STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
IV CONCEPTS, INC, )
)
Petitioner, )
)
vs. ) Case No. 02-0017MPI
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in this case on December 12, 2002, in Tallahassee, Florida, before Patricia Hart Malono, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Sean M. Ellsworth, Esquire
Sean M. Ellsworth, P.A. Post Office Box 190559
Miami Beach, Florida 33119-0559
For Respondent: L. William Porter, II, Esquire
Agency for Health Care Administration Fort Knox Executive Center III
2727 Mahan Drive, Suite 3431
Tallahassee, Florida 32308-5403 STATEMENT OF THE ISSUE
Whether the Petitioner should be required to reimburse the Respondent for Medicaid overpayments as set forth in the Final Agency Audit Report dated October 29, 2001.
PRELIMINARY STATEMENT
In a Final Agency Audit Report ("FAAR") dated October 29, 2001, the Agency for Health Care Administration ("AHCA") notified IV Concepts, Inc., that it had completed an audit of IV Concepts' paid Medicaid claims for the period extending from January 1, 1997, through June 15, 1998 ("audit period"), and that it had determined that IV Concepts had been overpaid
$2,841,045.40 for claims that were not covered by Medicaid. AHCA set forth its rationale for this overpayment calculation as follows:
We have required that you submit invoices from your suppliers to substantiate the availability of drugs that you billed to Medicaid. You have not fully substantiated such availability. Additionally, you were not given credit for purported purchases from suppliers that were not a licensed drug wholesaler [sic] in accordance with
Chapter 499, F.S.
Subsequent to the mailing of the FAAR to IV Concepts, AHCA re- calculated the amount of the overpayment and determined that
IV Concepts had received a Medicaid overpayment in the amount of
$2,815,847.32.
IV Concepts timely disputed the overpayment determination and requested a formal administrative hearing. AHCA transmitted the matter to the Division of Administrative Hearings for assignment of an administrative law judge. The final hearing
was scheduled for January 28, 2002. The hearing was re- scheduled for March 4 and 5, 2002, pursuant to the motion of the parties for a continuance. In an order entered February 12, 2002, the case was placed in abeyance at the request of the parties to allow them time to complete discovery. The parties periodically submitted status reports, and the case was continued in abeyance, at the parties' request, until October 3, 2002, when an order was entered scheduling the hearing for December 12 and 13, 2002.
At the hearing, Sections 24:68-12 and 45:14-26.1, New Jersey Statutes, were granted official recognition at the request of IV Concepts. Joint Exhibits 1 through 31 and 34 through 43 were received into evidence pursuant to the stipulation of the parties. Joint Exhibit 42 is the transcript of the deposition of Juan Gallinal, a former employee and officer of IV Concepts, which was offered in lieu of live testimony. Joint Exhibit 43 is the transcript of the deposition of William Bebell, Pharm. D., a pharmacist formerly employed by IV Concepts, which was offered in lieu of live testimony.
AHCA presented the testimony of Susan Williams, Joann Jackson, and Sandra Stovall. Agency Exhibits 33 and 44 were offered and received into evidence without objection.1
IV Concepts objected to the admission of Agency Exhibit 32, which consisted of invoices purporting to show that IV Concepts
sent significant quantities of drugs during the audit period to a company named ImmuneCare and/or to a physician named Dr. Mark Sachs, who was affiliated with ImmuneCare. The information contained in these invoices was used by AHCA to offset the quantities of drugs that IV Concepts had demonstrated were available for it to dispense to Medicaid recipients during the audit period. IV Concepts objected to the admissibility of these invoices on the grounds that the invoices were not authenticated and that they were hearsay and could not provide a basis for a finding of fact that the quantities of drugs identified in the invoices were not available for IV Concepts to dispense.
Ruling was withheld on the admissibility of
Agency Exhibit 32, pending submission of written argument in the parties' proposed recommended orders. Based on consideration of the entire record of this proceeding, including the arguments of counsel during the hearing and in the parties' Proposed Recommended Orders, Agency Exhibit 32 is received into evidence. The invoices comprising Agency Exhibit 32 are business records and not hearsay under the exception to the hearsay rule set forth in Section 90.803(6), Florida Statutes (2002). Because resolution of IV Concepts' evidentiary objections relies in part on factual issues, this ruling will be discussed in detail in the Conclusions of Law.
IV Concepts presented no evidence at the final hearing except the joint exhibits identified above.
The two-volume transcript of the final hearing was filed with the Division of Administrative Hearings on January 13, 2003. The parties timely filed their proposed findings of fact and conclusions of law, after they requested and were granted two extensions of time. The parties' proposed findings of fact and conclusions of law have been considered in the preparation of this Recommended Order.
FINDINGS OF FACT
Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:
AHCA is, and was at the times material to this proceeding, the state agency responsible for administering the Medicaid program for the State of Florida. Section 409.901(2), Florida Statutes (1997 & 1998).2
AHCA is, and was at the times material to this proceeding, authorized to make payments on behalf of persons eligible for the Medicaid program for goods and services covered by the program to providers who are qualified under state and federal law to receive such payments. Section 409.902, Florida Statutes (1997 & 1998).
AHCA is, and was at the times material to this proceeding, authorized to make payments for goods and services provided to persons eligible for Medicaid benefits only to persons who have in effect a provider agreement with AHCA. Section 409.907, Florida Statutes (1997 & 1998).
At the times pertinent to this proceeding, IV Concepts operated under a Florida community/special pharmacy license, and its place of business was a suite of offices located in Broward County, Florida.
IV Concepts was in the business of compounding medications and delivering them to patients to be administered in their homes. IV Concepts received prescriptions for medications submitted by physicians either by telephone or by facsimile transmittal, and the pharmacy was not open to the public.
Many of the patients to whom IV Concepts dispensed medications were HIV-infected, and IV Concepts dispensed medications to these patients for administration orally or by injection. Other patients served by IV Concepts were not HIV- infected, and IV Concepts dispensed medications to these patients for the treatment of ordinary health problems.
A provider agreement executed by AHCA and IV Concepts was in effect at the times material to this proceeding, and
IV Concepts received payments from the Medicaid program under Medicaid Provider Number 102900200.
IV Concepts executed the Non-Institutional Professional Technical Medicaid Provider Agreement on December 26, 1994. In the agreement, IV Concepts agreed, among other things:
2. . . . [T]o keep for 5 years complete and accurate medical and fiscal records that fully justify and disclose the extent of the services rendered and billings made under the Medicaid program and agrees to furnish the State Agency and Medicaid Fraud Control Unit upon request such information regarding any payments claimed for providing these services. . . .
* * *
. . . [T]o abide by the Florida Administrative Code, Florida Statutes, policies, procedures, manuals of the Florida Medicaid Program and Federal laws and regulations.
AHCA is, and was at the times material to this proceeding, required "to operate a program to oversee the activities of Florida Medicaid recipients, and providers and their representatives, to ensure that fraudulent and abusive behavior and neglect of recipients occur to the minimum extent possible, and to recover overpayments and impose sanctions as appropriate." Section 409.913, Florida Statutes (1997 & 1998). As part of this program, AHCA is, and was at the times material to this proceeding, required to "conduct, or cause to be conducted by contract or otherwise, reviews, investigations,
analyses, audits, or any combination thereof, to determine possible fraud, abuse, overpayment, or recipient neglect in the Medicaid program and shall report the findings of any overpayments in audit reports as appropriate."
Section 409.913(2), Florida Statutes (1997 & 1998).
Pursuant to this responsibility, AHCA's fiscal agent instituted a desk audit of Medicaid payments made to IV Concepts between February 1, 1997, and January 31, 1998. Twenty-five drugs were flagged in the desk audit because it appeared that the inventory of the drugs was not sufficient to match the claims submitted to Medicaid.
After the results of the desk audit were received in AHCA's Medicaid Program Integrity office ("MPI office"), an audit of IV Concepts was begun by Susan Williams, a senior pharmacist employed in the MPI office.
In a letter to IV Concepts dated June 25, 1998, Ms. Williams notified IV Concepts that AHCA's MPI office was conducting an audit of its pharmacy department and requested that IV Concepts provide, within 30 days:
Documentation that identifies all
purchases/acquisitions by IV Concepts, Inc., for the products listed on "Attachment A" for the period from January 1, 1997, through June 15, 1998.
Documentation that identifies all credits/returns for the period stated above for the products listed on "Attachment A".
"Attachment A" was a list of 18 different drugs for which IV Concepts was to provide documentation.
Ms. Williams chose to limit her audit to the drugs listed in "Attachment A" because they were expensive drugs and because IV Concepts had claimed Medicaid reimbursement during the audit period for large quantities of these drugs.
Ms. Williams requested the documentation so she could compare the quantities of drugs for which IV Concepts had claimed Medicaid reimbursement during the audit period and the quantities of drugs IV Concepts had available to dispense to Medicaid recipients during the audit period.
Ms. Williams was advised in a letter from IV Concepts' attorney dated July 30, 1998, and in a letter from Juan Gallinal dated August 26, 1998, that IV Concepts was having difficulties compiling all of the requested documentation. In a separate letter dated July 30, 1998, IV Concepts' attorney requested an additional 30 days, or until September 1, 1998, to produce the documentation. Ms. Williams granted the requested extension.
Ms. Williams was aware from telephone conversations during July and August 1998 that IV Concepts was considering a sale of its assets to another entity. She was advised by letter in September 1998 that IV Concepts had sold its assets to Flagship Health Care, Inc., and Flagship Pharmacy ("Flagship").
IV Concepts and Ms. Williams worked together cordially, and IV Concepts provided some documentation to Ms. Williams pursuant to her request in the June 25, 1998, letter.
Ms. Williams proceeded with her audit, and AHCA's Provisional Agency Audit Report ("PAAR"), which was prepared by Ms. Williams, was issued on April 17, 2000. In the PAAR,
IV Concepts was advised that AHCA had determined that
IV Concepts had received an overpayment for Medicaid claims with service dates during the audit period in the amount of
$3,105,471.66. In calculating this amount, AHCA had considered the Medicaid claims paid to IV Concepts with service dates during the audit period and the purchase/acquisition documentation provided by IV Concepts on August 12, 13, and 27, 1998; September 10, 1998; and October 5, 1998.
According to the PAAR, IV Concepts had "failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid." In addition, IV Concepts was not given credit for "purported purchases from suppliers that were not a licensed drug wholesaler [sic] in accordance with Chapter 499, F.S."
IV Concepts was advised in the PAAR that the overpayment determination was a provisional finding, and
IV Concepts was encouraged to provide AHCA with any additional documentation that might change the overpayment determination.
During the time she was working on the IV Concepts audit, Ms. Williams was also working on a Medicaid provider fraud and abuse investigation of a company named ImmuneCare. During the course of this audit, Ms. Williams received from AHCA's legal department copies of invoices provided to AHCA's legal department by ImmuneCare that purported to show that
IV Concepts had transferred quantities of drugs during the audit period to ImmuneCare and/or to Dr. Mark Sachs, a physician affiliated with ImmuneCare.
It was the practice of IV Concepts during 1997 and 1998 to provide drugs to ImmuneCare and/or Dr. Sachs for infusion into Dr. Sachs' patients. Each day, IV Concepts received a list of prescriptions to be filled for those of Dr. Sachs' patients scheduled for infusions on the next day; IV Concepts was also provided with a prescription for each patient. A pharmacist or a pharmacy technician employed by IV Concepts compounded and assembled the medications in
accordance with the prescriptions provided by Dr. Sachs, and the drugs were delivered to Dr. Sachs each morning. Dr. Bebell worked as a pharmacist at IV Concepts, and he also, at the request of IV Concepts management, worked part-time at
ImmuneCare, compounding and dispensing medications from ImmuneCare's small pharmacy.
IV Concepts' usual business practice was to fill prescriptions for individual patients and to deliver the medications to the patients' homes, together with delivery slips the patients would sign indicating that they had received the medications. The medications shown on the invoices that came into Ms. Williams' possession were, however, all delivered to ImmuneCare and/or Dr. Sachs, rather then directly to the patients' homes.
According to Mr. Gallinal, who supervised IV Concepts' billing department, invoices for the medications delivered to ImmuneCare and/or Dr. Sachs were sent along with the medications for payment by ImmuneCare or Dr. Sachs as a third party.
Mr. Gallinal identified Invoice #1934 in Agency Exhibit 32 as an example of an invoice for the medications delivered by
IV Concepts to ImmuneCare and/or Dr. Sachs. The invoice shows Dr. Sachs as the "insured," and the total amount billed on Invoice #1934 was $17,526.88 for medications transferred from IV Concepts to ImmuneCare on November 3, 5, 6, and 7, 1997.
According to Mr. Gallinal, ImmuneCare paid IV Concepts for the medications delivered to ImmuneCare and/or Dr. Sachs.
Ms. Williams left AHCA's MPI office in May 2000 to take another job with AHCA. Joann Jackson, a senior pharmacist
with AHCA's MPI office, took over both the IV Concepts audit and the ImmuneCare fraud investigation after Ms. Williams' departure. Among the documents in the audit file for
IV Concepts were the invoices showing that IV Concepts delivered quantities of drugs to ImmuneCare and/or Dr. Sachs.
Because the PAAR had been recently issued when
Ms. Jackson took over the IV Concepts audit, she was awaiting a response to the PAAR from IV Concepts. Ms. Jackson received a response dated May 16, 2000, from Mr. Green, who continued to act as IV Concepts' attorney for purposes of the audit.
Mr. Green advised Ms. Jackson that IV Concepts disputed the overpayment assessed in the PAAR, and he stated that IV Concepts needed a copy of all of the invoices that it had provided to AHCA during the audit. Mr. Green also requested copies of the documents supporting the implication in the PAAR that
IV Concepts had purchased drugs from unlicensed wholesalers. Finally, Mr. Green advised that IV Concepts would again be attempting to obtain additional documentation of its drug purchases during the audit period either from Flagship or from its wholesale pharmaceutical vendors. Mr. Green asked for, and was granted, an additional 90 days in which to provide the additional documentation.
In letters dated August 23, 2000; September 12, 2000; October 16, 2000; November 17, 2000; and December 6, 2000,
Mr. Green kept the MPI office apprised of the efforts
IV Concepts was making to obtain additional documentation from Flagship and/or the wholesale drug distributors from which it purchased drugs during the audit period. Mr. Green also requested in the September 12, 2000, letter that the MPI office send him a list of the reimbursements made by Medicaid to
IV Concepts during the audit period.
Ms. Jackson provided Mr. Green with copies of the documents and with the information he requested.
On January 16, 2001, Mr. Green sent the MPI office IV Concepts' formal response to the PAAR issued April 17, 2000. The response consisted of a letter and of a loose-leaf binder containing a worksheet presenting information on additional invoices located by IV Concepts and information relating to particular medications. In the letter, Mr. Green provided an explanation of the materials contained in the response as follows:
IV Concepts had, during times of shortages, transferred to other pharmacies drugs which were not covered by the audit in exchange for an equal value of Abelcet, Proleukin, and Neupogen, drugs that were included in the audit, which transfers were addressed in affidavits submitted by Jose Gallinal, a pharmacy technician employed by IV Concepts, and by Dr. Bebell;
IV Concepts had found it necessary, during times of shortages, to obtain Sandoglobulin and Gammar, two of the drugs included in the audit, from A.D. Allen, a wholesale pharmaceutical company operating in the United Kingdom, and it was providing in its response additional documentation for the purchase of these drugs, including invoices from A.D. Allen and documentation from the federal Food and Drug Administration releasing the medications for delivery to IV Concepts.
Mr. Green also requested that IV Concepts receive credit in the audit for units of drugs that IV Concepts purchased in strengths that were not specified in the list of drugs attached to the PAAR.
Mr. Green reported in the January 16, 2001, letter to the MPI office that he had re-calculated the amount of the overpayment based on the additional documentation and information provided in the response and that the overpayment should be reduced from $3,105,471.66 to $842,605.97.
Ms. Jackson reviewed the materials submitted by
IV Concepts on January 16, 2001, and gave IV Concepts credit for a number of drug purchases based on the documentation
IV Concepts had provided in its response to the PAAR.
The FAAR that is the subject of this proceeding was issued on October 29, 2001. IV Concepts was notified in the FAAR that the MPI office had determined that IV Concepts had
received overpayments from Medicaid in the amount of
$2,841,045.40 during the audit period. This overpayment related only to Medicaid claims paid IV Concepts during the audit period for nine specified drugs. IV Concepts was advised in the FAAR that it had "failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid."
The FAAR also contained the following statement:
The overpayment calculation is based upon the assumption that all stock, with the exception of stock purportedly acquired from unlicensed drug wholesalers, that you have demonstrated as available during the period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the calculated overpayment.
Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid.
The FAAR included four attachments to support the overpayment calculation:
A compilation of the claims paid by Medicaid to IV Concepts for the nine drugs that were the subject of the audit report;
A summary of the basis for the calculation of the total overpayment amount, including the amount of the Medicaid payments to IV Concepts during the audit period for each of the
nine drugs, the number of units of each drug for which Medicaid paid IV Concepts, the number of units of the nine drugs that
IV Concepts had documented it purchased during the audit period, the unit difference, the unit price, and the amount of the overpayment for each of the nine drugs;
An Invoice Review listing purchases for which
IV Concepts provided documentation, including the date of the invoice, the supplier, the drug and strength, the package size, the number of packages, and the number of units purchased, together with the total number of documented unit purchases made by IV Concepts; and
A packet containing the invoices from IV Concepts to ImmuneCare and/or Dr. Sachs provided to Ms. Williams in the course of the fraud investigation of ImmuneCare, which do not constitute part of AHCA's audit work papers.
Ms. Jackson prepared the October 29, 2001, FAAR. The focus of the audit was to establish that the drugs for which IV Concepts received payment from Medicaid during the audit period were actually available to IV Concepts to dispense to Medicaid recipients.
In preparing the FAAR, Ms. Jackson first compiled a list of each payment made by Medicaid to IV Concepts during the audit period for each of the nine drugs included in the audit; these payments necessarily included payments for drugs dispensed
prior to the first day of the audit period. This data included the numbers of units of each of these drugs for which payment was made to IV Concepts during the audit period.
Ms. Jackson then computed the number of units of the specified drugs that IV Concepts had documented were available for dispensing to Medicaid recipients during the audit period.3
Ms. Jackson did not give IV Concepts credit for the units of drugs shown by the invoices provided by IV Concepts to have been purchased before January 1, 1997, or after June 15, 1998.4 These exclusions are consistent with AHCA's standard practice of assuming that a pharmacy's inventory remains relatively constant during the audit period and that the shelf inventory on the first day of the audit period is equal to the shelf inventory on the last day of the audit period.
Ms. Jackson did not give IV Concepts credit for the units of drugs shown by the invoices provided by IV Concepts to have been shipped and billed to pharmacies other than
IV Concepts.5 IV Concepts did not provide any supplementary documentation showing that it had subsequently purchased the drugs, and, therefore, it failed to provide documentation establishing that the units of drugs identified in this group of invoices were available to be dispensed to Medicaid recipients during the audit period.
Ms. Jackson did not give IV Concepts credit for the units of drugs shown by invoices provided by IV Concepts to have been shipped to a pharmacy other than IV Concepts, even though the invoices show that IV Concepts was billed for the drugs.6
IV Concepts did not provide any supplementary documentation showing that it took possession of the drugs, and it, therefore, failed to provide documentation establishing that the units of drugs identified in this group of invoices were available to be dispensed to Medicaid recipients during the audit period.
Ms. Jackson did not give IV Concepts credit for the units of the nine specified drugs that were purportedly obtained by IV Concepts through the barter of other drugs of equal value. IV Concepts provided AHCA with affidavits of Dr. Bebell and Jose Gallinal, which included averments that, during the audit period, IV Concepts acquired through barter approximately 1,000 of the units of Neupogen that was paid by Medicaid, approximately 5% of the units of Abelcet that was paid by Medicaid, and approximately 5% of the units of Proleukin that was paid by Medicaid.7 Dr. Bebell and Jose Gallinal further averred that no invoices or other documentation was typically received to evidence these barter transactions. The information contained in these affidavits is not sufficient, however, to establish that IV Concepts acquired through barter the amounts of the three drugs as specified in the affidavits and had these
quantities of the drugs available for dispensing to Medicaid recipients during the audit period as a result of barter. The affidavits are imprecise and are not the types of documents that are acceptable to establish that quantities of drugs were available to IV Concepts for dispensing to Medicaid recipients because the affidavits were not prepared in the normal course of IV Concepts' business.
Ms. Jackson did not give IV Concepts credit for the units of drugs shown on invoices provided by IV Concepts that showed the purchase of drugs from entities that Ms. Jackson determined were not licensed in Florida as wholesale drug distributors.8 "The purchase or receipt of a legend drug from a person that is not authorized under the law of the state in which the person resides to distribute legend drugs" is unlawful. Section 499.005(14), Florida Statutes (1997 & 1998). Even though IV Concepts provided documentation to establish that the units of drugs specified in these invoices were available for dispensing to Medicaid recipients during the audit period, IV Concepts should not be permitted to receive Medicaid payments for the unlawfully acquired units of drugs that it dispensed to Medicaid recipients during the audit period.
Ms. Jackson did not give IV Concepts credit for the units of drugs shown on invoices provided by IV Concepts that showed purchases of drugs from A.D. Allen, a foreign drug
wholesaler, that were not accompanied by a notice indicating that the federal Food and Drug Agency ("FDA") had either approved the shipment prior to entry into the United States or had appended a signed notice allowing the importation of the drugs without FDA examination.9 In the absence of FDA approval for these drugs to enter the United States, the drugs were not legally acquired by IV Concepts, and, even though IV Concepts provided documentation to establish that the units of drugs specified in these invoices were available for dispensing to Medicaid recipients during the audit period, IV Concepts should not be entitled to receive Medicaid payments for the units of drugs it imported into the United States without FDA approval.
Finally, Ms. Jackson subtracted from the number of units of the nine specified drugs for which she had given
IV Concepts credit the units of drugs delivered to ImmuneCare and/or Dr. Sachs, as shown by the invoices provided to AHCA by ImmuneCare.10 These units were not available to IV Concepts to dispense to Medicaid recipients, and, in addition, ImmuneCare and/or Dr. Sachs paid IV Concepts for the units of drugs delivered for infusion into Dr. Sachs' patients.
After the FAAR was issued, Ms. Jackson re-calculated the amount of overpayment charged against IV Concepts, and reduced the amount to $2,815,847.32. The reduction was the result of Ms. Jackson's giving IV Concepts credit for invoices
showing the purchase of drugs from wholesale drug distributors who were not licensed in Florida but were licensed in their home states.
The unrefuted evidence presented by AHCA is sufficient to establish that IV Concepts received overpayments from Medicaid during the period extending from January 1, 1997, through June 15, 1998, in the amount of $2,815,847.32, which amount is subject to recoupment by AHCA.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2002).
At the times material to this proceeding, AHCA had the authority pursuant to Section 409.913, Florida Statutes (1997 & 1998), "to recover overpayments" made to providers of goods and services to Medicaid recipients.
AHCA bears the burden of establishing a Medicaid overpayment by a preponderance of the evidence. South Medical Services, Inc. v. Agency for Health Care Administration,
653 So. 2d 440, 441 (Fla. 3d DCA 1995); Southpointe Pharmacy v. Department of Health and Rehabilitative Services,
596 So. 2d 106, 109 (Fla. 1st DCA 1992); see also
Section 120.57(1)(j), Florida Statutes (2002)("Findings of fact
shall be based on a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute . . .").
51. Section 409.913(21), Florida Statutes (1997 & 1998), provides that "[t]he audit report, supported by agency work papers, showing an overpayment to a provider constitutes evidence of the overpayment." AHCA's audit report and work papers were received into evidence and, therefore, AHCA has established a prima facie case to support its determination that IV Concepts received a Medicaid overpayment during the audit period. See Andrew Justice, d/b/a Mobile Optical v. Agency for Health Care Administration, DOAH Case No. 02-4801MPI (Recommended Order June 2, 2003); Choices in Support and Services, Inc. v. Agency for Health Care Administration, DOAH Case No. 01-1977MPI (Recommended Order March 13, 2003).
IV Concepts did not present any evidence to rebut AHCA's prima facie case. Rather, IV Concepts argued that AHCA had no authority to assess IV Concepts for a Medicaid overpayment based on IV Concepts' failure to provide documentation that it had a sufficient quantity of drugs available for dispensing to Medicaid recipients during the audit period, and it also contested the legal authority for AHCA to refuse to give IV Concepts credit for drugs purchased outside the audit period, for drugs purchased by IV Concepts but shipped
by the wholesale distributor to another pharmacy, for drugs obtained through barter, for drug purchases from unlicensed wholesale distributors, for drugs imported into the United States that did not receive FDA clearance, and for drugs delivered and billed to ImmuneCare and/or Dr. Sachs.
Admissibility of ImmuneCare invoices as evidence of quantities of drugs not available to IV Concepts for dispensing to Medicaid recipients during the audit period.
As noted above in the Preliminary Statement,
IV Concepts asserted that Agency Exhibit 32, consisting of the invoices AHCA received in the context of the audit and fraud investigation of ImmuneCare, should not be admitted into evidence because the documents comprising the exhibit were not properly authenticated.
The evidence of Mr. Gallinal and of Dr. Bebell is, however, sufficient under the circumstances in this case to establish that the invoices comprising the Agency's Exhibit 32 are authentic invoices showing transfers of drugs from
IV Concepts to ImmuneCare and/or Dr. Sachs for administration in the amounts specified to the patients identified in the invoices. Even though Mr. Gallinal and Dr. Bebell did not examine each invoice, they both testified at length about the transactions that took place between IV Concepts and ImmuneCare and/or Dr. Sachs. Mr. Gallinal acknowledged in his testimony that Invoice # 1934, the first invoice in Agency Exhibit 32, was
representative of the type of transaction engaged in by
IV Concepts and ImmuneCare and/or Dr. Sachs, and the remaining invoices in the exhibit include information virtually identical to that in Invoice # 1934.
IV Concepts also argued that the invoices comprising Agency Exhibit 32 could not form the basis for a finding of fact that IV Concepts did not have available for dispensing to Medicaid recipients during the audit period the quantities of drugs specified in the ImmuneCare invoices. IV Concepts took the position that the information contained in the invoices is hearsay, that the invoices do not fall under the business records exception permitting admission of such invoices in a civil proceeding, and that AHCA failed to present other evidence establishing that the transfers of drugs from IV Concepts to ImmuneCare and/or Dr. Sachs had actually taken place. See Section 120.57(1)(c), Florida Statutes (2002).
56. Section 409.920(4), Florida Statutes (1997 & 1998), provides that "[a]ll records in the custody of the agency or its fiscal agent which relate to Medicaid provider fraud are business records within the meaning of s. 90.803(6)."
Section 90.803(6), Florida Statutes, provides that business records, even though hearsay, are not inadmissible to prove the truth of the matters asserted in the records. Ms. Williams testified that she received the invoices comprising Agency
Exhibit 32 from AHCA's legal office as part of her Medicaid provider fraud investigation of ImmuneCare. Custody of the invoices was transferred from Ms. Williams to Ms. Jackson when the IV Concepts audit and the ImmuneCare fraud investigation were transferred to Ms. Jackson. The invoices are, therefore, deemed to be business records pursuant to Section 409.920(4), and the information contained in those invoices may be used to support findings of fact in this Recommended Order.
Failure of IV Concepts to provide documentation establishing that it had available for dispensing to Medicaid recipients during the audit period quantities of drugs that corresponded to the quantities of drugs for which it received Medicaid payments during the audit period.
Pursuant to Section 409.913(8), Florida Statutes (1997 & 1998), IV Concepts was required to retain for a period of five years all records "pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid." This requirement is also included in the Medicaid provider agreement that IV Concepts executed in December 1994 and in the
Medicaid reimbursement handbooks applicable to pharmacies during the audit period. It is implicit in these record-keeping requirements that Medicaid providers are strictly liable for the maintenance of Medicaid-related records and may be held accountable if they fail to keep these records.11
The types of documentation that may be used to establish the acquisition of inventory are "written invoices,
written inventory, records, or other competent written documentary evidence maintained in the normal course of the provider's business." Section 409.913(21), Florida Statutes (1997 & 1998).
It is clear from the statutes, rules, and provider handbooks that AHCA is entitled to recoup Medicaid overpayments that are based on IV Concepts' failure to provide adequate documentation to establish that it had available for dispensing to Medicaid recipients the amount of drugs for which it received Medicaid reimbursement during the audit period; accord Colonnade
Medical Center, Inc. v. AHCA, DOAH Case No. 01-1929 (Recommended Order Nov. 14, 2001), aff'd 28 Fla. L. Weekly D1021 (Fla. 4th DCA Apr. 23, 2003)(Opinion not yet released for publication):
a. Section 409.913(14)(n), Florida Statutes (1997 & 1998), provides that AHCA "may seek any remedy provided by law" if a Medicaid provider "fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods . . . to support the provider's billings to Medicaid." Recoupment is a remedy available to AHCA. See Section 409.913, Florida Statutes (1997 & 1998)("The agency shall operate a program to oversee the activities of Florida Medicaid recipients, and providers and their representatives, . . . to recover overpayments and impose sanctions as appropriate.")
The analytical methods that could be used by AHCA to determine whether a provider has received a Medicaid overpayment
include
reviews to determine variances between the quantities of products that a provider had on hand and available to be purveyed to Medicaid recipients during the review period and the quantities of the same products paid for by the Medicaid program for the same period, taking into appropriate consideration sales of the same products to non-Medicaid customers during the same period.
Section 409.913(19), Florida Statutes (1997 & 1998). In addition, Rule 59G-9.030(4)(c), Florida Administrative Code (Rev. Jan. 1995), provided that, when AHCA chose to use the aggregate-analysis method of determining Medicaid overpayments,
[u]pon reasonable request, a provider of goods that are billed to and paid for by the Medicaid program must furnish to authorized auditors, investigators and agents invoices and other information directly related to inventory or acquisition of goods from suppliers and other documentation demonstrating that the provider had available during the audit period sufficient quantities of such goods to support billings to Medicaid.
Finally, the Medicaid provider handbooks applicable to claims submitted by IV Concepts during the audit period specifically provide that recoupment of Medicaid payments may be made for any payments that lack the required documentation.
"Overpayment" is defined in Section 409.913(1)(e), Florida Statutes (1997 & 1998), as including "any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake." Other sources of overpayments may be the failure to document a good or service "as having been available to be provided by sufficient invoices, distributor sales records, or manufacturer sales records to support the size and quantity of goods claimed to have been provided to Medicaid recipients during an audit period." Rule 59G-9.030(2)(b)6., Florida Administrative Code (Rev. Jan. 1995).
A Medicaid provider must ensure that claims for payment for goods and services provided to a Medicaid recipient are "for goods and services" that are provided "in accordance with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law." Section 409.913(7)(e), Florida Statutes (1997 & 1998). A Medicaid provider is not entitled to payment from Medicaid for goods that come into the possession of the Medicaid provider unlawfully.
For the above-stated reasons, and based on the findings of fact herein, AHCA has proven by a preponderance of
the evidence that IV Concepts received Medicaid overpayments in the amount of $2,815,847.32.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order finding that IV Concepts received overpayments from the Medicaid program in the amount of
$2,815,847.32 during the period extending from January 1, 1997, through June 15, 1998, and requiring IV Concepts to repay the overpayment amount.
DONE AND ENTERED this 30th day of June, 2003, in Tallahassee, Leon County, Florida.
PATRICIA HART MALONO
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 30th day of June, 2003.
ENDNOTES
1/ Agency Exhibit 33 consists of the FAAR and four attachments. It was received into evidence pursuant to the provisions of Section 409.913(21), Florida Statutes (1997 & 1998), which specifies that AHCA's "audit report, supported by agency work papers, constitutes evidence of overpayment."
IV Concepts initially objected to the attachment to the FAAR of a packet of invoices that had been considered in the calculation of the overpayment identified in the FAAR.
IV Concepts challenged the authenticity of these invoices and alleged that the invoices were hearsay upon which no findings of fact could be made. IV Concepts, however, withdrew its objection to the introduction of Agency Exhibit 33 based on a ruling that the FAAR and its attachments establish only the amount of the overpayment and the legal and factual bases for AHCA's overpayment determination and that IV Concepts was not precluded from challenging the authenticity of the invoices or their sufficiency to support findings of fact as to the truth of the matters asserted in the invoices.
2/ AHCA consistently refers to both the 1997 and 1998 versions of Florida Statutes as governing this case. The statutory references in this Recommended Order conform to AHCA's usage.
3/ In their Second Joint and Agreed Pre-Hearing Stipulation, filed on December 10, 2002, the parties stipulated to the efforts made by IV Concepts to obtain purchase documentation for the audit period. In brief, the stipulation establishes that, in June 1998, IV Concepts entered into a "Purchase Asset Agreement" in which it agreed to sell its assets to Flagship.
Pursuant to the agreement, in September 1998, IV Concepts transferred to Flagship all of its records, including those records relating to Medicaid; Flagship was obligated by the agreement to maintain these records for not less than
four years. Prior to April 17, 2000, however, when AHCA issued the PAAR, Flagship filed for bankruptcy. IV Concepts made every effort to locate the records necessary for the audit, but it could not retrieve these records from Flagship or from the wholesalers from whom it purchased the drugs during the audit period.
Joint | Exhibit | 22. |
Joint | Exhibit | 23. |
Joint | Exhibit | 24. |
Joint | Exhibit | 25. |
Joint | Exhibit | 26. |
4/
5/
6/
7/
8/
9/ Joint Exhibit 31.
10/ Agency Exhibit 32.
11/ The dilemma in which IV Concepts found itself as a result of its transferring all of its Medicaid-related records to Flagship is regrettable, but these difficulties do not excuse
IV Concepts' failure to keep the documents available for the statutory five-year period.
COPIES FURNISHED:
Sean M. Ellsworth, Esquire Sean M. Ellsworth, P.A. Post Office Box 190559
Miami Beach, Florida 33119-0559
L. William Porter,II, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Suite 3431
Fort Knox Executive Center III Tallahassee, Florida 32308-5403
Lealand McCharen, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Valda Clark Christian, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308
Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration Fort Knox Building, Suite 3116
2727 Mahan Drive
Tallahassee, Florida 32308
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 07, 2003 | Agency Final Order | |
| Jun. 30, 2003 | Recommended Order | AHCA proved Petitioner rec`d Medicaid overpayments during audit period of $2,815,847.32. Petitioner not credited for drugs for which it provided no documentation, purchased from unlicensed wholesalers, and that were transferred/billed to another pharmacy. |
