STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSAL HEALTH PLAN OF FLORIDA, )

)

Petitioner, )

)

vs. ) CASE NO. 95-1948

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent, )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Richard Hixson, held a formal hearing in this case on August 28, 1995 in Tallahassee, Florida.

APPEARANCES

For Petitioner: Heidi Garwood, Esquire

Agency for Health Care Administration 2727 Mahan Drive

Fort Knox - Building 1 Tallahassee, Florida 32308

For Respondent: Ellen Leibovitch, Esquire

Lori Lovgren, Esquire ADORNO & ZEDER, P.A.

2255 Glades Road, Suite 342W Boca Raton, Florida 33431

STATEMENT OF THE ISSUES

Whether Petitioner correctly imposed sanctions on Respondent for violation of applicable statutory, rule, and compliance criteria and standards as set forth in Chapter 641, Florida Statutes, Chapter 59A-12, Florida Administrative Code, and the 1994-1995 Medicaid Prepaid Health Plan Contract.

PRELIMINARY STATEMENT

By letter dated March 30, 1995, Petitioner, AGENCY FOR HEALTH CARE ADMINISTRATION, (AHCA), notified Respondent, UNIVERSAL HEALTH PLAN OF FLORIDA,

INC., (UNIVERSAL), of AHCA's decision to impose a fine in the amount of $100,000 on Respondent and further to place on Respondent an enrollment and expansion moratorium because of Respondent's substantial failure to comply with various quality of care criteria and standards required of prepaid health plans by statute, rule, and contract. Respondent filed a timely Petition for Formal Hearing. On April 21, 1995, the matter was referred to the DIVISION OF ADMINISTRATIVE HEARINGS, (DOAH), to conduct a formal hearing.

A Formal Hearing by video was scheduled for August 28, 1995. Pursuant to Order of the Hearing Officer, on August 24, 1995, the parties filed a Joint Prehearing Stipulation which is incorporated herein by reference. Hearing was held by video on August 28, 1995, with Respondent and counsel appearing in Miami, Florida, and Petitioner and counsel appearing in Tallahassee, Florida. At hearing, the ore tenus motion of AHCA, which carries the burden of proof in this case, to realign the parties was granted and AHCA, redesignated as Petitioner, went forward with the presentation of evidence. Petitioner offered

the testimony of one witness, Tom Arnold, Director of Medicaid Quality Assurance for AHCA. Fourteen Joint Exhibits were received into evidence. UNIVERSAL, redesignated as Respondent, presented the testimony of one witness, Barry Brennan, CEO of UNIVERSAL.

Also during the hearing, UNIVERSAL made an ore tenus motion to amend its Petition to include an additional challenge to AHCA's authority to impose sanctions based on an August 15, 1995 notice from AHCA revoking UNIVERSAL's Provider Certificate effective October 1, 1995. Ruling on UNIVERSAL's motion to amend was reserved pending receipt of further legal argument. For the reasons set forth below UNIVERSAL's motion to amend is denied.

The transcript of the hearing was filed on September 19, 1995. Petitioner filed its Proposed Recommended Order on October 3, 1995. Respondent filed its Proposed Recommended Order on October 2, 1995. Separate rulings on the parties' proposed findings are set forth in the Appendix attached hereto.

FINDINGS OF FACT

1. Petitioner, AGENCY FOR HEALTH CARE ADMINISTRATION (AHCA), is the agency of the State of Florida charged with the duty and responsibility of administering the provisions of the Florida Medicaid program pursuant to Chapter 641, Florida Statutes, relating to health care services. In 1992 statutory authority to regulate health maintenance organizations (HMO's) was transferred from the Florida Department of Health and Rehabilitative Services to AHCA.

   
   

2. Respondent, UNIVERSAL HEALTH PLAN OF FLORIDA, INC. (UNIVERSAL), is a commercially licensed health maintenance organization under Chapter 641, Florida Statutes, with offices located in Dade County, Florida.

   
   

3. In July of 1994, UNIVERSAL entered into a valid, enforceable, one-year Medicaid Prepaid Health Plan Contract (1994-1995 Contract) with AHCA. UNIVERSAL had specific knowledge of, and agreed to each of the requirements of the 1994- 1995 Contract.

   
   

4. The 1994-1995 Contract required UNIVERSAL to provide Medicaid managed health care services to Florida Medicaid recipients in accordance with specified minimum standards, including standards for quality care assurance. The 1994- 1995 Contract also provided for an annual medical audit, and provided for the imposition of penalties for failure to comply with the contract.

   
   

5. In December of 1994, as a result of negative press accounts, AHCA initiated a comprehensive review of each of the 29 Florida prepaid health plans to determine whether such plans were in compliance with their contractual requirements.

   
   

6. By letter dated December 20, 1994, AHCA notified UNIVERSAL of the agency's intention to undertake a comprehensive review of UNIVERSAL.

7. In accordance with the notification of December 20, 1994, AHCA, by letter dated January 10, 1995, informed UNIVERSAL that a comprehensive survey of UNIVERSAL's compliance with the conditions of the 1994-1995 Contract would begin on January 24, 1995. The January 10, 1995 letter specified the manner in which the survey would be conducted and itemized the information required of UNIVERSAL. AHCA also informed UNIVERSAL that the survey would review only those items required by the 1994-1995 Contract.

   
   

8. The survey instrument developed by AHCA contained 145 specific program requirements which were derived directly from the 1994-1995 Contract. Seventy of the requirements pertained to quality of care review, and included such requirements as the providing of early periodic screening diagnosis and treatment (EPSDT); establishing an accurate and comprehensive medical records system; ensuring peer review of medical facilities and services; verification and examination of the credentials of health care providers; coordination of the overall health care of each member; and assuring that services provided to members through referral sources were reported to the HMO or a designated health care provider.

   
   

9. In January of 1995, at the time of the AHCA survey, UNIVERSAL was undergoing major administrative changes including the replacement of its Chief Executive Officer. These changes were made in response to problems previously identified by UNIVERSAL which related to the operation of the plan, including problems relating to compliance with certain requirements of the 1994-1995 Contract.

   
   

10. The AHCA survey of UNIVERSAL was conducted from January 24-26, 1995. The survey team was composed of five staff members including medical personnel, a Medicaid monitor, a staff member from the Bureau of Managed Care, and a manager or supervisor from the agency.

    
    

11. In order to ensure consistency in the application of the survey standards, all team members participating in the comprehensive review of the 29 Florida prepaid Medicaid health plans were trained by AHCA prior to conducting the survey. The AHCA team members who conducted the comprehensive review of UNIVERSAL received such training.

    
    

12. At the conclusion of the on-site survey, the AHCA survey team did not make representations to UNIVERSAL which indicated that the team had found UNIVERSAL to be in such substantial noncompliance with the 1994-1995 Contract that sanctions would be imposed.

    
    

13. After all on-site surveys were completed, each AHCA review team compiled a detailed deficiency report for each plan listing those contract requirements with which the team had determined the plan was out of compliance.

    
    

14. The deficiency report which the AHCA survey team completed for UNIVERSAL determined that UNIVERSAL complied with only 68 percent of the quality of care standards required by the 1994-1995 Contract, and with only 76 percent of the overall standards required by the 1994-1995 Contract. UNIVERSAL did not contest the contract deficiencies as determined by the AHCA survey team.

    
    

15. AHCA sent each health plan, including UNIVERSAL, a copy of the deficiency report for their plan, and requested each health plan to develop and submit to AHCA a corrective action proposal for the deficiencies cited by the report.

16. UNIVERSAL acknowledged the deficiencies cited in the AHCA report, and developed a corrective action proposal addressing these deficiencies. AHCA accepted and approved UNIVERSAL's corrective action proposal on April 8, 1995.

    
    

17. As a result of the contract deficiencies determined during the comprehensive review of the prepaid Medicaid health plans, AHCA imposed sanctions against those plans which AHCA determined were not in substantial compliance with the requirements of the 1994-1995 Contract.

    
    

18. For commercially licensed health plans, including UNIVERSAL, AHCA developed a graduated schedule of quality of care fines which were imposed based on each plan's performance as related to the seventy quality of care standards reviewed during the comprehensive survey. The fines imposed by AHCA ranged from

    $20,000 to $100,000, depending on the number of quality of care deficiencies cited for each plan. Commercial plans with contractual compliance rates above

    90 percent were found to be in substantial compliance and no fines were imposed. Commercial plans with contractual compliance rates between 80 percent and 89 percent were fined $20,000. Those commercial plans between 70 percent and 79 percent were fined $60,000, and those commercial plans below 70 percent were fined $100,000.

    
    

19. In developing its graduated schedule for quality of care fines, AHCA weighed each quality of care deficiency equally.

    
    

20. UNIVERSAL was the only commercially licensed plan with a quality of care contractual compliance rate below 70 percent. The contractual quality of care requirements with which UNIVERSAL failed to comply included: 1) failure to provide EPSDT or to arrange for health risk and prevention measures; 2) failure to ensure a readily accessible, accurate and comprehensive medical records system; 3) failure to ensure peer review of its medical facilities and services;

    4) failure to verify and examine the credentials of each of its providers; 5) failure to coordinate the overall health care of each member; and 6) failure to assure that services provided members through referral sources were reported to the HMO or a designated health care professional.

    
    

21. By letter dated March 30, 1995, AHCA notified UNIVERSAL that because of the deficiencies found during the comprehensive review, UNIVERSAL was not in substantial compliance with the quality of care requirements of the 1994-1995 Contract. In accordance with the graduated schedule set forth above, AHCA assessed a fine against UNIVERSAL in the amount of $100,000. AHCA further notified UNIVERSAL that it was out of compliance with the overall requirements of the contract and imposed a moratorium on expansion and enrollment on UNIVERSAL.

    
    

22. AHCA conducted a follow-up survey of UNIVERSAL from July 18-20, 1995. At that time AHCA determined that the corrective action plan submitted by UNIVERSAL had not been met, and contractual deficiencies remained.

    
    

23. As a result of the follow-up survey, AHCA by letter dated August 15, 1995, notified UNIVERSAL that AHCA would be terminating UNIVERSAL's Medicaid Prepaid Health Contract, and revoking UNIVERSAL's certificate of authority effective October 1, 1995.

    
    

24. On September 15, 1995, a separate administrative action was instituted by UNIVERSAL with the Division of Administrative Hearings, (Case No. 95-4569), relating to AHCA's termination of its contract and revocation of its certificate.

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Section 120.57(1), Florida Statutes.

    
    

26. AHCA is the state agency vested with the statutory authority for the administration of the Florida Medicaid program, and the regulation of quality of care provided by commercially licensed HMOs. Chapter 93-129, s. 58, and Chapter 92-33 s. 10, Laws of Florida; Chapter 641, Part III, Florida Statutes.

    
    

27. AHCA has the burden of proof in this proceeding to establish that the imposition of sanctions against UNIVERSAL was appropriate. Department of Transportation v. J.W.C. Co., 396 So. 2d 778 (Fla. 1st DCA 1981).

    
    

28. Section 641.52(1)(a), Florida Statutes provides:

    
    

    1. The department may suspend the authority of an organization to enroll new subscribers or revoke the Health Care Provider Certificate

       of any organization, or order compliance within

       60 days, if it finds that any of the following conditions exist:

       (a) The organization is in substantial violation of its contracts.

       
       

29. Section 641.52(5), Florida Statutes further provides:

    
    

    (5) If the department finds that one or more grounds exist for the revocation or suspension of a certificate issued under this part, the department may, in lieu of such revocation or suspension, impose a fine upon the organization. With respect to any nonwillful violation, such fine shall not exceed $2,500 per violation.

    In no event shall such fine exceed an aggregate amount of $10,000 for all nonwillful violations arising out of the same action. With respect

    to any knowing and willful violation of a lawful order or rule of the department or a provision of this part, the department may impose a fine upon the organization in an amount not to exceed

    $20,000 for each such violation. In no event shall such fine exceed an aggregate amount of

    $100,000 for all knowing and willful violations arising out of the same action.

    
    

30. For purposes of administrative proceedings, "willfulness is satisfied by a conscious intentional act see Dezell v. King, 91 So.2d 624, 626 (Fla. 1956) done without justifiable excuse." State Department of Highway Safety and Motor Vehicles v. Taylor, 456 So. 2d 550, 552 (Fla. 3d DCA 1984).

    
    

31. The evidence in this case establishes that UNIVERSAL had specific knowledge of, and agreed to the contractual requirements of the 1994-1995 Contract. The evidence further establishes that UNIVERSAL knowingly and willfully failed to comply with 32 percent of the quality of care requirements

    of the 1994-1995 Contract, including at least six specifically identified quality of care contract violations.

    
    

32. Under these circumstances AHCA has the statutory authority to impose sanctions on UNIVERSAL as a commercially licensed HMO, including restriction of expansion and enrollment, and fines in the amount of $20,000 per violation, not to exceed $100,000.

    
    

33. The issues raised by UNIVERSAL challenging AHCA's authority to revoke UNIVERSAL's certificate of authority effective October 1, 1995, occurred subsequent to these proceedings and are appropriately addressed in DOAH Case No.95-4569.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that:

The sanctions imposed by AHCA on UNIVERSAL be UPHELD.

RECOMMENDED in Tallahassee, Leon County, Florida, this 17th day of October, 1995.

RICHARD HIXSON

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 17th day of October, 1995.

APPENDIX

As to Petitioner AHCA's proposed findings.

1 - 8. Accepted and incorporated.

1. Rejected as irrelevant.

2. Accepted and incorporated.

3. Rejected in part as a conclusion of law.

4. Accepted and incorporated.

13-14. Rejected in part as a conclusion of law.

1. Accepted and incorporated.

2. Rejected as irrelevant.

17 - 18. Accepted and incorporated.

19 - 28. Accepted and incorporated.

29. Rejected as irrelevant.

30 - 32. Accepted and incorporated.

As to Respondent UNIVERSAL's proposed findings.

1- 10. Accepted and incorporated.

11 - 12. Rejected.

13. Accepted and incorporated.

14 - 16. Rejected as irrelevant.

1. Accepted and incorporated.

2. Rejected as irrelevant.

3. Accepted and incorporated.

20 - 23. Accepted and incorporated.

24 - 31. Rejected as irrelevant.

32. Accepted and incorporated.

COPIES FURNISHED:

Heidi Garwood, Esquire Agency for Health Care

Administration 2727 Mahan Drive

Fort Knox - Building 1 Tallahassee, Florida 32308

Ellen Leibovitch, Esquire Lori Lovgren, Esquire ADORNO & ZEDER, P.A.

2255 Glades Road, Suite 342W Boca Raton, Florida 33431

Sam Power, Agency Clerk Agency for Health Care

Administration

The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Jerome Hoffman, General Counsel Agency for Health Care

Administration 2727 Mahan Drive

Fort Knox - Building 1 Tallahassee, Florida 32308

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the Final Order in this case concerning their 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: 95-001948

Orders for Case No: 95-001948