What You Need to Know About Complying with Executive Order 38

Governor Cuomo’s Executive Order 38 (EO 38) imposes limits on executive compensation and administrative expenses for entities (known as “covered providers”) that receive a substantial amount of state funding, either directly or indirectly.

The goal of EO 38 is to limit the executive compensation paid by and the administrative costs of certain entities that receive, called “covered providers.” To carry out EO 38, many state agencies have promulgated similar rules that are effective for various entities within their respective jurisdictions, including rules by the state Department of Health (DOH), Office for Aging, Office for People with Developmental Disabilities (OPWDD), Office of Alcoholism and Substance Abuse Services (OASAS), and the Office of Mental Health (OMH).

As we look toward the end of 2015, a new round of EO 38 reporting is upon us.

The limitations imposed by EO 38 can be transferred to a subcontractor or agent of a covered provider if enough state funding flows through the covered provider to the subcontractor or agent. A wide range of state funding, including Medicaid, can trigger reporting and compliance requirements for both the providers that receive funding from the state and their downstream partners.

Reporting and compliance requirements have proven to be complex and difficult for a range of providers, and with multiple active lawsuits related to implementation of Executive Order 38, the landscape is sure to remain confusing.

However, the EO 38 requirements must be taken seriously. Penalties for failure to comply range from de minimus – putting a corrective action plan in place – to extreme — exclusion from state funding programs.

If you receive substantial state funding, either directly or through a covered provider, you should seek legal counsel to ensure you are compliant with Executive Order 38.

Hinman Straub has extensive experience in guiding a wide range of clients representing the health care, human services, and other industries, through the intricacies of EO 38 compliance and reporting.

If you need assistance regarding EO 38 compliance, please contact Sean Doolan ([email protected]) or Kelly Ryan ([email protected]).