STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTHEAST MEDICAL CONSULTANTS, ) INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-4269BID

) STATE OF FLORIDA, AGENCY FOR ) HEALTH CARE ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a formal hearing in this case on August 9, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Richard P. Slavin

Project Director

1400 Miami Gardens Drive, #210 North Miami Beach, Florida 33179

For Respondent: Roger Maas, Esquire

Senior Attorney

1317 Winewood Boulevard

Building 6, Room 271

Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUES

Whether the Department of Health and Rehabilitative Services (now the Agency For Health Care Administration) properly rejected Southeast Medical Consultants, Inc.'s bid proposal resulting from request for proposal number (RFP) L9308-VF.

PRELIMINARY STATEMENT

By letter dated April 29, 1993, Respondent, State of Florida, Agency for Health Care Administration (AHCA), advised Petitioner, Southeast Medical Consultants, Inc. that it rejected all proposals received resulting from RFP L9308-VF on the basis of a letter received from the local United States Attorney's Office, essentially stating that the proposed finder's fee is far in excess of that provided in Federal qui tam actions. Additionally, the United States Attorney's Office, for the Northern District of Florida, opposed such a contract for other stated reasons. AHCA advised Petitioner that its determination was final agency action and that therefore, Petitioner had its point of entry to file a protest pursuant to Section 120.53(5), Florida

Statutes. Petitioner, by letter dated May 18, 1993, filed a formal protest to appeal AHCA's determination to reject all proposals resulting from RFP L9308-VF. Based on that protest, on July 28, 1993, this matter was referred to the Division of Administrative Hearings and was received by the Division on August 2, 1993. On August 5, 1993, the matter was noticed for hearing for August 9, 1993 and was heard as scheduled.

At the hearing, AHCA presented the testimony of Karen Kutrer, Terry Flynn and Donald Rahicki. Petitioner recalled Karen Kutrer as its own witness, and cross examined AHCA's witnesses. AHCA introduced Exhibits 1 through 6, which were received into evidence and Petitioner introduced three (3) exhibits which were received in evidence.

AHCA filed a Proposed Recommended Order which is in the nature of legal argument supportive of its position that the agency had the authority to reject any and all bids submitted. That argument concludes that the rejection was not done arbitrarily or capriciously but was in the best interest of the agency.

Since AHCA's proposal is not in the form of proposed findings of fact, no specific rulings are made on its legal argument. Likewise, Petitioner sent a letter urging that its proposal should be accepted as it would save the agency a large sum of money. Here again, the letter was considered; however no specific rulings are made on Petitioner's statement of position.

FINDINGS OF FACT

1. On February 19, 1993, Respondent, AHCA, published in the Florida Administrative Weekly, Volume 19, No. 7 at Page 859, a request for proposal "to provide identification and recoupment of medicaid overpayments to hospital vendors for the period prior to January 19, 1991." The RFP noted that all determinations or identification must be made and provided to the Department within sixty (60) days of the date of contract signing. The RFP provided that all proposals were to be provided no later than 3:00 p.m. on March 19, 1993. In the RFP, the Department "reserved the right to reject any and all proposals."

   
   

2. The RFP generated four (4) bids (proposals) of which Petitioner submitted one.

   
   

3. Petitioner's proposal was discussed by AHCA who in turn consulted with the United States Attorney for the Northern District of Florida for an opinion. Petitioner's proposal was reviewed with Gary Clark, the Assistant Secretary for Medicaid, and Terry Flynn, an Assistant United States Attorney in Florida.

   
   

4. Petitioner's proposal to AHCA proposed to the Department of Health Rehabilitative Services' medicaid unit that, for a forty percent (40 percent) finders' fee, they would identify and recover medicaid overpayments made to certain unnamed hospitals which had been stockpiling funds in the event that the overpayments were discovered by medicaid. Approximately 55 percent of Florida's medicaid funds comes from the federal government. Assistant Secretary Clark requested a written opinion from the United States Attorney from the Northern District (of Florida).

5. By letter dated April 12, 1993, the United States Attorney's Office for the Northern District formalized its opposition to such a contract for the following reasons:

   
   

   Title 31, U.S. States Code, Section 3730 allows for qui tam actions to be initiated by individuals. Should the federal government elect to pursue the qui tam action, the individuals who provide evidence to initiate the action can be awarded up to ten percent (10 percent) of proceeds recovered. (In recovery actions under the Federal Tort Claims Act, damages can be assessed in the amount of triple the face amount of false claims). If the federal government does not elect to pursue the qui tam action, the individual may pursue the case on its own and can be awarded up to twenty percent (20 percent) of the proceeds. The

   U.S. Attorney's Office inquired of Petitioner the source of their knowledge of overpayments. They refused to disclose. The U.S. Attorney's Office officials questioned whether the proposers had any civil or criminal liability and whether they were knowing participants in obtaining medicaid overpayments for any such hospital. The U.S. Attorney opined that it would be inappropriate for AHCA to enter into such a proposal. The conclusion was buttressed by the fact that the State of Florida was without authority to bind the federal government with such agreement as it would not preclude a federal grand jury from subpoenaing necessary evidence and testimony nor would it preclude the U.S. Attorney's Office from prosecuting civil and criminal violations which might surface from information gleaned from the proposal.

   
   

6. Based on the U.S. Attorney's Office opposition, as related to AHCA, and Respondent's inability to determine whether or not the proposers had any civil or criminal liability, either state or federal, AHCA made the decision to reject any and all bids submitted in response to the RFP.

   
   

7. The notice of rejection of all bids by AHCA was served on all parties on April 19, 1993. That notice was also posted at the site of the bid letting.

   
   

8. In addition to rejecting all proposals, the RFP was withdrawn and negotiations with all proposers were suspended.

   
   

9. Throughout the RFP, which was prepared by Karen Kutrer, a planner for AHCA, AHCA reserved the right to reject any and all proposals. Some of these reservations are set forth on pages 10, 11 and 23 of the RFP.

   
   

10. Subsequent to the rejection of all bids by AHCA, the U.S. Attorney's Office advised AHCA that it was no longer opposing such a contract although it was still uncertain whether the proposers had "clean hands."

    
    

11. AHCA further discussed the matter with its staff but decided that it would no longer initiate proposals pursuant to the subject RFP and declined to negotiate further with the proposers based on its determination that it was not in the agency's best interest to enter into such an agreement with proposers like Petitioner. This was done since it could not grant any immunity from prosecution in the event that the proposals provided the source for civil or criminal prosecution. AHCA also determined that the Petitioner had other alternatives, i.e., they could initiate qui tam actions on their own.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Section 120.53(5), Florida Statutes.

13. The parties were duly noticed pursuant to Chapter 120, Florida Statutes.

    
    

14. The authority of Respondent is derived from Chapter 120.53, Florida Statutes.

    
    

15. Respondent reserved the right to reject any and all bids when it solicited proposals through RFP L9308-VF.

    
    

16. AHCA's reservation of the right to reject any and all bids were specifically set out in the notice published in the Florida Administrative Weekly requesting proposals and was contained, in specific and clear language, throughout the proposal form (RFP L9308-VF).

    
    

17. AHCA's rejection of all bids was based on its considered opinion that it was not in its best interest to do so. It's decision was not made arbitrarily, capriciously or without valid reasons. AHCA's actions were reasonable; were made in good faith and afforded just consideration to the rights of Petitioner. Specifically, Petitioner can initiate, on its own, qui tam actions and still save the agency a large sum of money, if indeed it could do so under its agreement. For these reasons, it is concluded that the Respondent properly exercised its right to reject any and all bids in this case. See Berry v. Okaloosa County, 334 So.2d 349 (Fla. 1st D.C.A. 1976); Ward-Hopkins Contracting Company v. Roger AU & Son, Inc., 354 So.2d 456 (Fla. 1st D.C.A. 1978). Petitioner has not demonstrated that AHCA acted arbitrary or capriciously or in bad faith when it rejected all bids in this case.

RECOMMENDATION

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

Respondent (AHCA) enter a Final Order rejecting Petitioner's bid protest filed herein.

DONE AND ENTERED this 8th day of November, 1993, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

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 8th day of November, 1993.

COPIES FURNISHED:

Roger Maas, Esquire Senior Attorney

1317 Winewood Boulevard

Building 6, Room 271

Tallahassee, Florida 32399-0700

Richard K. Slavin Project Director

1400 Miami Gardens Drive, #210 North Miami Beach, Florida 33179

Sam Power, Agency Clerk

Agency for Health Care Administration The Atrium, Suite 301

325 John Knox Road Tallahassee, Florida 32303

Douglas M. Cook, Director

Agency for Health Care Administration 2727 Mahan Drive

Tallahassee, Florida 32308

Harold D. Lewis, Esquire

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 to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten 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.

Docket for Case No: 93-004269BID

Orders for Case No: 93-004269BID