New York State Comptroller Thomas DiNapoli, the defendant in the lawsuit. Photo: Mike Groll/AP

The auditing powers of New York State Comptroller Thomas DiNapoli was the subject of debate Thursday at the New York Court of Appeals, which will decide if his office has to get permission from patients before their records are sought to probe the state's payments to a medical provider.

The case provides the high court with a chance to determine whether DiNapoli, the state's chief auditor, may use the subpoena power, or has to jump through more administrative hoops, to find if the state overpaid the medical provider, who's pushed back on the inquiry.

Directly at issue is a subpoena sent by DiNapoli's office to The Plastic Surgery Group, a medical provider in Albany. The request was part of an audit from DiNapoli's office into whether the state had overpaid the company for a series of medical claims.

Those claims were submitted to UnitedHealthcare, which contracts with the state to process and pay medical claims for employees, retirees, and others on the Empire Plan, the primary health insurance plan for government workers in New York.

DiNapoli's office was looking into whether the state—through UnitedHealthcare—had overpaid The Plastic Surgery Group for claims submitted between 2011 and 2015. 

The Plastic Surgery Group did not respond to an initial request from DiNapoli's office for the relevant information, which resulted in a subpoena from auditors for those records.

The company is seeking to have the Court of Appeals, the state's highest court, reverse a decision from the Appellate Division, Third Department, that upheld the subpoena. It was represented Thursday by Matthew Didora, a partner at Abrams, Fensterman in Nassau County.

Didora argued that a section of state law, CPLR 3122(a), required DiNapoli's office to obtain written permission from each individual patient whose records they sought before the company had to comply with the subpoena.

That section of law says that such a request "shall be accompanied by a certification, sworn in the form of an affidavit and subscribed by the custodian or other qualified witness charged with responsibility of maintaining the records."

Didora said that, when read plainly, that law supported the argument that DiNapoli had to include written permission from the company's patients before they were required to hand over any information.

"They served a blanket subpoena for patient medical records, and the plain text of the statute says that a subpoena to a medical provider requesting patient records must be accompanied by authorizations," Didora said.

But there was disagreement as to whether CPLR 3122(a) could be interpreted as plainly as argued by Didora.

Associate Judge Eugene Fahey questioned whether the legislative history of that section of law supported Didora's conclusion. He said the bill jacket on the legislation, a collection of information on the statute, seemed to indicate differently. 

A memorandum on the legislation from the lawmakers who sponsored it, for example, said it was intended to apply during discovery in a legal proceeding, Fahey said. DiNapoli's subpoena was, instead, investigative in nature.

"All of those communications seem to support the reading that 3122 specifically refers to patient authorization applying only during discovery," Fahey said.

That argument was supported by DiNapoli's office, which was represented Thursday by Deputy Solicitor General Jeffrey Lang. 

Lang argued that the law referred to by Didora was housed under another section of that statute that details explicitly with subpoenas sent during the discovery process, not during an initial investigation. DiNapoli's audit falls under the latter category, he argued.

"You look at the rule as a whole, and when you look at the rule as a whole, it's clear it only applies to pretrial discovery subpoenas," Lang said.

Associate Judge Jenny Rivera asked Lang if there was any other way DiNapoli's office could obtain the information it needed to perform the audit, or if it could feasibly obtain permission from the patients. 

Lang said that would be a major burden on the office, and one not intended by the Legislature.

"There's just no other way to do this," Lang said. "We're talking about thousands of patients, and this is just to audit one provider."

Rivera separately asked Didora for his interpretation of a small section of the law he was using to support his argument. That section of the law said it was to be used "pursuant to this rule," though there were conflicting opinions on what that meant.

Didora argued that the statute was referring to itself, acting as a stand-alone. If the Legislature had intended for those words to refer to another section of law, such as one on subpoenas issued during discovery, it would have said so in the statute, he said.

"When they want to refer to a  specific statute, they do it specifically," Didora said.

Lang had argued that interpreting the law to be that direct, rather than referring to other areas of statute, wouldn't make sense in the broader legislative scheme.

"His argument as I understand is that it only refers to [the subsection of law] which in their view is just a freestanding subsection that applies to all subpoenas, which takes that subsection completely out of context," Lang said.

The Court of Appeals will likely hand down a decision in the case next month.

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