STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
G. B.; Z. L., THROUGH HIS GUARDIAN K.L.; J. H.; AND
M. R.,
Petitioners,
vs.
AGENCY FOR PERSONS WITH DISABILITIES,
Respondent.
/
Case No. 15-5903RP
FINAL ORDER
Pursuant to notice, a final hearing was held in this case from February 29 through March 2, 2016, in Tallahassee, Florida, before Garnett W. Chisenhall, a duly-designated Administrative Law Judge of the Division of Administrative Hearings (“DOAH”).
APPEARANCES
For Petitioner: Gigi Rollini, Esquire
Robert A. McNeely, Esquire Messer Caparello, P.A.
2618 Centennial Place
Tallahassee, Florida 32308
For Respondent: David A. Yon, Esquire
Brittany Adams Long, Esquire Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A.
Suite 200
301 South Bronough Street, Tallahassee, Florida 32301
Richard D. Tritschler, General Counsel Agency for Persons with Disabilities 4030 Esplanade Way, Suite 380
Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUES
The issues for disposition in this case are whether:
(1) proposed rules 65G-4.0213 through 65G-4.0218 of the Florida Administrative Code (“the Proposed Rules”) constitute an invalid exercise of delegated legislative authority as defined in section 120.52(8), Florida Statutes (2015)1/; and whether (2) the Agency for Persons with Disabilities (“APD”) failed to follow applicable rulemaking procedures in seeking to adopt the
Proposed Rules.
PRELIMINARY STATEMENT
Via a Petition filed on October 19, 2015, Petitioners alleged that the Proposed Rules were an invalid exercise of delegated legislative authority. Petitioners also alleged that APD failed to follow applicable rulemaking procedures.
Petitioners filed a Motion for Continuance on October 23, 2015, seeking to have the final hearing set outside the 30 days required by section 120.56(1)(c), Florida Statutes. Determining that there was good cause to grant a continuance, the undersigned issued a Notice of Hearing scheduling the final hearing for January 19 through January 20, 2016.
APD filed a “Motion to Dismiss, Strike, or in the Alternative, Motion for More Definite Statement” on November 11, 2015. After considering the aforementioned Motion and Petitioners’ Response thereto, the undersigned issued an Order on December 1, 2015, requiring Petitioners to file an Amended Petition by December 9, 2015 that identified with particularity which Proposed Rules (or portions thereof) were allegedly invalid exercises of delegated legislative authority.
Furthermore, the Amended Petition had to specify the ground or grounds as to why each Proposed Rule (or part thereof) allegedly amounted to an invalid exercise of delegated legislative authority.
Rather than filing a single amended petition, each Petitioner filed a separate Amended Petition on December 9, 2015.
After considering APD’s “Motion to Dismiss Amended Petitions,” the undersigned issued an Order granting the aforementioned Motion and requiring Petitioners to jointly file one petition on or before January 13, 2016, setting forth all of the reasons why the Proposed Rules were allegedly invalid exercises of delegated legislative authority.
Petitioners timely filed a Joint Amended Petition on January 13, 2016.
On January 15, 2016, Petitioners filed a “Joint Motion to Compel and Motion for Continuance” seeking to continue the Final Hearing until APD complied with certain discovery requests.
Petitioners asserted that a continuance was also justified because they needed additional time to conduct discovery pertaining to new issues raised in Petitioners’ Joint Amended Petition.
The undersigned granted the aforementioned Motion and continued the final hearing to February 10 through 12, 2016.
On February 9, 2016, APD filed a “Motion to Continue” the final hearing. In support thereof, APD asserted that it needed additional time to consider an expert report furnished by Petitioners’ expert witness. In addition, APD suggested that a continuance would enable the parties to potentially resolve certain aspects of their dispute.
After considering the circumstances described in APD’s “Motion to Continue,” the undersigned issued an Order on February 10, 2016, re-scheduling the final hearing to occur from February 29 through March 2, 2016.
The final hearing was commenced as scheduled, and Petitioners called four witnesses: Dr. James McClave, who was accepted as an expert in statistics and econometrics; Susan Chen, a data analyst at APD; Dr. Xu-Feng Niu, the chair of the department of statistics at Florida State University; and Denise
Arnold, Deputy Director of Programs at APD. APD called two witnesses: Ms. Arnold and Dr. Niu, who was accepted as an expert in statistics.
The following exhibits were admitted into evidence: Joint Exhibits J-1 through J-15; demonstrative exhibits, which were numbered, photographed, and filed as Joint Exhibit J-16; Petitioners’ Exhibits P-1 through P-13; and Respondent’s Exhibits R-1 and R-2. The ALJ took official recognition of Respondent’s Exhibit R-4, Ch. 2015-222, § 21, Laws of Fla.
A Transcript of the final hearing was filed at DOAH on March 17, 2016. After granting two extensions, the undersigned carefully considered each party’s timely-filed proposed final orders.
The parties engaged in a substantial amount of Motion practice during the course of this proceeding. Any previously pending Motions have been disposed of via an order issued along with this Final Order.
As explained in detail below, Petitioners allege that the Proposed Rules amount to an invalid exercise of delegated legislative authority because they allegedly: (1) enlarge, modify, and contravene the specific provisions of the law implemented; (2) contain vague and inadequate standards that vest unbridled discretion in APD; (3) are arbitrary and capricious; and (4) exceed the grant of rulemaking authority in
section 393.0662(9), Florida Statutes. In addition, Petitioners allege that APD failed to follow applicable rulemaking procedures set forth in sections 120.54(3) and 120.541, Florida Statutes, relating to a Statement of Estimated Regulatory Costs.
FINDINGS OF FACT
The Parties
Petitioners face profound mental and physical challenges, and they receive services through the Home and Community-Based Services Medicaid Waiver Program for individuals with developmental disabilities (“the Waiver”).
APD’s mission is to help people with developmental disabilities live and receive services in their communities.
§ 393.066(1), Fla. Stat.
The Waiver
Medicaid is the primary funding source for services to income-qualified, developmentally disabled individuals. See
Russell v. Ag. for Pers. With Disab., 929 So. 2d 601, 602 (Fla.
1st DCA 2006). See also § 393.063(9), Fla. Stat. (defining “developmental disability” to mean “a disorder or syndrome that is attributable to intellectual disability, cerebral palsy, autism, spina bifida, or Prader-Willi syndrome; that manifests before the age of 18; and that constitutes a substantial handicap that can reasonably be expected to continue indefinitely.”).
States participating in Medicaid must comply with federal requirements governing the program, but the Medicaid Act allows states to obtain waivers from those requirements. Russell, 929 So. 2d at 603.
Florida provides services to APD’s clients2/ through the Waiver, and APD administers the Waiver.
APD’s goal is to enable its clients to live productive lives in their communities rather than in costly institutions. See § 393.066(1), Fla. Stat. (mandating that APD “shall plan, develop, organize, and implement its programs of services and treatment for persons with developmental disabilities to allow clients to live as independently as possible in their own homes or communities and to achieve productive lives as close to normal as possible.”).
Even though the services provided to APD’s clients are funded through the Waiver, those services must still comply with certain federal requirements. For example, all Waiver services must be medically necessary. Also, Waiver funding is funding of last resort. Therefore, a Waiver recipient must exhaust all other available resources from his or her state, local community, and family prior to receiving waiver funds. See
§ 393.0662(4), Fla. Stat. (mandating that “[a] client must use all available services authorized under the state Medicaid plan, school-based services, private insurance and other benefits, and
any other resources that may be available to the client before using funds from his or her iBudget to pay for support and services.”).
APD currently serves approximately 30,600 clients through the Waiver. Due to budgetary constraints, approximately 21,000 people are on a “wait list” for receiving Waiver services.
The iBudget Statute
In 2007, the Florida Legislature directed APD to develop and implement a comprehensive redesign of the waiver system. Moreland v. Ag. for Pers. with Disab., 19 So. 3d 1009, 1010 (Fla. 1st DCA 2009). This new system, referred to as the “Tier System,” placed each client into one of four different “tiers” based on that client’s need for services and the cost of providing those services. See § 393.0661(3), Fla. Stat. See also Moreland, 19 So. 3d at 1011 (noting that “[t]iers two,
three, and four each have a different annual monetary cap; thus, the level of services available for each individual is contingent upon the tier into which the individual is placed.”).
APD responded by promulgating proposed rules to implement the Tier System. However, the First District Court of Appeal invalidated them. Moreland, 19 So. 3d 1009.
In 2010, the Florida Legislature shifted to the iBudget System. As discussed in the preamble to section
393.0662, Florida Statutes, the iBudget System was intended to assist APD with its budgeting so that the agency could avoid the budget shortfalls that had plagued the Tier System. The Legislature also intended to provide APD’s clients with greater flexibility in choosing the services that would enable them to remain in their local communities:
The Legislature finds that improved financial management of the existing home and community-based Medicaid waiver program is necessary to avoid deficits that impede the provision of services to individuals who are on the waiting list for enrollment in the program. The Legislature further finds that clients and their families should have greater flexibility to choose the services that best allow them to live in their community within the limits of an established budget. Therefore, the Legislature intends that [APD], in consultation with the Agency for Health Care Administration, develop and implement a comprehensive redesign of the service delivery system using individual budgets as the basis for allocating the funds appropriated for the [Waiver] among eligible enrolled clients. The service delivery system that uses individual budgets shall be called the iBudget system.
§ 393.0662, Fla Stat.
The increased flexibility that clients have under the iBudget system enables them to obtain necessary services without getting prior approval from APD.
The Legislature also expressed a commitment to keeping clients in their local communities rather than in costly institutions:
The Legislature finds and declares that existing state programs for the treatment of individuals with developmental disabilities, which often unnecessarily place clients in institutions, are unreasonably costly, are ineffective in bringing the individual client to his or her maximum potential, and are in fact debilitating to many clients. A redirection in state treatment programs for individuals with developmental disabilities is necessary if any significant amelioration of the problems faced by such individuals is ever to take place . . . . Further, the greatest priority shall be given to the development and implementation of community- based services that will enable individuals with developmental disabilities to achieve their greatest potential for independent and productive living, enable them to live in their own homes or in residences located in their own communities, and permit them to be diverted or removed from unnecessary institutional placements.
§ 393.0662, Fla. Stat.
In order to accomplish the goals described above, section 393.0662(1), provides that “[t]he agency shall establish an individual budget, referred to as an iBudget, for each [client]. The funds appropriated to the agency shall be allocated through the iBudget system to eligible, Medicaid- enrolled clients.”
Also, APD must utilize an algorithm in establishing each client’s iBudget:
In developing each client’s iBudget, the agency shall use an allocation algorithm and methodology. The algorithm shall use variables that have been determined by the agency to have a statistically validated relationship to the client’s level of need for services provided through the [Waiver]. The algorithm and methodology may consider individual characteristics, including, but not limited to, a client’s age and living situation, information from a formal assessment instrument that the agency determines is valid and reliable, and information from other assessment processes.
§393.0662(1)(a), Fla. Stat.
The algorithm referred to in section 393.0662(1)(a) (“the Allocation Algorithm”), is a multiple linear regression model. In very simple terms, a multiple linear regression model is an equation with independent variables and a constant on one side and a dependent variable on the other. A very simple regression model would follow this format:
dependent variable = constant
+ coefficient1(independent variable1)
+ coefficient2(independent variable2)
+ coefficient3(independent variable3)
The amount of the dependent variable is correlated to some degree with each of the independent variables, and the coefficients next to each independent variable quantify the correlation between the dependent variable and that particular independent variable.
Therefore, if one has amounts for each of the independent variables, then the expected amount for the
dependent variable can be calculated by: (a) plugging the amounts for the independent variables into the regression equation; (b) multiplying the independent variables by their coefficients; and (c) adding those results to the constant.
The Legislature intends for the Allocation Algorithm to establish each client’s iBudget. However, the Legislature has recognized that there may be instances in which a particular client’s needs will not be met through the iBudget amount or other resources. These instances are referred to as “significant additional needs” (“SANs”)3/, and they will lead to an increase to a client’s iBudget.
The first SAN is characterized in section 393.0662, as “[a]n extraordinary need that would place the health and safety of the client, the client’s caregiver, or the public in immediate, serious jeopardy unless the increase is approved.” This first SAN category is very broad and encompasses situations such as: (1) a documented history of life-threatening behaviors; (2) a complex medical condition that requires intervention by a licensed nurse; (3) a chronic comorbid condition; and (4) a need for total physical assistance with the activities of daily living. See § 393.0662, Fla. Stat.
The second SAN category encompasses “[a] significant need for one-time or temporary support or services that, if not provided, would place the health and safety of the client, the
client’s caregiver, or the public in serious jeopardy ”
A significant need for one-time services could include needs such as modifications to a home or services to address the temporary loss of a caregiver. Id.
The third SAN category accounts for a significant increase in the need for services after the beginning of the plan year due to substantial changes in a client’s circumstances. This could encompass situations such as the permanent or long-term loss of a caregiver or a significant change in medical or functional status that requires the provision of additional services. Id.
Section 393.0662, contains other important provisions.
For instance, section 393.0662(1)(b), requires that APD “shall reserve portions of the appropriation for [the Waiver] for adjustments required pursuant to this paragraph and may use the services of an independent actuary in determining the amount of the portions to be reserved.”
Also, section 393.0662(1)(c), mandates that “[a] client’s iBudget shall be the total of the amount determined by the algorithm and any additional funding provided pursuant to paragraph (b) [i.e. SANs]. A client’s annual expenditures for [Waiver] services may not exceed the limits of his or her iBudget.”
The Florida Legislature gave APD the authority to adopt rules governing the implementation of the iBudget system:
[APD] and the Agency for Health Care Administration may adopt rules specifying the allocation algorithm and methodology; criteria and processes for clients to access reserved funds for extraordinary needs, temporarily or permanently changed needs, and one-time needs; and processes and requirements for selection and review of services, development of support and cost plans, and management of the iBudget system as needed to administer this section.
§ 393.0662(9), Fla. Stat.
APD’s First Attempt to Adopt iBudget Rules
APD utilized its rulemaking authority by promulgating Proposed Rules 65G-4.0210 through 65G-4.027 (“the First Proposed Rules”) in 2012.
The Petitioners in the instant case filed a petition alleging that the First Proposed Rules were an invalid exercise of delegated legislative authority. An Administrative Law Judge rejected their challenge, but the First District Court of Appeal held that the First Proposed Rules violated section 120.52(8)(c), by enlarging, modifying, or contravening section 393.0662:
Here, the Legislature was clear: the algorithm is the sole mechanism to set a client's iBudget, save for three exceptions specifically delineated by statute.
§ 393.0662(1)(c), Fla. Stat. In
contravention of this clear requirement, the
Proposed Rules use the algorithm, instead, as merely a starting point. The algorithm amount is then put through various modification mechanisms—none of which are contemplated by the clear statutory mandate that the "iBudget shall be the total of the amount determined by the algorithm and any additional funding provided pursuant to paragraph (b)." Id.
Further, the use of the review mechanisms to decrease the algorithm amount contravenes the iBudget Statute. Nowhere in the statutory language does the Legislature contemplate decreasing the algorithm amount. The Legislature directed the algorithm be the floor and then permitted increases to that algorithm amount based on three delineated circumstances.
G.B. et al. v. Ag. for Pers. with Disab., 143 So. 3d 454, 457-
58 (Fla. 1st DCA 2014).
Even though the First Proposed Rules were invalidated, APD transitioned its clients to the iBudget System on July 1, 2013, when the federal waiver for the Tier System expired. This was possible because APD enacted an emergency rule and the Legislature allowed APD to continue using the First Proposed Rules until a new set of rules was adopted.
In order to comply with the G.B. ruling, APD increased the iBudgets for approximately 14,000 clients so that their iBudgets were at least the algorithm amount.
Development of the Proposed Rules
After the G.B. decision, APD published a notice of
development of rulemaking on October 23, 2014. Over the next
several months, APD held multiple public hearings and noticed multiple changes to the Proposed Rules based on public comment.
APD staff analyzed whether a statement of estimated regulatory costs (“SERC”) was required by completing a standardized checklist form entitled “Proposed Rule: Is a SERC Required.” See § 120.541(1)(b), Fla. Stat. (mandating that “[i]f a proposed rule will have an adverse impact on small business or if the proposed rule is likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule, the agency shall prepare a statement of estimated regulatory costs as required by s. 120.54(3)(b).”);
§ 120.541(3), Fla. Stat. (mandating that “[i]f the adverse impact or regulatory costs of the rule exceed any of the criteria established in paragraph (2)(a), the rule shall be submitted” for legislative ratification).
Denise Arnold, APD’s Deputy Director, testified at the final hearing that APD’s SERC analysis included an examination of rules that had already been adopted, an evaluation of public comments, and an analysis of whether the Proposed Rules would raise costs for those private entities providing services to APD’s clients.
Using the SERC checklist, APD concluded that the direct and indirect regulatory costs associated with
implementing the Proposed Rules would be “zero;” that “zero” entities would be impacted; and that there would be no adverse economic or noneconomic impact from the implementation of the Proposed Rules.
During the final hearing, there was no persuasive evidence that regulatory costs incurred by those providing services to APD’s clients would be increased if the Proposed Rules were to be adopted. For example, no Waiver providers testified at the final hearing.
In contrast, the greater weight of the evidence demonstrated that the Proposed Rules would not materially increase the costs of providing services to APD’s clients. Under both the current iBudget system and the Tier System, Waiver providers have substantially the same responsibilities and workloads.
While the Proposed Rules may require Waiver providers to complete new forms, the evidence demonstrated that those new forms will simply replace ones Waiver providers are currently using.
Accordingly, APD’s Director signed the SERC checklist on December 3, 2014, and thus certified that no SERC was required.
APD published a version of the Proposed Rules on December 5, 2014. That notice stated that a SERC and
legislative ratification were not required. However, the notice did not include a description of the information utilized by APD to make that determination.
Accordingly, the Joint Administrative Procedures Committee (“JAPC”) addressed a letter to APD on May 13, 2015, advising APD that the legislative ratification statement was missing from the notice of proposed rulemaking. The letter continued by stating that because “a SERC was not prepared for the rules, please publish a notice of correction describing the information expressly relied upon by [APD] in determining whether the rules are expected to require legislative ratification.”
APD responded by publishing a notice of correction on May 28, 2015 stating:
The Notice of Proposed Rule did not state what information was relied upon in determining that the proposed rule is not expected to require legislative ratification. The information expressly relied upon is the analysis conducted by [APD] to determine whether a SERC was required and the nature of the rule.
This information sufficiently described the information utilized by APD in its SERC analysis. However, even if that were not the case, there is no basis for inferring that any deficiency in the notice of correction impaired the Petitioners’ substantial interests or the fairness of the
proceeding. Also, there was no evidence or testimony presented at the final hearing to suggest otherwise.
The Proposed Rules
A few key components of the Proposed Rules warrant discussion. For example, the completion of a Questionnaire for Situational Information (“QSI”) is the first step in establishing a client’s iBudget. Proposed Rule 65G-4.0213(18) defines a QSI as “[a]n assessment instrument used by [APD] to determine an individual’s needs in the areas of functional, behavioral, and physical status,” and Proposed Rule 65G- 4.0213(18) incorporates the QSI by reference.
The QSI is a series of questions designed to gather information about a client’s functional ability (i.e., the client’s need for assistance with eating, bathing, walking, etc.), behavioral issues (i.e., aggression, elopement, self- injury, etc.), and physical issues (i.e., medical issues that require assistance). The answers each client provides to the QSI enable APD to identify that client’s level of need and the types of supports he or she requires.
The University of South Florida verified that the questions set forth in the QSI elicit answers that enable APD to reliably evaluate each client’s level of need for services. Proposed Rule 65G-4.0213(18) identifies the QSI as a “valid and reliable assessment instrument.”
Ms. Arnold testified that a QSI is to be completed for every client at least once every three years. However, Proposed Rule 65G-4.0214(1)(d) provides that a client may request that another QSI be completed if there has been a significant change in circumstances that could affect a client’s iBudget amount.
The data gathered from a client’s QSI plays a substantial role in calculating that client’s iBudget. As discussed in more detail in a subsequent section, the answers from several of the QSI questions serve as inputs into the Allocation Algorithm.
Proposed Rule 65G-4.0216(3) provides that after calculation of a client’s Allocation Algorithm amount, the client’s Waiver Support Coordinator meets with the client, the client’s representative, and/or the client’s advocate in order to evaluate whether the client has any SANs.4/
Proposed Rule 65G-4.0218(1) sets forth SAN categories that essentially mirror the three listed in section
393.0662. However, Proposed Rule 65G-4.0218(1) provides for an additional or fourth SAN category involving transportation services to a waiver-funded adult day training program or to a waiver-funded supported employment. This applies when the client’s need cannot be met through his or her iBudget amount without compromising the client’s health and safety and there are no other viable means of transportation.
If the Waiver Support Coordinator in conjunction with the client, the client’s representative, and/or the client’s advocate determines that the client has a SAN, then Proposed Rule 65G-4.0216(3) provides that the Waiver Support Coordinator will complete an Amount Implementation Meeting (“AIM”) Worksheet and submit it to APD within 30 days of receiving a new algorithm amount. If no additional documentation is needed, then APD will have 30 days from receipt of the AIM Worksheet to issue a decision on the client’s iBudget amount.
Proposed Rule 65G-4.0216(3) mandates that APD “shall approve an increase to the iBudget amount if additional funding is required to meet [SANs] subject to the provisions of the iBudget rules.”
In contrast, if the Waiver Support Coordinator in conjunction with the client, the client’s representative, and/or the client’s advocate determines that the algorithm amount is sufficient to pay for all the services and supports the client will need, then the individual review is complete and no further action is necessary. The client or someone acting on the client’s behalf signs the AIM form and notifies APD that there are no SANs.
Once a client’s iBudget amount is established, Proposed Rule 65G-4.0217(1) requires the client’s Waiver Support Coordinator to submit a cost plan proposal to APD reflecting the
specific waiver services and supports that the client will utilize and the providers of those services and supports. APD then reviews the cost plan to ensure that it conforms with the iBudget rules and the rules governing Waiver services in general.
The Allocation Algorithm
Section 393.0662(1)(a) directs APD to use an algorithm with variables that have been determined by APD to have a statistically validated relationship to the client’s level of need for services provided through the Waiver.
In 2009 to 2010, APD contracted with Dr. Xu-Feng Niu, the chair of the statistics department at Florida State University, to develop and recommend options for an algorithm for the First Proposed Rules.
Dr. Niu has performed statistical work for other Florida state agencies, including developing models and algorithms for the Department of Environmental Protection and the Department of Transportation. Dr. Niu has an extremely long and distinguished career as a statistician. He earned his Ph.D. in statistics from the University of Chicago in 1991.
After being hired by Florida State University to teach statistics in 1991, Dr. Niu became the Chair of the University’s statistics department in 2011 and still holds that position.
Dr. Niu created the allocation algorithm that was incorporated into the First Proposed Rules. That allocation algorithm’s validity was at issue during the previous rule challenge, and the ALJ who considered that challenge found that Dr. Niu’s allocation algorithm was valid. G.B., Z.L. through
His Guardian K.L., J.H., and M.R. v. Ag. for Persons with Disab., Case No. 13-1849 (Fla. DOAH Sept. 9, 2013). In the
subsequent appellate decision that invalidated the First Proposed Rules, G.B., et. al v. Ag. for Persons with Disab., supra, the First District Court of Appeal in G.B. did not
address the allocation algorithm’s validity.
In 2014, APD contracted with Dr. Niu to update the Allocation Algorithm for the Proposed Rules.
Dr. Niu developed the Allocation Algorithm in the Proposed Rules by using a linear regression statistical method. As explained above, a multiple linear regression model utilizes independent variables (predictors) to arrive at a response (dependent variable). The independent variables in the Allocation Algorithm include a client’s age, living setting, and certain individual characteristics and support needs specified in the QSI.
To provide a baseline to begin constructing the allocation algorithm, Dr. Niu used the clients’ fiscal year
2013-14 waiver expenditures (also referred to as claims data) as
the dependent variable. Use of that fiscal year was significant because that was the first year that the Tier system was no longer in place, and the iBudget statute had been in effect for a full year. According to APD, every client’s needs had been met during the 2013-14 fiscal year.
In practice, the dependent variable will be unknown because the dependent variable is that particular client’s future expected need, and that is what the Allocation Algorithm is designed to calculate.
Dr. Niu’s analysis did not include 2013-14 claims data for a significant number of APD’s clients. For instance, APD served approximately 30,600 clients during that fiscal year, but Dr. Niu justifiably did not rely on claims data for any clients who had not been on the Waiver for at least one year.
Also, Dr. Niu excluded the claims date from approximately 2,410 clients who were deemed to be “outliers.” In this context, “outliers” were deemed to be clients whose total claims during the 2013-14 fiscal year were extremely high or extremely low. This exclusion was done partially because including such outliers in a regression model sometimes reduces the model’s predictive ability.
In making the decision to exclude approximately
10 percent of the clients who had been receiving Waiver services for a full year or more as outliers, rather than five percent as
suggested by Petitioners, Dr. Niu considered input from APD’s stakeholders. As discussed above, APD conducted several public meetings regarding the formulation of the Proposed Rules, and all stakeholders (i.e., interested parties such as parents or guardians of clients, service providers, and staff from the Agency for Healthcare Administration) had ample opportunity to provide input to APD.
Dr. Niu presented the stakeholders with a choice of designating either five percent or 10 percent of clients as outliers and excluding their claims data from the Allocation Algorithm’s formulation. The stakeholders ultimately recommended that 10 percent be designated as outliers, and Dr. Niu agreed with their recommendation.
According to Dr. Niu, designating either five percent or 10 percent of the clients as outliers would have been appropriate. However, designating 10 percent of the clients as outliers was more appropriate in this instance, and resulted in a better model, because the iBudget system had only been in place for one year. The 10 percent exclusion was also deemed appropriate because there was a great deal of variation in the claims data.
Because the claims data was in dollars, Dr. Niu needed to transform the data in order to create a bell curve. He accomplished that by performing a square root transformation on
the data. While Dr. Niu could have used a logarithmic transformation, he determined that the square root transformation made the data more bell-shaped. Though either transformation could have been used, the preponderance of the evidence indicated that the square root transformation was a reasonable and appropriate means for developing the bell curve.
After transforming the claims data from the 2013-
14 fiscal year, Dr. Niu had a baseline or a dependent variable for the Allocation Algorithm, but he still needed independent variables. In order to satisfy section 393.0662’s requirement that any allocation algorithm utilized by APD use independent variables that “have a statistically validated relationship to the client’s level of need for services provided through [the Waiver],” Dr. Niu turned to the QSI. As noted above, the QSI questions have already been validated as having a statistically valid relationship to a client’s level of need.
However, Dr. Niu still had to determine what data from the QSI to use as independent variables in the algorithm. While Dr. Niu could have constructed an algorithm that utilized every piece of data from a client’s QSI, such a model would have been overly complex.
Accordingly, Dr. Niu tested over 100 different regression models, each with different combinations of QSI data points as independent variables. After considering several
different regression models, Dr. Niu ultimately determined that a regression model he designated as “5B” was the best one at predicting a client’s expected future need for services. That model’s independent variables include the client’s age, living setting status, and certain individual characteristics and support needs specified in the individual’s QSI. That QSI information included questions (among others) pertaining to a client’s ability to eat, dress, and protect himself or herself. Other questions assessed whether a client engages in inappropriate sexual behavior or experiences episodes of aggression.
Dr. Niu determined that Model 5B was the best one by performing a bootstrapping analysis. Bootstrapping is a statistical method used for testing regression models. The method involves running a model with the original data while randomly repeating some claims and randomly dropping others. Dr. Niu performed this test approximately 10,000 times in order to test the reliability of Model 5B.
Dr. Niu’s conclusion about Model 5B was also influenced by its R-squared value. The R-squared value quantifies how much of the variation from the average claim is explained by a particular model, and the R-squared value is a number between zero and one. If a particular model’s R-squared value is 1, then that model explains 100 percent of the
deviation from the average claim. Model 5B had an R-squared value of .80. Therefore, that model explained 80 percent of the deviation.
Dr. James McClave5/, Petitioner’s expert statistician, testified during the final hearing that the Allocation Algorithm’s margin of error was 90 percent when used to calculate actual claims totals by APD’s clients in 2013-14.
In response, Dr. Niu testified that Dr. McClave was testing for the wrong thing. According to Dr. Niu, evaluating the Allocation Algorithm by its ability to predict past claims for the 2013-14 fiscal year was not a valid test of what the Allocation Algorithm was designed to accomplish.
Specifically, Dr. Niu testified that the Allocation Algorithm is not attempting to predict past expenditures. Instead, it is trying to predict or calculate a claimant’s future expected need.
A client’s future expected need is driven by that particular client’s individual characteristics and circumstances (i.e., the independent variables in the Allocation Algorithm).
That same client’s future expected need can differ from his or her actual future need due to unexpected circumstances such as a drastic change in the client’s condition or the death of a caregiver.
The evidence and testimony presented at the final hearing indicated that it would be extremely difficult to construct an algorithm that could account for such unexpected circumstances and thus be effective in calculating or predicting that client’s actual future need.
Accordingly, the Allocation Algorithm is intended to calculate or predict a client’s future expected need based on the information that is known about that client. Dr. Niu’s testimony was credible and is accepted.
To that point, Ms. Arnold persuasively explained why an individual client’s expenditures may unexpectedly change from one year to another.
Ms. Arnold is the Deputy Director of Programs for APD and has been involved in implementing the iBudget System since its inception. She has worked for APD for over 30 years, and she was a service provider prior to her service at APD.
Ms. Arnold has been working on the iBudget implementation and development for ten years, spending about 75 percent of her time on it. Ms. Arnold has spent numerous hours in meetings regarding the Proposed Rules and has spent many hours in meetings with Dr. Niu discussing the Allocation Algorithm.
Thus, Ms. Arnold understands the Proposed Rules, what the Allocation Algorithm is supposed to do, and what the QSI does.
As Ms. Arnold testified, the Allocation Algorithm is based on characteristics that identify a client’s future expected need. Therefore, clients with the same characteristics will receive the same Allocation Algorithm amount.
However, this statistical process, which predicts need based on individual characteristics, does not account for all of the social variables that can create totally different situations for one client as opposed to another. For example, Ms. Arnold testified that you could have two individuals with similar characteristics; however, one client lives with a single mother and the other lives with a brother and sister who provide a great deal of support. As a result, the client with a single parent who works may need support during the day (such as a day program), while the client with sibling support may not have that same need.
Ms. Arnold also testified that clients’ lives can change rapidly, and an algorithm relying on immature data cannot capture all of those changes.
In addition, there are other reasons why a client’s future expected need may differ from his or her future actual need. Clients living in rural communities may receive services less often, a caregiver’s condition could change, an individual could go on vacation, or an individual may go into a hospital for an extended period.
Also, Waiver funding is funding of last resort.
§ 393.0662(4), Fla. Stat. Therefore, a client’s need for Waiver funds may be accurately predicted by the Allocation Algorithm, but that client may not end up using all of the Waiver funds because his or her need is being met through other resources.
As mentioned above, section 393.0662(1)(b), requires that the Allocation Algorithm “use variables that have been determined by [APD] to have a statistically validated relationship to the client’s level of need” for Waiver services. APD proved by a preponderance of the evidence that the Allocation Algorithm satisfies that requirement.
During the final hearing, Petitioners attempted to undermine the Allocation Algorithm developed by Dr. Niu by noting that it was ineffective in “predicting” the Waiver claims made by APD’s clients during the 2013-14 fiscal year. This was evidenced by the 90 percent margin of error discussed above.
Petitioners argued that if the Allocation Algorithm does a poor job of predicting claims made during the 2013-
14 fiscal year, then the Allocation Algorithm is not satisfying section 393.0662(1)(b)’s requirement to use variables having a statistically validated relationship to the client’s level of
need.
However, APD’s witnesses persuasively testified that
the test put forth by Petitioners was not the appropriate way to
ascertain whether the Allocation Algorithm uses variables having a statistically validated relationship to the client’s level of need. As discussed above, APD is not attempting to use the Allocation Algorithm to predict or calculate a client’s actual future need. Instead, APD is attempting to use the Allocation Algorithm to predict or calculate a client’s future expected need based on certain facts known about that client. Unexpected events may cause that client’s actual future need to substantially differ from that client’s future expected need.
Moreover, Petitioners presented no other evidence that the information utilized in the Allocation Algorithm (such as the QSI information) did not have a statistically validated relationship to the client’s level of need. However, a cursory examination of the independent variables utilized in the Allocation Algorithm indicates they would have a substantial influence on a client’s level of need. Dr. Niu simply determined that a particular combination of variables had the strongest correlation to a client’s future expected need.
As noted above, APD transitioned its clients to the iBudget System on July 1, 2013, and has been utilizing the First Proposed Rules.
The finding that the Allocation Algorithm uses independent variables having a statistically validated relationship to the client’s level of need is corroborated by
the fact that the iBudget System has been successful during the short amount of time that it has been implemented.
The First Proposed Rules also had an Allocation Algorithm, and its R-squared value was .67 while the R-squared for the Allocation Algorithm at issue in this case is .80.
Nevertheless, Ms. Arnold testified that only about 2,500 clients had to utilize the SANs process in a recent year.
Also, Ms. Susan Chen, a statistician employed by APD, testified that APD’s clients generally spent only about
80 percent of their iBudgets during the 2013-14 fiscal year. If the iBudget system was not working, then the clients’ needs would have exceeded their iBudget allocation.
Ms. Chen also testified that three of the Petitioners did not spend all of the money they had received via the Allocation Algorithm currently in effect. Specifically, two of the Petitioners spent only 80 percent of their allocations, and a third spent approximately 90 percent of what he or she was allocated.
Finally, APD had budget surpluses during the 2013-
14 and 2014-15 fiscal years. This is additional evidence that the needs of those clients receiving Waiver services are being met. It is also evidence that the Allocation Algorithm (with a higher R-squared value than the one currently being utilized)
has a statistically validated relationship to the client’s level of need.
In sum, the evidence and testimony presented by APD was more persuasive than the evidence and testimony presented by Petitioners.
Petitioners raised several other issues that will be addressed below.
CONCLUSIONS OF LAW
DOAH has jurisdiction over the subject matter and the parties to this proceeding. §§ 120.56 and 120.57(1), Fla. Stat.
Section 120.56(1)(a), provides that “any person substantially affected by . . . a proposed rule may seek an administrative determination of the invalidity of the rule on the ground that the rule is an invalid exercise of delegated legislative authority.”
In such proceedings, the proposed rule is not presumed to be valid or invalid. See § 120.56(2)(c), Fla. Stat.
In a proposed rule challenge, “[t]he petitioner has the burden of going forward. The agency then has the burden to prove by a preponderance of the evidence that the proposed rule is not an invalid exercise of delegated legislative authority as to the objections raised.” § 120.56(2)(a), Fla. Stat.
With regard to the instant case, Petitioners have raised several arguments alleging that the Proposed Rules are an
invalid exercise of delegated legislative authority, and each of those arguments will be addressed in the following sections.
The Allocation Algorithm Uses Variables That Have a Statistically Validated Relationship to a Client’s Level of Need
Petitioners assert that the Allocation Algorithm’s variables do not have a statistically validated relationship to the client’s level of need and that the Allocation Algorithm is not sufficiently reliable. According to the Petitioners, those alleged deficiencies render the Proposed Rules an invalid exercise of delegated legislative authority.
As found above, APD proved by a preponderance of the evidence that the Allocation Algorithm utilizes variables having a statistically validated relationship to the client’s level of need for services.
The comparison Dr. McClave attempted to make between the algorithm results and the 2013-14 claims data is simply not the correct statistical test for the model developed by Dr. Niu. First, he was measuring the wrong thing. Dr. McClave sought to measure how close the model’s predictions for future expenditures came to what individuals spent during the 2013-
14 fiscal year. If Dr. Niu had been trying to predict past expenditures, he could have simply looked them up. Instead, the Allocation Algorithm attempts to identify what certain
individuals with similar characteristics should be expected to spend in any given year, not how much they will expend.
APD intends for the Allocation Algorithm to calculate a client’s future expected need. As is the case with any budgeting process, unexpected events can cause a client’s actual future need to differ from his or her future expected need.
Petitioners appear to be arguing that the Allocation Algorithm is not using independent variables with statistically validated relationship to the client’s level of need unless the Allocation Algorithm can predict a client’s actual future need
with a very high degree of precision. However, section 393.0662, does not impose such a standard. The statute simply requires that the Allocation Algorithm use variables that have a statistically validated relationship to the client’s level of need.
Also, Petitioners’ argument overlooks the fact that an APD client’s actual future need can be influenced by unexpected events that are extremely difficult to predict with any degree of accuracy. The evidence and testimony presented at the final hearing demonstrated that the standard Petitioners would impose on the Allocation Algorithm is unrealistic.
In sum, the Allocation Algorithm is not an invalid exercise of delegated legislative authority. It does not contravene, modify, or enlarge section 393.0662. Also, the
Allocation Algorithm is not arbitrary or capricious. A great deal of thought, reason, and testing went into the Allocation Algorithm. The Allocation Algorithm is supported by facts and logic.
Proposed Rule 65G-4.0215(6) Does Not Impermissibly Leave Certain Terms Undefined
Petitioners take issue with provisions within Proposed Rule 65G-4.0215(6)(a)-(c) that allow for clients to be dis-enrolled from the Waiver if that client “moves to a correctional facility, detention facility, defendant program, or nursing home,” or “is no longer able to be maintained safely in the community.” The Proposed Rules and section 393.0662 do not define the aforementioned terms.
To whatever extent Petitioners are arguing that the lack of definitions makes Proposed Rule 65G-4.0215(6)(a)-(c) vague, such an argument would be meritless. The terms correctional facility, detention facility, defendant program, and nursing home have meanings that persons of common understanding and intelligence should be able to agree upon. See Dep’t of HRS v. Health Care & Retirement Corp., 593 So. 2d
539, 541 (Fla. 1st DCA 1992)(citing State v. Cumming, 365 So. 2d
153 (Fla. 1978) and State v. Rodriguez, 365 So. 2d 157 (Fla.
1978) for the proposition that the test for vagueness is
“whether men of common understanding and intelligence must guess at [the provision’s] meaning.”).
As for the assertion that the lack of definitions gives APD unbridled discretion, there are obviously instances when it is difficult to definitively determine whether a particular person “is no longer able to be maintained safely in the community.” This appears to be an area that would elude any attempt to formulate a precise standard. See Cole Vision Corp.
v. Dep’t of Bus. & Prof’l Regulation, 668 So. 2d 404, 410 (Fla. 1st DCA 1997)(stating that “[t]he sufficiency of a rule’s standards and guidelines may depend on the subject matter dealt with and the degree of difficulty involved in articulating finite standards. Askew v. Cross Key Waterways, 372 So. 2d 913, 918 (Fla. 1978). We agree with the Board that it is not possible for it to adopt rules in such excruciating detail that every potential circumstance arising in the practice of optometry on a mercantile or commercial establishment will be expressly addressed.”).
The Proposed Rules Do Not Contradict Federal Rules Regarding the Provision of Natural Supports
Petitioners allege that Proposed Rules 65G-4.0213(16) and 65G-4.0215(1)(a) contravene federal rules by enabling APD to compel the provision of natural supports. An example of a natural support would be assistance provided by a parent.
Contrary to Petitioners’ assertion, there is nothing on the face of Proposed Rules 65G-4.0213(16) and 65G- 4.0215(1)(a) indicating that APD will compel the provision of natural supports. Proposed Rule 65G-4.0213(16) defines a “natural support” as “[u]npaid supports that are or may be provided voluntarily to the individual in lieu of Waiver services and supports.” Also, Proposed Rule 65G-4.0215(1)(a) provides that with the assistance of the waiver support coordinator the client “must utilize all available State Plan Medicaid services, school-based services, private insurance, natural supports, and any other resources which may be available to the individual before expending funds from the individual’s iBudget Amount for support or services.”
Standards Governing IFS Funding
Proposed Rule 65G-4.0218(8) provides that “Individual and Family Supports (INF) Funding to cover temporary emergency services is authorized when needed while requests for [SANs] are being processed.” According to Petitioners, the lack of standards in Proposed Rule 65G-4.0218(8) leaves APD with the ability to operate with unbridled discretion.
This issue was not set forth in the Joint Amended Petition filed by Petitioners on January 13, 2016, or in the Joint Amended Prehearing Stipulation filed on February 9, 2016. Prior to the final hearing, the undersigned issued an Order
requiring Petitioners to jointly file one petition on or before January 13, 2016, setting forth all of the reasons why the Proposed Rules were allegedly invalid exercises of delegated legislative authority.
As a result, this issue cannot serve as a basis for invalidating the Proposed Rules or any portion thereof. See
§ 120.56(1)(b), Fla. Stat. (mandating that a petition alleging that a rule or a proposed rule is invalid “must state with particularity the provisions alleged to be invalid with sufficient explanation of the facts or grounds for the alleged invalidity and facts sufficient to show that the person challenging a rule is substantially affected by it, or that the person challenging a proposed rule would be substantially affected by it.”). See also Palm Beach Polo Holdings, Inc. v.
Broward Marine, Inc., 174 So. 3d 1037 (Fla. 4th DCA 2015)(holding that a failure to identify issues to be tried in a pretrial stipulation amounts to a binding waiver and elimination of issues not included).
Petitioners Are Not Injured by the Inclusion of Transportation as a SAN
As noted above, section 393.0662(1)(b) provides for three different categories of SANs: (a) an extraordinary need;
(b) a significant need for one-time or temporary support/services; and (c) a significant increase in need after
the beginning of the service plan year. Petitioners assert that Proposed Rule 65G-4.0218(1)(d) contravenes the foregoing statute by appearing to add a fourth category covering a significant need for transportation:
A significant need for transportation services to a waiver-funded adult day training program or to a waiver-funded supported employment where such need cannot be accommodated within the funding authorized by the client’s iBudget amount without affecting the health and safety of the client, where public transportation is not an option due to the unique needs of the client, and where no other transportation resources are reasonably available. However, such increases may not result in the total of all clients’ projected annual iBudget expenditures exceeding the agency’s appropriation for waiver services.
Petitioners have failed to allege or demonstrate how they are injured by inclusion of transportation as a fourth SAN in Proposed Rule 65G-4.0218(1)(d). On the contrary, Petitioners
G.B. and Z.L. alleged in the Joint Amended Petition that they rely on Waiver-funded transportation services in order to attend adult day programs. In addition, Petitioner M.R. alleges in the Joint Amended Petition that she relies on Waiver-funded transportation services for her ordinary, daily needs.
Therefore, with regard to challenging the inclusion of transportation as a fourth SAN in Proposed Rule 65G- 4.0218(1)(d), Petitioners have no standing. See Ward v. Bd. of
Trustees of the Internal Improvement Trust Fund, 651 So. 2d 1236
(Fla. 4th DCA 1995)(stating that a “substantially affected” person has standing to challenge the validity of a proposed agency rule on the basis that the proposed rule is an invalid exercise of delegated legislative authority if that person can establish: (1) a real and sufficiently immediate injury in fact; and (2) that the alleged interest is arguably within the zone of interest to be protected or regulated.).
In addition, the undersigned takes official recognition of the fact that chapter 2016-140, Laws of Florida will go into effect on July 1, 2016. The law will amend section 393.0662(1) by adding transportation as a fourth category of
SAN:
A significant need for transportation services to a waiver-funded adult day training program or to waiver-funded employment services when such need cannot be accommodated within a client’s iBudget as determined by the algorithm without affecting the health and safety of the client, if public transportation is not an option due to the unique needs of the client or other transportation resources are not reasonably available.
Ch. 2016-140, § 5, Laws of Fla. (adding section 393.0662(1)(b)4.).
If there is an appeal of this Final Order, the appellate court would likely apply the amended version of section 393.0662(1). See Hendeles v. Sanford Auto Auction,
364 So. 2d 467, 468 (Fla. 1978)(noting that “disposition of a case on appeal should be made in accord with the law in effect at the time of the appellate court’s decision rather than the law in effect at the time the judgment appealed was rendered.”).
The Lack of a Rule Governing Reserves Does Not Contravene Section 393.0662
As noted above, section 393.0662(1) requires that APD “shall reserve portions of the appropriation for [the Waiver] for adjustments required pursuant to this paragraph and may use the services of an independent actuary in determining the amount of the portions to be reserved.” Petitioners argue that the lack of any proposed rules governing the reserve requirement contravenes section 393.0662, enables APD to operate with unbridled discretion, and is arbitrary and capricious.
Establishing an appropriate reserve appears to be another area that would seem to elude effective rulemaking. It is reasonable to infer that an adequate reserve amount is something that could vary with the circumstances confronting APD during a particular year, and those circumstances could be subject to unanticipated changes. See Cole Vision Corp.,
668 So. 2d at 410 (stating that “[t]he sufficiency of a rule’s standards and guidelines may depend on the subject matter dealt with and the degree of difficulty involved in articulating finite standards.”).
Also, establishing a reserve is essentially a budgeting task. If Petitioners have standing to raise this challenge, then it would stand to reason that the citizens of Florida could sue the Legislature for appropriating an insufficient amount of money to APD.
Furthermore, if Petitioners are truly aggrieved by the lack of a reserve rule, then it would seem that a petition to initiate rulemaking would be the appropriate remedy. See
§ 120.54(7)(a), Fla. Stat. (providing that “[a]ny person regulated by an agency or having substantial interest in an agency rule may petition an agency to adopt, amend, or repeal a rule . . .”).
In sum, the lack of a proposed rule governing the reserve requirement does not amount to an invalid exercise of delegated legislative authority as to the Proposed Rules.
Petitioners Have Failed to Present a Basis for Concluding that Proposed Rule 65G-4.0215(3)(c) Is Invalid
Proposed Rule 65G-4.0215(3) pertains to “cost plan flexibility” and provides the following:
After the individual's proposed cost plan is approved, he or she may change the services in his or her Approved Cost Plan provided that such change does not jeopardize the health and safety of the individual and meets medical necessity.
When changing the services within the Approved Cost Plan, the individual and his or her WSC shall ensure that sufficient
funding remains allocated for unpaid services that were authorized and rendered prior to the effective date of the change.
Individuals enrolled in iBudget will have flexibility and choice to budget or adjust funding among the following services without requiring additional authorizations from the Agency, provided the individual's overall iBudget Amount is not exceeded and all health and safety needs are met:
Life Skills Development 1
Life Skills Development 2
Life Skills Development 3, within the approved ratio.
Durable Medical Equipment;
Adult Dental.
Personal Emergency Response Systems
Environmental accessibility adaptations,
Consumable Medical Supplies,
Transportation.
Personal Supports up to $16,000
Respite up to $10,000
Medically necessary services will be authorized by the Agency for covered services not listed above if the cost of such services are within the individual's iBudget Amount and in accordance with Rule 65G-4.0215(l). The Agency shall authorize services in accordance with criteria identified in Section 393.0662(1)(b), F.S., medical necessity requirements of section 409.906, F.S., subsection 59G-l.010(166),
F.A.C., Handbook limitations, and the authority under Rule 42 CFR 440.230(d).
Retroactive application of changes to service authorizations is prohibited without written approval from the agency. In limited circumstances, an exception may be made for a retroactive service authorization by the Agency regional office to correct an administrative error or to
consider a health and safety risk and emergency situations.
Petitioners allege that Proposed Rule 65G-4.0215(3) provides inadequate standards because it “allows changes without first obtaining a service authorization, while simultaneously prohibiting retroactive application of changes to service authorizations without written approval from the agency in much more narrow circumstances.”
With regard to this allegation, Petitioners have failed to carry their burden. As noted above, a petitioner challenging a proposed rule has the burden of going forward. That burden is satisfied by establishing a factual basis for the objections to the proposed rule. See St. Johns River Water
Mgmt. Dist. v. Consol. - Tomoka Land Co., 717 So. 2d 72,
76 (Fla. 1st DCA 1998)(parts superseded by Ch. 99-379, §§ two, three, Laws of Fla.). This requires a petitioner to offer more than mere conclusions or allegations that a rule is arbitrary or capricious or is an invalid exercise of delegated legislative authority in some other way. See Combs Oil Co. v. Dep’t of Fin. Servs., Div. of State Fire Marshall, Case No. 11-3627RP,
¶ 14 (Fla. DOAH Mar. 9, 2012). Rather, the petitioner must offer expert testimony, documentary evidence, or other competent, evidence. Otherwise, the petitioner’s objections amount to nothing more than conjecture and speculation. Id.
Here, Petitioners’ assertion regarding the alleged invalidity of Proposed Rule 65G-4.0215(3) is nothing more than a bare allegation. There is no adequate explanation as to why Proposed Rule 65G-4.0215(3) is internally inconsistent and why that internal inconsistency amounts to an invalid exercise of delegated legislative authority.
The Proposed Rules Do Not Give APD the Ability to Reduce a Client’s iBudget Below His or Her Algorithm Amount
Petitioners assert that the Proposed Rules violate sections 120.52(8)(c), (d), and (e) by giving APD the ability to reduce a client’s iBudget below his or her algorithm amount. In other words, Petitioners assert that the Proposed Rules suffer from the same infirmity that led to the invalidation of the First Proposed Rules at issue in G.B., 143 So. 2d 454.
This argument is meritless. Ms. Arnold testified during the final hearing that APD cannot reduce a client’s iBudget below the Allocation Algorithm amount. In addition, Proposed Rule 65G-4.0216(1) clearly provides that “[t]he iBudget Amount for an individual shall be the Allocation Algorithm Amount, as provided in Rule 65G-4.0214, plus any approved Significant Additional Needs funding as provided in 65G-4.0218.” Petitioners have cited no other provision in the Proposed Rules that contradicts the aforementioned provision.
While the First Proposed Rules started with an algorithm amount and then contemplated a complex process that allowed APD to increase or decrease the algorithm funding, the Proposed Rules do not allow the algorithm amount to decrease.
Petitioners argue that the SANs process leaves unbridled discretion for APD to determine whether funding for significant additional needs exist. Petitioners’ argument ignores that the Proposed Rule governing SANs directly tracks the statute. It also ignores the fact that each client has very different needs and available supports which have to be considered when determining funding needs consistent with all state and federal laws. The Proposed Rules are consistent with the statute and explain what APD will consider when determining SANs funding.
In a closely related argument, Petitioners assert that APD will utilize the limitations set forth in section 409.906, and rules 59G-13.070, 59G-13.080, and 59G-13.081 to reduce iBudgets.
Section 409.906 pertains to Optional Medicaid Services and requires that they be medically necessary and provided in accord with state and federal law. Because Medicaid funds the Waiver, services provided through the Waiver must be medically necessary. However, that does not mean that iBudgets will be reduced below the Allocation Algorithm amount. Instead,
it simply means that a client cannot use his or her iBudget funds to purchase a service that is not medically necessary.
Rule 59G-13.070 pertains to Waiver providers and requires that “[a]ll providers of [Waiver] services who are enrolled in the Florida Medicaid program must be in compliance with the provisions of the Florida Medicaid Developmental Disabilities Individual Budgeting Waiver Services Coverage and Limitations Handbook, September 2015 . . . .” Petitioners point to nothing in this rule that would empower APD to reduce a client’s iBudget below the Allocation Algorithm amount.
Similarly, Petitioners point to nothing in rules 59G-
13.080 and 59G-13.081 that would enable APD to reduce a client’s iBudget below that client’s Allocation Algorithm amount.6/
APD Has the Authority to Adopt Rules Governing Criteria for Clients, Providers, and Services Rendered
Proposed Rule 65G-4.0215(5) sets forth criteria governing how an entity becomes an iBudget Waiver provider. Also, Proposed Rule 65G-4.0215(6) sets forth circumstances under which a client can become dis-enrolled from the Waiver. In addition, Proposed Rule 65G-4.0213(15)(a) defines “medically necessary” or “medical necessity.” Petitioners argue that APD lacks the authority to adopt such rules.
Section 120.52(8)(b) provides that a rule is an invalid exercise of delegated legislative authority if the
agency has exceeded its grant of rulemaking authority.
Moreover, the famous “flush left” paragraph of section 120.52(8) explains that,
A grant of rulemaking authority is necessary but not sufficient to allow an agency to adopt a rule; a specific law to be implemented is also required. An agency may adopt only rules that implement or interpret the specific powers and duties granted by the enabling statute. No agency shall have authority to adopt a rule only because it is reasonably related to the purpose of the enabling legislation and is not arbitrary and capricious or is within the agency’s class of powers and duties, nor shall an agency have the authority to implement statutory provisions setting forth general legislative intent or policy. Statutory language granting rulemaking authority or generally describing the powers and functions of an agency shall be construed to extend no further than implementing or interpreting the specific powers and duties conferred by the enabling statute.
§ 120.52(8), Fla. Stat.
The extensively cited cases of S.W. Fla Water Mgmt.
Dist. v. Save the Manatee Club, Inc., 773 So. 2d 594 (Fla. 1st
DCA 2000), and Bd. of Trs. of the Int. Imp. Trust Fund v. Day Cruise Ass’n, Inc., 794 So. 2d 696 (Fla. 1st DCA 2001),
recognize that the flush left paragraph of section 120.52(8) was intended to restrict and narrow the scope of agency rulemaking. As established in Day Cruise, 794 So. 2d at 700:
It is now clear, agencies have rulemaking authority only where the Legislature has
enacted a specific statute, and authorized the agency to implement, and then only if the (proposed) rule implements or interprets specific powers or duties, as opposed to improvising in an area that can be said to fall only generally within some class or powers or duties the Legislature has conferred on the agency.
Nonetheless, “[i]t follows that the authority for an administrative rule is not a matter of degree. The question is whether the statute contains a specific grant of legislative authority for the rule, not whether the grant of authority is specific enough.” S.W. Fla. Water Mgmt. Dist. v. Save the Manatee Club, Inc., 773 So. 2d at 600. See United Faculty of
Fla. v. Fla. State Bd. of Educ., 157 So. 3d 514, 517-18 (Fla. 1st DCA 2015)(stating that “it is not necessary under Save the
Manatee Club and its progeny for the statutes to delineate every
aspect of tenure that the Board is authorized to address by rule; instead, all that is necessary is for the statutes to specifically authorize the Board to adopt rules for college faculty contracts and tenure, which the statutes clearly do.”).
In the instant case, the Proposed Rules cite section 393.0662 as the rulemaking authority and as the law implemented. Subsection (9) of the statute provides that APD and the Agency for Health Care Administration
may adopt rules specifying the allocation algorithm and methodology; criteria and processes for clients to access reserved funds for extraordinary needs, temporarily
or permanently changed needs, and one-time needs; and processes and requirements for selection and review of services, development of support and cost plans, and management of the iBudget system as needed to administer this section.
§ 393.0662(9), Fla. Stat. (emphasis added).
The reference in subsection (9) to “management of the iBudget system as needed to administer this section” can be reasonably construed to encompass criteria governing how an entity becomes an iBudget Waiver provider, circumstances under which a client can become dis-enrolled from the Waiver, and criteria for the types of services covered by the Waiver.7/
APD Was Not Required to Prepare a SERC
Petitioners argue that APD erred by not preparing a SERC. See § 120.541(1)(b), Fla. Stat. (mandating that “[i]f a
proposed rule will have an adverse impact on small business or if the proposed rule is likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate within 1 year after the implementation of the rule, the agency shall prepare a statement of estimated regulatory costs as required by s. 120.54(3)(b).”). Petitioners also argue that APD erred by failing to disclose required information upon determining that no SERC was required.
With regard to the SERC issue, Petitioners assert that a SERC was required because: (1) small businesses provide
the services Petitioners receive and the small businesses will be negatively impacted by the proposed rules; (2) waiver support coordinators will have increased workloads, which will either impact the businesses that employ them or will result in increased costs paid by clients; (3) the algorithm will create an indirect administrative cost on Petitioners; and (4) the funding scheme will result in increased costs to service providers. In other words, Petitioners argue that if the providers and waiver support coordinators are impacted, then Petitioners’ services will be impacted.
However, each of the impacts set forth by Petitioners is speculative and will not support standing. “To satisfy the sufficiently real and immediate injury in fact element, an injury must not be based on pure speculation or conjecture.” Off. of Ins. Reg. & Fin. Servs. Comm’n v. Secure Enterprises, LLC, 124 So. 3d 332, 336 (Fla. 1st DCA 2013).
Petitioners are recipients of iBudget Medicaid services. No Petitioner is a provider of services or a Waiver support coordinator. Petitioners have not demonstrated that they would be substantially affected by a potentially negative impact on providers or Waiver support coordinators.
Moreover, even if Petitioners had standing to raise the SERC issue, APD was not required to prepare a SERC for the Proposed Rules. The persuasive evidence introduced during the
final hearing demonstrated that Waiver providers will not be adversely impacted by the Proposed Rules. Absent contrary and persuasive evidence, no basis exists to conclude that APD erroneously failed to prepare a SERC. Thus, Petitioners did not demonstrate that APD materially failed to follow the applicable rulemaking procedures. S.W. Fla. Water Mgmt. Dist. v. Charlotte Cnty., 774 So. 42 2d 903, 908 (Fla. 1st DCA 2001) (explaining
that a party challenging a proposed rule has the burden of establishing a factual basis for the objections to the rule).
As noted above, Petitioners also assert that APD erred by failing to issue a rulemaking notice that adequately disclosed the information APD relied upon in determining that no SERC was required. See § 120.54(3)(a).
APD’s notice of correction sufficiently described the information APD utilized in its SERC analysis. However, even if that is not the case, there is no basis for inferring that any deficiency in the notice of correction impaired the Petitioners’ substantial interests or the fairness of the proceeding. There was no evidence or testimony presented at the final hearing to suggest otherwise. See § 120.56(1)(c), Fla. Stat. (providing that “[t]he failure of an agency to follow the applicable rulemaking procedures or requirements set forth in this chapter shall be presumed to be material; however, the agency may rebut this presumption by showing that the substantial interests of
the petitioner and the fairness of the proceedings have not been
impaired.”).
ORDER
Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that proposed rules 65G-4.0213 through 65G- 4.0218 do not constitute an invalid exercise of delegated legislative authority.
DONE AND ORDERED this 3rd day of June, 2016, in Tallahassee, Leon County, Florida.
S
G. W. CHISENHALL Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of June, 2016.
ENDNOTES
1/ Unless indicated otherwise, all statutory references will be to the 2015 version of the Florida Statutes.
2/ APD refers to the people served via the Waiver as “clients,” and that terminology will be used in this Final Order.
3/ The testimony presented at the final hearing by APD indicated that if a client’s iBudget is insufficient to cover his or her needs, then the shortfall will be addressed through the SANS
process. There was no testimony that APD denied SANs requests from any clients with a legitimate need for an increase to their iBudgets.
4/ Rule 65G-4.0213(27) defines a “Waiver Support Coordinator” as “a person who is selected by the individual to assist the individual and family in identifying their capacities, needs, and resources; finding and gaining access to necessary supports and services; coordinating the delivery of supports and services; advocating on behalf of the individual and family; maintaining relevant records; and monitoring and evaluating the delivery of supports and services to determine the extent to which they meet the needs and expectations identified by the individual, family, and others who participated in the development of the support plan with person-centered planning.” Section 393.063(6), Florida Statutes, defines a “client advocate” as “a friend or relative of the client, or of the client’s immediate family, who advocates for the best interests of the client in any proceedings under this chapter in which the client or his or her family has the right or duty to participate.” In addition, rule 65G-4.0213(5) provides that a “client advocate” can also include legal counsel if designated by the individual or the individual’s representative.”
5/ Dr. McClave earned a Ph.D. in statistics from the University of Florida in 1971, and he has taught business and economic statistics as an adjunct professor at the University of Florida’s Graduate School of Business since 1989. In addition, Dr. McClave works in the fields of statistical consulting, information systems software development, data management, computer analysis, and litigation support.
6/ Petitioners argue in their Proposed Final order that the Proposed Rules fail to provide for an ongoing assessment process. See G.B., (stating “[t]he iBudget Statute contemplates more, as it intends for an ongoing process and assessment of client needs.”). However, Ms. Arnold testified at the final hearing that APD will rerun the Allocation Algorithm when a client’s cost plan is reviewed on an annual basis. She also testified that the Allocation Algorithm will also be rerun every three years when a new QSI is completed and when the client’s QSI is updated to reflect SANS. The undersigned finds this testimony credible and concludes there is no merit to Petitioner’s assertion that the Proposed Rules do not provide for an ongoing assessment process.
7/ Also, Petitioners allege that Proposed Rule 65G-4.0213(15)(d) is vague and arbitrary/capricious due to inclusion of the term “statewide” in the definition of “medically necessary” and “medical necessity.” The Proposed Rule provides that medically necessary good and services must “[b]e reflective of the level of services that can be safely furnished, and for which no equally effective and more conservative or less costly treatment is available; statewide . . . .” However, this Proposed Rule tracks the language in existing rule 59G-1.010(166) which pertains to Medicaid-related services and provides a definition for “medically necessary” and “medical necessity.” Therefore, the preponderance of the evidence demonstrates that Proposed Rule 65G-4.0213(15)(d) is not an invalid exercise of delegated legislative authority.
COPIES FURNISHED:
Ken Plante, Coordinator
Joint Administrative Procedures Committee Room 680, Pepper Building
111 West Madison Street Tallahassee, Florida 32399-1400 (eServed)
Ernest Reddick, Chief Alexandra Nam Department of State
R. A. Gray Building
500 South Bronough Street Tallahassee, Florida 32399-0250 (eServed)
David De La Paz, Agency Clerk
Agency for Persons with Disabilities 4030 Esplanade Way, Suite 380
Tallahassee, Florida 32399-0950 (eServed)
Richard D. Tritschler, General Counsel Agency for Persons with Disabilities 4030 Esplanade Way, Suite 380
Tallahassee, Florida 32399-0950 (eServed)
Barbara Palmer, Director
Agency for Persons with Disabilities 4030 Esplanade Way, Suite 380
Tallahassee, Florida 32399-0950 (eServed)
Gigi Rollini, Esquire Messer Caparello, P.A. 2618 Centennial Place
Tallahassee, Florida 32308 (eServed)
Donna Elizabeth Blanton, Esquire Radey Law Firm, P.A.
Suite 200
301 South Bronough Street Tallahassee, Florida 32301 (eServed)
Brittany Adams Long, Esquire Radey Thomas Yon & Clark Suite 200
301 South Bronough Street Tallahassee, Florida 32301 (eServed)
David A. Yon, Esquire Radey Law Firm, P.A. Suite 200
301 South Bronough Street Tallahassee, Florida 32301 (eServed)
Robert A. McNeely, Esquire Messer Caparello, P.A.
2618 Centennial Place
Tallahassee, Florida 32308 (eServed)
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 administrative appeal with the agency clerk of the Division of Administrative Hearings within
30 days of rendition of the order to be reviewed, and a copy of the notice, accompanied by any filing fees prescribed by law, with the clerk of the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides or as otherwise provided by law.
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 03, 2016 | DOAH Final Order | Proposed rules 65G-4.0213 through 65G-4.0218 are not an invalid exercise of delegated legislative authority. |
AGENCY FOR HEALTH CARE ADMINISTRATION vs ALLCARE HEALTH AND HUMAN SERVICES, INC., 15-005903RP (2015)
AGENCY FOR HEALTH CARE ADMINISTRATION vs KENNETH HARDEN, D/B/A KEN CARE, INC., 15-005903RP (2015)
AGENCY FOR HEALTH CARE ADMINISTRATION vs KENNETH HARDEN, D/B/A KEN CARE, INC., 15-005903RP (2015)
AGENCY FOR HEALTH CARE ADMINISTRATION vs MARIA D. GONZALEZ, 15-005903RP (2015)
