STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ETTA AND JAMES ALDRIDGE, )

)

Petitioners, )

)

vs. ) CASE NO. 88-6008

) DEPARTMENT OF ADMINISTRATION, ) DIVISION OF STATE EMPLOYEES' ) INSURANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on June 6 and 7, 1989, in Bradenton, Florida.

APPEARANCES

For Petitioners: Michael J. Bittman, Esquire

Post Office Box 285 Orlando, Florida 32802-0285

For Respondent: Larry D. Scott, Esquire

438 Carlton Building Tallahassee, Florida 32399-1550

STATEMENT OF THE ISSUES

The issues are (1) whether certain medical expenses incurred by petitioners' daughter should be covered under the state group health insurance program, and (2) whether the state is estopped from denying the claim based upon erroneous misrepresentations made by its agent.

PRELIMINARY STATEMENT

This matter began on October 21, 1988, when respondent, Department of Administration, Division of State Employees' Insurance, advised petitioners, Etta and James Aldridge, that their request for reimbursement of medical expenses incurred by their daughter, Jerrilyn, had been denied. As a ground, the agency stated that the state group health insurance plan would not cover the expenses since the patient had been treated by a nursing home and not a hospital. Thereafter, petitioners requested a formal hearing under Subsection 120.57(1), Florida Statutes (1987) to contest the agency's decision. The matter was referred by respondent to the Division of Administrative Hearings on December 5, 1988, with a request that a hearing officer be assigned to conduct a hearing.

By notice of hearing dated December 29, 1988, a final hearing was scheduled on February 22 and 23, 1989, in Bradenton, Florida. At petitioners' request, the matter was rescheduled to June 6 and 7, 1989, at the same location.

On May 23, 1989, petitioners filed a motion seeking to add as a party Manatee Springs Nursing Center, Inc. d/b/a Mediplex Rehab-Bradenton, the facility in which the patient was treated. The motion was denied by order dated June 2, 1989 on the ground the facility lacked standing to participate. At final hearing the undersigned denied respondent's motion for summary judgment and counterclaim for refund of overcharges. At the same time, petitioners' motion to amend their petition for formal administrative hearing was granted.

At final hearing, petitioners testified on their own behalf and presented the testimony of William R. Seaton, state benefits administrator, and Patricia Dear, Dale S. Zaletel, Denise White, Michelle Farese, Dr. Eugene G. Alcazaren, and Dr. James A. Micula, all officers or employees of the facility where the patient was treated. They also offered petitioners' exhibits 1-25. All exhibits were received in evidence. Respondent presented the testimony of William R. Seaton and offered respondent's exhibits 1-3. All exhibits were received in evidence.

The transcript of hearing (two volumes) was filed on June 28, 1989.

Proposed findings of fact and conclusions of law were originally due on July 18, 1989. At the request of respondent, this time was extended to July 28, 1989.

Both parties made timely submissions on that date. A ruling on each proposed finding is made in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. Background

   
   

   1. Petitioner, Etta Aldridge, is a full-time employee of Sunland Training Center in Marianna, Florida and is a participant in the state group health insurance program (the plan). James Aldridge, her husband and also a petitioner in this cause, and Jerrilyn Aldridge, her daughter, are covered by the plan.

      
      

   2. On November 3, 1987, Jerrilyn, then around seventeen years of age, was severely injured in an automobile accident near her home in Greenwood, Florida. Among other things, she suffered a skull fracture, abrasions, crushed pelvis and hip, and punctured lungs and stomach. She was initially taken to a Marianna hospital for emergency treatment and then transferred to a Tallahassee hospital for longer-term care. While at the Tallahassee hospital, Jerrilyn was diagnosed by her neurologist as having a closed, diffuse brain injury and brain stem contusions.

      
      

   3. After Jerrilyn was treated in Tallahassee for two and one-half months, which included one month in the hospital and forty-five days at the hospital's extended care facility, her parents were advised that, due to her poor prognosis, they had a choice of putting her in a nursing facility or taking her to their home. Although Jerrilyn was still in a coma, petitioners decided to take her home and care for her in a bedroom which had been converted into a hospital room setting. After six or seven weeks at home, and contrary to earlier medical expectations, Jerrilyn opened her eyes, made noises and manifested some slight arm movement. Based upon these encouraging signs,

      petitioners sought further medical advice and were told that, given the foregoing signs of improvement, treatment in a facility that specialized in brain injury rehabilitation would improve their daughter's condition.

      
      

   4. Petitioners contacted the National Head Injury Foundation and were given a list of health care facilities in the state that provided rehabilitative services for brain injured patients. This list included Manatee Springs Nursing Center, Inc. d/b/a Mediplex Rehab-Bradenton (MRB), a facility licensed by the state as a skilled nursing facility but which specialized in rehabilitating brain injured patients. MRB is the largest brain injury rehabilitation facility in the southeastern united States.

      
      

   5. Since the Aldridges did not have the financial resources to pay for any additional treatment for Jerrilyn, it was essential that they selected a facility that would be covered by the plan. After James Aldridge spoke with and received information from most of the facilities on the list, and conferred with Jerrilyn's neurologist, he eventually narrowed his choice to several facilities, including MRB, which impressed him because of its good reputation and specialty in head injury rehabilitation.

      
      

   6. To confirm whether coverage would be provided for further treatment, James Aldridge telephoned the customer service unit of Blue Cross and Blue Shield of Florida, Inc. (BCBS), the plan's administrator. He also contacted MRB and authorized it to make an inquiry with BCBS on his behalf. On March 28, 1989 Aldridge received favorable advice from a BCBS service representative concerning coverage and benefits for Jerrilyn at MRB. This advice was independently confirmed by MBR on the same date, and Jerrilyn was accepted as a patient at the facility effective March 31, 1988. Some three months later, and after some of the bills had been paid, BCBS advised MBR and petitioners that a "computer" error had been made and that the requested benefits applied only when rendered in a licensed hospital and not a skilled nursing facility. BCBS accordingly declined to pay the bills. That prompted petitioners to initiate this proceeding. The bills in question total over $225,000.

      
      

2. The Insurance Plan

   
   

   1. The State has elected to provide a self-insured group health insurance program for its employees and their dependents. The legislature has designated respondent, Department of Administration, Division of Employees' Insurance (Division), as the responsible agency for the administration of the plan. To this end, the Division has entered into an agreement with BCBS to administer the plan. Among other things, BCBS provides verification of coverage and benefits, claims payment services, actuarial and printing services, and medical underwriting of late enrollee applications.

      
      

   2. Including dependents and retirees, there are almost 300,000 persons who are covered by the plan. Upon enrolling in the plan, all employees, including Etta Aldridge, were routinely given an insurance card with BCBS's telephone number and a brochure entitled "State of Florida Employees Group Health Self Insurance Plan Brochure" (brochure) containing a general description of the plan. The brochure warns the insured that the brochure is not a contract since it does not include all the provisions, definitions, benefits exclusions and limitations of the plan. It also contains advice that if the brochure does not answer an employee's question, he should telephone the Division's customer service section in Tallahassee. In actual practice, however, if an employee contacts the Division number, he is told to telephone BCBS's customer service unit in Jacksonville regarding any questions as to coverage and benefits, claims

      or other problems concerning the plan. The Division generally becomes involved only when an employee is unable to resolve a claims problem with BCBS.

      
      

   3. BCBS has established a service unit that deals exclusively with inquiries regarding coverage and benefits under the state group health plan. There are approximately twenty- eight service representatives in that unit. Each representative receives four weeks of training before being certified as a customer service representative. After being certified, a representative's primary responsibility is to respond to inquiries from state employees, health providers and physicians regarding verification of benefits and coverage under the state group policy. It should be noted that a distinction exists between verification of benefits and coverage. To verify coverage means to verify that a person has an active policy at the time services are rendered. To verify benefits means to confirm that a specific service is covered under the policy. In this case, there was an inquiry by the insured and provider regarding both benefits and coverage. In the event a representative is unsure as to the licensing status of a facility or provider, the representative has access to BCBS's master registry department which maintains the provider number and licensure status of every facility in the state. That registry identified MRB as a skilled nursing home.

      
      

   4. BCBS representatives have the authority to make decisions regarding benefits and coverage. It is only when an inquiry falls within a "grey area" that the final decision is referred from the unit to either the Legal or Medical Division of BCBS.

      
      

   5. The Division, with the assistance of BCBS, has prepared a seventy-five page benefit document (document) which governs all claims arising under the plan. However, the document is for BCBS in-house use only and is not given to state employees or providers. The document first became effective on May 1, 1978 and has been subsequently amended from time to time. When Jerrilyn was admitted to MRB, the document effective October 1, 1987 was controlling. The document was further amended effective July 1, 1988, which was three months after her admission to MRB. As is pertinent here, the July 1, 1988 amendments increased the deductibles and narrowed the definition of a "hospital".

      According to the state benefits administrator, the document is "the final word" on any dispute regarding coverage or claims. The BCBS service unit uses this document to verify coverage and benefits. Included in the document are numerous definitions that are used to resolve disputed claims. Relevant to this controversy is the definition of a hospital at the time Jerrilyn was admitted to MRB:

      
      

      "Hospital" means a licensed institution engaged in providing medical care and treatment to a patient as a result of illness or accident on an inpatient/outpatient basis at the patient's expense and which fully meets all the tests set forth in 1., 2., and

      1. below:

         1. It is a hospital accredited by the Joint Commission on the Accreditation of Hospitals, or the American Osteopathic Association or

            the Commission on the Accreditation of Rehabilitative Facilities;

         2. It maintains diagnostic and therapeutic facilities for surgical or medical diagnosis and treatment of patients under the

            supervision of a staff of fully licensed physicians;

         3. It continuously provides twenty-four (24) hour a day nursing service by or under the supervision of registered graduate nurses.

            
            

            It is undisputed that, while MRB may have provided many services comparable to those rendered by a licensed hospital and is considered to be an atypical nursing home, MRB is still licensed by the state as a skilled nursing facility. Thus, MRB cannot qualify as a hospital under the benefit document.

            
            

   6. Payment for services in a skilled nursing facility, such as MRB, are much more limited and restrictive than for a hospital. To qualify for payment of benefits in a skilled nursing facility, the insured must have been hospital confined for at least three consecutive days prior to the day of hospital discharge before being transferred, upon a physician's advice, to a skilled nursing facility. Once admitted to such a facility, the insured's room and board reimbursement is limited to a maximum of $76 per day. Further, payment of services and facilities is limited to sixty days of confinement per calendar year. In contrast, benefits for hospital care include, for example, unlimited days of coverage per calendar year and much higher reimbursement rates for room, board and other services. In this case, besides having been admitted to MRB directly from her home, and not a hospital, Jerrilyn had already used up forty- five of the sixty days of annual benefits at the extended care unit of a Tallahassee hospital.

      
      

   7. BCBS also has a fee schedule that is used in paying all covered claims. However, the schedule was not introduced into evidence.

      
      

3. Estoppel

   
   

   1. Before he made a final decision as to where to send his daughter, James Aldridge spoke by telephone with several BCBS representatives, including Michelle Sahdala and Rhonda Hall, the unit supervisor and considered its most experienced representative. 1/ Aldridge made these telephone calls because he wanted to positively confirm which facilities would be covered by the plan. During one conversation, Sahdala advised Aldridge that the proposed treatment would not be covered in several facilities named by the National Head Injury Foundation, including New Medico Rehabilitation Center of Florida in Wauchula, Florida and Capital Rehabilitation Hospital in Tallahassee. Aldridge advised BCBS that he might want to place his daughter in MRB, but only if such treatment was covered under his wife's insurance plan. He heard nothing further from BCBS until a week later.

      
      

   2. Aldridge contacted MRB on March 21, 1988 and advised an MRB representative that he wished to place his daughter in the facility if his wife's insurance covered the treatment at MRB. He also gave MRB the BCBS unit supervisor's name (Rhonda Hall) and telephone number. To verify coverage and benefits, MRB's admission coordinator, Patricia Dear, telephoned Hall on March 22, 1988. Such an inquiry is routinely made by the provider on behalf of the insured and before the patient is admitted to the facility. This is to ascertain if the prospective patient is insured, and if so, to verify the amount of benefits. Dear identified herself and advised Hall that she was requesting benefits information on Jerrilyn Aldridge, an insured. She told Hall that MRB was a skilled nursing facility and not a hospital, the nature of services that would be provided to Jerrilyn and her need to determine whether such services would be covered under the plan before Jerrilyn was accepted as a patient. When

      asked if she would need further information in hand concerning MRB before determining the amount of benefits, Hall responded affirmatively. Accordingly, Dear sent Hall by overnight mail a letter and brochure describing the facility's services. They were received by BCBS the next morning, or March 23. The letter included information concerning MRB, the fact that it was a skilled nursing facility and not a hospital, the type of services that MRB provided, a summary of the expected charges for treating Jerrilyn (from $600 to $850 per day), the average length of stay of a patient (3 to 9 months), and an offer to answer any additional questions that BCBS might have.

      
      

   3. When Dear heard nothing further from Hall within the next few days, she made a follow-up telephone call to Hall on March 28 to see if Hall had any questions and to verify benefits coverage. Hall acknowledged receiving the letter of March 22 with attachment. After Dear discussed each of the disciplines and types of services to be provided and their expected cost, including physician services, physical therapy, neuropsychology, central supply, pharmacy, laboratory services and a room and board charge of $351 per day, Hall advised Dear that the only policy exclusions on coverage would be occupational and speech/language therapy. She added that all charges would be subject to medical necessity, and ambulance costs to transport Jerrilyn to the facility would be covered. The two also discussed the fact that there were no time limitations under the policy and that almost $475,000 in lifetime coverage still remained. Hall represented that after the Aldridges satisfied their $1500 deductible on which BCBS paid only 80% of the bills, BCBS would thereafter pay 100% of all medically necessary charges. In making that representation, Hall did not disclose the fact that BCBS has a fee schedule and that all payments were subject to the limitations specified in that schedule. After verifying that Hall had cited all policy limitations, and consistent with her longtime experience in verifying benefits with other insurance carriers, Dear properly assumed that if the policy contained a provision which limited payment to something less than 100% of covered services, Hall would have said so. Dear asked Hall if there was any reason not to admit Jerrilyn and Hall replied "no." Dear also asked Hall if she (Hall) was in a position to verify benefits and Hall represented that she was. Dear then told Hall that Jerrilyn would be presented to the admissions committee the next day and, if clinically appropriate, she would be admitted. Dear ended the conversation by advising Hall that a letter confirming their understanding would be sent after Jerrilyn was admitted. After speaking with Hall, Dear had a clear understanding that coverage and benefits had been approved and, except for occupational and speech/language therapy, BCBS would pay 80% of all medically necessary charges until the Aldridge's $1,500 deductible was met, and then to pay 100% of all remaining medically necessary charges. 2/ After receiving the favorable advice, Dear telephoned Aldridge the same day and told him the results of her conversation with Hall. Within a few moments after speaking with Dear, Aldridge received a telephone call from an unidentified female BCBS representative who informed him that BCBS would pay for his daughter's treatment at MRB.

      
      

   4. Jerrilyn was accepted as a patient by MRB's admissions committee on March 28, 1988. Both the provider and the insured relied upon Hall's representations in admitting Jerrilyn to the facility. Had Jerrilyn not been covered by the plan, the committee would not have approved her admission. Also, if the Aldridges had known that the treatment at MRB was not covered, they would have sent their daughter to another facility covered by the plan.

   5. On April 4, 1988, and pursuant to her last telephone conversation with Hall, Dear sent Hall by overnight mail the following letter:

      
      

      This is to confirm the admission of Jerrilyn Aldridge on March 31, 1988, to the specialized head trauma rehabilitation program at Mediplex Rehab-Bradenton, Florida.

      
      

      The following benefits information has been verified by you and Patricia Dear, R. N., Admissions Coordinator on March 28, 1988.

      
      

      Effective date: 10/1/79

      Benefits: After $1,500 - out of pocket/yr- 100% coverage

      Days available: Unlimited days Monies available: $474,533.79

      Exclusions: Occupational Therapy, Speech- Language Therapy

      Limitations: Treatment subject to "Medical

      Necessity"

      
      

      If I do not hear from you, I will consider you to be in agreement with the above information. Please place this in the client's file.

      
      

      Thank you for your prompt attention to this matter. (Emphasis supplied)

      
      

   6. Although BCBS's records reflect that Dear's letter was received, Hall did not advise Dear that there were any problems concerning Jerrilyn's coverage and benefits under the plan or that Dear's understanding of the benefits to be paid was inaccurate or in error. Of some note is the fact that Hall is considered one of the most knowledgeable BCBS representatives on state health plan benefits and recognizes that her statements concerning benefits are relied upon by providers. Even though Hall was specifically advised both orally and in writing that MRB was licensed as a nursing home, and she had access to BCBS's master registry to confirm MRB's licensure status, she failed to discern that a nursing home was not a covered facility for the requested services within the meaning of the plan. Indeed, she later acknowledged by deposition that she knew that "the state does not pay for nursing homes" and that she had made a mistake by failing to properly "investigate" the matter more thoroughly. By failing to convey accurate advice to James Aldridge and MRB and to note that the proposed treatment would not be covered if rendered by a nursing home, Hall failed to use reasonable care and competence in responding to the inquiry.

      
      

   7. Three months after Jerrilyn's admission, James Aldridge received notice that BCBS had changed its position and now asserted it was not going to pay for Jerrilyn's rehabilitation and treatment at MRB. Proposed agency action confirming this decision was later issued by the Division on October 21, 1988.

      
      

4. Miscellaneous

1. All medical services received by Jerrilyn were medically necessary within the meaning of the benefit document. The necessity of Jerrilyn's placement in a rehabilitation facility was established by Dr. James D.

   Geissinger, her Tallahassee neurologist, who based it upon Jerrilyn's improvement after leaving the Tallahassee hospital and made her a candidate for brain rehabilitation. Doctor Geissinger also noted that, as a result of receiving treatment at MRB, Jerrilyn had made "remarkable" improvement and was able to partially regain her language function, use her left arm and hand, and improve her "activities of daily living." There are expectations that she will be able to walk again within a year. Further, based upon the testimony of an MRB staff physician, the services and treatment received by Jerrilyn at MRB were medically necessary to facilitate her neurologic and functional recovery. Given the nature of her injury and MRB's nursing staffing ratios, the required intensive medical rehabilitation and monitoring of Jerrilyn's medical and neurological condition was comparable to care in a hospital intensive care unit. These matters were not contradicted.

   
   

2. On April 1, 1988, the Aldridges executed a standard financial agreement with MRB whereby they agreed to indemnify MRB for all charges which were not paid by BCBS. As is normally done, they also authorized MRB to directly bill BCBS for all charges incurred by Jerrilyn while being treated at the facility. Finally, the Aldridges authorized MRB to make inquiries on their behalf with BCBS to verify insurance coverage and benefits for Jerrilyn.

   
   

3. MRB submitted to BCBS all bills for services and treatment given to Jerrilyn during her five or six month stay at the facility. A summary of the dates of service, charges, payments made by BCBS and balance due is contained in petitioners' exhibit 17. In all, there are thirty-eight outstanding bills totaling $227,139.27. The parties have stipulated that the bills in exhibit 17 represent services that were actually performed and supplies that were actually received by the patient. As noted in finding of fact 21, all such supplies and services were medically necessary.

   
   

4. For the reasons given in the conclusions of law portion of this recommended order, the doctrine of equitable estoppel applies, and petitioners are entitled to be reimbursed for all unpaid bills filed with BCBS in accordance with the representations of agent Hall. These include room and board charges (at the intensive care room rate), physician services, neuropsychology, physical therapy, central supply, pharmacy and laboratory charges as more fully described in petitioners' exhibit 17. Such reimbursement should be not be subject to the limitations prescribed in the fee schedule.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding pursuant to Subsection 120.57(1), Florida Statutes (1987)

   
   

6. As the party seeking reimbursement from the Division, the Aldridges bear the burden of proving by the preponderance of the evidence that they are entitled to benefits and coverage under the plan.

   
   

7. Under Subsection 110.123(5), Florida Statutes (Supp. 1988), the Division has the responsibility of administering the state group health insurance program. Among other things, the Division determines the benefits to be provided for the program. To this end, the agency has prepared a benefit document which sets forth the controlling provisions for benefits and coverage under the plan.

8. The evidence reveals that under the benefit document, the services rendered to Jerrilyn by a licensed skilled nursing home would not be covered except to the extent she was entitled to receive reimbursement for nursing home services. This is true even though the services rendered by MRB were comparable to those provided by a hospital. Therefore, it is concluded that MRB does not qualify as a "hospital" within the meaning of the benefit document, and reimbursement under this theory must be denied.

   
   

9. Petitioners also contend they are entitled to relief under the theory of estoppel. This raises the subsidiary issue of whether the Aldridges, in support of this contention, may utilize the communications between MRB and the insurance carrier. In its proposed order, respondent has objected to the use of these statements on the ground the declarations are hearsay in nature and are thus inadmissible. However, the representations of Hall and other unit employees are clearly party admissions under Subsection 90.803(18)(d), Florida Statutes (1987) and thus can be used to make findings of fact. /3 Since the Aldridges authorized MRB to make inquiries on their behalf concerning insurance coverage and benefits, and to bill the insurance carrier directly for all services rendered, it is concluded that the facility was acting as an agent for the insured. This is especially true since providers routinely make such inquiries on behalf of the patient. Thus, it is concluded that, in addition to the representations made by BCBS to James Aldridge, the communications between the facility and the insurance carrier may also be used in determining whether the doctrine applies in this proceeding.

   
   

10. The doctrine of equitable estoppel may be effectively applied against the state, although only in exceptional circumstances. See, e.g., Fraga v. Department of Health and Rehabilitative Services, 464 So.2d 144 (Fla. 3d DCA 1985). To establish estoppel, there must be a showing of the following elements: (1) a representation as to a material fact that is contrary to a later-asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. The evidence reveals that BCBS, as an agent of the Division, made factual representations to petitioners that, except for two exclusions and the meeting of the $1500 deductible threshhold, the plan would cover 100% of all other services rendered by MRB to Jerrilyn subject only to proof that such services were medically necessary. This representation constituted a positive act on respondent' part and was contrary to respondent's later asserted position that benefits did not apply and the Division would not honor the bills. Thus, the first element of estoppel has been satisfied. Secondly, petitioners have demonstrated that they relied upon BCBS's representation and thereafter had their daughter admitted to MRB for treatment. By doing so, they have satisfied the second required element. Finally, respondent's change in position some three months later was detrimental to petitioners since the Division's newly asserted position shifted responsibility to the Aldridges for paying over $225,000 in medical bills. Therefore, it is concluded that under these exceptional circumstances the doctrine applies, and the Division is estopped from asserting that the Aldridges do not qualify for reimbursement because MRB is not a covered facility (hospital).

    
    

11. In reaching this conclusion, the undersigned has considered the Division's argument that estoppel does not apply "to transactions which are forbidden by statute or which are contrary to public policy." Citing the case of Dade County v. Beugis Associates, Inc., 257 So.2d 291 (Fla. 3d DCA 1971), respondent posits that if benefits were allowed in this case, this would contravene the benefit document which was established pursuant to the legislative mandate in subsection 110.123(5). However, Dade County, and other

    cases which support the cited proposition, deal principally with local governments' right to enforce zoning ordinances against illegally obtained permits. The undersigned finds more persuasive the results reached in other, more recent cases in which the state was estopped from denying a citizen's claim even where the requested relief was contrary to existing rule or law. See, e. g., Salz v. Department of Administration, Division of Retirement, 432 So.2d 1376 (Fla. 3d DCA 1983)(state estopped from denying a teacher's purchase of retirement credit for service earned at an out-of-state private school even though sections 238.01 and 238.06 required such service to be in a public school); Kuge v. Department of Administration, Division of Retirement, 449 So.2d

    389 (Fla. 3d DCA 1984)(state estopped from denying retirement benefits to teacher even though teacher did not have the statutorily required ten years of creditable service); Fraga, supra (state estopped from denying Medicaid reimbursement payments to non-Board certified physician even though agency rule required that Medicaid providers be Board certified).

    
    

12. The undersigned has also considered the Division's argument, as expressed by its state benefits administrator at hearing, that this was an error on the part of an employee and the Division should not be held responsible for a mistake. However, it is a well established principle that an action undertaken by a state employee, even gratuitously, must be performed with reasonable care. Tri-State Systems, Inc. v. Department of Transportation, 500 So.2d 212 (Fla. 1st DCA 1986). See also St. Joseph's Hospital and Medical Center v. Reserve Life Insurance Company, 154 Ariz. 307, 742 P.2d 808 (1987)(health insurer required to use reasonable care and competence in responding to an inquiry by hospital concerning verification of benefits and coverage for services to be rendered by the hospital to an insured). Under this principle, once BCBS personnel undertook the task of advising an insured as to whether coverage and benefits applied, they had a duty to use reasonable care in responding to the inquiry. Here, in the face of an extremely large prospective claim, one of its most knowledgeable employees (Hall) did not use reasonable care or competence in recognizing that benefits would not apply to the described services if rendered by a non-hospital facility. By making a misrepresentation of a material fact in the performance of its duties, BCBS, as agent for the state, is now estopped from asserting that coverage and benefits do not apply. Therefore, the petition, as amended, should be granted and the Aldridges' claim for reimbursement of all medically necessary charges at MRB, except for occupational and speech/language therapy, should be approved as discussed in the following paragraph. In view of this result, it is unnecessary to reach petitioners' contention that they are entitled to recover under the theory that Section 627.4232, Florida Statutes (1987) mandates coverage of the denied charges as if MRB were a hospital.

    
    

13. Respondent has taken the position that if petitioners prevail, they must still submit for further processing all previously unpaid claims. This would mean that every unpaid bill would be reexamined, item by item, for review and possible payment depending on the fee schedule, submission of proof that all charges were medically necessary, and any other considerations that come into play during this process. If a dispute arose over payment of any bill, the Aldridges would be required again to seek redress through Chapter 120 to contest the Division's preliminary decision. Although the undersigned expressed agreement with that suggested procedure at hearing, upon further reflection the undersigned concludes that such a procedure would be cumbersome, expensive,

time-consuming and patently unfair to petitioners. Indeed, over objection of respondent, petitioners were allowed to present evidence at hearing concerning medical necessity so that all issues could be resolved in one proceeding.

Therefore, the record contains adequate evidence to allow the parties to resolve

all outstanding claims without the need for further proceedings. Petitioners have suggested that if they prevail on the theory of estoppel, as they did here, they are entitled to recover all unpaid bills except for occupational and speech/language therapy charges subject only to a lifetime cap of $500,000, even if such charges exceed those authorized by the fee schedule. Such recovery, they argue, would be consistent with the representations made by Hall in March 1988. To support this argument, they rely upon the case of Peninsular Life Insurance Company v. Wade, 425 So.2d 1181 (Fla. 2d DCA 1983) and cases cited therein which holds that where an insurer's agent makes incorrect representations to an insured regarding the scope of coverage, the insurer is estopped from thereafter denying coverage even if the policy does not provide coverage for the loss in question. The undersigned has found no case or authority to indicate that the concepts in Peninsular, which deal with automobile insurance, do not apply to health insurance as well. The record shows that Hall made clear and unequivocal factual representations that all bills (if shown to be medically necessary) would be paid at a 100% rate once the

$1500 deductible threshold was reached. The only exclusions mentioned were occupational and speech/language therapy, and no reference to a fee schedule was made. Although 100% coverage may exceed some of the authorized charges in the fee schedule, the principles of Peninsular dictate that petitioners be entitled to recover all charges reflected in exhibit 17. Since all bills have been submitted to BCBS, and medical necessity is no longer in issue, there can be no further basis for denial of the claim.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the amended petition of Etta and James Aldridge be

GRANTED, and the Division order Blue Cross and Blue Shield of Florida, Inc. to

reimburse petitioners $227,139.27 as reflected in petitioners' exhibit 17.

DONE and RECOMMENDED this 7th day of August 1989, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of August, 1989.

ENDNOTES

1/ Because the information card given to all insured contained BCBS's telephone number, Aldridge did not contact the Division regarding coverage and benefits.

2/ Although James Aldridge knew that the plan did not cover all charges, his testimony indicates that he was familiar only with the limitation pertaining to the $1500 threshold on which BCBS paid 80% of the charges.

3/ A similar contention that the conversations by Aldridge with unidentified members of BCBS's service unit are uncorroborated hearsay and thus inadmissible is also deemed to be unavailing. These statements, though of less quality and reliability than the statements of Hall and Sahdala, nonetheless corroborate the uncontradicted party admissions and are admissible under subsection 120.58(1)(a).

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-6008

Petitioners:

1-3. Covered in finding of fact 1. 4-5. Covered in finding of fact 7. 6-7. Covered in finding of fact 2.

8. Covered in findings of fact 2 and 3. 9-10. Covered in finding of fact 3.

1. Covered in findings of fact 7 and 8.

2. Covered in findings of fact 5 and 14.

3. Covered in findings of fact 4 and footnote 2. 14-15. Covered in finding of fact 15.

1. Covered in finding of fact 16.

2. Covered in findings of fact 14, 16 and 19.

3. Rejected as being unnecessary.

4. Covered in finding of fact 19.

5. Covered in finding of fact 16. 21-22. Covered in finding of fact 17.

1. Covered in finding of fact 18.

2. Covered in findings of fact 15 and 19.

3. Covered in finding of fact 19.

4. Covered in finding of fact 20.

5. Rejected as being unnecessary. 28-29. Covered in finding of fact 20.

1. Covered in finding of fact 4.

2. Covered in finding of fact 11.

3. Covered in findings of fact 4 and 11. 33-37. Covered in finding of fact 11.

38-39. Rejected as being unnecessary.

40. Covered in finding of fact 23. 41-42 Covered in finding of fact 21.

Respondent:

1-2. Covered in finding of fact 1.

1. Covered in finding of fact 2.

2. Covered in findings of fact 2 and 3.

3. Covered in finding of fact 3.

4. Covered in finding of fact 6.

5. Covered in finding of fact 14.

6. Covered in findings of fact 6 and 20.

7. Covered in finding of fact 6.

8. Covered in finding of fact 8 and footnote 1.

9. Covered in footnote 2.

10. Covered in finding of fact 9. 13-14. Covered in finding of fact 7.

1. Covered in finding of fact 11.

2. Covered in finding of fact 20.

COPIES FURNISHED:

Michael J. Bittman, Esquire Post Office Box 285

Orlando, Florida 32802-0285

Larry D. Scott, Esquire

438 Carlton Building Tallahassee, Florida 32399-1550

Andrew J. McMullian, III, Interim Secretary Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

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AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF ADMINISTRATION

ETTA ALDRIDGE, and JERRILYN ALDRIDGE,

Petitioners,

v. CASE NO. A-88-18

DOAH CASE NO. 88-6008

DEPARTMENT OF ADMINISTRATION, DIVISION OF STATE EMPLOYEES' INSURANCE,

Respondent.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above styled case submitted a Recommended Order to the Department of Administration (DOA). A copy of that Recommended Order is attached hereto (Exhibit "A").

On August 7, 1989, the Hearing Officer in this matter entered a Recommended Order for the consideration of DOA prior to the entry of a Final Order in this

matter. The Agency, by Order dated August 18, 1989, returned jurisdiction of this matter to the Hearing Officer for clarification of his rulings on the Proposed Findings of Fact submitted by the parties. The Hearing Officer returned jurisdiction to the Agency by Order dated August 23, 1989, for entry of this Final Order.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order, except for finding of fact number seven. Insofar as the Hearing Officer found or implied that Blue Cross and Blue Shield (BCBS) is an agent for the State of Florida for questions concerning insurance coverage, that finding cannot be accepted. First, it is a conclusion of law and second it is incorrect and not supported by substantial evidence as required by Chapter 120, Florida Statutes. That finding is modified as follows, to the extent that BCBS provides claims processing service for DOA an agency is present. Determinations as to claimant eligibility for benefits and coverage are initially made by BCBS prior to payment, but subject to review by DOA. In all cases concerning coverage, however, DOA has exclusive and final authority to make those determination.

CONCLUSIONS OF LAW

Based upon these facts presented, and as modified above, the Department adopts and incorporates by reference the conclusions of law set forth in the Recommended Order.

It is, therefore,

ORDERED that Petitioner's request for payment of claims shall be GRANTED. DONE AND ORDERED this 8th day of December, 1989, at Tallahassee, Leon

County, Florida.

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DEPARTMENT OF ADMINISTRATION, AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

ALETTA L. SHUTES

Secretary

Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550 (904) 488-4116

I HEREBY CERTIFY that this Final Order was filed with the Clerk of the Department of Administration on this 12th, day of November, 1989.

Clerk

Department of Administration

COPIES FURNISHED:

Larry D. Scott, Esquire Department of Administration

435 Carlton Building Tallahassee, FL 32399-1550

Michael J. Bittman, Esquire Subin, Shams, Rosenbluth, and

Moran, P.A.

Post Office Box 285 Orlando, FL 32802-00285

Donald R. Alexander, Esquire Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Building

Tallahassee, FL 32399-1550

Docket for Case No: 88-006008

Orders for Case No: 88-006008