STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Petitioner, )
)
vs. ) CASE NO. 89-6057
)
SOUTHPOINTE PHARMACY, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly assigned Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on May 22, 1990, in Miami, Florida. The record, which was kept open for the purposes of permitting Petitioner to filed a late-filed exhibit, was closed by order entered August 17, 1990.
APPEARANCES
For Petitioner: William M. Furlow, Esquire
Katz, Kutter, Haigler, Alderman, Eaton, Davis & Marks, P.A.
Post Office Box 1877 Tallahassee, Florida 32302-1877
For Respondent: David G. Pius, Esquire
Senior Attorney Building 6, Room 233
1317 Winewood Boulevard
Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUE
Whether Southpointe Pharmacy received overpayments from the Medicaid program between November 1, 1987, and July 31, 1988, and the appropriate remedies available to Southpointe or the appropriate penalties that should be imposed against Southpointe.
PRELIMINARY STATEMENT
Southpointe Pharmacy is a Medicaid provider of prescription medications located in Dade County, Florida. On August 23, 1989, the Department of Health and Rehabilitative Services (DHRS) informed Southpointe that it had determined by audit that Southpointe had been overpaid the sum of $60,201.02 for the period November 1, 1987 through July 31, 1988. That letter was superseded by a letter dated September 27, 1989, which revised the amount of overpayment to $50,247.25. DHRS advised Southpointe that it demanded repayment of the overpayment, that it intended to impose an administrative fine in the amount of $2,000.00, and that
it intended to terminate Southpointe from the Medicaid program for a period of two years.
After receipt of the DHRS letter, Southpointe timely filed a petition for an administrative hearing, and the matter was transferred to the Division of Administrative Hearings. Upon motion by Southpointe, the parties were realigned so that DHRS was designated as Petitioner and Southpointe was designated as the Respondent. In addition, the order clarified that the burden of presenting a prima facie case that Southpointe was overpaid was on DHRS.
At the formal hearing, DHRS presented the testimony of Robert V. Peirce, JoAnn Padell, and Susan Franklin McLeod. Petitioner offered four exhibits, each of which was accepted into evidence. An additional exhibit, the deposition of Raymond Cano, was accepted as a late-filed exhibit. Mr. Peirce is the Administrator of the Medicaid Investigation Unit in the DHRS Office of Program Integrity. Ms. Padell is a pharmacist who was employed by the organization used by DHRS to conduct the audit of Southpointe. Ms. McLeod is a pharmacist employed by DHRS in its Office of Program Integrity review section. Mr. Cano is an employee of Gulf Distributors, Southpointe's principal supplier. Southpointe presented one exhibit, but presented the testimony of no witnesses. At the request of the parties, official recognition was taken of all pertinent Medicaid rules.
A transcript of the proceedings has been filed. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 22I-6.031, Florida Administrative Code. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.
FINDINGS OF FACT
Petitioner, Department of Health and Rehabilitative Services (DHRS), is the agency responsible for insuring the integrity of the Medicaid program in the State of Florida.
Medicaid is a joint program, funded by the federal government and, in Florida, by the State of Florida. Consequently, Medicaid providers are subject to federal and state regulation.
Respondent, Southpointe Pharmacy (Southpointe), is a pharmacy located in Dade County, Florida, that participates in the Medicaid program by providing medication to Medicaid recipients and receiving reimbursement for that medication from DHRS. Southpointe is owned by Marco Burgos.
The DHRS Office of Program Integrity has the responsibility for insuring that the goods and services billed to the Medicaid program are those that are actually provided to Medicaid recipients.
At the times pertinent to this proceeding, DHRS contracted with Professional Foundation for Health Care (PFHC) to conduct audits of pharmacies.
The audit period pertinent to this proceeding was from November 1, 1987 through July 31, 1988.
In early 1989, PFHC conducted a routine audit of Southpointe. This routine audit is a general audit of a number of factors related to the provision of medications by a pharmacy and includes an examination of prescriptions in the pharmacy, an analysis of prices that are charged, and a review of the inventory of certain drugs to determine whether the volume of drugs on the shelf is consistent with the quantity of drugs that have been previously billed to Medicaid. Three computer printouts were generated for use of PFHC in the routine audit of Southpointe. The first computer printout was a random sampling listing two hundred Medicaid claims out of the several hundred Medicaid claims that had been submitted by Southpointe during the audit period. The second computer printout and the third computer printout listed all of the drugs that had been paid for by the Medicaid program to Southpointe during the audit period. The second printout listed these drugs according to the total dollar amount of the claims paid for each respective drug while the third listed the drugs alphabetically.
After the routine audit was concluded, the results were sent to the Medicaid Program Integrity Office where it was reasonably determined that further action would be warranted. The routine analysis had been for screening purposes only, and did not serve as the basis for the position asserted by DHRS in this proceeding.
DHRS decided to conduct a further audit, referred to as an aggregate analysis. DHRS based its conclusion that Southpointe had been overpaid based on the results of the aggregate analysis. Prior to the date of the formal hearing in this case, DHRS had not promulgated a rule specifically authorizing the aggregate analysis auditing method, but instead utilized incipient, non-rule policy, and then sought to explicate that policy at the hearing.
An aggregate analysis is a more detailed audit that is typically done on behalf of DHRS by a contractor such as PFHC. The aggregate analysis does not review the medicaid payments to a provider on a claims by claims basis.
Instead, it is a statistical analysis in which claims that have been billed to and paid by the Medicaid program are reviewed to determine whether the pharmacy purchased a sufficient quantity of each respective drug to cover the provider's billings to the Medicaid program for that drug. The aggregate analysis is designed to determine whether the pharmacy's inventory levels are consistent with its Medicaid billings. If the billings to Medicaid exceed the amount of the drug that the provider had available for distribution during the period being audited, DHRS presumes that the pharmacy's Medicaid claims are not justified to the extent of the excess and that the pharmacy has been overpaid.
The aggregate analysis examines the top 100 drugs dispensed by Southpointe during the audit period based on the dollar value of all claims for those drugs. The auditors then attempt to determine the extent of the overpayment for each individual drug by determining whether the quantity of the drug billed to Medicaid exceeds the quantity of the drug available for sale by the pharmacy. If the quantity of the drug billed to Medicaid exceeds the quantity of the drug available for sale by the pharmacy, the differences in quantity is multiplied by the price of the drug which produces the dollar amount of the overpayment. The overpayment for all drugs are then added to derive the total of the alleged overpayment. In conducting the aggregate analysis, DHRS' auditors presumed that all drugs available to Southpointe were dispensed to Medicaid patients. It had been calculated that 71 percent of Southpointe's business was comprised of Medicaid recipients. The initial calculations (which included the Gulf Distributors information that was not shown to be reliable) were based on the presumption that only 71 percent of the drugs available to
Southpointe would have gone to Medicaid recipients and produced an initial determination that the overpayment was $60,201.02. A revised calculation (which also included the Gulf Distributors information) presuming that all of the drugs available to Southpointe would have gone to Medicaid recipients produced a determination that Southpointe had been overpaid in the amount of $50,247.25.
The main supplier for Southpointe is Gulf Distributors. Southpointe was asked to provide all invoices for drugs it had purchased from any supplier other than Gulf Distributors during the pertinent period, but it was not asked to provide any invoices or any other evidence of purchases of drugs it had made from Gulf Distributors. Instead, DHRS relied on information in the form of a computer printout it had received directly from Gulf Distributors. DHRS failed to establish that the data reflected by the computer printout was reliable or that the subsequent portions of the aggregate analysis, which depended on the unreliable computer printout, accurately reflected an overpayment to Southpointe.
Southpointe purchases drugs manufactured by Upjohn Company (Upjohn) and by Merck, Sharp and Dohme Company (MSD) directly from those manufacturers without going through Gulf Distributors. Southpointe, at the telephonic request of JoAnn Padell, produced the invoices from Upjohn and MSD for analysis by Joseph Kopotowsky. Both Ms. Padell and Mr. Kopotowsky are pharmacists employed by PFHC as auditors. Mr. Kopotowsky, the only representative of PFHC who made personal contact with Southpointe, did not testify at the formal hearing. Southpointe was given adequate time to produce those invoices, and there was no claim that the invoices produced were incomplete or inaccurate. However, there was no evidence that Southpointe was told what the auditors intended to do with the invoices or how the audit was being conducted.
The aggregate analysis of twelve drugs purchased by Southpointe from Upjohn Company and from Merck, Sharp and Dohme Company reflected an overpayment to Southpointe in the total amount of $7,301.68. The analysis assumed that the invoices Southpointe gave Mr. Kopotowsky constituted all of the drugs manufactured by Upjohn and MSD that were available to Southpointe for distribution during the audit period. There was no evidence that the auditors asked whether Southpointe acquired additional drugs manufactured by Upjohn and MSD by means other than purchase from these manufacturers. It is common practice for pharmacies to exchange or barter inventory, and such exchanges would not be reflected by an examination of the invoices of purchases directly from the manufacturers. There was no evidence that the auditors asked to see records of such acquisitions. There was no evidence as to the shelf life of any of these drugs or that DHRS, through its auditors, accurately determined Southpointe's beginning or ending inventory for the Upjohn and MSD drugs. Without this information, the aggregate analysis, upon which DHRS bases its claim for overpayment, is flawed and does not accurately reflect an overpayment to Southpointe.
DHRS relied exclusively on the auditing procedures described herein. DHRS did not check with any Medicaid recipients to see whether they had actually received their medications, nor did DHRS check with any of the physicians to see if the prescriptions had actually been prescribed, even though it had access to the identities of the patients and the physicians.
DHRS has withheld amounts from the Medicaid payments due Southpointe. The amounts withheld was not established at the formal hearing.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.
DHRS, as the party seeking to establish that Southpointe was overpaid by Medicaid for drugs provided to Medicaid recipients, has the burden of proving by a preponderance of the evidence this allegation, and establishing a basis for sanctions it seeks to impose. Florida Department of Transportation v. J.W.C., Co., 396 So.2d 778 (Fla. 1st DCA 1981), David's Pharmacy v. Department of Health and Rehabilitative Services, 11 FALR 2935 (DOAH 1988).
DHRS is required to take all necessary steps to recover Medicaid payments paid to providers through fraud or mistake, including the withholding of reimbursement payments until an overpayment is recovered. Section 409.335, Florida Statutes, provides, in pertinent part, as follows:
Whenever it becomes apparent that any person or provider has received any benefits under this chapter to which he is not entitled, either through simple mistake or fraud, the department shall take all necessary steps to recover the overpayment ...
When the department has made a probable cause determination and alleged that an overpayment to a Medicaid provider has occurred, the department, after notice to the provider, may:
Withhold, and continue to withhold during the pendency of an administrative hearing pursuant to chapter 120, any medical assistance reimbursement payments until such time as the overpayment is recovered ...
* * *
... When the hearing officer's decision is that an overpayment was not made in an amount as great as identified by the department, any collections made by the department pursuant to subsection (2) shall be reimbursed within 60 days to the provider by the department with interest at 10 percent per year.
Rule 10C-7.061(4)(b), Florida Administrative Code, provides, in pertinent part, as follows:
Statistical Calculation. If it is not reasonably possible to examine every paid claim of a provider for a given period of time in order to compare the amount actually paid with the amount that should have been paid, generally accepted statistical methods may be employed to determine the overpayment for the total population of claims. The total number of provider's claims of a specific type or types paid by Medicaid during a given period of time, or such claims having dates of service extending over a given period of time, will be taken to be the population of claims analyzed. From this population of claims, or appropriate subset of the population, a statistically representative sample will be taken. The overpayment for the claims in the sample will be determined and then, using
generally accepted statistical methods, the overpayment applying to the total population of claims, or subset of the population, will be calculated.
At the times pertinent to this proceeding, DHRS had not adopted a rule specifically authorizing the aggregate analysis employed by its auditors in the audit of Southpointe. (DHRS adopted Rule 10C-7.061(4)(b), Florida Administrative Code, which authorizes the use of the aggregate analysis were adopted after the audit was conducted in this case. DHRS is not attempting to rely on that rule in this proceeding.) While an appropriate application of an aggregate analysis may be defensible under the auspices of Rule 10C-7.061 (4)(b), Florida Administrative Code, DHRS did not establish, at the formal hearing, that the manner in which the aggregate analysis was utilized in this proceeding was reliable, and it failed to explicate a reasonable basis for relying on the procedures that were followed. Even if the audit procedures utilized by DHRS in this proceeding were considered to constitute incipient agency policy, DHRS has the burden to explicate that policy at hearing.
McDonald v. Department of Banking & Finance, 346 So.2d 569 (Fla. 1st DCA 1977); Department of Commerce v. Matthews Corp., 358 So.2d 256 (Fla. 1st DCA 1978), David's Pharmacy v. Department of Health and Rehabilitative Services, supra.
DHRS failed to meet that burden in this proceeding.
DHRS failed to establish that any actions of Southpointe constituted fraud or mistake within the meaning of Section 409.335, Florida Statutes.
In addition to overpayments resulting from fraud or mistake, DHRS is authorized to impose sanctions and to withhold Medicaid payments to a provider pursuant to the provisions of Section 409.266, Florida Statutes, by establishing that the provider has failed to comply with pertinent statutes, rules, and adopted policies regulating Medicaid providers, including those related to record keeping and providing access to records. Among the records a pharmaceutical provider is required to keep are those which justify its billings to the Medicaid program as described by Rules 10C-7.030(8) and 10C-7.042(9) and (16), Florida Administrative Code. DHRS failed to establish that Southpointe failed to keep appropriate records or that it failed or refused to allow the auditors access to any records. To the contrary, the evidence established that Southpointe provided copies of invoices requested by the auditors. There was no evidence that Southpointe failed to provide the auditors any documentation the auditors requested, that it failed to cooperate with the auditors in any material manner, or that it committed any acts in violation of Section 409.266, Florida Statutes.
Section 409.266(14), Florida Statutes, provides as follows:
Medicaid assistance payments to a provider, received as a result of a violation of this section may be withheld pending completion of an investigation under this section when there is reasonable cause to believe that a provider has committed one or more violations resulting in such payment. However, when payments are withheld, the monthly medical assistance payment shall not be reduced by more than 10 percent. Payments withheld under this section shall be paid to a provider within 60 days at 10 percent interest per year upon determining that no such violation has occurred.
DHRS has failed to establish its right to withhold sums from Southpointe's Medicaid payments during the pendency of this proceeding.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered which dismisses this action
against Southpointe Pharmacy; which orders that any amounts withheld from
Southpointe Pharmacy's Medicaid payments be promptly paid to Southpointe Pharmacy, together with interest at the rate of 10 percent per annum pursuant to Sections 409.266(14), and 409.335(3), Florida Statutes; and which removes any other sanctions imposed against Southpointe Pharmacy as a result of the subject audit.
DONE AND ORDERED in Tallahassee, Leon County, Florida, this 15th day of November, 1990.
CLAUDE B. ARRINGTON
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 15th day of November, 1990.
APPENDIX TO THE RECOMMENDED ORDER
The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner, Department of Health and Rehabilitative Services.
The proposed findings of fact in paragraphs 1-12, 21-25, 29, 32-39, 47, 60, and 68 are adopted in material part by the Recommended Order.
The proposed findings of fact in paragraph 13 and 72-77 are rejected as being argument which is discussed in the conclusions of law section of the Recommended Order.
The proposed findings of fact in paragraph 14, 27, and 63 are rejected as being unnecessary to the conclusions reached and are discussed in the preliminary matters section of the Recommended Order. The proposed findings of fact in paragraph 27 are also discussed in the conclusions of law section of the Recommended Order.
The proposed findings of fact in paragraphs 15, 18-20, 26, 48-49, 57- 59, 62, 64-67, 69, and 71 are rejected as being unnecessary to the conclusions reached.
The proposed findings of fact in paragraphs 16-17, 28, 30-31, 40-43, 45-46, 50-56, and 70 are rejected as being subordinate to the findings made.
The proposed findings of fact in paragraph 44 are rejected as being unsubstantiated by the evidence since there was no evidence that Mr. Burgos was asked that question or that he was under an affirmative duty to make such a statement.
The proposed findings of fact in paragraph 61 are rejected as being unsubstantiated by the evidence since the testimony upon which the proposed finding is based related to all of Southpointe's questioned billings, not just the twelve from Upjohn and MSD.
The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent, Southpointe Pharmacy.
The proposed findings of fact in paragraphs 1-7 and 9-10 are adopted in material part by the Recommended Order.
The proposed findings of fact in paragraph 8 are rejected, in part, as being unnecessary to the conclusions reached and are discussed to the extent deemed pertinent in the conclusions of law section of the Recommended Order.
COPIES FURNISHED:
William M. Furlow, Esquire Katz, Kutter, Haigler, Alderman
Eaton, Davis & Marks, P.A. Post Office Box 1877 Tallahassee, Florida 32302-1877
David G. Pius, Esquire Senior Attorney Building 6, Room 233
1317 Winewood Boulevard
Tallahassee, Florida 32399-0700
Sam Power, Agency Clerk Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
Linda K. Harris, Esquire Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399-0700
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
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AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,
Petitioner, DOAH CASE NO.: 89-6057
vs.
SOUTHPOINTE PHARMACY,
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 Health and Rehabilitative Services (HRS). A copy of that Recommended Order is attached hereto.
RULING ON EXCEPTIONS FILED BY THE DEPARTMENT
Counsel excepts to the Hearings Officer's finding of fact and conclusion of law that the department relied on non rule, incipient policy in using the aggregate analysis method to audit respondent. The relevant rule (Section 10C- 7.061(4)(b), Florida Administrative Code) authorizes the use of a "statistical analysis" to determine overpayment, Id, and aggregate analysis is a statistical analysis. (See finding of fact 10). The department, therefore, did not rely on non-rule policy.
Counsel excepts to finding of fact 14, page 8, where the Hearing Officer found that the aggregate analysis was flawed, and did not accurately reflect an overpayment to Southpointe, because there was no evidence that the department's auditors asked to see records of drugs Southpointe may have obtained through barter or exchange, there was no evidence presented as to the shelf life or the drugs at issue, and because no beginning or ending inventory was determined.
Respondent did not claim he had obtained any drugs through barter or exchange, nor that he had acquired drugs through any means for which he did not have invoices, even though he was required by law to keep such documents. Sections 10C-7.030(8), 10C-7.042(9), and 10C-7.042(16), Florida Administrative Code. The Hearing Officer apparently made the finding based on cross examination of the department's witnesses 1/ as to hypothetical possibilities despite the total lack of evidence that such transactions occurred. 2/
As to the portion of finding number 14 that finds the aggregate analysis flawed because no evidence was presented as to shelf life of the drugs, or beginning and ending inventory, the evidence demonstrated that it is not
necessary to determine beginning and ending inventories to determine overpayment by aggregate analysis. Despite the fact that it is not a requirement under Rule 10C-7.061(4)(b), the impact of the pharmacy's inventory was indeed considered. (Transcript at pp. 36, 144). There was competent, substantial evidence presented by Susan Franklin McLeod, a Senior Pharmacist employed by the department's Office of Program Integrity with experience in Pharmacy management and inventory control, and an MBA in Management, (Transcript at pp. 122, 140- 141), as to the impact of the inventory on the overpayment calculations. As part of her inventory review Ms. McLeod analyzed the invoices received from respondent and reviewed the pharmacy's purchasing pattern, i.e. the frequency and quantities of drugs purchased at any given time during the audit period. (Transcript at pp. 166-167).
Ms. McLeod prepared a chart that was admitted into evidence, (Transcript at
150), showing the difference between what the respondent claimed to have dispensed and what was purchased during the audit period. The chart also indicates the number of bottles of medication that would be needed to account for the difference. (Transcript at pp. 140, 145-147). Included in the chart are all twelve (12) types of drugs manufactured by Upjohn and Merck, Sharp and Dohme (MSD) which are the drugs at issue. Based on her analysis of purchasing patterns, and the extraordinary quantities that would have been necessary for the pharmacy to have had in inventory to account for the differences between purchases by the pharmacy and billings to Medicaid, Ms. McLeod came to the conclusion that the drugs in question were not available to be dispensed by the pharmacy. (Transcript at pp. 167-169). This opinion was based on several factors including the physical space that would be required to store the large quantities of medications, the cost of acquiring and maintaining such large inventories, and the limited shelf life of the drugs. (Transcript at pp. 167- 169).
In addition to Ms. McLeod's review of the pharmacy's purchasing patterns, the evidence shows that inventory was kept low and purchases by the pharmacy were made frequently. (P. Ex. 1 at pp. 4-5 of the "Review of Billing Patterns").
Respondent was also given an opportunity to provide evidence of any bulk purchases, including purchases made outside the audit period, or additional purchases not originally computed in the overpayment calculations. No evidence, however, was presented. (Transcript at pp. 37, 145, 156).
Ms. McLeod also expressed the opinion that, given the large differences, it was not reasonable to believe that there would be a sufficient quantity of lost invoices to cover the shortages in purchases that was determined or that inventories were an issue. (Transcript at p. 169).
Based on the preceding summary of the testimony and evidence in the record, I conclude that the challenged portions of finding of fact 14 are not based on competent, substantial evidence and are therefore rejected. 3/
Counsel excepts to the conclusion of law at paragraph 6, page 11, that the department failed to establish that any actions of Southpointe constituted fraud or mistake within the meaning of Section 409.335, Florida Statutes. The conclusion is rejected.
Counsel excepts to conclusion of law number seven (7), pages 11-12, wherein the Hearing Officer found that it was not shown that Southpointe did not keep records to justify its billings to the Medicaid program. Southpointe maintained during the audit that it had sufficient quantities of drugs on hand to justify
its billings to the program, but when asked for documents to substantiate this fact was not able to provide substantiating records, Southpointe cannot have it both ways: Either it only had the medications on hand for which it had records, and thus through "simple mistake or fraud" billed the Medicaid program for drugs it did not have, in violation of Rules 10C-7.030 and 10C-7.060, Florida Administrative Code; or it had sufficient quantities of drugs but failed to keep records establishing it had them and thus violated Sections 10C-7.030, 10C- 7.042, and 10C-7.060, Florida Administrative Code. (Section 409.335(1), Florida Statutes). Conclusion of law number seven (7) is therefore rejected.
Counsel excepts to the conclusion of law at paragraph nine (9), page 12 that the department failed to establish its right to withhold sums from Southpointe's Medicaid payments during the pendency of this proceeding. The conclusion is contrary to the record and is rejected.
Finally, counsel excepts to the recommendations at page 13 of the Recommended Order. The recommendations are contrary to the record and are rejected.
FINDINGS OF FACT
The department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order except where inconsistent with the rulings on the exceptions.
CONCLUSIONS OF LAW
[As stated in the Hearing Officer's Recommended Order].
[As stated in the Hearing Officer's Recommended Order].
[As stated in the Hearing Officer's Recommended Order].
[As stated in the Hearing Officer's Recommended Order].
Respondent is Southpointe Pharmacy which is located at 805 5th Street, Miami Beach, Florida. The Pharmacy is owned by Marco Burgos.
Respondent is a Medicaid provider and received payments from the Florida Medicaid program for medications dispensed to Medicaid recipients. As such, Respondent is required to follow the applicable state and federal rules and statutes that relate to the Medicaid program in general, and specifically to the provision of pharmacy services.
During the period of time at issue, the Office of Program Integrity contracted with a peer review organization, the Professional Foundation for Health Care, to conduct routine audits of pharmacies.
Based on the findings of a routine audit conducted at Southpointe Pharmacy the department was justified in conducting a more detailed review.
The more detailed review in this case was a type of statistical analysis shown as an aggregate analysis.
The aggregate analysis is a type of statistical analysis in which drugs billed to and paid for by the Medicaid program are reviewed to determine whether, for each of those drugs, the pharmacy purchased a sufficient quantity
of the drugs to justify its billing to the Medicaid program. The underlying premise to the analysis is that before a drug is claimed to have been dispensed, the pharmacy should have the drug in its possession.
If it is found that Medicaid paid for more drugs than the pharmacy had available to dispense, then there has been an overpayment and the overpayment should be recovered, and any appropriate sanctions should be applied.
The authority for the department to perform this aggregate analysis type of audit is found in Rule 10C-7.061(4)(b), Florida Administrative Code.
The department's interpretation and application of Rule 10C- 7.061(4)(b) as it applies to the aggregate analysis done in this case is supported by competent, substantial evidence and is reasonable.
Rule 10C-7.030(8), requires that a provider be able to justify its billings to the Medicaid program, that it keep certain records, and that those records be available to the Medicaid office. Rule 10C-7.042(9) also provides that complete and accurate pharmaceutical and fiscal records that fully disclose the extent of services and billings must be maintained by the provider for five
(5) years from the date of service. Rule 10C-7.042(16) specifically addresses invoices and provides that the invoices must be kept for five (5) years and be furnished to the department for the purposes of audit.
Southpointe was unable to furnish invoices that justified its billings. Respondent is thus in violation of the cited portions of the Rules by failing to have the required justification and is subject to sanction pursuant to Section 409.266(11)(g), Florida Statutes.
Further, Rule 10C-7.061(2)(a) provides that overpayment may occur due to mistake or fraud. The rules clearly contemplate a situation such as the one here.
The reports submitted as a result of the routine audit and the aggregate analysis were admitted into evidence. No objection was made as to the authenticity, accuracy, or reliability of the Routine Audit Report or the computer documents contained in the report. The documents are, nevertheless, hearsay unless they fall under one of the exceptions to the hearsay rule. The testimony presented established that both the computer printouts and the report itself are business records of the department and the Professional Foundations for Health Care, respectively, and are thus admissible as exceptions to the hearsay rule. They may thus be the basis for findings of fact.
Similarly, the Aggregate Analysis Report was admitted without objection. The testimony presented established that this report is also a business record, and is thus also excepted from the hearsay rule. The portions of the report; however, dealing with purchases from Gulf Distribution, because they were compiled based on the Gulf computer printout which was held to be unreliable, may not be the basis of a finding of overpayment.
The portion of the Aggregate Analysis Report's invoice analysis dealing with purchases from the suppliers Upjohn Company and Merck, Sharp & Dohme (MSD) fall into a different category. The invoices reviewed are business records of the drug supplier. Further, they were provided by the respondent, who manifested his belief in their truth by presenting them to the auditor as evidence of his purchases, and would thus be admissions of a party. See, Ehrhardt, Florida Evidence Section 803.18 (2d Ed. 1984).
Because the calculations based on the Gulf printout are not reliable the amount of overpayment originally calculated has not been established in this proceeding.
Because documentation regarding the purchases from Upjohn and MSD are admissible; however, the calculations regarding drugs purchased exclusively from those two suppliers are valid. Reviewing the invoice review sheets in the record, and the overpayment calculations that are also in the record, twelve
(12) drugs are identified that were purchased exclusively from Upjohn and MSD and for which overpayment was calculated. The twelve (12) drugs and associated amounts of overpayments are listed in the chart attached as Appendix "A" to the department's exceptions.
While respondent brought out on cross-examination testimony that suggested the possibility that the quantity of drugs available or dispensed might be different, no evidence was presented by the respondent suggesting that any of the possibilities actually occurred.
Merely suggesting the possibility that the department's calculations were inaccurate without any supporting evidence is not sufficient to overcome the department's prima facie case.
The unrebutted testimony presented was that the respondent was paid for claims submitted to the department, that the department audited those claims, that the respondent provided all the invoices that he had to support the claims for payment; and, even after considering the possibility of lost invoices and the effect of possible inventory reduction, the invoices did not justify the extent of services claimed by the pharmacy.
The department has established that there was overpayment to Southpointe Pharmacy in the amount of seven thousand seven hundred forty two dollars and ninety three cents ($7,742.93)
Because it is concluded that the department did not prove the amount of overpayment originally claimed, the sanction originally sought cannot be imposed. It remains to fashion an appropriate sanction based on the amount of overpayment actually established.
Rule 10C-7.063 provides guidelines for administrative sanctions for providers who violate Medicaid rules, regulations, or policies. Included in the Rule is a sanction matrix that assigns point values for the degree of violations.
The appropriate violation section of the matrix is sections eleven
(11) and twelve (12) "any violation of Medicaid policy." At the hearing, competent, substantial evidence demonstrated that the audit period was from November 1, 1987 through July 31, 1988. This is less than one (1) year, thus the appropriate point value to assign is one hundred fifty (150) points. Seven thousand seven hundred forty two dollars and ninety three cents ($7,742.93) is seven percent (7 percent) of the total Medicaid payment as established by the admissible evidence, thus the appropriate point value is two hundred fifty (250) points. The point subtotal is thus four hundred (400) points.
Assuming a deduction of one hundred fifty (150) points, (degree to which lesser sanctions would be sufficient to remedy the violations and small impact on recipient access) the modified result is two hundred fifty points,
which yields a sanction of a two hundred fifty dollar ($250.00) fine and a three
(3) month suspension.
Based upon the findings of fact and conclusions of law cited herein, it is ADJUDGED, that Southpointe Pharmacy was overpaid and is obligated to return
to the Florida Medicaid program the amount of seven thousand seven hundred forty two dollars and ninety three cents ($7,742.93).
The department shall return the difference between the overpayment amount determined and the monies already withheld from the respondent, plus interest at the rate of ten percent (10 percent) per annum pursuant to Section 409.335(3), Florida Statutes.
It is further ADJUDGED that sanctions be imposed, pursuant to Rule 10C- 7.063, Florida Administrative Code, requiring respondent to pay an administrative fine in the amount of two hundred fifty dollars ($250) and suspending respondent from participation in the Florida Medicaid program for a period of three (3) months from the date of rendition of this Final Order.
DONE and ORDERED this 16th day of January 1991, in Tallahassee, Florida.
Gregory L. Coler, Secretary
Department of Health and Rehabilitative Services
by Deputy Secretary for Programs
ENDNOTES
1/ Southpointe rested without presenting any evidence. This total lack of evidence justifies an adverse inference against Southpointe. State vs. D.O., 11 FALR 2795 (HRS 4/6/89).
2/ The hypothetical possibilities do no constitute competent, substantial evidence. DeGrott vs. Sheffield, 95 So2d 912, 916 (Fla. 1957), Desmond vs. Medic Ayers Nursing Home, 492 So2d 427, 429 (Fla. 1st DCA 1986) and State vs. Morals, 460 So2d 410, 415 (Fla. 2nd DCA 1984).
3/ The entire record was reviewed as required by Section 120.57(1)(b)10, Florida Statutes (1989).
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS AND A SECOND COPY, ALONG WITH FILING FEE AS PRESCRIBED BY LA, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
COPIES FURNISHED:
William M. Furlow, Esquire KATZ, KUTTER, HAIGLER, ALDERMAN
EATON, DAVIS & MARIS, P. A.
Post Office Box 1877 Tallahassee, FL 32302-1877
David G. Pius, Esquire Senior Attorney
1317 Winewood Boulevard
Building 6, Room 233
Tallahassee, FL 32399-0700
Claude B. Arrington Hearing Officer
DOAH, The DeSoto Building 1230 Apalachee Parkway
Tallahassee, FL 32399-1550
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was sent to the above-named people by U.S. Mail this 22nd day of January, 1991.
R. S. Power, Agency Clerk Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407
Tallahassee, Florida 32399-0700 904/488-2381
| Issue Date | Proceedings |
|---|---|
| Feb. 26, 1993 | BY ORDER OF THE COURT (RE: consolidation) filed. |
| Jun. 24, 1992 | Petitioner's Response to Motion to Dismiss Untimely File Petition filed. |
| Jun. 19, 1992 | (Respondent) Motion to Dismiss Untimely Filed Petition filed. |
| Nov. 15, 1990 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 22, 1991 | Agency Final Order | |
| Nov. 15, 1990 | Recommended Order | No overpayment of Medicaid established where Department of Health and Rehabilitative Services (DHRS) used flawed methodology. |
SOUTHPOINTE PHARMACY vs DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 89-006057 (1989)
SOUTH MEDICAL SERVICES, INC. vs DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 89-006057 (1989)
AGENCY FOR HEALTH CARE ADMINISTRATION vs SOUTH POINT PHARMACY, CORP., 89-006057 (1989)
AGENCY FOR HEALTH CARE ADMINISTRATION vs SOUTH POINT PHARMACY, 89-006057 (1989)
