STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

A COMMUNITY HEALTH CARE, INC. d/b/a ) WE LOVE TO CARE HOME HEALTH AND )

DOUGLAS NALLS, M.D. as President ) and Owner, )

)

Petitioner, )

)

vs. ) CASE NO. 94-1123F

) AGENCY FOR HEALTH CARE ADMINISTRATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled case on June 6, 1994, in Tallahassee, Florida. The Petitioner appeared via television from Miami, Florida.

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 B. Scott, Esquire

Agency for Health Care Administration 1317 Winewood Boulevard

Building B, Room 271 Tallahassee, Florida 32399-0700

STATEMENT OF THE ISSUES

Whether Petitioner is entitled to an award of attorney's fees against Respondent pursuant to Section 57.111, Florida Statutes.

PRELIMINARY STATEMENT

Petitioner timely applied for an award of attorney's fees pursuant to Section 57.111, Florida Statutes, predicated on its status as a prevailing party in DOAH Case 93-4194. The parties stipulated that Petitioner had established a prima facie case that it is entitled to an award of attorney's fees and costs and that the statutory cap of $15,000 would be a reasonable amount to award.

Respondent asserts that notwithstanding the prima facie showing, fees should not be awarded to Petitioner because Respondent was substantially justified in

taking the action that was at issue in DOAH Case 93-4194 and, in the alternative, that special circumstances exist which would make the award unjust.

At the formal hearing, Petitioner presented no witnesses, but offered one exhibit, which was accepted into evidence. Respondent presented the testimony of John Whiddon and offered one exhibit, which was accepted into evidence. At the times pertinent to this proceeding, Mr. Whiddon was the Chief of the Florida Medicaid Program Integrity.

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 final order be rendered within thirty days after the transcript is filed. Rule 60Q-2.031, Florida Administrative Code. Rulings on the proposed findings of fact submitted by the parties may be found in the appendix to this Final Order.

FINDINGS OF FACT

1. Petitioner was a prevailing small business party in DOAH Case 93-4194. Petitioner timely applied for an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes. The statutory cap of $15,000 is a reasonable amount for the award should it be concluded that Petitioner is entitled to fees and costs.

   
   

2. In DOAH Case 93-4194, the Petitioner successfully challenged the Respondent's action in temporarily withholding all of Petitioner's payments under the medicaid program. John Whiddon, the Chief of the Florida Medicaid Program Integrity at that time, made the decision to withhold the payments to Petitioner. The information which triggered Mr. Whiddon's decision was a letter from John G. Morris, Jr., who was director of the Medicaid Fraud Control Unit. Mr. Morris advised that ". . . there is reliable evidence that the [Petitioner] billed for home health care services that were not provided and this investigation will be referred for criminal prosecution".

   
   

3. The provisions of 42 CFR 455.23 authorize a State Medicaid agency such as the Respondent to withhold Medicaid payments, in whole or in part, upon receipt of the State agency 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."

   
   

4. In DOAH Case 93-4194, it was concluded that Respondent had failed to establish that it had "reliable evidence" to withhold Petitioner's Medicaid payments. It was further found that even if Respondent had such reliable evidence, it could not withhold all of Petitioner's payments unless it proceeded pursuant to Section 120.59(3), Florida Statutes. Absent such emergency order pursuant to Section 120.59(3), Florida Statutes, it was concluded that any withholding would be subject to the following limitations on the withholding of Medicaid payments contained in Section 409.913(17), Florida Statutes:

   
   

   (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.

   
   

5. The Recommended Order in DOAH Case 93-4194 was adopted in toto by Respondent as a Final Order on January 28, 1994.

   
   

6. The Medicaid Program Integrity is responsible for the oversight and regulatory aspect of the Florida Medicaid Program. Program Integrity is a part of the Agency for Health Care Administration and was formerly a part of the Department of Health and Rehabilitative Services.

   
   

7. The Medicaid Fraud Control Unit (MFCU) is a part of the Office of the Auditor General. The MFCU is responsible for investigating abuse and criminal fraud pertaining to the medicaid program. Federal regulations require that Program Integrity and MFCU be totally separate and apart from each other.

   
   

8. MFCU and Program Integrity operate under a memorandum of agreement which allows them to conduct separate investigations. When MFCU advises Program Integrity that it is investigating a Medicaid provider, Program Integrity routinely stops any investigation it may have started so as not to jeopardize the criminal investigation by the MFCU.

   
   

9. Program Integrity is not provided any information about MFCU's criminal investigation until certain kinds of actions have occurred or when MFCU desires certain support.

   
   

10. Mr. Whiddon testified that Program Integrity routinely takes administrative action against a Medicaid provider when it learns that MFCU is conducting a criminal investigation against that provider. Mr. Whiddon also testified that information received by Program Integrity from MFCU has historically proven to reliable. Mr. Whiddon did not testify as to the nature of the administrative action that is routinely taken when Program Integrity learns that MFCU is conducting a criminal investigation. There was no evidence as to the rules or statutes, other than a reference to 42 CFR 455.23, upon which Program Integrity bases such administrative actions.

    
    

11. Based upon information from the Medicaid claims processing subsystem and the information from MFCU, Mr. Whiddon had reason to suspect that substantial sums were being paid to Petitioner for services for which there was no entitlement.

    
    

12. The Petitioner was receiving approximately $28,900 per week from Medicaid when it was decided to temporarily withhold Medicaid payments.

    
    

13. After the receipt of the MFCU letter, Mr. Whiddon believed something had to be done and began to review the options that he believed were available to him. Mr. Whiddon concluded that the most appropriate remedy was to withhold

    Medicaid payments pursuant to 42 CFR 455.23, which provides for a hearing at which the Petitioner could submit information that would justify its billings.

    
    

14. Mr. Whiddon did not believe at the time he decided to temporarily withhold Petitioner's Medicaid payments that the issue was one of an overpayment. He also did not believe that it would be appropriate to issue an immediate final order pursuant to Section 120.59(3), Florida Statutes, because of the limited information available to him.

    
    

15. Respondent failed to establish that it had reliable evidence to temporarily withhold all of Petitioner's Medicaid payments.

    
    

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 57.111 and Chapter 120, Florida Statutes.

17. Section 57.111(4)(a), provides, in pertinent part, as follows: (4)(a) Unless otherwise provided by law, an

    award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding pursuant to chapter

    120 initiated by a state agency, unless the actions of the state agency were substantially justified or special circumstances exist which would make the award unjust.

    
    

18. Respondent has the burden of establishing the statutory defenses upon which it attempts to rely. See, 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).

    
    

19. Pursuant to the stipulation of the parties, Petitioner is entitled to an award of attorneys fees and costs in the amount of $15,000 unless it is concluded that Respondent was substantially justified in taking the action at issue in DOAH Case No. 93-4194 or if it is concluded that special circumstances exist which would make the award unjust.

    
    

20. Section 57.111(3)(e), Florida Statutes, provides the following definition pertinent to this proceeding:

    
    

    (e) A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency.

    
    

21. To be substantially justified, the government agency must have a solid though not necessarily correct basis in fact and law for the position it took in the underlying proceeding. See, McDonald v. Schweiker, 726 F.2d 311, 316 (7th Cir. 1983). Compare, Department of Health and Rehabilitative Services v. S. G., 613 So.2d 1380, (Fla. 1st DCA 1993) and Kibler v. Department of Professional Regulation, 418 So.2d 1081, (Fla. 4th DCA 1982).

    
    

22. Respondent relied solely on the conclusory information contained in the MFCU letter and on its knowledge that significant sums of money were being paid Petitioner under the Medicaid program. That information was not considered

    by Respondent to be a sufficient basis upon which an emergency order should be entered pursuant to Section 120.59(3), Florida Statutes. Instead, Respondent purported to act pursuant to 42 CFR 455.23, which authorizes a state agency to withhold payments "in whole or in part" if it has "reliable evidence" of Medicaid fraud. Both the Recommended Order and the Final Order entered in the underlying case found that the information available to Respondent did not constitute "reliable evidence" of Medicaid fraud. Even if the letter from MFCU is considered to be reliable evidence of fraud, the letter does not speak to the scope of any suspected fraud and would not justify a 100 percent withholding of Medicaid payments to the provider. Further, in the underlying proceeding Respondent entered a Final Order which adopted the conclusions that the limitations on withholding of Medicaid payments contained in Section 409.913(17), Florida Statutes, apply (absent an emergency order pursuant to Section 120.59(3), Florida Statutes) and that Respondent could not withhold all of Petitioner's Medicaid payments even if it had reliable evidence of fraud.

    The agency action challenged in DOAH Case 93-4194 disregarded those limitations.

    
    

23. Respondent has failed to establish that it was substantially justified in taking the action at issue in DOAH Case No. 93-4194 or that there exist special circumstances that would make an award of fees and costs unjust. Consequently, it is concluded that Petitioner is entitled to an award of attorney's fees and costs in the amount of $15,000 pursuant to Section 57.111, Florida Statutes.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Petitioner's application for an award of attorney's fees

and costs is GRANTED in the amount of $15,000.

DONE AND ENTERED this 15th day of September, 1994, 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 15th day of September, 1994.

APPENDIX TO THE FINAL ORDER, CASE NO. 94-1123F

The proposed findings of fact submitted by the Petitioner are adopted in material part by the Final Order.

The proposed findings of fact submitted by the Respondent are adopted in material part by the Final Order with the exception of the proposed findings in paragraph 12, which are unnecessary to the conclusions reached.

COPIES FURNISHED:

Gene Reibman, Esquire

600 Northeast Third Avenue Fort Lauderdale, Florida 33304

Anthony C. Vitale, Esquire Suite 105

2400 South Dixie Highway Miami, Florida 33133

Gordon B. Scott, Esquire

Agency for Health Care Administration Building B, Room 271

1317 Winewood Boulevard

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, General Counsel Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

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 Division of Administrative Hearings 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.

Docket for Case No: 94-001123F

Orders for Case No: 94-001123F