Bergeron v. Department of Health Services

In Bergeron v. Department of Health Services (1999) 71 Cal.App.4th 17, the Fifth District noted that the federal regulations require state agencies to have a method for investigating fraud which does not infringe upon due process rights of the provider. It found that the state and federal regulations did comport with due process which requires "notice reasonably calculated to apprise interested parties of the pendency of the action affecting their property interest and an opportunity to present their objections." (Id. at p. 24.) Thus, due process is satisfied if the administrative agency complies with the statutory limitations on its authorities such as giving notice to the provider stating the general allegations, but not disclosing any specific information. (Ibid.) The Bergeron court reasoned that to provide detailed accounts of the incident being investigated would jeopardize the investigation, and due process only requires notice generally of the allegations supporting the investigation. (Id. at p. 25.) The Court wrote: "Under the governing regulations, the Department is permitted, in fact encouraged, pursuant to 42 Code of Federal Regulations section 455.23 (1998) to withhold payments to Medi-Cal providers when provided with reliable evidence that there has been fraud or willful misrepresentation in the practices of the provider. In an obvious effort to comport with the dictates of due process, the regulation carefully lays out the limitations of the state agency's authority to take such action. They include: 1) notice must be given to the provider stating the 'general allegations as to the nature of the withholding action, but need not disclose any specific information concerning its ongoing investigation'; 2) the notice must state the regulatory authority for the withholding and advise the provider he or she may submit written evidence for consideration by the agency; and 3) the withholding must be temporary, continuing only until a final resolution of the allegations of fraud. (42 C.F.R. 455.23; .) The regulatory scheme is obviously designed to parallel a criminal investigation by the agency or a state fraud prosecuting unit. It is temporary in nature in order to hold the status quo and protect the government's monetary interests until the criminal investigation ends in either abandonment or a judicial proceeding." (Bergeron v. Department of Health Services, supra, at p. 24.)