STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTH MEDICAL SERVICES, INC. )

)

Petitioner, )

)

vs. ) CASE NO. 92-3548

)

AGENCY FOR HEALTH CARE )

ADMINISTRATION, as legal ) successor to the ) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on December 3, 1992, in Miami, Florida before J. Stephen Menton, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: J. Alfredo De Armas, Esquire

Armas & Borron

2121 South West Third Avenue, Suite 400 Miami, Florida 33129-1438

For Respondent: Karel Baarslag, Esquire

HRS Medicaid Office Building 6, Room 234

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUE

The issue in this case is whether Respondent is entitled to an overpayment recovery from Petitioner South Medical Services, Inc., and/or whether Petitioner should be terminated from the Medicaid Program.

PRELIMINARY STATEMENT

By letter dated April 22, 1992, Respondent, the Department of Health and Rehabilitative Services (the "Agency") 1/ informed Petitioner, South Medical Services, Inc. ("South Medical") that a review of Medicaid claims submitted during the period January 1, 1991 through November 30, 1991 showed South Medical had been overpaid $264,122.38. In the April 22, 1992 letter, the Agency sought repayment of this alleged overpayment and also notified Petitioner of its intent to impose an administrative fine of $5,000.00 against Petitioner and to terminate Petitioner from the Medicaid Program. South Medical timely requested

an administrative hearing on the matter and the case was referred to the Division of Administrative Hearings which noticed and conducted the hearing.

At the hearing, Respondent conceded that it had the burden of proof in this proceeding and reduced its claim for alleged overpayment to $161,802.80.

Petitioner presented testimony from four witness: Alicia Vidal-Zas, who along with her husband, is the owner of South Medical; Dr. Andres Vega, who is a board certified anesthesiologist; Ellen Williams, who is employed by Respondent as an investigator for the Medicaid Program; and Dr. John Sullenberger, who is board certified in general surgery and thoracic surgery and is employed by Respondent as a consultant to the Medicaid Program. Petitioner offered twelve exhibits into evidence all of which were accepted without objection.

Respondent did not call any witnesses. Respondent offered eleven exhibits into evidence, all of which were accepted without objection. At Petitioner's request, official recognition pursuant to Section 120.61, Florida Statutes, has been taken of Rule 10C-7.038(4)(c), Florida Administrative Code. 2/

A transcript of the proceedings has been filed. Both parties have submitted proposed recommended orders. Petitioner's proposal contains a mixture of argument, legal conclusions and factual conclusions and does not include separately identified proposed findings of fact. Accordingly, no specific rulings are made with respect to Petitioner's proposal. A ruling on each of Respondent's proposed findings of fact is included in the Appendix to this Recommended Order.

FINDINGS OF FACT

Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made:

1. Petitioner, South Medical, is a Florida Medicaid provider, having been issued provider number 0626937-00.

   
   

2. At all times material hereto, South Medical was owned by Alicia Vidal- Zas and her husband Juan Zas. They started the company in early 1990. Neither Alicia Vidal-Zas nor Juan Zas are medical doctors. There is no evidence that South Medical has ever had any physician employees or that any physicians have ever owned a part of the company.

   
   

3. South Medical is a radiology and diagnostic center which performs x- rays, sonograms, and diagnostic studies including cardiovascular studies and spirometry.

   
   

4. South Medical contends that it only performed tests or procedures after a referral from a physician. Other than a couple of instances of minor errors in coding, no evidence was presented that South Medical ever billed Medicaid for any tests which had not been ordered by a physician.

   
   

5. Respondent's April 22, 1992 letter terminating South Medical from the Medicaid Program (the "Termination Letter") cites three grounds: "(1) Documentation in the medical records does not reflect medical necessity for the x-rays and other diagnostic tests billed to Medicaid; (2) the physician listed as treating provider did not render the services; (3) the provider actually reading and interpreting the results of the tests was not a member of the group." At the time this Termination Letter was written, Respondent presumed

   that South Medical was a group of physicians providing services since that was the way South Medical was enrolled in the Medicaid Program. As discussed below, this enrollment was in error since South Medical did not employ any physicians.

   
   

6. A large percentage of the tests performed by South Medical were ordered by Dr. Leon Hirzel. Dr. Hirzel's relationship with South Medical is discussed in more detail below. Respondent's expert, Dr. John Sullenberger, reviewed a random sample of South Medical's files. All of those files contained referrals from Dr. Hirzel. Dr. Sullenberger concluded that the medical necessity for the tests that were performed and billed to Medicaid was often not reflected in the records he reviewed. While the records he reviewed included the referral forms from Dr. Hirzel's office and some records reflecting the patients' histories and diagnoses, it is not clear whether Dr. Sullenberger had access to all of the pertinent records of the physician who ordered the tests. It should also be noted that Dr. Sullenberger did not talk to Dr. Hirzel or to any of the patients.

   
   

7. In the April 22, 1992 Termination Letter, Respondent alleged that South Medical was overpaid $264,122.38 by the Medicaid Program for tests conducted by South Medical which were purportedly not medically necessary. The Termination Letter suggests that the amount of the alleged overpayment was determined by extrapolating the results of the random survey of South Medical's files to all of the claims submitted by that company. In other words, Respondent apparently concluded for purposes of the Termination Letter, that all of the Medicaid payments made to South Medical should be refunded. No competent evidence was offered at the hearing to establish the amount of the claims submitted by South Medical and no explanation was given as to the manner in which the $264,122.38 alleged overpayment was calculated. At the hearing in this matter, Respondent stated that it had reduced its claim for overpayment to $161,802.80. Other than the conclusory deposition testimony of Ellen Williams, no evidence was presented to explain how this amount was calculated. In Respondent's unilateral prehearing stipulation, there is a representation that there was "no challenge to the validity of the statistical methods used in this case." No such conclusion is included in Petitioner's pleadings. In fact, Petitioner offered some evidence challenging the contention that the tests performed were not medically necessary. Since this evidence was vague and not tied to specific files, it is not possible to reach any conclusions as to the medical necessity of the tests in any particular case.

   
   

8. The testimony of Respondent's expert raises considerable doubt as to the medical necessity for many of the tests performed in the files reviewed by Respondent's investigators. However, none of the files were offered into evidence and no competent substantial evidence was offered as to the tests conducted in any particular case. Furthermore, it is not clear that Respondent had all of the documents necessary to make a determination of medical necessity with respect to the files it reviewed. Respondent's investigators reviewed approximately twenty-seven files obtained from South Medical. Respondent also requested South Medical to produce the medical charts from Dr. Hirzel. The evidence was insufficient to establish that Respondent obtained all of the records from the referring physician, Dr. Hirzel. Moreover, none of the investigators talked to the referring physician or any of the patients. It should also be noted that, since South Medical was merely a diagnostic laboratory, it did not have the authority to question the medical necessity for the tests ordered by the referring physician. Finally, while Section 409.913(12), Florida Statutes, permits Respondent to use statistical methods in determining an overpayment, no evidence was offered in this case to establish a reasonable statistical method. No stipulation or evidence was offered to

   establish the statistical methodology used by Respondent or the number or amount of claims to which the methodology was applied. For these reasons, Respondent has not established in this proceeding its right to a refund for tests performed by South Medical that were allegedly not medically necessary.

   
   

9. Respondent suggests that there was a suspicious consistency in the diagnoses and tests ordered for a number of the South Medical patients whose files were reviewed. While Dr. Sullenberger's testimony certainly raises some concerns in this regard, insufficient evidence was presented regarding these alleged consistencies to draw any conclusions.

   
   

10. At the time the April 22, 1992 Termination Letter was drafted, Respondent was under the impression that South Medical was a group of physician providers. The evidence clearly established that South Medical was not a physician group. Nonetheless, as discussed in more detail below, that is the manner in which South Medical was listed in the computer records of the Medicaid Program. South Medical contends that its mistaken enrollment was the result of bureaucratic bungling. Unfortunately, the evidence presented at the hearing regarding the enrollment of South Medical in the Medicaid Program was often confusing and inconclusive. It is necessary to review the facts as best can be determined from the evidence presented.

    
    

11. To become a participant in the Medicaid Program, a provider has to fill out a Provider Enrollment Application (the "Application Form.") Shortly after South Medical was formed, it submitted an Application Form seeking enrollment as a provider in the Medicaid Program. The Application Form requires the applicant to provide certain information regarding the "provider type," the specialty involved, the type of practice, the ownership of the provider, and the "category of service." The applicant is provided with a numerical code key and is expected to fill in the blanks on the Application Form with the appropriate numerical code that corresponds to the business.

    
    

12. The code key for the Provider Type includes a detailed listing of numerous kinds of providers of health care services including several types of hospitals and clinics, a number of different categories of individual health care providers ranging from social workers to medical doctors, several different types of transportation services and a number of testing facilities including dental laboratories, independent laboratories, portable x-ray companies, and dialysis centers. Alicia Vidal-Zas, who filled out the Application Form for South Medical, contends that she was uncertain as to the appropriate classification for her company and, therefore, left this blank empty on the Application Form she submitted.

    
    

13. Consultec is a fiscal intermediary that processes claims and provider applications for the Medicaid Program. The Application Form on file with Consultec for South Medical has the provider code "99" (which corresponds to an electronic media claims intermediary) written in the box for the Provider Type. The evidence was inconclusive as to the person who entered that code in the provider blank. The "99" is crossed out and "25" is written next to it. That code corresponds to a physician provider. There is also a parenthetical notation on the Application Form which states "does vascular studies." As best can be determined from the evidence presented in this case, the "25" and the notation regarding vascular studies were made by a Consultec representative. Respondent suggests that Consultec contacted South Medical for clarification as to the types of services being provided and the Consultec representative was told that South Medical did vascular studies. Respondent further suggests that, since vascular studies can allegedly be performed only by a physician, the

    Consultec representative concluded that South Medical was a physician provider group and should be enrolled that way. Unfortunately, no conclusive evidence was presented on these issues. No representative from Consultec testified and only Petitioner's version of its enrollment has been presented. Petitioner denies that it ever advised Consultec that it was a physician group and claims that it never sought enrollment as anything other than a diagnostic laboratory.

    
    

14. The Application Form on file with Consultec for South Medical reflects a specialty code of "99" for the specialty of the provider. This code indicates that the applicant's specialty is something other than the sixty-three listed physician specialties, (including several categories of radiology) or eighteen other categories of specialties set forth in the code key. The evidence did not establish who completed this part of the Application Form.

    
    

15. The Type of Practice blank on the Application Form is filled in with a "99" which reflects a practice other than the types specified in the code key. The code key includes separate categories for an individual practice as well as for a group practice. The evidence established that Alicia Vidal-Zas completed this section of the Application Form. There is one page of the Application Form which calls for certain, additional information for "group membership." It does not appear the South Medical provided any information on this page.

    Nonetheless, there is an indication on that page that Consultec approved enrollment as a physician group.

    
    

16. The code key for the Category of Service blank on the Application Form sets forth over thirty different types of services. The Application Form on file with Consultec for South Medical originally had the number "65" (which reflects a home health service) written in. The "65" was entered by Alicia Vidal-Zas at the time she submitted the Application Form. No adequate explanation was offered as to why South Medical was described as a home health service when that was clearly not the business in which it was engaged. On the Application Form on file with Consultec, the number "65" was crossed out and next to it was written the number "25," which represents "physician care (MD)." It is not clear when this change was made or who made it. It was apparently done by someone at Consultec. No conclusive evidence was presented as to the basis for this change.

    
    

17. While the evidence was sketchy regarding the communications that took place between Consultec and South Medical, it is clear that some discussions took place after the Application Form was submitted. On September 11, 1990, Alicia Vidal-Zas sent a letter to Teresa Jones of Consultec which provided as follows.

    
    

    As per our telephone conversation of this

    morning, I providing [sic] the information needed. Leon F. Hirzel, Jr., (Medicaid No. 069389800)

    is affiliated with South Medical Services, Inc.

    
    

18. Shortly after the September 11 letter, South Medical was accepted as a provider in the Medicaid Program as reflected in a letter dated September 29, 1990. However, no direct evidence was presented that the September 11 letter was considered in enrolling South Medical in the Medicaid Program. The computer printout from Consultec for South Medical reflects Dr. Hirzel as a member of South Medical. Likewise, Dr. Hirzel's printout from Consultec reflects that he is a member of South Medical. Other than noted above, no evidence was presented as to the basis for these computer printouts.

19. Without question, the enrollment information provided by South Medical was vague and contained significant omissions. The September 11, 1990 letter is particularly troublesome. South Medical contends that, after it began submitting claim forms for payment to Medicaid, it encountered difficulties in receiving payment. South Medical says that it contacted Consultec and was told that the Medicaid Program could not pay the claims submitted because the referring physician was not listed on the claims form and it was not clear the referring physician was a provider under the Medicaid Program. Consultec purportedly told South Medical that the claims could not be processed without the referring physician's provider number. South Medical claims it gave Consultec Dr. Hirzel's physician provider number in the September 11 letter and, on subsequent claims forms, filled that number in a blank on a section of the claims form titled "Leave Blank." This justification for the September 11 letter fails to explain why Dr. Hirzel is referred to as being "affiliated" with South Medical. While this explanation is unsatisfactory, Respondent has not provided evidence as to the consideration, if any, given to the September 11 letter.

    
    

20. While there is a great deal of confusion surrounding the application submitted by South Medical, the evidence clearly established that South Medical was enrolled in the Medicaid Program as a physician group. At the time of its enrollment, South Medical was provided with the handbook for submitting physician claims under the Medicaid Program. South Medical was also provided with a phone number to call if it had any problems or questions regarding the program. Petitioner claims that it simply followed the handbook directions as best it could and did not realize it had been provided with the wrong book. The excerpts of the handbook that were introduced into evidence are clearly identified as the Medicaid Physician Provider Handbook. However, the directions contained in the excerpts provided are generic in nature and would not necessarily be inappropriate for any provider.

    
    

21. In submitting its claims, South Medical used physician billing codes. These codes represent a comprehensive service which includes the administration of the test and the professional interpretation of it. In other words, since no modifier or explanation was included, South Medical was billing a "global fee" for the entire service. Because South Medical had no physicians on staff, it was not entitled to bill Medicaid a global fee using the physician billing codes. No evidence was presented as to the appropriate billing codes and amounts for an independent laboratory. Thus, it is impossible to determine from the evidence presented in this case what the difference was between the amount billed by South Medical and the amount to which it would have been entitled if it was properly enrolled as an independent laboratory.

    
    

22. In submitting claims forms to Medicaid, South Medical did not fill out any of the information regarding the patient's condition, disability, etc. The forms submitted simply included the date of service, the type of procedure, the diagnosis code and the charges for services rendered. The information was based upon the referral records received from Dr. Hirzel. It appears that the claims were paid as submitted. However, no conclusive evidence was offered on this point.

    
    

23. Alicia Vidal-Zas admitted that, under a column headed "Leave Blank" on the claims forms, she filled in Dr. Hirzel's Medicaid provider number. She claims that this number was filled in at the direction of the Consultec personnel who told her that the referring physician's number should be placed there. This explanation is not consistent with the instructions in the claims handbook provided to Petitioner. However, while Petitioner's explanation is

    difficult to believe, it was not successfully refuted. The only conclusion that can be reached based on the evidence presented was that South Medical was confused as to the proper manner to bill for the tests it performed. South Medical's confusion does not excuse its obligation to determine the proper billing codes. However, the evidence was insufficient to conclude that South Medical's billing was fraudulent.

    
    

24. As noted above, Dr. Hirzel was the referring physician on most of South Medical's patients. Dr. Hirzel was located in the same building as South Medical. The evidence indicates that, at least for the year beginning January 1, 1991, Dr. Hirzel rented his office space from South Medical for an annual rent of $3,600.00 per year. There was no other evidence of any relationship or connection between Dr. Hirzel and South Medical.

    
    

25. Dr. Hirzel was originally enrolled as a provider in the Florida Medicaid Program beginning in 1984. South Medical suggests that Dr. Hirzel's enrollment expired and that he renewed his provider agreement in July of 1990. The alleged expiration of Dr. Hirzel's enrollment was offered as an explanation for the September 11, 1990 letter. However, the evidence on this issue was not conclusive and Dr. Hirzel's 1990 Medicaid application was not authenticated.

    
    

26. South Medical sent at least one letter to a patient in November of 1991 advising the patient that she was due "for her next doctor's appointment." That letter specifically directed the patient to "please call the office to schedule a new appointment. Our telephone number is (305) 267-5008. We are looking forward to seeing you again." It is not clear who the patient's doctor was and/or what that doctor's involvement was with South Medical. While this correspondence suggests that South Medical's involvement may have been more than it claimed at the hearing, no further evidence was presented, thus no conclusions can be drawn.

    
    

27. The confusion surrounding South Medical's enrollment in the Medicaid Program and its close relationship with the physician who was referring most of its patients is certainly cause for concern and investigation, however, the evidence presented in this case was insufficient to conclude that South Medical was the alter ego of Dr. Hirzel and/or that it was obligated to determine the medical necessity of all the tests he ordered.

    
    

28. There is no evidence that South Medical ever performed tests that were not requested by a physician or ever billed for services which it did not perform.

    
    

29. There was a suggestion during the hearing that a "Dr. Elias" read and interpreted the test results for South Medical. No explanation was provided as to his relationship with South Medical and/or the basis upon which he was providing professional services. There is no indication that he was enrolled as a provider in the Medicaid Program.

    
    

30. In addition to challenging the medical necessity for many of the tests performed by South Medical, Respondent also complains that the records it reviewed were often insufficient to justify the diagnoses made. However, as noted above, it is not clear that Respondent ever obtained all of the treating physician's records. While the records of South Medical were often insufficient to justify the diagnoses reflected in the records and/or the tests that were ordered, it cannot be concluded that the physician's records were also inadequate. In this regard, it should be noted that South Medical performed tests for some physicians other than Dr. Hirzel.

    CONCLUSIONS OF LAW

    
    

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

    
    

32. Pursuant to Section 409.902, Florida Statutes and Chapter 93-129, Section 58, Laws of Florida, Respondent is the state agency designated to administer the Medicaid Program.

    
    

33. Respondent is authorized to oversee the activities of Medicaid providers and conduct investigations, analyses and audits of possible fraud, abuse and neglect in the Medicaid Program.

    
    

34. Section 409.913(5), Florida Statutes, provides:

    
    

    When presenting a claim for payment under the Medicaid Program, a provider has an affirmative duty to supervise the provision of, and be responsible for, goods and services claimed to have been provided, to supervise and be responsible for preparation and submission of the claim, and to present a claim that is true and accurate and that is for goods and services which:

    1. Have actually been furnished to the recipient by the provider prior to submitting the claim.

    2. Are necessary.

       * * *

       (e) Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law.

       
       

35. Under Section 409.913(8), Florida Statutes, Respondent may impose administrative sanctions against a Medicaid provider if:

    
    

    1. The provider is not in compliance with provisions of departmental policy manuals or handbooks which have been adopted by reference as rules in the Florida Administrative Code, state laws, federal rules and regulations . . .

    2. The provider has furnished or ordered the furnishing to a recipient of goods or services that are inappropriate, unnecessary, excessive, or harmful to the recipient or are of inferior quality. Such determinations must be based on competent peer judgments and evaluations;

    3. The provider or an authorized representative of the provider has submitted or caused to be submitted false or erroneous Medicaid claims that have resulted in payments to the provider in excess of those

       to which the provider was entitled under the Medicaid program;

    4. The provider or an authorized representative of the provider has submitted or caused to be submitted a Medicaid provider enrollment application, request for prior authorization for Medicaid services, or Medicaid cost report that contains materially false or incorrect information.

    
    

36. Section 409.913(9) sets forth the sanctions that can be imposed by Respondent for any of the acts described in subsection (8). Those sanctions include suspension for a specific period of time of not more than one year, termination for a specific period of time from more than one year to 20 years and imposition of a fine of up to $1,000 for each violation not exceeding a total fine of $25,000 in connection with any one audit or investigation. Each instance of knowingly submitting a materially false or erroneous Medicaid provider enrollment application and each false or erroneous Medicaid claim leading to an overpayment to a provider is considered to be a separate violation. Section 409.913(10) sets forth the factors that should be considered in determining the appropriate sanction. These factors include the seriousness and extent of the violation and the prior history of violations by the provider.

    
    

37. Rule 10C-7.060(1) Florida Administrative Code, provides:

    
    

    Each provider of healthcare and related services who voluntarily enrolls in the Florida Medicaid program shall agree to deliver services in accord with applicable state and federal laws and regulations related to the program and to the provider's professional services.

    
    

38. Rule 10C-7.061, Florida Administrative Code, sets forth the procedures to determine whether an overpayment has been made to a Medicaid provider. That rule draws a distinction between a "simple mistake" which is defined as "an inadvertent error, irrespective of source" and fraud as defined in Section 409.325, Florida Statutes.

    
    

39. Section 409.913(12), Florida Statutes, permits Respondent to utilize a statistical method to calculate overpayments based upon a sampling of a provider's records. The procedures for calculating overpayments are described in more detail in Rule 10C-7.061(4).

    
    

40. Since Respondent is seeking to terminate Petitioner from the Medicaid Program, Respondent bears the burden of proving the grounds for termination and the imposition of sanctions. In addition, Respondent has the burden to prove the amount of any overpayment which it seeks to collect. See, Belino vs. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). At the commencement of the hearing in this matter, Respondent conceded that it had the burden of proof in this proceeding.

    
    

41. Respondent claims that Petitioner is obligated to refund in excess of

    $160,000 to the Medicaid Program because South Medical's files for several of its patients allegedly do not contain adequate documentation to justify the tests performed. The evidence presented in this case was insufficient to determine the amount Petitioner was overpaid either as a result of unnecessary

    tests or as a result of improperly billing for physician rather than laboratory services.

    
    

42. The April 22, 1992 Termination Letter from Respondent sought repayment from Petitioner of an alleged overpayment of $264,122.38. At the commencement of the hearing, Respondent reduced this claim to $161,802.80. As best can be determined, both sums were statistical calculations of the alleged overpayment made by Respondent after an evaluation of the medical necessity of the tests contained in a random sample of Petitioner's files reviewed by Respondent's investigators. No competent, substantial evidence was presented as to how either sum was calculated. Thus no conclusions can be reached as to the amount Petitioner was overpaid, if any.

    
    

43. The evidence in this case established that Petitioner was erroneously enrolled in the Medicaid Program as a group of physicians. Petitioner was at least partly responsible for the erroneous enrollment as a result of the errors and omissions in its Application Form and other inaccurate information provided by Petitioner to Consultec, including the September 11, 1990 letter. However, it cannot be concluded based upon the evidence presented in this case that Petitioner fraudulently enrolled in the Medicaid Program. While some of Petitioner's explanations stretch credulity, Respondent has failed to produce any evidence to explain exactly how the erroneous enrollment occurred. Based upon the evidence presented, it cannot be concluded that Petitioner's erroneous enrollment was the result of fraud on the part of Petitioner as opposed to a combination of errors and confusion on the part of all the parties. On the other hand, Petitioner must accept responsibility for submitting claims forms that utilized physician billing codes when Petitioner was not entitled to the "global fee" associated with those billing codes. However, the evidence was insufficient to conclude that Petitioner acted fraudulently in submitting those claims given the confusion surrounding its enrollment status.

    
    

44. At the hearing, Respondent's consultant and its investigator conceded that an independent laboratory is not expected to determine the medical necessity of a test ordered by a physician. In view of the foregoing, it would appear that the appropriate measure of any overpayment to Petitioner in this case should not be based upon a review of the medical necessity of the tests since Petitioner did not have the ability to second guess the referring physician. Instead, the proper measure of the overpayment should be the difference between what Petitioner could have billed as a laboratory and what it was apparently paid as a result of its erroneous enrollment as a physician group; however, no evidence was presented to establish this amount.

    
    

45. The applicable statutes and rules clearly imposed an obligation on Petitioner to ascertain the correct billing methods and procedures. See Section 409.913(5), Florida Statutes. While Petitioner may have been confused as to the applicable billing codes, its own actions contributed to the confusion and the Rules do not excuse a provider from determining for itself the appropriate billing codes. Thus, Petitioner must bear the responsibility for improperly submitting claim forms that included physician billing codes. A fine of $5,000 should be imposed for filing claims forms that included physician billing codes when such codes were inappropriate for a business such as Petitioner. In addition, a fine of $2,000 should be imposed as a result of Petitioner's filing of an incomplete application form and the submission of the September 11, 1990 letter which was clearly inaccurate and a possible source of much of the confusion surrounding Petitioner's enrollment status. In view of all the facts in this case, in particular Petitioner's misleading application and unsatisfactory answers to the many questions surrounding its enrollment and the

    claims forms it submitted, Petitioner should be terminated from the Medicaid Program.

    
    

46. At the hearing, Petitioner argued that Respondent could only terminate Petitioner from the Medicaid Program, impose sanctions and/or seek an overpayment based upon the allegations contained in the April 22, 1992 Termination Letter. That Letter was clearly drafted under the mistaken impression that Petitioner was a group of physician providers. However, the letter adequately advised Petitioner that there were problems with the claims that it submitted to Medicaid. One of the problems cited was that the provider actually reading and interpreting the results of the tests was not employed by the company. This allegation has in fact proven to be true. While parts of the Termination Letter do not seem to be appropriate in view of the confusion surrounding Petitioner's enrollment status, Petitioner should not be permitted to hide behind the confusion since Petitioner's own actions contributed to it.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Agency for Health Care Administration enter a Final Order

terminating Petitioner, South Medical Services, Inc. from the Medicaid Program, and imposing an administrative fine of $7,000. No conclusion is reach herein as to whether Respondent can seek reimbursement of the alleged overpayment in this or a subsequent proceeding upon submission of appropriate evidence to establish the amount of the overpayment.

DONE and ENTERED this 14th day of December 1993, at Tallahassee, Florida.

J. STEPHEN MENTON Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of December 1993.

ENDNOTES

1/ Pursuant to Chapter 93-129 Section 58, Laws of Florida, all powers duties and functions of the Medicaid Program within HRS have been transferred to the Agency for Health Care Administration effective July 1, 1993.

2/ This rule has subsequently been transferred and renumbered as Rule 10P- 4.230, Florida Administrative Code.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-3548

Petitioner's Proposed Findings of Fact.

As set forth in the Preliminary Statement, Petitioner's Proposed Recommended Order includes a combination of factual conclusions, argument and legal conclusions. The Proposed Findings of Fact cannot be isolated and, accordingly, no specific ruling is made on Petitioner's proposals.

Respondent's Proposed Findings of Fact.

1. Adopted in substance in Finding of Fact 1.

2. Adopted in the Preliminary Statement.

3. Adopted in substance in Findings of Fact 2.

4. Adopted in substance in Findings of Fact 3.

5. Addressed in the Preliminary Statement.

6. Addressed in the Preliminary Statement.

7. Subordinate to Findings of Fact 12-13.

8. Subordinate to Findings of Fact 15.

9. Subordinate to Findings of Fact 16.

10. Addressed in the Preliminary Statement.

11. Addressed in the Preliminary Statement.

12. Subordinate to Findings of Fact 17 and 19.

13. Subordinate to Findings of Fact 15.

14. Rejected as unnecessary.

15. Rejected as unnecessary.

16. Subordinate to Findings of Fact 10-18.

17. Adopted in substance in Findings of Fact 20.

18. Adopted in substance in Findings of Fact 20.

19. Adopted in substance in Findings of Fact 20.

20. Subordinate to Findings of Fact 21.

21. Subordinate to Findings of Fact 21.

22. Subordinate to Findings of Fact 21.

23. Addressed in the Preliminary Statement.

24. Addressed in the preliminary Statement and subordinate to Findings of Fact 21.

25. Subordinate to Findings of Fact 22 and 23.

26. Subordinate to Findings of Fact 23.

27. Addressed in the Preliminary Statement and in Findings of Fact 23.

28. Adopted in substance in Findings of Fact 23.

29. Rejected as vague and ambiguous.

30. Addressed in the Preliminary Statement.

31. Rejected as unnecessary. Neither parties' expert talked to Dr. Hirzel or any of the patients.

32. Rejected as unnecessary.

33. Rejected as unnecessary and as vague and ambiguous.

34. Rejected as unnecessary.

35. Rejected as unnecessary.

36. Rejected as unnecessary and a summary of testimony rather than a finding of fact.

37. Rejected as unnecessary and a summary of testimony rather than a finding of fact.

38. Rejected as vague, unnecessary and overly broad.

39. Addressed in the Preliminary Statement.

40. Rejected as a summary of testimony rather than a finding of fact and as unnecessary.

41. Subordinate to Findings of Fact 10 and 22.

42. Rejected as unnecessary. This handwritten letter was not authenticated and no competent substantial evidence was offered to establish the contents therein.

43. Adopted in substance in Findings of Fact 13.

44. Addressed in the Preliminary Statement and in Findings of Fact 30.

45. Addressed in the Preliminary Statement.

46. Subordinate to Findings of Fact 21.

47. Subordinate to Findings of Fact 21.

48. Subordinate to Findings of Fact 21.

49. Addressed in the Preliminary Statement.

50. Addressed in the Preliminary Statement.

51. Subordinate to Findings of Fact 6 and 8.

52. Subordinate to Findings of Fact 6 and 8

53. Subordinate to Findings of Fact 6 and 8.

COPIES FURNISHED:

J. Alfredo De Armas, Esquire Armas & Borron

2121 South West Third Avenue, Suite 400 Miami, Florida 33129-1438

Karel Baarslag, Esquire HRS Medicaid Office Building 6, Room 234

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

Harold D. Lewis, Esquire Agency for Health Care

Administration

The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Sam Power, Clerk Agency for Health Care

Administration

The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

AGENCY FOR HEALTH CARE ADMINISTRATION

SOUTH MEDICAL SERVICES, INC.,

Petitioner, CASE NO.: 92-3548

RENDITION NO.: AHCA-94-62-FOF-MDT

vs.

STATE OF FLORIDA, AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings (DOAH) in the above-styled case submitted a Recommended Order to the Agency for Health Care Administration (AHCA). The Recommended Order entered December 14, 1993, by Hearing Officer J. Stephen Menton is incorporated by reference.

RULING ON EXCEPTIONS

Counsel for the agency excepted to the findings of the Hearing Officer as follows:

Counsel challenges the findings that the agency failed to establish that the statistical methodology by which the agency extrapolated the overpayment was consistent with generally accepted statistical methods. Counsel maintains that because the agency is authorized by rule and statute to use generally accepted statistical methods, no such foundation is required. The agency based its overpayment case on the premise that South Medical was a group physician practice, and that tests performed by South Medical were medically necessary.

In this proceeding it was established that South Medical is a referral facility which has no physicians on its staff. South Medical does not assess medical necessity; it only performs tests requested by referring physicians. The Hearing Officer's conclusion that South Medical was overpaid was based on an entirely different premise, that South Medical was paid for professional evaluation of test results, a service not provided by South Medical. Because the findings challenged by counsel are not relevant to facts established in this proceeding, the challenged findings are deleted.

Counsel excepts to finding of fact 9 regarding the weight to be given to Dr. Sullenberger's opinion that there was a suspicious consistency in Dr.

Hirzel's diagnoses. Both parties presented testimony by physicians on the issue of whether the tests ordered by Dr. Hirzel were medically necessary. This

testimony was conflicting. In such circumstances it is the role of the Hearing Officer to weigh the evidence and resolve the conflicts. The agency has no authority to reject the findings of fact which are supported by competent, substantial evidence; therefore, the exception is denied. Heifetz vs.

Department of Business Regulation, 475 So. 2d 1277 (Fla. 1st DCA 1985).

Counsel excepts to finding of fact 23 wherein the Hearing Officer concluded the evidence was insufficient to find South Medical's billing was fraudulent.

Counsel maintains that the agency did not base its case on fraud; therefore, the conclusion is irrelevant. Having read the entire record, I conclude that counsel did seek to establish that South Medical did misleadingly hold itself out as a physician provider, when in fact it was only a diagnostic center performing tests when requested by referring physicians. I see no grounds for striking the Hearing Officer's conclusion.

Counsel excepts to finding of fact 26 wherein the Hearing Officer concluded that the evidence was insufficient to find South Medical was holding itself out as a physician provider. This is another instance of the Hearing Officer resolving conflicting evidence. The owner and operator of South Medical testified that South Medical employed no physicians, had no contractual relationship with any physicians, and simply performed tests based on physician referrals. The exception is denied.

Counsel's exceptions to the conclusions of law reiterate exceptions to findings of fact which have been addressed above except for the exception to paragraph 43 wherein the Hearing Officer concluded that the measure of overpayment received by South Medical was the difference between an appropriate charge for each test and the charge for each test including physician analysis. South Medical's billing was coded so as to include physician analysis even though no physician analysis was provided by South Medical. The Hearing Officer's conclusion is based on testimony by agency witnesses that a facility such as South Medical does not assess medical necessity for tests ordered by a referring physician, and that South Medical's charges improperly included physician analysis. See testimony of Ellen Williams and Dr. Sullenberger. On page 212 of the transcript of the final hearing Ms. Williams' testimony is as follows:

Ms. Williams: South Medical has equipment and they took pictures, they did sonograms, they did x-rays, and that's all they did as far as we can tell by the records.

Mr. DeArmas: Is that not what they billed for?

Ms. Williams: No, they billed for a comprehensive service. They billed for what we would call a global fee. When you bill a physician code, whatever it is, unless you put a modifier of some sort, that code represents the entire service--

Mr. DeArmas: Ms. Williams--

Ms. Williams: a service which includes not only the taking of the films, but the professional part.

The exception is denied.

FINDINGS OF FACT

The agency hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order, except as stated in the ruling on the exceptions.

CONCLUSIONS OF LAW

The agency hereby adopts and incorporates by reference the conclusions of law set forth in the Recommended Order, except as stated in the ruling on the exceptions.

At issue in this case is whether South Medical was overpaid, whether to terminate South Medical from participation as a Medicaid provider, and whether to impose fines. The Hearing Officer concluded that South Medical was overpaid, but he rejected the basis on which the agency had determined overpayment, the lack of medical necessity for tests provided. Instead, the Hearing Officer found that the agency is entitled to recover the difference between the appropriate fees for the tests provided and the actual payments which included the costs of professional analysis. There was no evidentiary basis for the Hearing Officer to calculate the amount of the overpayment. I conclude that the calculation is ministerial, given the instructions of the Hearing Officer.

Therefore, the agency is directed to inform South Medical of the amount due, and provide a point of entry for South Medical to request another 120.57 proceeding if it wishes to challenge the amount.

Based upon the foregoing, South Medical is obligated to refund overpayments in an amount to be determined; South Medical is terminated as a Medicaid provider for a period of five years commencing from the date of rendition of this Final Order, and finally, the fines of $7,000.00 recommended by the Hearing Officer are imposed.

DONE and ORDERED this day of 21st day of April, 1994, in Tallahassee, Florida.

Douglas M. Cook, Director Agency for Health Care

Administration

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF AHCA, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Copies furnished to:

J. Stephen Menton Hearing Officer

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Karel Baarslag, Esquire Senior Attorney

1317 Winewood Boulevard

Building 6, Room 234

Tallahassee, Florida 32399-0700

J. Alfredo De Armas, Esquire Armas & Borron

2121 S.W. Third Avenue Suite 400

Miami, Florida 33129-1438

Rufus Noble, Inspector General

Agency for Health Care Administration Winewood Office Park

2730 Blair Stone Road Building 8, Room 226

Tallahassee, Florida 32399-6571

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished to the above named addresses by U.S. Mail this 22nd day of April, 1994.

R. S. Power, Agency Clerk State of Florida, Agency for

Health Care Administration

325 John Knox Road

The Atrium Building, Suite 301 Tallahassee, Florida 32303

(904)922-3808

Docket for Case No: 92-003548

Orders for Case No: 92-003548