STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONVAL-CARE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-0653F

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

FINAL ORDER

This case came before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, upon the filing of Petition for Attorneys Fees and Costs.

APPEARANCES

For Petitioner: Samantha D. Boge, Esquire

Post Office Box 11059 Tallahassee, Florida 32302

For Respondent: Roger R. Maas, Senior Attorney

Agency for Health Care Administration General Counsel's Office, Medicaid 2727 Mahan Drive

Fort Knox Executive Center, Number1 Tallahassee, Florida 32308

STATEMENT OF THE ISSUES

The issue in this case is whether Petitioner, Conval-Care, Inc., is entitled to the payment of attorney fees and costs pursuant to Section 57.111, Florida Statutes, from the Agency for Health Care Administration, the successor in interest to the Respondent, the Department of Health and Rehabilitative Services.

PRELIMINARY STATEMENT

On February 14, 1995, Petitioner, Conval-Care, Inc., filed a Petition for Attorney Fees and Costs with the Division of Administrative Hearings.

Petitioner sought an award of attorney fees and costs pursuant to Section 57.111, Florida Statutes, and Rule 22I-6.035, Florida Administrative Code (renumbered Rule 60Q-2.035).

The Petition was designated case number 95-0635F and was assigned to the undersigned.

On March 2, 1995, the Agency for Health Care Administration, the successor in interest to Respondent, the Department of Health and Rehabilitative Services, filed a Response in Opposition to Petition for Attorney's Fees and Costs.

The parties were given an opportunity to file proposed final orders on or before May 30, 1995. Petitioner filed a proposed final order containing proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Final Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached hereto. Respondent did not file a proposed final order.

FINDINGS OF FACT

1. By letter dated November 4, 1991, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"), notified Conval-Care, Inc. (hereinafter referred to as "Conval-Care"), that it intended to impose an administrative fine on Conval-Care pursuant to Section 409.913(9)(c), Florida Statutes.

   
   

2. Conval-Care contested the proposed fine and requested a formal administrative hearing, including a request that it be awarded attorney fees and costs pursuant to Section 57.111, Florida Statutes.

   
   

3. The matter was designated case number 92-0126 and was assigned to the Honorable Judge Robert T. Benton, then Hearing Officer Benton. On June 30, 1993, following a formal hearing held on March 24, 1993, Hearing Officer Benton entered a Recommended Order recommending dismissal of the sanctions letter of November 4, 1991.

   
   

4. The findings of fact made by Hearing Officer Benton, in Conval-Care, Inc. v. Department of Health and Rehabilitative Services, DOAH Case No. 92-0126, are hereby adopted to the extent relevant to this proceeding.

   
   

5. On September 19, 1993, the Department entered a Final Order. The Department accepted and incorporated into its Final Order the findings of fact made by Hearing Officer Benton. The Department, however, rejected Hearing Officer Benton's conclusions of law to the extent that he not had concluded that Conval-Care lacked authority to reject the demand for its records which was the subject of the proceedings. The Department concluded that, in light of the fact that Conval-Care had acted on the advice of counsel, it would reduce the fine from $25,000.00 to $5,000.00.

   
   

6. The Department's decision was appealed by Conval-Care. On December 16, 1994, the District Court of Appeal, First District, filed an opinion reversing the Department's Final Order. Mandate from the First District was entered January 3, 1995.

   
   

7. On February 14, 1995, Conval-Care filed a Petition for Attorneys Fees and Costs in this case. Conval-Care requested an award of $15,000.00 as a small business party pursuant to the provisions of Section 57.111, Florida Statutes.

   
   

8. Attached to the Petition were the Final Order entered by the Department, the Recommended Order, the First District's Opinion and Mandate, an Attorney's Affidavit stating the nature, extent and monetary value of the services rendered and costs incurred in the proceedings, the Petition for Formal Administrative Hearing filed by Conval-Care in 1991 and the Department's November 4, 1991 sanctions letter.

9. On March 2, 1995, the Agency for Health Care Administration, the successor in interest of the Department (hereinafter referred to as "AHCA"), filed a Response in Opposition to Petition for Attorney's Fees and Costs.

10 In its Response, AHCA admitted all of the allegations contained in paragraphs 1 through 6 and 8 through 9 of the Petition.

1. AHCA denied the allegations of paragraph 7 of the Petition. Paragraph

   7 of the Petition alleged the following:

   
   

   7. The action of DHRS, in filing the admini- strative complaint against CCI, was not sub- stantially justified because there was no reasonable basis in law or fact to support the issuance of its letter seeking to impose an administrative fine upon CCI.

   
   

2. Attached to the Response was an Affidavit from John M. Whiddon in support of its position that its actions were substantially justified. The Affidavit does not add any alleged credible justification not presented to Hearing Officer Benton or the First District Court of Appeal.

   
   

3. AHCA did not assert in it Response the following:

   
   

   1. that the costs and attorney's fees claimed in Conval-Care's affidavit were unreasonable;

   2. that Conval-Care is not a prevailing small business party;

   3. that circumstances exist that would make an award unjust; or

   4. that AHCA was a nominal party only.

      
      

4. AHCA also did not "either admit to the reasonableness of the fees and costs claimed or file a counter affidavit [specifying each item of costs and fee in dispute] along with its response."

   
   

5. Finally, AHCA did not request an evidentiary hearing in its Response.

   
   

6. The only issue which AHCA asserted in its Response was at issue in this proceeding is whether AHCA's actions were substantially justified.

   
   

7. On April 6, 1995, an Order to Provide Information was entered. Although the parties had not requested an evidentiary hearing, the undersigned entered the Order soliciting input from the parties before the undersigned decided whether a hearing was necessary on the one issue raised by the Department. In the Order, the parties were given an opportunity to provide input concerning the procedures they believed should be followed to resolve this matter. The parties were specifically requested to answer certain specified questions, including the following:

   
   

   1. Do the parties believe that an [sic] hearing is necessary to resolve any factual disputes and/or for purposes of oral argument before a decision is rendered?

   * * *

   5. Do the parties agree that the documents attached to the Petition and the Response should be considered in rendering a decision in this case? . . ."

   
   

8. Conval-Care filed a response to the April 6, 1995 Order indicating that there was no need for a hearing. Conval-Care asserted that a hearing would be improper unless Conval-Care consents to one. Conval-Care also asserted that all of the documents attached to petition should be considered.

   
   

9. AHCA filed a response to the April 6, 1995 Order indicating that "[t]he Respondent feels a hearing in this matter is essential." AHCA did not provide any explanation of why it believed a hearing was necessary or any discussion of whether a hearing was authorized under the applicable statutes and rules. AHCA also indicated in its response that it "agrees that the documents attached to the Petition and Response should be considered in this case "

   
   

10. On May 19, 1995, an Order Concerning Final Order was entered. Based upon a review of the pleadings and the lack of explanation from either party to justify an evidentiary hearing, it was concluded that no evidentiary hearing was necessary. Therefore, the parties were informed in the May 19, 1995 Order that a hearing would not be held in this case. The parties were also informed that they could file proposed final orders on or before May 30, 1995.

    
    

11. Conval-Care filed a proposed order. AHCA did not.

    
    

12. Neither Conval-Care nor AHCA timely requested an evidentiary hearing in this case. Both parties agreed that the documentation filed with Conval- Care's Petition and AHCA's Response could be relied upon in reaching a decision in this case.

    
    

13. Based upon AHCA's failure to contest most of the relevant issues in this proceeding, the only issue which requires a decision if whether the Department's actions against Conval-Care were substantially justified. The documents, including the Mr. Whiddon's Affidavit filed by AHCA with its Response, sufficiently explain why the Department took the actions it took against Conval-Care which led to this proceeding. No evidentiary hearing was, therefore, necessary.

    
    

14. The weight of the evidence failed to prove that the Department's actions in this matter were substantially justified. The Department could have sought the information it wanted by pursuing available discovery. Counsel for Conval-Care even remained the Department of the availability of discovery. The Department, however, rather than pursuing the information which it indicated it needed, elected to pursue a punitive action against Conval-Care rather than obtaining the information through discovery. The Department's reason for pursuing punitive actions against Conval-Care was not convincing to Hearing Officer Benton. Despite this fact, the Department entered a Final Order upholding its actions and imposing a fine of $5,000.00 for refusing to provide it with information which it could have obtained through other means. The First District Court reversed the Department's Final Order opining that the Department "lacked a legitimate investigatory purpose for demanding the records" which gave rise to its action against Conval-Care. Finally, the entire record in this case failed to indicate that there was any basis in law or fact to substantially justify the actions of the Department.

    CONCLUSIONS OF LAW

    
    

    1. Jurisdiction.

       
       

15. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Sections 57.111 and 120.57(1), Florida Statutes; and Rule 60Q-2.035, Florida Administrative Code.

    
    

    1. Burden of Proof.

       
       

16. The burden of proving ultimate entitlement to an award in this proceeding was on Conval-Care. See Adam Smith Enterprises v. Department of Environmental Regulation, 553 So.2d 1260, (Fla. 1st DCA 1990); and Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1979).

    
    

17. The burden of proving that the agency's actions in this matter were substantially justified, however, was on AHCA. Department of Professional Regulation v. Toledo Realty, Inc., 549 So.2d 715, 717 (Fla. 1st DCA 1989).

    
    

    1. Authority for An Award of Attorney Fees and Costs.

       
       

18. Section 57.111, Florida Statutes, provides for an award of attorney fees and costs in proceedings under Section 120.57(1), Florida Statutes. Section 57.111, Florida Statutes, provides, in pertinent part:

    
    

    (4)(a) Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circum- stances exist which would make the award unjust. [Emphasis added].

    
    

19. No award may be made in any case in which the state agency was a nominal party. Section 57.111(4)(d)1, Florida Statutes. The amount of any award is limited to a maximum of $15,000.00. Section 57.111(4)(d)2, Florida Statutes.

    
    

    1. Procedures for Obtaining an Award Under Section 57.111, Florida Statutes.

       
       

20. The following procedures for obtaining an award are established by Section 57.111, Florida Statutes:

    
    

    1. 1. To apply for an award under this section, the attorney for the prevailing small business party must submit an itemized affidavit . . . to the Division of Administrative Hearings which shall assign a hearing officer, in the case of a

       proceeding pursuant to chapter 120, which affidavit shall reveal the nature and extent of the services rendered by the attorney as well as the costs incurred in preparations, motions, hearings, and appeals in the proceeding.

       2. The application for an award of attorney's fees must be made within 60 days after the date that the small business party becomes a prevailing small business party.

    2. The state agency may oppose the application for the award of attorney's fees and costs by affidavit.

    3. The . . . hearing officer in the case of a proceeding under chapter 120, shall promptly conduct an evidentiary hearing on the application for an award of attorney's fees and shall issue a judgment,

    or a final order in the case of hearing officer. . . .

    
    

21. Procedures for obtaining an award are established by Rule 60Q-2.035, Florida Administrative Code. First, the small business party asserting entitlement to an award is required to file a petition for costs and fees with the Division of Administrative Hearings within sixty days after becoming a prevailing small business party. Rule 60Q-2.035(1), Florida Administrative Code. See Eager v. Florida Keys Aqueduct Authority, 605 So.2d 883 (Fla. 3d DCA 1992).

    
    

22. The contents of the petition are specified in Rule 60Q-2.035(1)(a)- (g), Florida Administrative Code. Pursuant to Rule 60Q-2.035(2), Florida Administrative Code, requires that all documents on which the claim that the small business party prevailed is predicated are to be attached to the petition. An itemized affidavit executed by the attorney for the prevailing small business party setting out details concerning the amount of the award sought must also be attached to the petition. Rule 60Q-2.035(3), Florida Administrative Code.

    
    

23. Conval-Care complied with the foregoing procedural requirements.

    
    

24. Secondly, the state agency is required to comply with the following procedures in responding to a claim for an award:

    
    

    (4) The state agency shall either admit to the reasonableness of the fees and costs claimed or file a counter affidavit along with its response. The counter affidavit shall specify each item of cost and fee in dispute.

    (5)(a) A state agency against which a petition for costs and fees has been filed shall file a response within twenty (20) days of filing of

    the petition, which shall state whether the state agency seeks an evidentiary hearing and shall specify whether the state agency asserts:

    1. That costs and attorney's fees claimed in the affidavit are unreasonable;

    2. That the petitioner is not a prevailing small business party;

    3. That the agency's actions were substantially justified;

    4. That circumstances exist which would make the award unjust; or

    5. That the agency was a nominal party only.

    (b) When a state agency relies upon any of the grounds listed in (a), it shall state the facts supporting its position with particularity.

25. AHCA did not assert that any of the issues listed in Rule 60Q- 2.0035(5), Florida Administrative Code, were contested by it in this matter except whether its actions were substantially justified. Therefore, AHCA waived its right to question: (1) whether the costs and attorney's fees claimed in the affidavit filed by Conval-Care are unreasonable; (2) whether Conval-Care is a "prevailing small business party" in an administrative proceeding pursuant to chapter 120 initiated by a state agency; (3) whether special circumstances exist which would make an award unjust; or (4) whether AHCA was a nominal party in these proceedings.

    
    

26. The only issue which AHCA asserted was in dispute was whether its actions "were substantially justified". Based upon the weight of the evidence, AHCA failed to prove that its actions in this matter were substantially justified.

    
    

    1. The Department's Actions were not Substantially Justified.

    
    

27. In order to prove that its actions were justified, AHCA was required to prove that it had a reasonable basis in law and fact at the time the proceeding was initiated to take the action it took.

    
    

28. The evidence failed to prove that AHCA had a reasonable basis in law and fact at the time the proceeding was initiated to take the action it took against Conval-Care.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Agency for Health Care Administration, as successor in

interest to the Department of Health and Rehabilitative Services, pay to Conval- Care, Inc., the sum of $15,000.00 as partial payment of attorney fees.

DONE and ORDERED this 20th day of June, 1995, in Tallahassee, Florida.

LARRY J. SARTIN, 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 20th day of June, 1995.

APPENDIX

Conval-Care has submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Final Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. AHCA did not file a proposed order.

Conval-Care's Proposed Findings of Fact

1. Accepted in 4-5 and hereby accepted.

2. Accepted in 12 and hereby accepted.

COPIES FURNISHED:

Samantha D. Boge, Esquire Post Office Box 11059 Tallahassee, Florida 32302

Roger R. Maas, Esquire Agency for Health Care

Administration

General Counsel's Office - Medicaid 2727 Mahan Drive

Fort Knox Executive Center #1 Tallahassee, Florida 32308

Douglas M. Cook, Director Agency for Health Care

Administration

General Counsel's Office - Medicaid 2727 Mahan Drive

Fort Knox Executive Center #1 Tallahassee, Florida 32308

Tom Wallace, Asst. Director Agency for Health Care

Administration

General Counsel's Office - Medicaid 2727 Mahan Drive

Fort Knox Executive Center #1 Tallahassee, Florida 32308

NOTICE OF POSSIBLE RIGHT TO JUDICIAL REVIEW

ANY PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER MAY BE 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 ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 95-000653F

Orders for Case No: 95-000653F