STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

A COMMUNITY HOME HEALTH, INC., ) d/b/a WE LOVE TO CARE HOME HEALTH ) and DOUGLAS NALLS, M.D., as )

President and Owner, )

)

Petitioner, )

)

vs. ) CASE NO. 93-4194

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to the "Stipulation as to Procedure" filed by the parties on September 20, 1993, the formal hearing in this matter, which had been scheduled for September 17, 1993, was waived and the matter submitted to the undersigned for the submission of a Recommended Order based on "Respondent's Sole Testimony and Exhibits for Final Hearing" filed September 20, 1993.

APPEARANCES

For Petitioner: Gene Reibman, Esquire

600 Northeast Third Avenue

Fort Lauderdale, Florida 33304

Anthony C. Vitale, Esquire

2400 South Dixie Highway, Suite 105

Miami, Florida 33133

For Respondent: Gordon Scott, Esquire

Agency for Health Care Administration 1317 Winewood Boulevard

Building 6, Room 234

Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUES

Whether Respondent may withhold from Petitioner Medicaid claims for home health claims and, if so, the amounts that may be withheld.

PRELIMINARY STATEMENT

Petitioner is a Medicaid provider in the State of Florida. The Director of Florida's Office of Medicaid Program Integrity received a letter dated April 6, 1993, from the Director of Florida's Medicaid Fraud Control Unit that stated that there exists reliable evidence that Petitioner had billed for home health care services that had not been provided and that the results of the Medicaid Fraud Control Unit investigation would be referred for criminal prosecution.

On June 29, 1993, John Whiddon, the Director of the Office of Medicaid Program Integrity, advised Petitioner that it had received reliable evidence of circumstances involving fraud or willful misrepresentation and that payments for home health claims would be withheld. Petitioner timely challenged that determination, and this proceeding followed.

Prior to hearing, Respondent moved for an in camera proceeding for the purpose of permitting the Hearing Officer to listen to testimony from agents of the Medicaid Fraud Control Unit to determine the reliability of any evidence it may have against Petitioner. This in camera inspection contemplated the exclusion of Respondent and Respondent's representatives. This motion was denied because the requested procedure is not authorized by statute or by rule.

By their "Stipulation as to Procedure" the parties stipulated that there was no need for a formal hearing and stipulated that the recitation of evidence and exhibits set forth in Respondent's "Sole Testimony and Exhibits for Final Hearing" filed September 20, 1993, is admitted and is all the evidence to be presented by the parties. The stipulation was accepted by the undersigned Hearing Officer and the parties were provided the opportunity to submit proposed recommended orders, which have been duly considered in the preparation of this Recommended Order. All proposed findings of fact submitted by the parties are based on stipulation and are adopted in material part by the Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to this proceeding, Petitioner was a medicaid provider in the State of Florida.

   
   

2. At all times pertinent to this proceeding John Whiddon was the Chief of Florida's Medicaid Program Integrity.

   
   

3. Florida's Medicaid Program Integrity is charged with the oversight of the Medicaid program in Florida. The parties stipulated that Mr. Whiddon would have testified that the responsibility is ". . . basically to see that the Medicaid program gets what it pays for."

   
   

4. The Florida Medicaid Program Integrity has the responsibility to protect Medicaid funds should an investigation reveal there is fraud or willful misrepresentation.

   
   

5. Section 409.913(3), Florida Statutes, provides as follows:

   
   

   (3) Any suspected criminal violation or fraudulent activity by a provider, or by the representative or agent of a provider, identified by the department shall be

   referred to the Medicaid fraud control unit of the Office of the Auditor General for investigation.

   
   

6. The Medicaid Fraud Control Unit (MFCU) is the agency with the statutory responsibility for criminal investigations in the Medicaid program. The Medicaid Program Integrity is a part of the Florida Department of Health and Rehabilitative Services. The MFCU is a part of the Office of the Auditor General, which is an agency of the legislative branch of government.

   
   

7. On occasions, the MFCU advises Medicaid Program Integrity of a criminal investigation into a particular provider's activities. However, Medicaid Program Integrity is not told of the specific facts of the criminal investigation until after the case is prosecuted or until after the case is closed.

   
   

8. The parties stipulated that Mr. Whiddon would testify that he is of the opinion that Section 409.913(7), Florida Statutes, prohibits MFCU from revealing anything about its investigation while the investigation is ongoing.

   
   

9. Mr. Whiddon received a letter dated April 6, 1993, from John G. Morris, Jr., the Director of the Medicaid Fraud Control Unit, which referenced Petitioner as the provider, and which stated as follows:

   
   

   Pursuant to provisions of 42 CFR 455.23, this is to advise you that there is reliable evidence that the above referenced provider billed for home health care services that

   were not provided and this investigation will be referred for criminal prosecution.

   
   

10. No specific facts of this criminal investigation were given to the Medicaid Program Integrity by the MFCU.

    
    

11. The parties stipulated that Mr. Whiddon would testify that Program Integrity believes that the Petitioner will be prosecuted based upon the MFCU investigation as stated in the April letter, but that Mr. Whiddon concedes that any decision to prosecute is solely the decision of the prosecutor and may be declined.

    
    

12. During the months of April, May, and June of 1993, the Petitioner continued to receive substantial Medicaid payments. These payments amounted to approximately $28,906 every week.

    
    

13. Mr. Whiddon decided it was necessary to withhold Medicaid payments to the Petitioner until the MFCU investigation was completed. This decision was based solely on the MFCU letter of April 6, 1993, and his interpretation of his responsibility under 42 CFR 455.23.

14. Mr. Whiddon directed Mike Morton to sign the Agency's letter to Petitioner dated June 29, 1993, because Mr. Whiddon was unavailable because of an unrelated special assignment. The letter dated June 29, 1993 provided, in pertinent part, as follows:

    
    

    PLEASE TAKE NOTICE that the undersigned has directed Consultec, the fiscal agent for the Department of Health and Rehabilitative Services, to withhold Medicaid payments to

    A-Community Home Health, Inc. in accordance with the provisions of 42 CFR 455.23. This action is being taken because of receipt of reliable evidence that the circumstances giving rise to the need for a withholding of payment involves fraud or willful misrepresentation. The withholding of payment will be temporary and will not continue after:

    1. The Department or prosecuting authorities determine that there is insufficient evidence of fraud or willful misrepresentation by A-Community Home Health,

       Inc., or

    2. Legal proceedings related to

       A-Community Home Health, Inc., alleged fraud or willful misrepresentation are completed.

       
       

       The type of Medicaid claims withheld are home health claims.

       
       

       CONCLUSIONS OF LAW

       
       

15. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

16. Respondent, as the party asserting its entitlement to withhold the subject Medicaid payments, has the burden of proving that entitlement by a preponderance of the evidence. Rule 28-6.08(3), Florida Administrative Code. See also, Florida Department of Transportation v. J.W.C., Co., 396 So.2d 778 (Fla. 1st DCA 1981). The confidentiality afforded the MFCU investigation by Section 409.913(7), Florida Statutes, makes it difficult for Respondent to prove its case. That difficulty does not, however, relieve Respondent from its burden of proof in this proceeding.

    
    

17. The Respondent does not dispute that Petitioner is entitled to a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes, to challenge the temporary withholding of its Medicaid payments. The question of whether the temporary withholding of these Medicaid payments affected the substantial interests of Petitioner within the meaning of Section 120.57(1), Florida Statutes, was not raised by the parties and is not at issue. Such a hearing is contemplated by 42 CFR 455.23.

    
    

18. Among the issues to be resolved is whether Respondent had "reliable evidence that the circumstances giving rise to the need for a withholding of payments involve fraud or willful misrepresentation." In this proceeding, the only evidence that there exists such "reliable evidence" is the letter dated

    April 6, 1993, from Mr. Morris to Mr. Whiddon. That letter is hearsay and cannot be the sole basis for a finding that the requisite "reliable evidence" exists. See Section 120.58(1)(a), Florida Statutes. In this proceeding there was no competent evidence that the MFCU had conducted an investigation or that the investigation produced "reliable evidence" that would justify the withholding of payments. Consequently, it is concluded that Respondent has failed to establish in this proceeding its right to withhold these payments.

    
    

19. Respondent correctly argues that its interpretation of its rules and statutes is entitled to great deference in this proceeding. The resolution of this proceeding, however, does not turn on the agency's interpretation of its governing rules or statutes. It turns on whether the agency has met its burden of proof in this proceeding.

    
    

20. Because it is concluded that Respondent has failed to meet its burden of proof in this proceeding, it is unnecessary to determine whether the limitations on the withholding of Medicaid payments contained in Section 409.913(17), Florida Statutes, apply.

    
    

21. In the event the conclusion that Respondent failed to meet its burden of proof is rejected, Respondent should conclude that the limitations contained in Section 409.913(17), Florida Statutes, do apply.

    
    

22. Respondent argues that it has proceeded under the authority vested in it by 42 CFR 455.23, not by the provisions of Section 409.913, Florida Statutes, and that it is not limited as to the amount that may be withheld as provided in Section 409.913(17), Florida Statutes.

    
    

23. The provisions of 42 CFR 455.23 provide, in pertinent part, as follows:

    
    

    1. Basis for withholding. The State Medicaid agency may withhold Medicaid payments, in whole or in part, to a provider upon receipt of reliable evidence that the circumstances giving rise to the need for a withholding of payments involve fraud or willful misrepresentation under the Medicaid program. The State Medicaid agency may withhold payments without first notifying the provider of its intention to withhold such payments. A provider may request, and must be granted, administrative review where State law so requires.

    2. Notice of withholding. The State agency must send notice of its withholding of program payments within 5 days of taking such action. The notice must set forth the general allegations as to the nature of the withholding action, but need not disclose any specific information concerning its ongoing investigation. The notice must

       1. State that payments are being withheld in accordance with this provision.

       2. State that the withholding is for a temporary period, as stated in paragraph (c) of this section, and cite the circumstances under which withholding will be terminated.

       3. Specify, when appropriate, to which type or types of Medicaid claims withholding is effective, and

       4. Inform the provider of the right to submit written evidence for consideration by the agency.

    3. Duration of withholding. All withholding of payment action under this section will be temporary and will not continue after:

       1. The agency or the prosecuting authorities determine that there is insufficient evidences of fraud or willful misrepresentation by the provider, or

       2. Legal proceedings related to the provider's alleged fraud or willful misrepresentation are completed.

          
          

24. Section 120.59(3), Florida Statutes, provides as follows:

    
    

    1. If an agency head finds that an immediate danger to the public health, safety, or welfare requires an immediate final order, it shall recite with particularity the facts underlying such finding in the final order, which shall be appealable or enjoinable from the date rendered.

    
    

25. Section 409.913, Florida Statutes, provides, in pertinent part, as follows:

    
    

    The department (DHRS) shall operate a program to oversee the activities of Medicaid recipients, and providers and their representatives, to ensure that fraudulent and abusive behavior and neglect of recipients occur to the minimum extent possible.

    * * *

    (3) Any suspected criminal violation or fraudulent activity by a provider, or by the representative or agent of a provider, identified by the department shall be referred to the Medicaid fraud control unit of the Office of the Auditor General for investigation.

    * * *

    1. The complaint and all information obtained pursuant to an investigation of a Medicaid provider, or the authorized representative or agent of a provider, relating to an allegation of fraud, abuse, or

       neglect are confidential and exempt from the provisions of s. 119.07(1):

       1. Until the department takes final agency action respecting the provider and requires repayment of any overpayment, or imposes an administrative sanction;

       2. Until the Auditor General refers the case for criminal prosecution;

       3. Until 10 days after the complaint is determined without merit; or

       4. At all times if the complaint or information is otherwise protected by law.

    * * *

    (17) The department may withhold Medicaid payments to a provider, up to the amount of the alleged overpayment, pending completion of an investigation under this section if it has reasonable cause to believe that the provider has committed one or more violations in relation to such payments. With the exception of providers terminated under the provisions of s. 120.59(3), in which case all payments shall be immediately terminated, the department may withhold payments under this provision, the monthly Medicaid payment may not be reduced by more than 10 percent, and the payments withheld must be paid to the provider within 60 days with interest at the rate of 10 percent a year upon determining that no such violation has occurred. If the amount of the alleged overpayment is in excess of $75,000, the department may reduce

    the Medicaid payments up to $25,000 per month.

    
    

26. Agencies of the State of Florida are creatures of statute and may only exercise those powers that are expressly or impliedly conferred by Florida law. City of Cape Coral v. GAC Utilities, Inc. of Florida, 281 So.2d 493 (Fla. 1973). It is concluded that Respondent has the implied authority to exercise the discretion to withhold all or part of Petitioner's Medicaid payments pursuant to

    42 CFR 455.23 as the agency that is charged with the administration of the Medicaid program in Florida. It is further concluded, however, that Florida law permits Respondent to exercise that discretion either pursuant to the provisions of Section 120.59(3), Florida Statutes, or pursuant to the provisions of Section 409.913(17), Florida Statutes. Neither party has cited a rule or any other statute that confers upon Respondent the authority it seeks to exercise in this proceeding. It is clear that Respondent is not acting pursuant to the provisions of Section 120.59(3), Florida Statutes. Consequently, it is concluded that if it is determined that Respondent has met its burden of proving that it had "receipt of reliable evidence that the circumstances giving rise to the need for a withholding of payments involve fraud or willful misrepresentation under the Medicaid program" within the meaning of 42 CFR 455.23, then it had the right to withhold Medicaid payments pursuant to Section 409.913(17), Florida Statues. The receipt of the "reliable evidence" would provide Respondent with "reasonable cause" to withhold payments pursuant to Section 409.913(17), Florida Statutes. The withholding would be subject to the limitations contained in Section 409.913(17), Florida Statutes.

27. Respondent also argues that payments procured by fraud or material misrepresentation should not be considered to be an overpayment. There is no statutory definition of the term "overpayment", nor is the term defined by rule. The commonly understood meaning of the term "overpayment" is a payment that is in excess of what is rightfully due. Consequently, it is concluded that Respondent's argument should be rejected because a payment procured by fraud is an overpayment and should be recouped, just as a payment made by mistake. Respondent has asserted that the type of Medicaid payments under investigation in this case and being withheld are those for home health services. The fact that the amount of the overpayment has not been formally established in any fashion does not prevent Respondent from exercising its authority to withhold payments pursuant to and subject to the provisions of Section 409.913(17), Florida Statutes. The amounts to be withheld can be calculated based on Petitioner's billings.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order which terminates the

withholding of Medicaid payments from Petitioner and which reimburses Petitioner for payments that have been withheld.

DONE AND ENTERED this 3rd day of November 1993, in Tallahassee, Leon County, Florida.

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 3rd day of November 1993.

ENDNOTE

1/ Section 409.920(9), Florida Statutes, provides, in pertinent part, as follows:

1. The Auditor General shall conduct a statewide program of Medicaid fraud control. To accomplish this purpose, the Auditor General shall:

   1. Investigate the possible criminal violation of any applicable state law pertaining to fraud in the administration of the Medicaid program, in the provision of medical assistance, or in the activities of providers of health care under the Medicaid program.

* * *

(d) Refer to the appropriate state attorney all violations indicating a substantial potential for criminal investigation.

* * *

(f) Refer to the department for collection each instance of overpayment to a provider of health care under the Medicaid program which he discovers during the course of an investigation.

COPIES FURNISHED:

Gene Reibman, Esquire

600 Northeast Third Avenue

Fort Lauderdale, Florida 33304

Anthony C. Vitale, Esquire

2400 South Dixie Highway, Suite 105

Miami, Florida 33133

Gordon Scott, Esquire

Agency for Health Care Administration 1317 Winewood Boulevard

Building 6, Room 234

Tallahassee, Florida 32399-0700

Sam Power, Agency Clerk

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Harold D. Lewis, Esquire

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

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 ten 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.

Docket for Case No: 93-004194

Orders for Case No: 93-004194