STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MIRIAM LARA, M.D., )

)

Petitioner, )

)

vs. ) Case No. 01-4669F

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the final hearing was held in this case on January 29, 2002, in Miami, Florida, before Larry J. Sartin, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Gonzalo Alberto Gayoso, Esquire

Maria del Carmen Calzone, Esquire 1050 Spring Garden Road

Miami, Florida 33136

For Respondent: L. William Porter II, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Building 3

Tallahassee, Florida 32308-5403

STATEMENT OF THE ISSUE

The issue in this case is whether the Respondent, Agency for Health Care Administration, is liable to Petitioner, Miriam Lara, M.D., for attorney's fees and costs pursuant to

Section 57.111, Florida Statutes, and, if so, the amount of attorney's fees and costs Petitioner should be awarded.

PRELIMINARY STATEMENT

On July 13, 2001, the Agency for Health Care Administration filed a "Notice" with the Division of Administrative Hearings requesting that an administrative law judge be assigned to conduct proceedings to determine whether Petitioner's participation in the Florida Medicaid Program should be terminated. Attached to the Notice was a copy of a letter dated April 13, 2001, to Dr. Lara advising her that her participation in the Florida Medicaid Program was "terminated for cause" and advising of her right to request a formal administrative hearing to challenge the termination. Also attached to the Notice was a Petition for Formal Hearing Pursuant to Section 120.569, Fla.

Stat. (2001) and Petition for Other Relief Under Fla. Stat. and

F.A.C. In the Petition Dr. Lara requested, among other things, an award of "[c]osts and attorney fees incurred as a result of this petition and subsequent hearing; "

The matter was styled Miriam Lara, M.D. vs. Agency for Health Care Administration, designated DOAH Case No. 01-2789 (hereinafter referred to as the "Underlying Case"), and assigned to Administrative Law Judge John G. Van Laningham.

On September 18, 2001, Respondent filed a Notice of Withdrawal of Final Agency Action in the Underlying Case.

Consequently, an Order Closing File was entered the same day, canceling the scheduled final hearing of the Underlying Case and closing the file of the Division of Administrative Hearings.

On November 26, 2001, Dr. Lara filed a Renewed Petition to Determine Amount of Attorney Fees and Costs Pursuant to Section 57.111, Fla. Stat. (2001) and Other Relief Under Fla. Stat. and

1. (hereinafter referred to as the "Renewed Petition"). An Attorney Fee Affidavit was attached to the Renewed Petition in which it was represented that attorney's fees in the amount of

   $18,279.50 had been reasonably incurred in the Underlying Case, but recognizing that fees and costs are capped at $15,000.00 under Section 57.111(4)(d)2., Florida Statutes. The Renewed Petition was designated Case No. 01-4669F and was assigned to Judge Van Laningham.

   In a Response to the Initial Order entered in this case, Respondent admitted that the fees set forth in the Affidavit attached to the Renewed Petition were reasonable

   . . . with two exceptions:

   
   

   1. Fees exceeding $15,000 are not available in these proceedings, see F.S. 57.111(4)(d)(2).

      
      

   2. The Agency was substantially justified in its actions, or circumstances exist which would make any award of fees unjust.

By Notice of Hearing entered January 8, 2002, this case was set for hearing to be held on January 29, 2002.

Prior to the commencement of the final hearing, the parties filed a pleading titled "Pre-Hearing Stipulation." Pursuant to the Pre-Hearing Stipulation the parties agreed that the only issue to be determined was whether Respondent was "substantially justified" in its actions in the Underlying Case. If so, no award of fees and costs would be allowed pursuant to Section 57.111, Florida Statutes.

This case was subsequently transferred to the undersigned to conduct the final hearing.

At the final hearing Petitioner presented the testimony of Maria del Carmen Calzone, Esquire, who represented Dr. Lara prior to the filing of the Underlying Case. Petitioner's Exhibits 1 and 2 were admitted. Respondent presented the testimony of Ellen Williams, a Medicaid/Healthcare Program Analyst for Respondent. Respondent's Exhibits 1, 2, 8, 9, 10, and 11 were admitted.

A one-volume Transcript of the proceeding was filed on March 21, 2002. By Order entered March 22, 2002, the parties were informed that proposed "recommended [sic] orders" were to be filed on or before April 1, 2002. Respondent filed a Proposed Recommended Order on April 1, 2002. Petitioner requested by telephone a one-week extension of time to file a proposed order and represented that Respondent was not opposed to the requested extension. Petitioner was, therefore, informed

that her proposed order was to be filed on or before April 8, 2002. Petitioner attempted to send a facsimile copy of the proposed order on April 8, 2002. The "fax" was not, however, received. When Petitioner learned, through inquiry, that the proposed order had not been received, a second facsimile copy was sent on April 15, 2002. The second "fax" was received.

Respondent has indicated that it has no objection to the late- filed proposed order of Petitioner being considered. The post- hearing pleadings filed by the parties have been fully considered in rendering this Final Order.

FINDINGS OF FACT

1. Respondent, the Agency for Health Care Administration (hereinafter referred to as the "Agency"), is the agency of the State of Florida responsible for the administration of the Federal government's Medicaid program in Florida. Section 409.907, Florida Statutes.

2. One of the duties imposed upon states in order to participate in the Medicaid program is the duty to terminate any approved Medicaid provider where the provider has been "convicted" of certain types of crimes. See Social Security Act, Section 1128(a)(1), 42 U.S.C. Section 1230a-7.

3. In particular, 42 U.S.C. Section 1230a-7(a)(1) requires the mandatory exclusion from the Medicaid program of any

   individual or entity that has been "convicted" of a program- related crime:

   Any individual or entity that has been convicted of a criminal offense related to the delivery of any item or service under subchapter XVII of this chapter or under any State health care program.

   
   

   For this purpose, the term "convicted" is defined to include "participation in a . . . deferred adjudication, or other agreement or program where judgement of conviction has been withheld." 42 U.S.C. Section 1230a-7(i)(4).

4. Petitioner, Dr. Miriam Lara, is a licensed medical doctor and an approved Medicaid provider in the State of Florida.

5. On January 20, 1998, Dr. Lara was indicted for "Organized Fraud and Medicaid Fraud." A copy of the Arrest Warrant, Respondent's Exhibit 9, was provided to the Agency shortly after Dr. Lara's arrest putting the Agency on notice of the charges against her.

6. On or about November 30, 1998,1 Dr. Lara entered into a "Deferred Prosecution Agreement and Speedy Trial Waiver" (hereinafter referred to as the "DPA") which was filed in the Circuit Court of the Eleventh Judicial Circuit of Florida, in and for Dade County. Dr. Lara agreed, in part, to the following in the DPA:

   I, [sic] understand that I have been tentatively accepted as a participant in the Pretrial Diversion Program, and that the charges against me will not be prosecuted so as [sic] long as I am a program participant in good standing and that my case will not come to trail during that time.

   
   

   While it is clear from the DPA that the charges against Dr. Lara were not to be prosecuted so long as she participated in the program, the DPA does not specifically state that the charges would be dropped if she completed the program. Although the DPA is not specific, the Office of the Statewide Prosecution and Dr. Lara intended, when they entered into the DPA that the charges would be completely dropped if Dr. Lara completed the Pretrial Diversion Program.

7. On April 20, 1999, after Dr. Lara successfully completed the pretrial program,2 the Office of Statewide Prosecution nolle prossed all charges pending against her.

8. In early 1999 the Agency became aware that Dr. Lara had entered into and completed some type of "pretrial program." Ellen Williams, a Medicaid/Healthcare Program Analyst for the Agency, was notified that Dr. Lara had completed what

   Ms. Williams understood to be a "pretrial intervention program."

   
   

9. The Agency, through Ms. Williams, also became aware of the disposition of Dr. Lara's case some time during 1999.

   Ms. Williams was provided with a copy of a disposition record for Dr. Lara's case from the Clerk of the Circuit and County

   Court of the Eleventh Judicial Circuit of Florida. That disposition record, Respondent's Exhibit 11, states that the charges against Dr. Lara had been "NOLLE PROS . . ." on April 20, 1999.

10. The Agency, through Ms. Williams, believed that all pretrial programs involved a program through which an individual charged with a crime could, by participating in the program, avoid being adjudicated "guilty" of the charged offense. Because the information contained on the disposition record provided to Ms. Williams indicated that the charges had been nolle prossed and, this appeared to be inconsistent with the Agency's belief that all pretrial programs result in adjudication being withheld, Ms. Williams attempted to find out precisely what had happened to the criminal charges against

    Dr. Lara.

    
    

11. Ms. Williams first telephoned and spoke with Assistant Attorney General Hugo Acebo, whom she understood to be an attorney, about the matter. Ms. Williams was told by Mr. Acebo that Dr. Lara had entered into some type of pretrial program and that she had successfully completed the program. Ms. Williams did not recall being told by Mr. Acebo that the charges against Dr. Lara had been dropped. Nor did she recall being told that any plea had been entered by Dr. Lara or adjudication on the charges had been withheld. Consistent with the Agency's belief

    about the nature of pretrial programs, Ms. Williams assumed that Dr. Lara, by successfully completing the pretrial program, had merely avoided being adjudicated guilty of the offenses for which she had been charged. Ms. Williams did not understand that the charges against Dr. Lara had been dropped.

12. On October 12, 1999, a Case Closing Report on Miriam Lara, M.D. (hereinafter referred to as the "Closing Report"), Case No. 04-96-03-0016, was issued by the Office of the Attorney General, Medicaid Fraud Control Unit, Fort Lauderdale Bureau. In pertinent part, the Closing Report states the following:

    According to Assistant Attorney General Hugo Acebo, Dr. Lara entered into a pretrial intervention (PTI) program, which she successfully completed in April 1998. The charges against her were then dropped. . . .

    (Emphasis added).

    
    

13. Ms. Williams received a copy of the Closing Report.

    
    

    The Agency, therefore, had actual notice that the charges against Dr. Lara had been dropped, but Ms. Williams continued to incorrectly believe that, because the Closing Report indicated that Dr. Lara had entered into a "pretrial intervention (PTI) program, which she successfully completed . . . " she had been "convicted" of a criminal offense that is Medicaid program- related, consistent with the Agency's incorrect understanding of pretrial programs.

14. Marie del Carmen Calzone, Esquire, who represented Dr. Lara at the time, spoke to Ms. Williams at least three times after the charges against Dr. Lara had been dropped.

    Ms. Calzone explained to Ms. Williams that the charges had been nolle prossed or dropped, that Dr. Lara had not entered any adverse plea to the charges, that "adjudication had not been withheld," and that Dr. Lara had not, therefore, been "convicted." Ms. Williams, however, incorrectly insisted that, because Dr. Lara had engaged in a pretrial program and successfully completed it, she had been "convicted" as that term is defined for Medicaid purposes.

15. Based upon Ms Williams' understanding of the Agency's interpretation of the pertinent law, Ms. Williams drafted a letter notifying Dr. Lara that her participation in the Florida Medicaid program was being terminated (hereinafter referred to as the "Termination Letter"). The Termination Letter indicates that the decision to terminate Dr. Lara's participation in the Medicaid program was based upon the following:

    The Agency for Health Care Administration has received information from the Attorney General, Office of Statewide Prosecution that indicates the following: You were indicted on January 20, 1998, for Organized Fraud and Medicaid Fraud. On November 20, 1998, you entered into a pretrial intervention program, which resulted in a nolle prosequi of the charges.

    The Social Security Act at section 1128(a)(1) provides for the mandatory exclusion from participation in the Medicaid program of any individual or entity convicted of a criminal offense that is program-related. Section 1128(I)(4) defines convicted to include "when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld." Section 1902(p)(1) of the Social Security Act provides for state authority to take action to exclude providers from the Medicaid program for the reasons cited in section 1128.

    
    

16. The Termination Letter was signed on or about April 13, 2001, almost two years after the charges against Dr. Lara had been nolle prossed. The Termination Letter was provided to Dr. Lara.

17. Dr. Lara disputed the Agency's proposed action to terminate her participation in the Medicaid program and filed a Petition for Formal Hearing Pursuant to Section 120.569, Fla. Stat. (2001) and Petition for Other Relief Under Fla. Stat. and

    F.A.C. (hereinafter referred to as the "Petition for Formal Hearing").

18. The Petition for Formal Hearing was filed with the Division of Administrative Hearing on July 13, 2001. The matter was styled Miriam Lara, M.D. vs. Agency for Health Care Administration, and designated DOAH Case No. 01-2789.

19. On September 18, 2001, realizing that Dr. Lara had not been "convicted" of any charges, the Agency filed a Notice of Withdrawal of Final Agency Action in the Underlying Case. Consequently, an Order Closing File was entered the same day, canceling the scheduled final hearing of the Underlying Case and closing the file of the Division of Administrative Hearings.

20. As stipulated to by the parties, the Agency is an "agency" as defined in Section 57.111, Florida Statutes; the Agency initiated an administrative proceeding against Dr. Lara; the Agency was not a nominal party; and Dr. Lara, a "small business party" as defined in Section 57.111, Florida Statutes, was the "prevailing party" in the Underlying Case by virtue of the filing of the Notice of Withdrawal of Final Agency Action.

21. The amount of reasonable attorney's fees incurred by Dr. Lara in the Underlying Case exceed $15,000.00.

22. On November 26, 2001, Dr. Lara filed a Renewed Petition to Determine Amount of Attorney Fees and Costs Pursuant to Section 57.111, Fla. Stat. (2001) and Other Relief Under Fla. Stat. and F.A.C. (hereinafter referred to as the "Renewed Petition"). An Attorney Fee Affidavit has been attached to the Renewed Petition in which it is represented that attorney's fees in the amount of $18,279.50 were reasonably incurred in the Underlying Case, but also recognizing that fees and costs are

    capped at $15,000.00 under Section 59.111(4)(d)2., Florida Statutes. The Renewed Petition was designated Case

    No. 01-4669F.

    
    

23. The pertinent information available to the Agency at the time it sent the Termination Letter to Dr. Lara included the following:

    1. Dr. Lara had been charged with criminal offenses that are program related in January 1998;

    2. Dr. Lara entered into a "Deferred Prosecution Agreement" in November 1998;

    3. Dr. Lara successfully completed the pretrial diversion program. At no time did she enter any plea to the charges and, therefore, there was no adjudication on the charges; and

    4. As a consequence of having completed the pretrial diversion program, all charges against her were dropped in 1999.

24. All information necessary to determine that Dr. Lara had not been "convicted" of charges related to the Medicaid program was available to the Agency before action was taken to terminate her participation in the Medicaid program.

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Sections 57.111 and 120.57, Florida Statutes (2000).

26. Attorney's fees and costs have been sought by Dr. Lara in this matter pursuant to Section 57.111, Florida Statutes, the "Florida Equal Access to Justice Act."

27. The following legislative intent for enacting the Florida Equal Access to Justice Act is provided in Section 57.111(2), Florida Statutes:

    (2) The Legislature finds that certain persons may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense of civil actions and administrative proceedings. Because of the greater resources of the state, the standard for an award of attorney's fees and costs against the state should be different from the standard for an award against a private litigant. The purpose of this section is to diminish the deterrent effect of seeking review of, or defending against, governmental action by providing in certain situations an award of attorney's fees and costs against the state.

    
    

28. In pertinent part, Section 57.111(4)(a), Florida Statutes, provides for an award of attorney's fees and costs under the following circumstances:

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

29. There is no dispute in this proceeding that Dr. Lara is a prevailing small business party. There is also no dispute that she prevailed in an administrative proceeding initiated by the Agency. The only issue which the Agency has contested is whether its actions were "substantially justified."

30. The terms "substantially justified" are defined in Section 57.111(3)(e), Florida Statutes, as follows:

    (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.

    
    

31. Although Dr. Lara has the ultimate burden of proving her entitlement to an award in this case, the Agency has the burden of demonstrating that it was "substantially justified" in its actions against Dr. Lara. See Department of Health and Rehabilitative Services v. South Beach Pharmacy, Inc., 635

    So. 2d 117 (Fla. 1st DCA 1994). In the South Beach Pharmacy, Inc., case, the court indicated the following concerning the burden of proof in actions for fees pursuant to Section 57.111, Florida Statutes:

    "The Act is designed to discourage unreasonable governmental action, not to paralyze agencies doing the necessary and beneficial work of government." Rudloe v. Department of Environmental Regulation, 33 Fla. Supp. 2d 203 (DOAH 1987). But, once a prevailing small business party proves that it qualifies as such under section 57.111, the agency that initiated the main or underlying proceeding has the burden to show

    substantial justification or special circumstances, Department of Health and Rehabilitative Services v. S.G., 613 So. 2d 1380, 1386-7 (Fla. 1st DCA 1993);

    Department of Professional Regulation, Div. of Real Estate v. Toledo Realty, Inc., 549 So. 2d 715 (Fla. 1st DCA 1989); Ray v.

    Department of Transportation, 9 F.A.L.R. 1537 (DOAH 1990); Gentele v. Department of Professional Regulation, 9 F.A.L.R. 310

    (DOAH 1986), aff'd, 513 So. 2d 672 (Fla. 1st

    DCA), in order to avoid liability for fees and costs.

    
    

32. The Agency's Termination Letter was issued pursuant to "[t]he Social Security Act at section 1128(a)(1)," which provides:

    1. Mandatory exclusion

       
       

       The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1320a-7b(f) of this title):

       (1) Conviction of program-related crimes Any individual or entity that has been

       convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII of this chapter or under any State health care program.

       
       

       42 U.S.C. Section 1320a-7(a)(1).

       
       

33. The Agency concluded that Dr. Lara had in fact been "convicted" of a criminal offense related to her delivery of Medicaid services, relying upon the following emphasized portion of 42 U.S.C. Section 1320a-7(i)(4):

    (i) "Convicted" defined

    
    

    For purposes of subsection (a) and (b) of this section, an individual or entity is considered to have been "convicted" of a criminal offense -

    
    

    . . . . (4)

    when the individual or entity has entered into participation in a first offender, deferred adjudication, or other arrangement or program where judgment of conviction has been withheld.

    
    

34. The "facts" relied upon by the Agency to support its decision that Dr. Lara had been "convicted" do not form a reasonable basis for its actions. Dr. Lara simply did not enter into participation in any program "where judgment of conviction [was] withheld." She entered into a program where there was no conviction; a program where, indeed, all charges were withdrawn. Once Dr. Lara completed the pretrial program, there were simply no charges for which any judgement could have been withheld. This information consisted of the same information which the Agency relied upon when it decided to withdraw the Termination Letter and, consequently, a Notice of Withdrawal of Final Agency Action in the Underlying Case was available to the Agency when the Termination Letter was issued. The Agency's decision to issue the Termination Letter did not, therefore, have a reasonable basis in law or fact.

35. Based upon the foregoing, it is concluded that the Agency's administrative action against Dr. Lara in this matter was not "substantially justified" as those terms are used in Section 57.111, Florida Statutes. Dr. Lara is, therefore, entitled to an award of attorney's fees and costs.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED that the Renewed Petition to Determine Amount of Attorney Fees and Costs Pursuant to Section 57.111, Fla. Stat. (2001) and Other Relief Under Fla. Stat. and F.A.C. is GRANTED. Within the time specified in Section 57.111(5), Florida Statutes, the Agency for Health Care Administration shall pay attorney's fees of $15,000.00 on behalf of Miriam Lara, M.D.

DONE AND ORDERED this 18th day of April, 2002, in Tallahassee, Leon County, Florida.

LARRY J. SARTIN

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 18th day of April, 2002.

ENDNOTES

1/ The Agency indicated in its letter terminating Dr. Lara's participation in the Florida Medicaid program that Dr. Lara had entered into a pretrial intervention program on "November 20, 1998." Based upon the fact that the actual agreement entered into by Dr. Lara is dated November 30th, it appears that the November 20 date is a typographic error.

2/ In Respondent's Exhibit 2, a Case Closing Report on Miriam Lara, M.D., issued October 12, 1999, it is indicated that

Dr. Lara completed the Deferred Prosecution program she agreed to in "April 1998." Again, this appears to be a typographical error. Dr. Lara didn't enter the Deferred Prosecution program until November 1998 and the charges against her were not nolle prossed until April 1999.

COPIES FURNISHED:

Gonzalo Alberto Gayoso, Esquire 1050 Spring Garden Road

Miami, Florida 33136

L. William Porter, II, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Tallahassee, Florida 32308-5403

Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive, Suite 3116

Tallahassee, Florida 32308-5403

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 the original notice of appeal with the Clerk of the Division of Administrative Hearings and a 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.

1/ The Agency indicated in its letter terminating Dr. Lara's participation in the Florida Medicaid program that Dr. Lara had entered into a pretrial intervention program on "November 20, 1998." Based upon the fact that the actual agreement entered into by Dr. Lara is dated November 30th, it appears that the November 20th date is a typographic error.

2/ In Respondent's Exhibit 2, a Case Closing Report on Miriam Lara, M.D., issued October 12, 1999, it is indicated that Dr. Lara completed the Deferred Prosecution program she agreed to in "April 1998." Again, this appears to be a typographical error. Dr. Lara didn't enter the Deferred Prosecution program until November 1998 and the charges against her were not nolle prossed until April 1999.

Docket for Case No: 01-004669F

Orders for Case No: 01-004669F