgated

Section 19 and Section 14.”

¶ 40 While plaintiff argued that the Department and Judge misapplied the term “vendor,” the

court found plaintiff’s argument that a suspended vendor is not a vendor unsupported by the

rules. Firstly, “[i]f Dr. Khan is correct that he was not a vendor, then Section 19 does not apply

to him” as plaintiff argued on the previous point. Also, after reciting various rules, the court

found,

“Read together, these regulations show the Department has promulgated separate sets

of requirements for enrollment and participation. An enrolled provider has a valid

license and has submitted all necessary paperwork. A participating provider has a valid

license, has submitted all necessary paperwork, and has also agreed to certain

conditions on the provider’s provision of goods and services to Medicaid patients.”

The court found that the evidence established that plaintiff qualified as a vendor, as he had a

valid medical license and was by his own admission treating Medicaid patients during his

suspension. Lastly, the court rejected plaintiff’s argument that suspended vendors cannot be

vendors because they would inherently violate their suspensions, as a suspended vendor would

violate Department rules not by status but by providing medical services or goods to Medicaid

patients during suspension.

¶ 41 As to plaintiff’s challenge to the Judge’s admission of Department records as hearing

exhibits, the court found that Department employee McClung generated the exhibits from

Department records in the ordinary course of Department business. While claims are submitted

by vendors, they are processed by the Department pursuant to Medicaid statutes and

regulations, with the Department then recording its disposition of the claims in its records.

“McClung’s reports are not records from other entities that the Department merely stores. They

are records of transactions the Department either agrees or refuses to complete.” The court

rejected the argument that the computer records were not of proven accuracy and found it to

be undermined by plaintiff’s admission that he treated and wrote prescriptions for Medicaid

patients during his suspension. Lastly, the Department rule on admitting Department records

does not unduly elevate Department records over other records or exhibits because it merely

creates a rebuttable presumption, which plaintiff did not successfully rebut.

¶ 42 As to plaintiff’s argument that he did not submit any bills or claims to the Department or

receive payment on claims, during his suspension, the court noted Department rules that a

claim must be signed by the service provider, an employee, or designated alternate payee and

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that the Department is not liable to pay claims that do not comply, as such claims are ineligible

for payment. The court found that, when plaintiff writes a prescription, a pharmacy that fills it

acts under his authority and carries out his directive. Moreover, when a pharmacy fills a

prescription for a Medicaid patient that the physician was not authorized to write and the

Department pays the prescription, it has spent taxpayer funds it was not permitted to pay. “The

onus should be borne by Dr. Khan, who knew or certainly should have known he was not

authorized to write prescriptions when he was not allowed to be a Medicaid provider. Unless

the pharmacy was informed of such fact, there is a minuscule probability it would be privy to

such information.” The court found that the Judge “was correct to assess the sum of $5,162.25

against Dr. Khan. But for Dr. Khan’s prescription, these moneys would have never been

erroneously paid by the [Department] and Dr. Khan rightfully bears the responsibility of

restoring these funds to the [Department] and to the taxpayers.” The court also found that this

recovery of payments from plaintiff did not take his private property. The court rejected

plaintiff’s argument that he should not be liable for prescriptions written before he had notice

of his suspension on February 4, 2014, noting a Department rule that a decision is deemed

served when mailed and the evidence that the Director’s decision was dated and mailed January

31, 2014.

¶ 43 Lastly, plaintiff argued that he should not be responsible for claims on prescriptions he

wrote before his suspension. The court rejected this argument, finding that plaintiff:

“need only have consulted his own records to determine which prescriptions to

Medicaid patients with refills were still outstanding when he received notice of his

suspension. [His] failure to consult these records and his failure to advise his patients

that he was no longer allowed to order goods for them are not excuses for the fact that

certain patients continued to refill prescriptions that could no longer be billed to

Medicaid after Dr. Khan was suspended.”

¶ 44 E. Reconsideration

¶ 45 Plaintiff filed a motion to reconsider the court’s January 2019 order later that same month.

Plaintiff argued that the Director’s decision was contrary to the Department rule that a vendor

must be reinstated after a year’s suspension unless they have not remedied the violations that

caused the suspension. The Department could separately charge any subsequent violations of

its rules rather than denying reinstatement and, indeed, had no authority to deny reinstatement

except for not remedying the grounds for suspension. While the court noted that plaintiff did

not offer records to counter the Department’s allegations or to show specific inaccuracy within

McClung’s reports, plaintiff argued that the accuracy of those reports was not proven. Also, a

claim presented sometime after a prescription was filled is not a contemporaneous note of a

transaction for business-record purposes, plaintiff argued. Plaintiff argued that his suspension

as a Medicaid provider did not bar him from treating Medicaid patients, noting the evidence of

crossover patients covered by both Medicaid and Medicare. He argued that he did not admit to

treating Medicaid patients, as the court found, because he “would not know if services he

rendered without billing would result in other providers billing the Medicaid Program for his

prescriptions or services.” Plaintiff speculated that “the patient could have paid out-of-pocket

for the prescription because the medication may not have been covered by the Medicaid

program” or “the payment from the medication could have come from another program of

insurance, such as Medicare.” Plaintiff did not bill for pharmacies or supervise their billing,

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nor were they his alternate payees, and the Department could seek recoupment of improper

payments to pharmacies from the pharmacies. He could not prevent his patients from filling

his prescriptions, nor would he know where they were having their prescriptions filled to

instruct the pharmacies not to fill them. He could not abandon his patients, he could not know

of the need to transfer or refer his patients until he knew he was suspended, and a referral or

transfer would have to be to another Medicaid provider so as to not impact his patients. Plaintiff

argued that the mailbox rule for the Director’s decision was applicable to filing an

administrative review action, not to having actual notice of the decision.

¶ 46 Defendants filed a response to the motion to reconsider, arguing that (1) the Department

was not required to reinstate plaintiff after a year’s suspension, (2) the Judge properly admitted

Department records as hearing evidence, (3) plaintiff was properly held responsible for claims

to the Department during his suspension, as he saw Medicaid patients while suspended but was

prohibited from providing services or ordering goods for Medicaid patients during his

suspension that would be paid in part or whole by the Department, and the Department

generally does not pay pharmacies for prescriptions written by suspended physicians, and

(4) the mailbox rule applies to the service of administrative decisions.

¶ 47 Plaintiff filed a reply in support of his motion to reconsider, reiterating arguments from his

motion.

¶ 48 On May 30, 2019, the court issued its order denying reconsideration of its January 2019

order. After reciting the procedural history including plaintiff’s reconsideration arguments, the

court reiterated its analysis from the January 2019 order that the Director’s decision properly

denied plaintiff’s application for reinstatement. The court also found that doing so was not an

extension of the 2014 suspension but separate penalties for separate violations. Also, the

Director’s decision was not contrary to or in excess of the Department’s statutory authority,

the court found. As to the admission of exhibits, plaintiff’s argument rested on the proposition

that the Department failed to prove their accuracy, a proposition the court rejected in detail.

Also, Department records were contemporaneous notes of vendors submitting claims and the

Department disposing of them.

¶ 49 As to holding plaintiff liable for pharmacies’ claims, “[i]t is not speculative to find Dr.

Khan should have exercised discretion when accepting patients,” and the court was

“unpersuaded that Dr. Khan was powerless to prevent prescriptions from being billed to

Medicaid during his suspension.” Also, the Department is authorized by statute to recover

wrongfully paid claims, and the “fact that these payments were made to the pharmacies does

not change the fact that they were made as a result of Dr. Khan improperly writing

prescriptions.” The court “did not find that Dr. Khan was required to force his patients to

[forgo] their medication” but “merely found Dr. Khan took no steps to transition his patients’

prescriptions to another provider who was authorized to order goods through Medicaid” and

that he was aware of his recommended suspension before it became a decision on January 31,

2014. Lastly, both statute (735 ILCS 5/3-103 (West 2018)) and Department rule provide for a

mailbox rule for service of administrative decisions and do not provide that a decision is served

when a party receives it. This appeal timely followed.

¶ 50 III. ANALYSIS

¶ 51 On appeal, plaintiff contends that the Director’s order was erroneous because (1) a

suspension cannot last more than a year under the Department’s rules, (2) the Department’s

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hearing exhibits were erroneously admitted as business records, (3) suspension of a physician

as a Medicaid vendor does not prohibit the physician from treating patients who are on

Medicaid, and (4) plaintiff could not prevent his Medicaid patients from filling prescriptions.

¶ 52 Defendants respond that the Director properly denied the application, plaintiff was required

to apply for reinstatement and the Director had the authority to deny that application, plaintiff’s

interpretation of the Department’s rules was unsupported, the Judge did not abuse his

discretion in admitting evidence, and the Director did not clearly err in determining that the

Department could withhold payments to plaintiff for services rendered during his suspension.

¶ 53 The Illinois statute governing Medicaid, article V of the Public Aid Code (305 ILCS 5/5-1

et seq. (West 2018)), provides in relevant part:

“Applicants and recipients shall be entitled to free choice of those qualified

practitioners *** and other dispensers of medical services meeting the requirements

and complying with the rules and regulations of the Illinois Department. However, the

Director of Healthcare and Family Services may, after providing reasonable notice and

opportunity for hearing, deny, suspend or terminate any otherwise qualified person,

firm, corporation, association, agency, institution, or other legal entity, from

participation as a vendor of goods or services under [Medicaid] if the Director finds

such vendor of medical services in violation of this Act or the policy or rules and

regulations issued pursuant to this Act.” Id. § 5-9.

¶ 54 The Director’s decision regarding Medicaid vendor eligibility is reviewable, first by the

circuit court, under the Administrative Review Law. Id. § 12-4.25(G); 735 ILCS 5/3-101

et seq. (West 2018). We review the administrative agency’s decision, not the circuit court’s

decision. Senno v. Department of Healthcare & Family Services, 2015 IL App (1st) 132837,

¶ 33. Judicial review of an administrative decision extends to all questions of law and fact

presented by the entire record, with the findings and conclusions of the administrative agency

considered prima facie true and correct. 735 ILCS 5/3-110 (West 2018).

¶ 55 The standard of review depends on whether the issue presented is a question of fact,

question of law, or mixed question of law and fact. Senno, 2015 IL App (1st) 132837, ¶¶ 33-

34. On a question of fact, including credibility determinations, we reverse only when the

findings were against the manifest weight of the evidence; that is, if the opposite conclusion is

clearly evident. Id. ¶¶ 34, 40. A mixed question of law and fact concerns the legal effect of a

given set of facts when the historical facts are admitted or established, the legal rule is

undisputed, and the issue is whether the facts satisfy the applicable rule. Id. ¶ 34. A mixed

question of law and fact is reversed only if the administrative decision was clearly erroneous;

that is, if we have a definite and firm conviction that a mistake was made. Id. ¶¶ 34, 42. A legal

question is reviewed de novo. Id. ¶ 34.

¶ 56 A. Denial of Reinstatement

¶ 57 Plaintiff first contends that the Director’s decision was erroneous because a suspension

cannot last more than a year under the Department’s rules, noting that a government agency

like the Department cannot exceed its authority.

¶ 58 Under the Public Aid Code, the “Department may deny, suspend, or terminate the

eligibility of any person [or entity] to participate as a vendor of goods or services to recipients

under [Medicaid], or may exclude any such person or entity from participation as such a

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vendor, and may deny, suspend, or recover payments, if after reasonable notice and opportunity

for a hearing the” Department makes certain findings, including that the “vendor is not

complying with the Department’s policy or rules and regulations.” 305 ILCS 5/12-4.25(A)(a)

(West 2018).

¶ 59 When a vendor has been suspended from participation in Medicaid,

“the Director may require that such vendor correct any deficiencies which served as the

basis for the suspension. The Director shall specify in the suspension order a specific

period of time, which shall not exceed one year from the date of the order, during which

a suspended vendor shall not be eligible to participate. At the conclusion of the period

of suspension the Director shall reinstate such vendor, unless he finds that such vendor

has not corrected deficiencies upon which the suspension was based.” Id. § 12-4.25(D).

A terminated, suspended, or excluded “vendor shall be barred from participation for at least

one year.” Id.

“At the end of one year a vendor who has been terminated, suspended, or excluded may

apply for reinstatement to the program. Upon proper application to be reinstated such

vendor may be deemed eligible by the Director providing that such vendor meets the

requirements for eligibility under this Code. If such vendor is deemed not eligible for

reinstatement, he shall be barred from again applying for reinstatement for one year

from the date his application for reinstatement is denied.” Id.

¶ 60 Statutory construction is a question of law reviewed de novo. Senno, 2015 IL App (1st)

132837, ¶ 37. While statutory construction is usually not deferential, we give substantial

weight and deference to the interpretation of the agency charged with administering a statute,

recognizing the agency’s expertise, experience, and role as an informed source of legislative

intent. Id. That said, the agency’s interpretation is not binding, and we may reject an

interpretation that is unreasonable or erroneous. Id.

¶ 61 Here, section 12-4.25(D) of the Public Aid Code has two paragraphs addressing the

duration of suspensions. One provides for a suspension that “shall not exceed one year,” under

which the Director may require that the vendor correct any deficiencies that served as the basis

for the suspension and “shall reinstate” the vendor after the period expires unless the Director

finds that the vendor has not corrected the deficiencies underlying the suspension. (Emphases

added.) 305 ILCS 5/12-4.25(D) (West 2018). The other paragraph provides that a suspended

“vendor shall be barred from participation for at least one year” and that after a year the vendor

“may apply for reinstatement to the program” and “may be deemed eligible by the Director

providing that such vendor meets the requirements for eligibility,” whereas if the “vendor is

deemed not eligible for reinstatement, he shall be barred from again applying for reinstatement

for one year from the date his application for reinstatement is denied.” (Emphasis added.) Id.

For clarity and brevity, we shall refer to these unnumbered paragraphs as the “not exceed one

year” and “at least one year,” paragraphs respectively.

¶ 62 The Department implemented these statutory provisions in two rules. Rule 17, as we shall

call it, provides:

“In actions based on Section 140.16 in which the Notice states an intent to

terminate, the final administrative decision may result in suspension for a specific time,

which shall not exceed one year from the time of the final administrative decision,

rather than termination, when the Department determines that:

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a) the seriousness and extent of the violations do not warrant termination; and

b) the vendor had no prior history of violations of the Medical Assistance

Program; and

c) the lesser sanction of suspension will be sufficient to remedy the problem

created by the vendor’s violations.” 89 Ill. Adm. Code 140.17 (1992).

Rule 17 has no parallel provision to the “not exceed one year” paragraph concerning correcting

deficiencies, either as a requirement of the suspension or a condition for reinstatement. The

other rule, which we shall refer to as Rule 19, provides in relevant part:

“a) A vendor that has been terminated, suspended or excluded from the Medical

Assistance Program may not apply to participate for at least one year after the date of

the final administrative decision terminating, suspending or excluding eligibility ***.

***

b) After one year, a vendor who has been terminated, suspended or excluded ***

may apply for reinstatement to the Medical Assistance Program. If a vendor’s

application for reinstatement is denied by the Department, he or she shall be barred

from again applying for reinstatement for one year after the date of the final

administrative decision denying his or her application for reinstatement.

***

d) At the end of a period of suspension, a vendor that has been suspended from the

Medical Assistance Program shall be reinstated upon completion of the necessary

enrollment forms and execution of a new vendor agreement unless it is determined that

such vendor has not corrected the deficiencies upon which the suspension was based.

If the deficiencies have not been corrected, the vendor shall, after notice and hearing,

be terminated. The notice in any termination action based on this Section shall notify

the vendor of the deficiencies not corrected.” 89 Ill. Adm. Code 140.19(a), (b), (d)

(2013).

¶ 63 We note a significant discrepancy between the statutory provisions and the Department

rules implementing them. While Rule 17 and the “not exceed one year” statutory provision

both provide for a suspension not to exceed one year, Rule 17 does not provide for the Director

requiring correction of the underlying deficiencies, nor does it require reinstatement unless the

vendor failed to correct the underlying deficiencies. While Rule 19 and the “at least one year”

provision both provide for suspensions of at least one year and both bar applying for

reinstatement for a year after an unsuccessful application for reinstatement, the statutory

paragraph provides that a suspended vendor “may be deemed eligible by the Director providing

that such vendor meets the requirements for eligibility” (emphasis added) (305 ILCS 5/12-

4.25(D) (West 2018)), while Rule 19(d) provides that a vendor shall be reinstated unless the

vendor did not correct the underlying deficiencies. In short, Rule 17 does not directly parallel

the “not exceed one year” statutory paragraph, nor does Rule 19 directly parallel the “at least

one year” paragraph.

¶ 64 Here, plaintiff was suspended for one year on January 31, 2014, a term that notably falls

under either the “not exceed one year” or “at least one year” statutory provisions. The

Director’s decision suspending him did not require him to correct the deficiencies underlying

his suspension as provided in the “not exceed one year” paragraph. The recommended decision

adopted in the Director’s 2014 decision quoted Rule 17 and clearly applied Rule 17’s

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requirements in concluding that suspension for a year was the appropriate sanction. However,

as stated above, Rule 17 does not directly correspond to the “not exceed one year” paragraph.

Under such circumstances, plaintiff’s 2014 suspension for a year is ambiguous as to which

statutory provision—which source of the Department’s authority—governs. In the proceedings

now under review, the Department and its Judge and Director effectively treated the 2014

suspension as an “at least one year” suspension, both in applying that paragraph’s discretion

in determining a suspended vendor’s eligibility and in barring plaintiff from reapplying for

reinstatement for a year. In light of the aforesaid ambiguity, we cannot conclude that they

exceeded their authority in doing so.

¶ 65 B. Evidentiary Ruling

¶ 66 Plaintiff also contends that the Judge erroneously admitted as evidence in the Department

hearing the exhibits generated by McClung. Specifically, because the claims described in the

exhibits came from vendors rather than being generated by the Department, the records in the

exhibits were not Department records. Plaintiff also argues that the Department rule on

admitting Department computerized records into hearing evidence is unfair, as it elevates

Department records over other records and the rules applicable to civil cases in the courts

should apply.

¶ 67 Those rules are in the Illinois Rules of Evidence. In particular, the rule of evidence defining

public records as an exception to hearsay is:

“The following are not excluded by the hearsay rule, even though the declarant is

available as a witness:

***

Records, reports, statements, or data compilations, in any form, of public offices or

agencies, setting forth (A) the activities of the office or agency, (B) matters observed

pursuant to duty imposed by law as to which matters there was a duty to report,

excluding, however, police accident reports and in criminal cases medical records and

matters observed by police officers and other law enforcement personnel, or (C) in a

civil case or against the State in a criminal case, factual findings from a legally

authorized investigation, but not findings containing expressions of opinions or the

drawing of conclusions, unless the opposing party shows that the sources of

information or other circumstances indicate lack of trustworthiness.” Ill. R. Evid.

803(8) (eff. Sept. 28, 2018).

¶ 68 The principles underlying Rule 803(8) are well established: the requirements for admitting

public records as an exception to the hearsay rule are that the record was made in the ordinary

course of business and was authorized by statute, rule, or regulation or required by the nature

of the public office. Village of Arlington Heights v. Anderson, 2011 IL App (1st) 110748, ¶ 17.

Documents reflecting regularly conducted governmental activities are made reliable by

systematic checking or regularity, actual experience of reliance upon them, or a duty to make

an accurate record. Id. ¶ 13. Rule 803(8) makes no distinction between public records and

computerized public records. Id. ¶ 18. “[E]vidence of public records may be authenticated by

producing ‘Evidence that: (A) a document was recorded or filed in a public office as authorized

by law; or (B) a purported public record or statement is from the office where items of this

kind are kept.’ ” (Emphasis added.) Id. (quoting Fed. R. Evid. 901(b)(7)).

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¶ 69 The Department rule on admitting its computerized records into evidence is “Unless proven

otherwise, computer generated documents prepared by the Department shall be presumed to

constitute an accurate reflection of the Department records as to the amount and type of

payment made to the vendor as well as the basis for such payment.” 89 Ill. Adm. Code 104.255

(1981).

¶ 70 Here, we conclude that the exhibits were not erroneously admitted. McClung’s testimony

laid an ample foundation, whether under the Department rule or Rule 803(8): the Department

keeps claims data in a standard computer system in the ordinary course of its business

overseeing the Medicaid program, including its obligation to review the payments it made to

Medicaid providers for services rendered to Medicaid patients. McClung testified to producing

the reports in the ordinary course of Department business using the Department’s standard

computer equipment and that each report accurately reflected the data in Department records.

¶ 71 As to the fact that vendors submitted the claims data, the Department claims records

nonetheless “set[ ] forth *** the activities of the” Department as provided in Rule 803(8). The

core activity of the Medicaid program, implemented in Illinois by the Department, is paying

vendors to provide medical services or goods to Medicaid patients. In other words, taking in

claims from Medicaid vendors and processing them is required by the nature of the

Department. As McClung’s testimony established, the Department receives claims and acts

upon them by paying them, rejecting them, holding them, or otherwise processing them, and

the Department records that processing in the same claims records. The data received from

vendors in claims—including which physician provided care or wrote a prescription—affects

the Department’s decision on a claim, which in turn may elicit more information from a vendor,

which again affects the Department’s decision, all of which is recorded in the claims records

at issue. As the circuit court stated, “McClung’s reports are not records from other entities that

the Department merely stores. They are records of transactions the Department either agrees

or refuses to complete.”

¶ 72 Plaintiff’s argument that Medicaid fraud exists goes to the weight of the evidence and not

its admissibility. The Department routinely pays vendors based on vendor-submitted claims

like the ones that commenced the claims records here, showing its reliance on claims in one of

the most concrete manners possible. The fact that some claims vary from that routine and are

rebutted does not render claims records generally untrustworthy.

¶ 73 Finally, we do not find the Department rule to be unfair, as both it and Rule 803(8)

expressly create a rebuttable presumption that public records are trustworthy and admissible.

Plaintiff’s general challenges to the reliability of computers were reasonably rejected by the

Judge as insufficient rebuttal, and we see no reason to conclude that they would not be similarly

rejected under Rule 803(8).

¶ 74 C. Director’s Decision

¶ 75 Lastly, plaintiff contends that the Director’s decision was erroneous because suspension of

a physician as a Medicaid vendor does not prohibit him from treating patients who are on the

Medicaid program and because plaintiff could not prevent his Medicaid patients from filling

prescriptions.

¶ 76 Under the Public Aid Code, the “Department may deny, suspend, or terminate the

eligibility of any person [or entity] to participate as a vendor of goods or services to recipients

under [Medicaid], or may exclude any such person or entity from participation as such a

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vendor, and may deny, suspend, or recover payments, if after reasonable notice and opportunity

for a hearing the” Department makes certain findings, including that a “vendor is not

complying with the Department’s policy or rules and regulations.” 305 ILCS 5/12-4.25(A)(a)

(West 2018). The Department “may recover money improperly or erroneously paid, or

overpayments, either by setoff, crediting against future billings or by requiring direct

repayment to the” Department, and “may suspend or deny payment, in whole or in part, if such

payment would be improper or erroneous or would otherwise result in overpayment.” Id. § 12-

4.25(E). “Payments may be suspended, denied, or recovered from a vendor or alternate payee

*** for services rendered in violation of the Illinois Department’s provider notices, statutes,

rules, and regulations ***.” Id. § 12-4.25(E)(1)(i).

¶ 77 A Department rule provides in relevant part,

“1) Upon being terminated, suspended, excluded or barred, and while the disability

from Medical Assistance Program participation remains in effect, an entity:

A) Cannot be a vendor, ***;

B) Cannot be an employer of a vendor; a person with management responsibility

for an employer of a vendor; an officer of an employer of a vendor; ***

C) Cannot order goods or services from a vendor when payment for such goods or

services will be made in whole or in part by the Department; [or]

D) Cannot render goods or services as an employee of a vendor or as an independent

contractor with a vendor for which payment will be made in whole or in part by the

Department[.]

***

4) After the provision of written notice to the affected parties, the Department may

deny payment for goods or services rendered or ordered by an entity that violates the

provisions of subsection (a)(1)(A), (B), (C) or (D).” 89 Ill. Adm. Code 140.32(a)(1),

(4) (2013).

¶ 78 Here, we conclude that the Director’s decision was not clearly erroneous. Plaintiff

acknowledges that a physician suspended from Medicaid participation cannot order for

Medicaid patients goods and services for which payment will be rejected, in whole or part, by

the Department, but plaintiff maintains that he should not be held responsible because he did

not submit the claims for which he was held liable. However, nothing in section 12-4.25(A) or

(E) limits the Department’s recovery of payments from a vendor for services rendered in

violation of statutes or Department rules to the vendor’s own claims or payments. By issuing

prescriptions and providing medical service for Medicaid patients during his suspension, he

ordered goods and services for which he knew or should know that Medicaid claims would be

presented. While he did not present claims, he continued to perform acts that would cause

claims to be presented, and it would not require plaintiff to “predict the future” (as he argues)

to know that he was causing Medicaid claims to be presented. As the circuit court stated, the

“onus should be borne by Dr. Khan, who knew or certainly should have known he was not

authorized to write prescriptions when he was not allowed to be a Medicaid provider. Unless

the pharmacy was informed of such fact, there is a minuscule probability it would be privy to

such information.”

¶ 79 Plaintiff points to crossover patients, those covered by both Medicare and Medicaid, but it

does not follow from the fact that such patients exist or that the Department excluded such

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patients from the hearing exhibits that plaintiff “was entitled to write prescriptions for these

patients” as he claims without citing authority. Moreover, because crossover patients were

excluded from the exhibits, plaintiff was not held liable for their claims.

¶ 80 Plaintiff raises the specter of leaving Medicaid patients unserved if he simply stopped

serving them, and in the Department hearing he dismissed the idea of having to refer his

patients to other physicians after his suspension. However, his suspension did not fall suddenly

from a cloudless sky: his January 2014 suspension was recommended in May 2013. Moreover,

he was providing care to Medicaid patients through the Organization, which would mitigate

the difficulties of referral. Indeed, right around the time of his suspension and well after his

suspension was recommended, plaintiff renewed his agreement with the Organization, through

which he served Medicaid patients and to which he represented that he was a Medicaid

provider in good standing with no investigations against him. While plaintiff testified that he

kept providing care to Medicaid patients through the Organization because it did not tell him

to stop, his false and misleading representations to the Organization would have kept it from

doing so unless and until it learned of his suspension.

¶ 81 As to plaintiff’s argument that he could not keep his patients from filling their prescriptions,

the Director’s decision did not require him to do so. The Director adopted the Judge’s

recommendation that the Department recover $5162.25 from plaintiff, which the Judge derived

by narrowing the 217 prescriptions at issue to 126 prescriptions written after plaintiff’s

suspension. Plaintiff’s renewal of his contract with the Organization and continuing provision

of care to Medicaid patients through the Organization, and the fact that he was held liable only

for prescriptions written after his suspension, belie his argument that he could not control the

presentation of claims.

¶ 82 IV. CONCLUSION

¶ 83 Accordingly, we affirm the decision of the Director of the Department of Healthcare and

Family Services.

¶ 84 Affirmed.

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