STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
OKAN INC., d/b/a CHOICE )
PHARMACY, )
)
Petitioner, )
)
vs. ) Case No. 00-0113MPI
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held in this case in accordance with Section 120.57(1), Florida Statutes, on March 7, 2002, by video teleconference at sites in Miami and
Tallahassee, Florida, before Stuart M. Lerner, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Nathan P. Diamond, Esquire
1221 Brickell Avenue, Suite 1020
Miami, Florida 33131
For Respondent: L. William Porter, II, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Suite 3431
Fort Knox Executive Center III Tallahassee, Florida 32308-5403
STATEMENT OF THE ISSUES
Whether Medicaid overpayments were made to Petitioner and, if so, what is the total amount of these overpayments.
PRELIMINARY STATEMENT
By letter dated October 27, 1999, the Agency for Health Care Administration (AHCA) advised Petitioner that, following a "review of [Petitioner's] paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998," and Petitioner's "product purchase/acquisition documentation received on May 13, 1999, September 14, 1999, and October 8, 1999," it had been determined that Petitioner "was overpaid
$4,247,497.70 for claims that in whole in part are not covered by Medicaid."
On December 7, 1999, Petitioner requested a "formal hearing pursuant to the Florida Administrative Procedures Act" on the overpayment determination AHCA had made. The case was referred to the Division of Administrative Hearings (Division) on January 7, 2000, for the assignment of a Division Administrative Law Judge to conduct the "formal hearing" Petitioner had requested.
The case was set for the hearing, but the hearing was continued and the matter placed in abeyance at the request of the parties (who represented in their Agreed Motion for Continuance that they had "agreed in princip[le] to a
settlement"). The matter was continued in abeyance at the request of the parties until December 3, 2001, when, after receiving the parties' Joint Status Report in which they stated that they were "available for hearing any date in March and April 2002," the undersigned rescheduled the final hearing in this case for March 7, 2002.
On February 6, 2000, the undersigned had issued an Order of Prehearing Instructions directing the parties, among other things, to prepare and file a prehearing stipulation that included the following information:
A concise statement of the nature of the controversy;
A brief, general statement of each party's position;
A list of all exhibits (except for impeachment exhibits) to be offered at the hearing, noting any objections thereto, and the grounds for each objection;
A list of the names and addresses of all witnesses (except for impeachment witnesses) to be called at the hearing by each party, with expert witnesses being so designated;
A concise statement of those facts which are admitted and will require no proof at hearing, together with any reservations directed to such admission;
A concise statement of those issues of law on which there is agreement;
A concise statement of those issues of fact which remain to be litigated;
A concise statement of those issues of law which remain for determination by the Administrative Law Judge.
On March 5, 2002, the parties filed their Joint Prehearing Stipulation, which provided, in pertinent part, as follows:
Concise Statement of the Nature of the Controversy:
This case involves a Medicaid audit by AHCA of Okan['s] Choice[] pharmacy operations.
In Final Agency Audit Report No. CI 98-1059- 000-3/KNH, AHCA sought repayment of
$4,247,497.70 in alleged overpayments to Okan, asserting that Okan was unable to sufficiently document the purchase of drugs that it had billed to, and collected . . . from, the Medicaid Program.
Brief Statement of Each Party's Position:
AHCA contends that the repayment to Medicaid should be required for the reasons set forth in its audit reports. AHCA contends that Okan failed to demonstrate that it had purchased sufficient quantities of drugs to support its billings to the Medicaid Program.
The Petitioner's position is that Okan purchased sufficient drug products and dispensed them in quantities sufficient to justify their billings to the Medicaid Program, with the exception of $400,000.00 of drug purchases.
List of Exhibits
The parties filed their Witness and Exhibit Lists under separate cover on March 1, 2001.[1/] The parties agree that objections
to the Exhibits are reserved for final hearing.
List of Witnesses
See (C)
Facts Not in Dispute
During the audit period(s), Okan was a properly licensed Pharmacy, licensed in the State of Florida.
Okan was unable to document purchases of
$4000,000.00 of drug inventory during the audit period and owes that amount in reimbursement to the Medicaid Program.
For the period of time at issue in the audits, Okan was an enrolled Medicaid Provider No. 104883000, subject to the duly enacted statutes, rules, and policy guidelines, including, but not limited to the Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (November 1997), together with any official updates or revisions, the Medicaid Provider Reimbursement Handbook (February 1996), together with any official updates or revisions, and the Prescribed Drug Services Coverage and Limitations Handbook (February 1996), together with any official updates or revisions, if any.
[4]. At all times material to this case, Okan was owned and operated by Ra[u]fu Taylor, R.Ph.
[5]. Ra[u]fu Taylor was, at all times material to this case, a Florida Licensed Pharmacist, License #PH0009155.
Concise Statement of Issues of Law on Which There is Agreement
The parties agree that this case is governed by the requirements of Section 409.913,
Florida Statutes, and Chapter 59G, Florida Administrative Code, and the Provider Manual and Coverage and Limitations Handbook referenced above. Pharmacy licensure is governed by Chapter 465, Florida Statutes, and the administrative rules promulgated thereunder in Chapter 64B, Florida Administrative Code. The Florida Drug and Cosmetics Act is set forth in Chapter 499, Florida Statutes.
Issues of Fact Remaining for Litigation:
1. Whether Okan should be required to repay Medicaid an amount of $4,247,497.70 for drugs that were billed to Medicaid for which Medicaid maintains the purchase documentation was insufficient, rather than the $400,000.00 [Okan] maintain[s] that [it] owe[s]. . . .
Among the witnesses that AHCA had listed on its Witness and Exhibit List (which was referenced in the parties' Joint Prehearing Stipulation) was Lawrence Pinkoff, who was, at all times material to the instant case, an owner/operator of IV Pharmaceutical Wholesalers, Inc., a drug wholesale company.
Among the exhibits that AHCA had listed on its Witness and Exhibit List were: a Plea Agreement between Mr. Pinkoff and the State of Florida filed in Leon Circuit Court Case No. 2000-4310 on November 8, 2000 (Respondent's Exhibit 41), in which Mr.
Pinkoff admitted that, notwithstanding that his company had never sold any prescription drugs to Petitioner, he had agreed to, and did, supply Petitioner with "false invoices" purporting to reflect that such sales had been made; and a composite
exhibit (Respondent's Exhibit 36), which included 50 "invoices" purporting to reflect sales of prescription drugs made by IV Pharmaceutical Wholesalers, Inc., to Petitioner ("invoices" that Petitioner had submitted to AHCA in December of 1999, after the issuance of the "final agency audit" report, in support of Petitioner's position that it had "correctly accounted for all medications billed through Medicaid").
Previously, on November 8, 2001, AHCA had filed a deposition that its counsel of record, L. William Porter II, Esquire, had taken of Mr. Pinkoff on October 11, 2001. At the outset of the deposition, in response to Mr. Porter's questions, Mr. Pinkoff gave his name, age, date of birth, social security number, address, and driver's license number, and, in addition, indicated that he was not "under the influence of any mind- altering or hallucinogenic drugs which [were] impairing [his] judgment or [his] ability to understand what was going on [a]round [him]." Mr. Porter then formally introduced himself and Petitioner's counsel of record, Nathan Diamond, Esquire, to Mr. Pinkoff and explained to Mr. Pinkoff the "essence" of the instant controversy between AHCA and Petitioner, after which there was the following exchange:
Q. (By Mr. Porter): Are you familiar with Okan, Incorporated d/b/a Choice Pharmacy?
A. (By Mr. Pinkoff): On the advice of counsel I respectfully decline to answer on
the basis that the question and/or my answer could or may tend to incriminate me. I therefore invoke the Fifth Amendment right not to respond. And from now on do I need to read that or can I just say I take the Fifth?
Q. I think we can stipulate that you have got a card in front of you. We will make it Exhibit B, and you can make a reference to that when you do decide that you can't answer questions.
A. Uh-huh.
Q. Are you familiar with a gentleman by the name of Raufu Taylor or Ralph Taylor?
A. I take the Fifth.
Q. Are you familiar with an organization called IV Pharmaceuticals, Incorporated?
A. I take the Fifth.
Q. Are you familiar with a gentleman by the name of Lewis A. Petrillo, P E T R I L L O?
A. I take the Fifth.
Q. By declining to answer whether or not you are familiar with IV Pharmaceuticals, Incorporated, would you then assert that same privilege as to any business dealings you would know about between IV Pharmaceuticals, Incorporated, and Okan, Incorporated?
A. That's correct, I would take the Fifth.
Q. This was a Subpoena Duces Tecum . . . .
Did you bring any of the paperwork that was indicated in the subpoena with you? . . .
Did you bring any paperwork with you at all?
A. No.
Q. Are you in possession of any paperwork such as invoices or other documents or product transfers between IV Pharmaceuticals and Okan, Incorporated?
A. I take the Fifth.
* * *
Q. . . . . I am showing you what has been marked as Exhibit A, which is a document entitled Plea Agreement, which is a 12-page composite exhibit which consists of a plea agreement and a judgment and other documents which involve a criminal case between the State of Florida and Lawrence Pinkoff. This is the same one that we talked about.
Mr. Diamond: Yes. If I can get a copy of that before we leave, I would appreciate it.
Mr. Porter: We are going to put that one in.
Mr. Diamond: Thank you.
Q. (By Mr. Porter): I don't expect you to memorize this. I just want to take a look at it. . . .
Q. Are you familiar with this document, sir, or this composite exhibit?
A. This is the first time I have seen it.
Q. It's the first time that you have seen it?
A. In a while, anyway.
Q. This is a 12-page composite, and the first section of it is a plea agreement. Are you, sir, one and the same . . .
Lawrence Pinkoff that is the defendant in this case, Leon County Case Number 2000- 4310?
A. I take the Fifth.
Q. You are taking the Fifth on whether or not you are that Lawrence Pinkoff?
A. Uh-huh.
Q. On the sixth page of this composite Exhibit A, . . . the first part of it is entitled, "Plea Agreement," . . . it has various things written on [it]. It says acknowledgment of defense counsel, and it has got a bunch of other stuff. Would you look at the signature of Lawrence Pinkoff, defendant, on page 6, and tell me is that your signature or not?
A. That is my signature.
Q. And I recognize this is a reproduction.
A. A photocopy of my signature.
Q. Right. You have looked at this plea agreement--at this exhibit, and again, it's a reproduction, I understand that, but is this an accurate reproduction and duplication of the plea agreement that you signed that day?
A. I take the Fifth. There's no way I can know that.
Q. Are you currently under any kind of court-ordered supervision by the Department of Corrections?
A. I take the Fifth.
Q. One page of the document that I will refer to as Exhibit A is a document called fingerprints of Defendant. Do you recognize--did you ever have your fingerprints taken by deputy sheriff--not ever. Did you have your fingerprints taken by the deputy sheriff on April 16th, 2001?
A. I take the Fifth.
Q. There is on the plea agreement that you identified your signature on, there is a section 2 which i[s] called Factual Predicate for this Plea Agreement. This might take you just a couple of minutes. It's like four or five paragraphs. Could you look at section 2, please, and read it. You don't have to read it out loud. Just read it.
Q Have you completed section 2?
A. Uh-huh.
Q. Having read section 2 of Exhibit A, I wanted to ask you when you signed this plea agreement, did you agree to the facts as they are presented in this factual predicate for this plea agreement?
A. I take the Fifth.
After he finished questioning Mr. Pinkoff, Mr. Porter asked if Mr. Diamond had "any questions," to which Mr. Diamond responded, "none."
As noted above, the final hearing in this case was held on March 7, 2002. AHCA presented the testimony of three witnesses, Mr. Pinkoff (who testified without claiming any privilege against self-incrimination), Katherine Holland, and William Avery, and it also offered into evidence 41 exhibits (Respondent's Exhibits 1 through 14 and 16 through 42), which were admitted at the outset of the hearing without objection.
Mr. Pinkoff was allowed to testify over Petitioner's objection. After AHCA's exhibits (including the aforementioned
Plea Agreement between Mr. Pinkoff and the State of Florida, wherein Mr. Pinkoff admitted his role in a scheme to provide AHCA with "false invoices") were received into evidence, but before the taking of any testimony, Mr. Diamond, on behalf of Petitioner, "move[d] to exclude the testimony of Mr. Pinkoff based on [Mr. Pinkoff's] prior assertion of privilege" at the October 11, 2001, deposition taken by Mr. Porter. 2/ Mr.
Diamond argued that he was "not prepared because [he] didn't think that Mr. Pinkoff would be a witness in these proceedings" since Mr. Pinkoff, at his deposition, had invoked his Fifth Amendment privilege against self-incrimination. Inasmuch as AHCA had listed Mr. Pinkoff as a witness; Mr. Pinkoff had claimed privilege in response to questions asked, not by Mr.
Diamond, but by Mr. Porter; Mr. Diamond had himself made no effort to depose Mr. Pinkoff; 3/ and Mr. Diamond had been aware, at least since the October 11, 2001, deposition, of the statements made by Mr. Pinkoff in the Plea Agreement between Mr. Pinkoff and the State of Florida 4/ (which had already been received into evidence 5/), the undersigned denied the motion to exclude Mr. Pinkoff as a witness, but, indicated that, in the exercise of his discretion, he would recess the hearing to give Mr. Diamond the opportunity to depose Mr. Pinkoff (using the video teleconferencing equipment being used for the hearing) and would go back on the record immediately upon the conclusion of
the deposition to take Mr. Pinkoff's testimony. Mr. Diamond thereupon deposed Mr. Pinkoff, outside the presence of the undersigned, who had departed the Tallahassee hearing room. 6/ When the undersigned returned, Mr. Diamond requested that the hearing be continued, arguing that, since he did not expect "anything but a Fifth Amendment privilege to be invoked by [Mr. Pinkoff]," he "should be afforded the opportunity to further investigate all of [Mr. Pinkoff's] wrongdoing." 7/ Not convinced that that there was good cause to continue, yet another time, the hearing in this case (which had been pending before the Division for more than two years), the undersigned denied Mr. Diamond's request, 8/ but indicated that he would give Mr. Diamond the opportunity to finish taking Mr. Pinkoff's deposition. Mr. Diamond declined the offer. Following a break for lunch, Mr. Pinkoff took the stand and gave testimony consistent with the statements he had made in his Plea Agreement.
The only evidence that Petitioner sought to introduce at the final hearing was the transcript of a deposition of Raufu Taylor, R.Ph, the owner/operator of Petitioner, taken by Mr. Porter on May 16, 2000. Mr. Taylor was not present at either the Miami or Tallahassee hearing site at the time of the hearing. Concerning Mr. Taylor's whereabouts, Mr. Diamond stated the following:
Clearly, I do not know the purpose or reason for Mr. Taylor['s] not being
available. . . . It was my understanding that Mr. Taylor had left the country because of an illness in his family, that his father was aged and infirm, and he was going to visit with his father in Nigeria. I have subsequently lost touch with Mr. Taylor. It is my understanding in talking with agents of the State that Mr. Taylor presently is residing in Nigeria where he told me [he] would be going. He told me he was going there because his father was sick and it was before there were any other problems for Mr. Taylor. . . .
Florida Rule of Civil Procedure 1.330(a)(3)(B) provides that "[t]he deposition of a witness, whether or not a party, may be used by any party for any purpose if the court finds: . . . .
that the witness is at a greater distance than 100 miles from the place of trial or hearing, or is out of the state, unless it appears that the absence of the witness was procured by the party offering the deposition." 9/ Mr. Porter, in objecting to the admissibility of Mr. Taylor's deposition, argued that "if Mr. Taylor is more than 100 miles away or otherwise
unavailable . . . that is something that he has made happen himself . . . because he is a fugitive and there is a warrant outstanding for his arrest." Under such circumstances, Mr.
Porter contended, Petitioner could not use Mr. Taylor's deposition in lieu of Mr. Taylor's live testimony since Petitioner was Mr. Taylor's "alter ego." Mr. Porter further argued that Petitioner was barred from introducing Mr. Taylor's
deposition into evidence by Subsection (21) of Section 409.913, Florida Statutes, which provides, in pertinent part, as follows:
A provider may not present or elicit testimony, either on direct examination or cross-examination in any court or administrative proceeding, regarding the purchase or acquisition by any means of drugs, goods, or supplies; sales or divestment by any means of drugs, goods, or supplies; or inventory of drugs, goods, or supplies, unless such acquisition, sales, divestment, or inventory is documented by written invoices, written inventory records, or other competent written documentary evidence maintained in the normal course of the provider's business.
At his deposition, Mr. Taylor testified that he was a resident of Miami-Dade County, and he gave no indication that he would be unavailable to attend the final hearing in the instant case. Contrast with Henderson v. Dade County School Board, 734 So. 2d 549, 550 (Fla. 3d DCA 1999)("[W]e view the introduction of witness Kendra Moss's videotaped deposition as proper because of statements during the deposition indicating that Moss planned to attend college out-of-state (thus explaining her non- availability)."); and Colonnades, Inc. v. Vance Baldwin, Inc.,
318 So. 2d 515, 517 (Fla. 4th DCA 1975)("Nor do we see any sound logical reason why the trial court should be prohibited from relying solely on the deposition testimony as a basis for finding that the required predicate [for use of the deposition pursuant to Florida Rule of Civil Procedure 1.330(a)(3)] has
been established. Here, just three days before trial, deponent stated in a deposition taken in Atlanta, Georgia, that he was a resident of Birmingham, Alabama, and that he did not expect to be in the State of Florida, and more particularly West Palm Beach (the site of the trial) on the following July 3 (the date of the trial)"; this deposition testimony was deemed sufficient by the appellate court "to establish a predicate for [the deposition's] use under Rule 1.330(a)(3) RCP."). To establish Mr. Taylor's unavailability, Petitioner relied, not on Mr.
Taylor's deposition testimony, but exclusively upon unsworn statements made by Mr. Diamond at the final hearing. There is case law supporting the proposition that, for purposes of establishing the "required predicate" pursuant to Florida Rule of Civil Procedure 1.330(a)(3), witness unavailability may be shown by unsworn statements made by the offering party's attorney. See Fishman v. Liberty Associates, Inc., 196 So. 2d 493, 496 (Fla. 3d DCA 1967)("This leads to the second question, which is whether the fact that the showing of the absence of the witness was in the form of a statement by the plaintiff's attorney of record without his having been sworn, or that it was not made by another person sworn as a witness, was a reason for which it should have been rejected. We hold that it was not, and that the fact that the showing of absence of the witness as a reason entitling the deposition to use was made by the unsworn
statement of plaintiff's attorney at the trial did not constitute a sound or valid reason to set aside the verdict and grant a new trial."); but see Jenkins v. State, 803 So. 2d 783, 786-87, n.3 (Fla. 5th DCA 2001)("These depositions, read into evidence over the respondent's objections, were permitted even though the State had made no effort (of record) to have the witnesses at the commitment hearing. In neither case was it properly established, when objections were raised by respondent, that the witness was outside the 100 mile limit or otherwise unavailable to testify. The State's comment that the witness was visiting a relative in the hospital, without more, is simply insufficient."); and Haverley v. Clann, 196 So. 2d 38, 43 (Fla. 2d DCA 1967)("[I]t is obvious that the 'showing' required to be made as a predicate for introduction of such a deposition must consist of proof in the form of evidence. The words 'evidence' and 'proof' pervade the opinions aforesaid, which directly interpret the rule here involved. And such proof and such evidence can only be of a sworn character. Certainly it could not encompass the mere unsworn statement of the attorney for one of the litigants. And this is in no way a reflection upon the attorney nor is it in derogation of his prestigious role as an officer of the Court. It is simply applying the age-old requirement that the requisite mode of proving a fact is by sworn testimony, whether it is a fact to be adduced in proving
or disproving a case upon the merits or is a fact necessary to be proved to establish a legal predicate for introduction of other facts."). While Mr. Diamond disavowed having any personal knowledge as to "the purpose or reason for Mr. Taylor['s] not being available" to testify at the final hearing, stating that he had "lost touch with Mr. Taylor," he did indicate that he had been told by "agents of the State" that Mr. Taylor was "presently . . . residing in Nigeria," a statement which Mr.
Porter did not dispute 10/ and which, under Fishman, despite its unsworn character, was sufficient, standing alone, as a party admission, to establish that Mr. Taylor, at the time of the final hearing, was, as required by Florida Rule of Civil Procedure 1.330(a)(3)(B), "at a greater distance than 100 miles from the place of . . . hearing." See Troya v. Miami Beach
Health Care Group, Inc., 780 So. 2d 228, 229 (Fla. 3d DCA 2001)("The decided cases clearly establish that the statement [by an unidentified hospital employee] about the excess wax was admissible [against the hospital] as a party admission under section 90.803(18)(d), Florida Statutes (2000)."); Section 90.803(18)(d), Florida Statutes ("The provision of s. 90.802 to the contrary notwithstanding, the following are not inadmissible as evidence, even though the declarant is available as a witness: ADMISSIONS.--A statement that is offered against a party and is: (d) A statement by the party's agent or servant
concerning a matter within the scope of the agency or employment thereof, made during the existence of the relationship."); and Section 120.57(1)(c), Florida Statutes (hearsay evidence is "sufficient in itself to support a finding" if "it would be admissible over objection in civil actions.").
The question remains whether Mr. Taylor's "absence" from the final hearing was "procured" by Petitioner," as Mr. Porter claimed. It was AHCA's burden to show that Petitioner engaged in such conduct. See Maxfly Aviation, Inc. v. Gill, 605 So. 2d 1297, 1300 (Fla. 4th DCA 1992)("Maxfly first argues that the trial court erred when it admitted Gill's deposition into evidence in lieu of his live testimony. Maxfly contends that although Gill was more than 100 miles away, see Fla. R. Civ. P. 1.330(a)(3)(B), Gill procured his own absence, which the rule disallows. The record, however, is devoid of evidence to the effect that Gill procured his own absence."); see also Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932, 934 (Fla. 1996)("'The general rule is that a party asserting the affirmative of an issue has the burden of presenting evidence as to that issue.'"); and Florida Department of Health and Rehabilitative Services v. Career Service
Commission, 289 So. 2d 412, 414 (Fla. 4th DCA 1974)("[T]he burden of proof is 'on the party asserting the affirmative of an
issue before an administrative tribunal.'"). To meet its burden, AHCA was entitled to use the same methods of proof that were available to Petitioner to establish Mr. Taylor's unavailability, including the unsworn statements of its attorney. Mr. Porter, in objecting to the admissibility of Mr. Taylor's deposition, asserted that Mr. Taylor's absence from the hearing was of Mr. Taylor's own doing (resulting from a desire to avoid criminal prosecution) and, since Petitioner was Mr.
Taylor's "alter ego," the absence was, in effect, "procured" by Petitioner. These assertions by Mr. Porter are insufficient to show that Petitioner engaged in the type of improper activity that, under Florida Rule of Civil Procedure 1.330(a)(3)(B), would prevent it from being able to have Mr. Taylor's deposition be considered in lieu of his live testimony. See Dania Jai-Alai
Palace, Inc. v. Sykes, 450 So. 2d 1114, 1121 (Fla. 1984)("[T]he corporate veil may not be pierced absent a showing of improper conduct."); Hilton Oil Transport v. Oil Transport Co., S.A., 659 So. 2d 1141, 1152 (Fla. 3d DCA 1995)("The mere fact that one or two individuals own and control the stock structure of a corporation does not lead inevitably to the conclusion that the corporate entity is a fraud or that it is necessarily the alter ego of its stockholders . . . ."); Hobbs v. Don Mealey
Chevrolet, Inc., 642 So. 2d 1149, 1156 (Fla. 5th DCA 1994)("The deposition of Thomas A. Warmus, provided by the plaintiffs on
appeal, merely indicated that Warmus owned and controlled AFSLIC and that he arranged for AFSLIC to loan funds to the plaintiffs. Even if this deposition had been available to the trial court in rendering its decision, the deposition was insufficient to support the plaintiffs' allegations that AFSLIC was the alter ego of Warmus."); SFP Tisca v. Robin Hill Farm, Inc., 711 A.2d 1175, 1178 (Conn. 1998)("We conclude that the trial court improperly reversed the attorney referee's granting of the motion to admit the deposition because it applied an incorrect definition of 'procure.' A party does not procure the absence of its own witness merely by failing to produce the witness at trial."); and Marshall v. Van Gerven, 790 P.2d 62, 64 (Utah App. 1990)("The trial court apparently considered rule 32(a)(3)(B)'s exception, 'unless it appears that the absence of the witness was procured by the party offering the deposition' [which is identical to the exception found in Florida Rule of Civil Procedure 1.330(a)(3)(B)], adjudged Mr. Brown to be a party, and concluded that by not being present, he had procured his own absence. Although Mr. Brown was not a named party, even a 'substantial identity of interest' between the party offering the deposition and the deponent does not, without more, raise a 'spectre of illicit procurement.'. . . 'Procurement' implies that there was some collusion in having witnesses remove themselves from the reach of subpoenas or to deliberately absent
themselves from the jurisdiction. . . . Moreover, 'procuring absence and doing nothing to facilitate presence are quite different things.'").
Having found that Mr. Taylor's deposition qualifies for admission, in lieu of his live testimony, pursuant Florida Rule of Civil Procedure 1.330(a)(3), it is necessary to determine whether the deposition's receipt into evidence is nonetheless barred by Subsection (21) of Section 409.913, Florida Statutes (which deals specifically with the admissibility of testimony, both live and in the form of a deposition, sought to be presented in proceedings, like the instant one, involving alleged Medicaid overpayments), as Mr. Porter argued. Cf. Adams v. Culver, 111 So. 2d 665, 667 (Fla. 1959)("It is a well settled rule of statutory construction . . . that a special statute covering a particular subject matter is controlling over a general statutory provision covering the same and other subjects in general terms."). The answer is "no," inasmuch as the record contains what purport to be "invoices" 11/ "document[ing]" the drug transactions about which Mr. Taylor testified in his deposition. While there is a question concerning the genuineness of these "invoices" (indeed, it is the determinative issue in the instant case 12/), the proof is sufficient to prima facie establish their authenticity. See State v. Love, 691 So. 2d 620, 621-22 (Fla. 5th DCA 1997)("Prima facie evidence
must be introduced in order to prove that the evidence is authentic. . . . In order to set forth a prima facie case of authenticity, the proponent of the evidence can utilize both direct and circumstantial evidence. Evidence may be authenticated by appearance, contents, substance, internal patterns, or other distinctive characteristics taken in conjunction with the
circumstances. . . . The state acknowledges that evidence must be authenticated before it is admitted, but argues that the state had sustained its burden of proving authentication through the introduction of both the testimony of Monticeux and the letter. The state contends that, by suppressing the letter from evidence, the trial court went beyond its role of determining whether the state had established a prima facie case of authenticity and impermissibly ruled upon the genuineness or veracity of the letter. The state argues that the final decision regarding genuineness is within the province of the jury and that the trial court's responsibility must end with a determination whether the facts support a finding of authenticity. We agree."); ITT Real Estate Equities, Inc. v.
Chandler Insurance Agency, Inc., 617 So. 2d 750, 750-51 (Fla.
4th DCA 1993)("Evidence is authenticated when prima facie evidence is introduced to prove that the proffered evidence is
authentic. . . . The finding of authenticity does not mean that the trial court has made a finding that the proffered evidence is genuine; rather, it only determines that prima facie evidence of genuineness exists. Once the matter has been admitted, the opposing party then can challenge its genuineness."); and Section 90.901, Florida Statutes ("Authentication or identification of evidence is required as a condition precedent to its admissibility. The requirements of this section are satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.").
In view of the foregoing, the undersigned has treated Mr. Taylor's deposition testimony as if it were testimony given in person during the final hearing and has taken this testimony into consideration in determining what findings of fact to include in this Recommended Order.
At the close of the evidentiary portion of the final hearing on March 7, 2002, the undersigned established a deadline (45 days from the date of the filing with the Division of the hearing transcript) for the filing of proposed recommended orders.
A Transcript of the final hearing (consisting of one volume) was filed with the Division on June 28, 2002. On August 6, 2002, Respondent filed an unopposed motion requesting a 15-day extension of the deadline for the filing of proposed
recommended orders. On August 7, 2002, the undersigned issued an Order granting the motion and giving the parties until August 27, 2002, to file their proposed recommended orders. On August 15, 2002, Petitioner filed an Unopposed Motion for Enlargement of Time, in which it stated the following:
The proposed recommended order is due in this case on Monday, August 12, 2002 [sic]. Petitioner has not received the transcript[] of the hearing.
The Petitioner was unaware that a transcript of the proceeding had been filed until speaking with opposing counsel on August 12, 2002. Opposing counsel was good enough to forward through electronic mail the transcript of the instant proceedings.
Not having the benefit of the transcript and due to the complex nature of the proceedings and undersigned's present trial schedule it would be impossible to prepare the proposed recommended order in less than the original forty-five (45) day[s] requested and therefore moves this Court for an agreed order continuing the date of submission of the proposed order until September 30, 2002.
Counsel for Petitioner has conferred with counsel for Respondent and Respondent is unopposed to the filing of this motion.
WHEREFORE, Respondent is requesting that an Order be issued granting the Respondent a forty-five (45) day enlargement of time to file the proposed recommended order.
.
On August 16, 2002, the undersigned issued an Order on the motion directing "that proposed recommended orders . . . be filed no later than September 13, 2002." The undersigned
indicated in his Order that, "[t]o the extent that Petitioner ha[d] requested that the deadline for filing proposed recommended orders be extended beyond September 13, 2002 (which is more than six months from the date of the conclusion of the final hearing and approximately two and half months from the date of the filing with the Division of the hearing transcript), [he was denying the request] inasmuch as [Petitioner had] not established, in its motion, that an extension of such length [was] justified."
On September 13, 2002, AHCA, on behalf of both parties, filed a Joint Emergency Motion for Enlargement of Time for the filing of proposed recommended orders in the instant case. By Order issued that same day (September 13, 2002), the motion was granted and the parties were given until September 18, 2002, to file their proposed recommended orders.
AHCA and Petitioner filed their Proposed Recommended Orders on September 17, 2002, and September 18, 2002, respectively.
These post-hearing submittals have been carefully considered by
the undersigned.
FINDINGS OF FACT
Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the stipulations of fact set forth in the parties' March 5, 2002, Joint Prehearing Stipulation:
Petitioner
Petitioner was incorporated in 1989 by Mr. Taylor.
It operated Choice Pharmacy, a pharmacy located at 9920 Northwest 27th Avenue in Miami, Florida, from around the time of its incorporation until approximately 1999.
The Provider Agreement
During the period from September 10, 1997, through August 31, 1998, Petitioner was authorized to provide pharmacy services and goods to eligible Medicaid recipients in Florida.
Petitioner provided such services and goods pursuant to a Medicaid Provider Agreement Mr. Taylor had signed, on behalf of Petitioner, on February 21, 1997. The Provider Agreement contained the following provisions, among others:
The Provider agrees to participate in the Florida Medicaid program under the following terms and conditions:
* * *
Quality of Service. . . . The services or goods must have been actually provided to eligible Medicaid recipients by the provider prior to submitting the claim.
Compliance. The provider agrees to comply with all local, state and federal laws, rules, regulations, licensure laws, Medicaid bulletins, manuals, handbooks and Statements or Policy as they may be amended from time to time.
Term and signatures. The parties agree that this is a voluntary agreement between the Agency and the provider, in which the
provider agrees to furnish services or goods to Medicaid recipients. This provider agreement shall become effective the date the provider's Florida Medicaid Enrollment Application is received by the state or its fiscal agent. It shall remain in effect until July 1, 1999, unless otherwise terminated. . . .
Provider Responsibilities. The Medicaid provider shall:
* * *
(b) Keep and maintain in a systematic and orderly manner all medical and Medicaid related records as the Agency may require and as it determines necessary; make available for state and federal audits for five years, complete and accurate medical, business, and fiscal records that fully justify and disclose the extent of the goods and services rendered and billings made under the Medicaid. The provider agrees that only records made at the time the goods and services were provided will be admissible in evidence in any proceeding relating to the Medicaid program.
* * *
(d) Except as provided by law, the provider agrees to provide immediate access to authorized persons (included but not limited to state and federal employees, auditors and investigators) to all Medicaid-related information, which may be in the form of records, logs, documents, or computer files, and all other information pertaining to services or goods billed to the Medicaid program. This shall include access to all patient records and other provider information if the provider cannot easily separate records for Medicaid patients from other records. . . .
Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook, and the Medicaid Provider Reimbursement Handbook
The Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case contained the following "record keeping " provisions, among others:
The provider must retain all medical, fiscal, professional and business records on all services provided to a Medicaid recipient.
Records may be kept on paper, magnetic material, film, or other media. In order to qualify as a basis for reimbursement, the records must be signed and dated at the time of service, or otherwise attested to as appropriate to the media. Rubber stamp signatures must be initialed.
The records must be accessible, legible and comprehensible.
Records must be retained for a period of at least five years from the date of service.
The following types of records, as appropriate for the type of service provided, must be retained (the list is not all inclusive): . . . .
Business records, such as accounting ledgers, financial statements, purchase/acquisition records, invoices, inventory records, check registers, canceled checks, sales records, etc.;
Tax records, including purchase documentation; . . . .
Providers who are not in compliance with the Medicaid documentation and record retention policies described in this chapter may be subject to administrative sanctions and recoupment of Medicaid payments.
Medicaid payments for services that lack required documentation or appropriate signatures will be recouped. . . .
The Medicaid Provider Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case contained similar provisions.
The Prescribed Drug Services Coverage, Limitations and Reimbursement Handbook (referenced in the "Facts Not in Dispute" section of the parties' Joint Prehearing Stipulation) at all times material to the instant case further provided that "[r]eimbursement for prescribed drug services is based on the cost of the drug to the pharmacy plus a dispensing fee."
The Audit and Aftermath
In July of 1998, AHCA's Medicaid fiscal agent contractor (Unysis Corporation) conducted a "desk audit" of Medicaid claims submitted by Petitioner.
Following the completion of the "desk audit," the matter was referred to AHCA's Office of Medicaid Program Integrity to conduct "a more in depth" audit (involving an examination of invoices and other documentation to determine whether Petitioner had available during the period under review
sufficient quantities of goods to support its billings to the Medicaid program).
The audit, which covered the period from September 10, 1997, through August 31, 1998 (Audit Period), was conducted by Kathryn Holland, with the assistance of an accounting firm retained by AHCA, Krause, Humphress, Pace & Wadsworth, CPA (Krause).
Ms. Holland is a Florida-registered pharmacist who has been a senior pharmacist with AHCA for the past 12 years.
She has no formal education or training in accounting, but does have 12 years of experience "doing the kind of audits" she conducted in the instant case.
In an effort to obtain information needed for the audit, Krause requested that Petitioner fill out and return a Questionnaire for Medicaid Providers.
The questionnaire was filled out and returned by Mr.
Taylor, on behalf of Petitioner, on or about October 30, 1998.
Mr. Taylor indicated on the questionnaire that, during the Audit Period, the "percentage of [Petitioner's] prescription business that [was] Medicaid" was approximately 90 percent. He further indicated on the questionnaire that Petitioner's "total dollar sales volume of prescription drugs" during the Audit Period was $5,732,028.84; Petitioner's "cost of prescription drugs sold during [the] Audit Period" was $5,220,200.27;
Petitioner's "prescription drug inventory at cost, [at the] beginning of [the Audit] Period" was $180,721.00; and Petitioner's "prescription drug inventory at cost, [at the] end of [the Audit] Period" was $306,081.00.
The questionnaire requested the name(s) of Petitioner's "major drug suppliers during the review period." All suppliers that "provided more than 10% of [Petitioner's] drug purchases" were to be listed.
Mr. Taylor listed on the questionnaire the following "major drug suppliers": "McKesson Inc.," "Quality Medical," "Pharma Plus Wholesale Inc.," and "Quest Medical Supply." IV Pharmaceutical Wholesalers, Inc., was not among the "major drug suppliers" named by Mr. Taylor.
According to the information provided on the questionnaire by Mr. Taylor, the purchases made by Petitioner from "McKesson Inc.," "Quality Medical," "Pharma Plus Wholesale Inc.," and "Quest Medical Supply" represented approximately 20 percent, 20 percent, 40 percent, and 10 percent, respectively, of Petitioner's "total [drug] purchases" during the Audit Period.
By letter dated November 9, 1998, Krause requested Pharma Plus Wholesale, Inc. (Pharma Plus) to provide it "with a
download of all transactions (all accounts) for the period September 1, 1997 through August 31, 1998," between Pharma Plus and Choice Pharmacy.
Pharma Plus, in a letter dated January 18, 1999, provided the following response to Krause's request:
[A]s per our conversation I am submitting this document to formally inform you and your office that Pharma Plus Wholesale, Inc. has never done any business with Choice Pharmacy (Legal Name: OKAN, Inc) 9920 N.W. 27th Avenue Miami, FL 33147.)
By letter dated January 20, 1999, Ms. Holland requested McKesson Drug Company (McKesson) to provide her "with a download of all transactions for the period July 1, 1997, through August 31, 1998" between McKesson and Choice Pharmacy.
On February 16, 1999, McKesson provided Ms. Holland with a "paper printout" containing the requested information.
The material submitted by McKesson revealed that there were a considerable number of transactions between McKesson and Choice Pharmacy during the period in question.
On April 2, 1999, Ms. Holland sent a letter to Mr.
Taylor, which read, in part, as follows::
On or around July 16, 1998, an auditor from Unisys Corporation, the fiscal agent contractor for the Florida Medicaid program, conducted an audit of your pharmacy department. The audit is being reviewed by Medicaid Program Integrity.
In order for us to complete our review, we are requesting and must receive the following:
Documentation that identifies all purchases/acquisitions by Choice Pharmacy for the products listed on "Attachment A" for the period from July 1, 1997, through August 31, 1998.
Documentation that identifies all credits/returns for the period stated above for the products listed on
"Attachment A." . . .
You have 30 days from the receipt of this letter to submit the requested information. . . .
The "products" listed on "Attachment A" did not include "every single drug Petitioner had billed to Medicaid. Only the 50 "highest paid" drugs were listed on "Attachment A."
Mr. Taylor responded to Ms. Holland's letter by providing her with, on May 13, 1999, a three-inch stack of documents reflecting transactions between Petitioner and "quite a few different [drug] wholesalers."
Ms. Holland attempted (successfully in some instances and unsuccessfully in others) to contact wholesalers whose names appeared on the documentation provided by Mr. Taylor to obtain from them documentation regarding their transactions with Petitioner.
After analyzing the documentation with which she had been provided by Petitioner and by the drug wholesalers she had
been able to contact, and examining AHCA's records of the claims filed by Petitioner during the Audit Period, Ms. Holland determined that there was insufficient documentation to demonstrate that, during the Audit Period, Petitioner had available sufficient inventory to support $4,248,262.37 of its billings to the Medicaid program.
By letter dated July 28, 1999, Ms. Holland advised Mr.
Taylor of this "provisional finding." The letter read, in part, as follows:
Medicaid Program Integrity has reviewed your paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998. We have also reviewed your product purchase/acquisition documentation received on May 13, 1999. Some of the purchase/acquisition documents that you furnished could not be substantiated by the distributor/wholesaler and were therefore not included in the review. You have failed to provide adequate documentation to the effect that the available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid. Based on this review, we have made a provisional determination that you were overpaid
$4,248,262.37 for claims that in whole or in part are not covered by Medicaid. The amount due for the overpayment is
$4,248,262.37.
This is, however, a provisional finding and we encourage you to submit any additional information or documentation that you may have that you feel may serve to change the overpayment.
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Based on the above, we have reason to believe that you have been overpaid by the Medicaid program. The overpayment identified in the summary sheet attachment is with regard only to the 45 drugs listed and comprehends only the period audited, namely September 10, 1997, through August
31, 1998. A printout identifying all relevant claims involved in the overpayment and a copy of the drug purchase/acquisitions are attached.
The overpayment calculation is based upon the assumption that all stock demonstrated as available during the audit period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the overpayment. Medicaid payments that have been substantiated by documented inventory are assumed to be valid; and payments in excess of that amount are regarded to be invalid. Accordingly, as shown in the summary sheet attachment, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $4,248,262.37. If additional overpayments are found subsequently, you will be notified.
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If you have any additional invoices or other relevant documentation that you wish to submit that you feel would alter these findings, please submit your written explanation and legible copies of the documentation to us immediately. . . .
If you have not submitted documentation or made payment within 30 days, we will send you notice regarding the agency's final determination, taking into consideration any information or documentation that you submit within this time period.
On August 16, 1999, Mr. Diamond, on behalf of Petitioner, telephonically requested a 21-day extension of time to submit additional documentation for Ms. Holland's consideration. By letter dated August 17, 1999, Ms. Holland advised Mr. Diamond that the requested extension of time had been granted.
Mr. Diamond, on behalf of Petitioner, on September 14, 1999, provided Ms. Holland with an "additional package of documentation." Ms. Holland reviewed these documents. "Most everything in this package was a duplicate" of documents that Ms. Holland had already been provided by Mr. Taylor.
The following day, Ms. Holland, by facsimile transmission, requested Mr. Diamond to provide her with cancelled checks evidencing Petitioner's payment of eight, specified invoices included in the "additional package of documentation" she had received from Mr. Diamond.
Mr. Diamond provided Ms. Holland with five cancelled checks on October 8, 1999.
Ms. Holland determined, in light of the additional documentation she had received following her "provisional finding" that Petitioner had been overpaid $4,248,262.37 by the Medicaid program, that the amount of that overpayment should be reduced by $764.67. She advised Mr. Taylor of this "final
agency audit" determination, by letter dated October 27, 1999, which read, in part, as follows:
Medicaid Program Integrity has completed a review of your paid Medicaid claims with dates of service from September 10, 1997, through August 31, 1998. We have also reviewed your product purchase/acquisition documentation received on May 13, 1999,
September 14, 1999, and October 8, 1999. You have failed to provide adequate documentation to the effect that the
available quantity of certain drugs of given strength was as great as the quantity of those drugs billed to and reimbursed by Medicaid. You are hereby notified that Okan, Inc. d/b/a Choice Pharmacy was overpaid $4,247,497.70 for claims that in whole or in part are not covered by Medicaid. The total amount due for the overpayment is $4,247,497.70. The above action and your right or appeal are discussed below.
* * *
We have required that you submit invoices from your suppliers to substantiate the availability of drugs that you billed to Medicaid. You have not fully substantiated such availability.
Section 409.913(10), F.S., states in part that the Agency may require repayment for inappropriate, medically unnecessary, or excessive goods or services.
Section 409.913(14)(n), F.S., states that "The agency may seek any remedy provided
by law, including but not limited to, the
remedies provided in subsection (12) and (15) and s. 812.035, if:
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(n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program."
Billing Medicaid for drugs that have not been demonstrated as available for dispensing is a violation of Medicaid laws and regulations and has resulted in the finding that you been overpaid by the Medicaid program. The overpayment identified in the summary sheet attachment is with regard only to the 45 drugs listed and comprehends only the period audited, namely September 10, 1997, through August
31, 1998. A printout identifying all relevant claims involved in the overpayment and a copy of the drug purchase/acquisition review are attached.
The overpayment calculation is based upon the assumption that all stock demonstrated as available during the audit period was exclusively dispensed to Medicaid recipients; this is undoubtedly not the case and the assumption serves to reduce the amount of the calculated overpayment. All Medicaid payments sufficient to cover documented inventory have been assumed to be valid, and payments in excess of that amount are regarded to be invalid. Accordingly, as shown in the summary sheet attachment, we have determined at this time that you have been overpaid by the Medicaid program in the amount of $4,247,497.70. If additional overpayments are found subsequently, you will be notified.
* * *
If you accept or concur with these finding, please send your check in the amount of
$4,247,497.70, made payable to the Florida Agency for Health Care Administration, to: . . . .
You have the right to request a formal or informal hearing pursuant to section 120.569, F.S. . . . [I]f a request for a hearing is made, the request or petition must be received within twenty-one (21) days of receipt of this letter. Failure to timely request a hearing shall be deemed a waiver of your right to a hearing. . . .
Mr. Diamond, on behalf of Petitioner, filed with AHCA a Petition for Formal Hearing on December 7, 1999.
The Petition for Formal Hearing was accompanied by 50 "invoices" purporting to reflect sales of prescription drugs (totaling approximately $4 million dollars) made by IV Pharmaceutical Wholesalers, Inc., to Choice Pharmacy during the Audit Period, as well as the following cover letter from Mr. Diamond to Ms. Holland:
Consistent with our prior discussions regarding our above referenced client, you will find enclosed the final documentation from [IV] Pharmaceutical Wholesalers, Inc. As I indicated in our prior discussions it would appear at this time that our independent audit has concluded. Our accounting reveals, based on all invoices provided, our above referenced client has correctly accounted for all medications billed through Medicaid.
I also enclose consistent with our prior discussion a copy of our request for a formal hearing in the event that you are not in agreement with our conclusions. In the event that you are satisfied with the conclusions, please advise Mr. John A. Owens, Chief, Medicaid Program Integrity, that we will withdraw our request for formal hearing.
Prior to the submission of these "invoices," AHCA had not received any information (in the form of documentation or otherwise) indicating that Petitioner had purchased or otherwise acquired drugs from IV Pharmaceutical Wholesalers, Inc.
Ms. Holland examined the "invoices." "They did not look like forms [she had] seen from this wholesaler before,
and . . . after years of looking at invoices they just appeared not right" to her.
On January 28, 2000, Ms. Holland sent the following letter to Mr. Diamond:
Thank you for the documents received on December 7, 1999. As they were received after the Final Agency Action, the Agency will consider them as possible evidence for trial or hearing. Once the hearing date and discovery schedule are set, we will propound interrogatories and take depositions in conjunction with these documents.
If you have any question, please contact Mr.
L. William Porter, II, senior attorney . . . .
Ms. Holland's suspicions regarding the genuineness of the IV Pharmaceutical Wholesalers, Inc., "invoices" submitted by Petitioner were correct.
Petitioner had never purchased or otherwise acquired any drugs from IV Pharmaceutical Wholesalers, Inc.
The "invoices" were fabricated. They were created by Mr. Pinkoff, for a fee ($800,000.18, which he was paid, in two
installments, in November of 1999), at the request of Mr. Taylor and a Betty Bills. 13/ Mr. Pinkoff was told that the "invoices" were needed for an audit to "substantiate the purchases of [certain] product[s]." 14/
Mr. Pinkoff was subsequently charged with criminal wrongdoing for his participation in this fraudulent scheme and "voluntarily surrendered" to the authorities. 15/ The charges were filed after Mr. Pinkoff's place of business had been searched by law enforcement authorities on December 1, 1999, pursuant to a search warrant obtained by the Florida Attorney General's Medicaid Fraud Control Unit, which was conducting a criminal investigation of another matter unrelated to Choice Pharmacy. 16/ The computer that Mr. Pinkoff used to create the falsified "invoices" for Petitioner was seized during the search.
Mr. Pinkoff entered into a Plea Agreement with the State of Florida in his criminal case. The Plea Agreement was filed in Leon County Circuit Court (Case No. 2000-4310) on November 8, 2000.
Section II of the Plea Agreement contained the "Factual Predicate for this Plea Agreement." It provided as follows:
The Defendant and the State agree that the following is the factual basis for the entry
of plea in this matter, (hereafter "SUBJECT MATTER"):
In June of 1999, the Defendant was approached by Louis A. Petrillo ("Petrillo"),[17/] who told the Defendant that Choice Pharmacy (Okan, Inc. d/b/a Choice Pharmacy ("Choice") and "Betty," an owner, needed certain invoices.
Specifically, Choice and Betty needed to demonstrate that Choice had purchased a number of prescription drugs with a value of
$4,000,000 dollars dating back to the period of 1997 through 1998. Choice was owned and operated by Raufu ("Ralph") Taylor and Betty (Last Name Unknown).
The Defendant owned a 1/2 interest in IV Pharmaceuticals, Inc., a Florida corporation that was a licensed prescription drug wholesale company. IV Pharmaceuticals had not sold any prescription drugs to Choice in 1997 or at any other time. Petrillo knew this fact but asked the Defendant if he could produce invoices for a specific list of drugs; the understanding was that the invoices would be false. The Defendant told Petrillo, Betty and Ralph that he could create or otherwise produce invoices from IV Pharmaceutical[s] to give to Choice for prescription drugs that IV Pharmaceutical[s], Inc. had previously purchased from manufacturers or other licensed wholesalers. This was necessary in case IV Pharmaceutical[s] was asked to produce its records to substantiate the invoices from IV Pharmaceutical[s] to Choice. All of the drugs Betty and Ralph requested invoices for were oncology or HIV prescription drugs, largely Neup[o]g[e]n and Procrit. IV Pharmaceutical[s] had invoices to substantiate its own purchases of those drugs.
A meeting was arranged by Petrillo. In attendance were the Defendant, Petrillo, Betty, and Ralph. After making
introductions, Petrillo left the meeting.[18/] Before leaving, Petrillo told the Defendant that it was up to him whether or not to create the invoices. The Defendant discussed with Betty and Ralph what specific prescription drug invoices were required. Betty and Ralph provided the Defendant with a list of drugs, including dates of purchase and quantities.
The Defendant believed that the invoices were to be used for some unlawful purpose, presumably involving AHCA, since the Defendant was familiar with the AHCA audit process and knew that AHCA required such invoices when conducting an audit. Betty and Ralph told the Defendant that the invoices were needed for drugs they had actually purchased but had no invoices for. The Defendant had at least one conversation with Petrillo related to the production following the meeting. Six months after the meeting, the Defendant drafted invoices under the IV Parmaceutical[s] name based upon the list provided by Betty and Ralph.
The Defendant gave the invoices to Petrillo to give to Betty and Ralph. Each false invoice produced by Defendant was submitted to AHCA.
The foregoing assertions of fact made in this section of the Plea Agreement are true and accurate.
Section III of the Plea Agreement indicated that Pinkoff understood that "pursuant to this plea agreement his minimum potential exposure under the Sentencing Guidelines [was]
55.5 months of imprisonment" and "[h]is maximum potential exposure under the Sentencing Guidelines [was] the statutory maximum of thirty-five years in State Prison and a $25,000.00 fine."
Section IV of the Plea Agreement set forth the "Defendant's Obligations." It read as follows:
The Defendant agrees to plead Guilty to the following charges contained in the information filed in the above-styled criminal case:
one count of "Racketeering activity" in violation of Florida Statutes, Section 895.03(3), a first degree felony; and
one count of Medicaid Provider Fraud in violation of Florida Statutes, Section 409.920(2)(a), a third degree felony.
The Defendant agrees to make himself accessible upon notice to receive and testify truthfully pursuant to any subpoena lawfully issued compelling such testimony pursuant to §914.04, Florida Statutes, However, by this AGREEMENT Defendant does not and shall not waive his Fifth Amendment privilege as to any statement or testimony except and only as to the specific facts set forth as the SUBJECT MATTER of this AGREEMENT; Defendant shall maintain his Fifth Amendment rights as to all other allegations of facts, including those facts related to the charges alleged in the Information not included in the factual predicate herein. The Defendant understands that if lawfully compelled to provide testimony, any perjury committed by him would constitute a violation of the ordinary terms and conditions of Defendant's community control and probation even if related to the charges alleged in the Information.
Section V of the Pleas Agreement contained the "sentence the State will recommend," which was as follows:
Seven (7) years of probation with the following special conditions:
Defendant with will serve 24 months of community control under the terms and conditions set by the Department of Corrections. . . .
Defendant shall pay a total of
$3,475,000 to the State of Florida as compensation to the State of Florida for its losses, both known and unknown. Such reimbursement shall not be deemed or otherwise construed as a fine or similar penalty. . . .
At the entry of this plea, Defendant agrees to provide the State of Florida with sufficient security to guarantee the payment of one million dollars ($1,000,000.00). This security shall be in the form of two Notes secured by two mortgages to be held by the State of two properties.
The first property is located at 5721 Oakview Terrace, Hollywood, Florida. The Note on this property shall be in the amount of $400,000.00. The second property secured by a Note is located at 6001 North Ocean Drive, PHS, Hollywood, Florida [and the note on this property] shall be in the amount of
$600,000.00.[19/] . . .
Defendant shall pay a fine in the amount of $25,000.00 which is the Statutory maximum;
Defendant shall be Adjudicated Guilty on all counts;
Defendant shall be precluded from working or having a business interest in or receiving remuneration or payment of any kind from any health care related facility that receives any funds or participates in any way with the Medicare and/or Medicaid programs under Titles XVIII and XIX of the United States Code. However, this does not preclude the Defendant from receiving proceeds from the divestment of his
interests or assets through the sale or transfer of said assets or interest to an entity that receives any funds or participates in any way with the Medicare and/or Medicaid programs of the United States.
Defendant shall pay court costs;
The monetary obligation under the AGREEMENT shall be paid over the course of probation and community control. However, the STATE and the Defendant agree that there is a value to the STATE in terms of economics and deterrence to receive swift and complete payment and the commitment of the Defendant to attempt to do so reflects his willingness to accept responsibility for his acts. Therefore, in the event that the Defendant pays $3,000,000.00 within 15 months of sentencing and has satisfied all other terms and conditions of community control and probation, the State agrees to the following:
the community control portion of the defendant's sentence shall be reduced to 15 months;
the term of probation shall be reduced to five (5) years;
The STATE agrees to return to court for an Order reducing the total obligation by
$500,000.00. Thus, the Defendant's total obligation under this Agreement would become Three Million dollars ($3,000,000.00). . . .
The State has no objection to the entry of any Order by the court to permit travel outside of the United States for business purposes upon at least 2 weeks notice to the probation department and the permission of the defendant's probation officer. The Defendant understands that he may not travel
outside the United States during the course of the community control portion of his sentence.
Section VI was entitled "Withdrawal of Guilty Plea and Vacation of Sentence." It read as follows:
In the event that the State files additional charges against the Defendant for matters currently under investigation, but not charged in the Information described in this AGREEMENT, the Defendant shall have the right and full entitlement to vacate the sentence imposed pursuant to this AGREEMENT and to withdraw his plea of guilty. The only condition to the Defendant's right and entitlement to vacate (as just described) shall be that the Defendant must not have breached this AGREEMENT prior to the additional charges being filed. If the Defendant does vacate and withdraw, all monies paid pursuant to this AGREEMENT shall be returned to the Defendant.
The Plea Agreement also contained a "Waiver of Rights," which provided, in pertinent part, as follows:
My entering into the AGREEMENT is not the result of force, threats, assurances or promises other than the promises contained in the attached agreement. I agree to the provision of this agreement as a voluntary act on my part, rather than at the discretion of or because of the recommendation of any other person, and I agree to be bound by its provisions.
I agree that this written plea agreement contains all the terms and conditions of my plea and that promises made by anyone that are not contained within this written agreement are without force and effect and are null and void. . . .
The Plea Agreement was signed by Mr. Pinkoff (on September 26, 2001), his attorneys (on September 26, 2001 and November 8, 2000), and the Special Counsel of Health Care Fraud Prosecution (on September 26, 2000).
Mr. Pinkoff is currently under "house arrest" at his residence (which he owns) located at 5721 Oakview Terrace in Hollywood, Florida; however, he is allowed to leave his home to work at his office (which is also located in Florida).
Mr. Pinkoff is still in the "pharmaceutical wholesaling" business. His business is licensed "out of Georgia."
Mr. Pinkoff has paid approximately $200,000.00 of the amount that he owes the State of Florida pursuant to the terms of his Plea Agreement.
He sold the 6001 North Ocean Drive property referenced in the Plea Agreement for $1.2 million. The state received approximately $192,000.00 of the proceeds from the sale
Mr. Pinkoff is presently paying the state $1,000.00 a
month.
CONCLUSIONS OF LAW
Effective July 1, 1993, by operation of Section 58 of Chapter 93-129, Laws of Florida, AHCA was transferred "[a]ll powers, duties and functions, records, personnel, property, and unexpended balances of appropriations, allocations, or other
funds of the Medicaid program within the Department of Health and Rehabilitative Services, as well as the infrastructure and support services that support the program, including, but not limited to, investigative, licensing, legal, and administrative activities."
Among the powers transferred to AHCA was the power to recover overpayments made to Medicaid providers, a power it still possesses.
An overpayment occurs when a Medicaid provider receives monies beyond those to which, pursuant to the provisions of its provider agreement, it is entitled.
In the instant case, AHCA is seeking to recover Medicaid overpayments (totaling $4,247,497.70) that AHCA alleges were made to Petitioner for drugs Petitioner claimed it dispensed to Medicaid recipients during the Audit Period.
To determine the merits of AHCA's allegation that such overpayments were made to Petitioner, it is necessary to examine the law in effect during the Audit Period. See Toma v. Agency
for Health Care Administration, No. 95-2419, 1996 WL 1059900 (Fla. DOAH 1996)(Recommended Order)("The statutes, rules, Medicaid Physician Provider Handbook and Medicaid EPSDT Provider Handbook in effect during the period for which the services were provided govern the outcome of the dispute.").
At all times material to the instant case, Section 409.913, Florida Statutes, provided, in part, as follows:
The agency shall operate a program to oversee the activities of Florida Medicaid recipients, and providers and their representatives, to ensure that fraudulent and abusive behavior and neglect of recipients occur to the minimum extent possible, and to recover overpayments and impose sanctions as appropriate:
For the purposes of this section, the term:
* * *
(d) "Overpayment" includes any amount that is not authorized to be paid by the Medicaid program whether paid as a result of inaccurate or improper cost reporting, improper claiming, unacceptable practices, fraud, abuse, or mistake.
* * *
The agency shall conduct, or cause to be conducted by contract or otherwise, reviews, investigations, analyses, audits, or any combination thereof, to determine possible fraud, abuse, overpayment, or recipient neglect in the Medicaid program and shall report the findings of any overpayments in audit reports as appropriate.
* * *
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 that:
Have actually been furnished to the recipient by the provider prior to submitting the claim.
Are Medicaid-covered goods or services that are medically necessary.
Are of a quality comparable to those furnished to the general public by the provider's peers.
Have not been billed in whole or in part to a recipient or a recipient's responsible party, except for such copayments, coinsurance, or deductibles as are authorized by the agency.
Are provided in accord with applicable provisions of all Medicaid rules, regulations, handbooks, and policies and in accordance with federal, state, and local law.
Are documented by records made at the time the goods or services were provided, demonstrating the medical necessity for the goods or services rendered. Medicaid goods or services are excessive or not medically necessary unless both the medical basis and the specific need for them are fully and properly documented in the recipient's medical record.
A Medicaid provider shall retain medical, professional, financial, and business records pertaining to services and goods furnished to a Medicaid recipient and billed to Medicaid for a period of 5 years after the date of furnishing such services or goods. The agency may investigate, review, or analyze such records, which must be made available during normal business hours. However, 24-hour notice must be provided if patient treatment would be
disrupted. The provider is responsible for furnishing to the agency, and keeping the agency informed of the location of, the provider's Medicaid-related records. The authority of the agency to obtain Medicaid- related records from a provider is neither curtailed nor limited during a period of litigation between the agency and the provider.
* * *
(10) The agency may require repayment for inappropriate, medically unnecessary, or excessive goods or services from the person furnishing them, the person under whose supervision they were furnished, or the person causing them to be furnished.
* * *
(14) The agency may seek any remedy provided by law, including, but not limited to, the remedies provided in subsections (12) and (15) and s. 812.035, if: . . . .
The provider has failed to make available or has refused access to Medicaid- related records to an auditor, investigator, or other authorized employee or agent of the agency, the Attorney General, a state attorney, or the Federal Government;
The provider has not furnished or has failed to make available such Medicaid- related records as the agency has found necessary to determine whether Medicaid payments are or were due and the amounts thereof; . . .
(e) The provider is not in compliance with provisions of Medicaid provider publications that have been adopted by reference as rules in the Florida Administrative Code; with provisions of state or federal laws, rules, or regulations; with provisions of the provider agreement between the agency and
the provider; or with certifications found on claim forms or on transmittal forms for electronically submitted claims that are submitted by the provider or authorized representative, as such provisions apply to the Medicaid program; . . .
(n) The provider fails to demonstrate that it had available during a specific audit or review period sufficient quantities of goods, or sufficient time in the case of services, to support the provider's billings to the Medicaid program;
* * *
In making a determination of overpayment to a provider, the agency must use accepted and valid auditing, accounting, analytical, statistical, or peer-review methods, or combinations thereof. Appropriate statistical methods may include, but are not limited to, sampling and extension to the population, parametric and nonparametric statistics, tests of hypotheses, and other generally accepted statistical methods. Appropriate analytical methods may include, but are not limited to, reviews to determine variances between the quantities of products that a provider had on hand and available to be purveyed to Medicaid recipients during the review period and the quantities of the same products paid for by the Medicaid program for the same period, taking into appropriate consideration sales of the same products to non-Medicaid customers during the same period. In meeting its burden of proof in any administrative or court proceeding, the agency may introduce the results of such statistical methods as evidence of overpayment.
When making a determination that an overpayment has occurred, the agency shall prepare and issue an audit report to the
provider showing the calculation of overpayments.
The audit report, supported by agency work papers, showing an overpayment to a provider constitutes evidence of the overpayment.[20/] A provider may not present or elicit testimony, either on direct examination or cross-examination in any court or administrative proceeding, regarding the purchase or acquisition by any means of drugs, goods, or supplies; sales or divestment by any means of drugs, goods, or supplies; or inventory of drugs, goods, or supplies, unless such acquisition, sales, divestment, or inventory is documented by written invoices, written inventory records, or other competent written documentary evidence maintained in the normal course of the provider's business.
At all times material to the instant case, Rule 59G- 9.030, Florida Administrative Code, provided, in part, as follows:
59G-9.030. Determination of Overpayments.
* * *
Reasons for Overpayments
Overpayments may be made to Medicaid providers as the result of either simple mistake or fraud.
Providers may be overpaid because of being paid for services or goods that were: . . . .
6. Not documented as having been available to be provided by sufficient invoices, distributor sales records, or manufacturer sales records to support the size and quantity of the goods claimed to have been
provided to Medicaid recipients during an audit period.
Detection of Possible Overpayments . . . .
Referrals from Auditors. Overpayments may be revealed in reports received by the Medicaid office from auditors of the agency, other agencies of the State of Florida, the Federal Government, the Medicaid fiscal agent contractor, or other
contractors. . . .
Determination of Overpayments . . . .
(c) Aggregate Analysis. Upon reasonable request, a provider of goods that are billed to and paid for by the Medicaid program must furnish to authorized auditors, investigators and agents invoices and other information directly related to inventory or acquisition of goods from suppliers and other documentation demonstrating that the provider had available during the audit period sufficient quantities of such goods to support billings to Medicaid. Such information and documentation shall include total sales data pertaining to each of the products that are sold and billed to Medicaid and to other customers and shall include purchase, barter and inventory records and the names of major suppliers. In addition to relying on provider records, the agency will make a good faith effort to obtain the required purchase information from the primary distributor from whom the provider purchases. If inventory data pertaining to any such product for the beginning and end of the audit period are not furnished by the provider, it will be taken that the beginning and the ending inventory quantities are the same for that product. Purchase and barter documentation will be considered to the extent furnished by the provider. If the provider does not supply to the agency within a reasonable
time period such information as the agency finds necessary to determine whether the provider was or is entitled to Medicaid payments, the provider shall be terminated by the agency from further participation in the Medicaid program.
The calculation of the overpayment, if any, for the audit period for each product billed to and paid for by Medicaid and selected for audit by the agency will be made in accordance with the following steps:
The total dollar value of payments by Medicaid will be determined. It will be the sum of the amount paid by Medicaid for all claims of the provider for the product with dates of service within the period being audited.
The total quantity available for sale will be determined. It will be the sum of the beginning inventory quantity plus quantities acquired through purchase and barter during the audit period less the ending inventory quantity, provided that if beginning and ending inventory data are not furnished for any product, it will be taken that they are the same. If inventory data are not furnished, documented extraordinary purchases, when brought to the agency's attention by the provider, will be considered to the extent that they are over and above normal purchasing volumes, when such documented extraordinary purchases occur within thirty (30) days prior to the audit period.
The quantity available to be purveyed to Medicaid recipients and to be billed to Medicaid will be determined. It will be the quantity determined in 59G-9.030(4)(c)2., F.A.C., multiplied by the fraction of units of the product paid by Medicaid in total sales in units for that product. If the provider chooses not to furnish total sales information for individual products, the
provider shall be terminated from further participation in the Medicaid program.
The dollar value available to be billed to Medicaid will be determined. It will be the quantity available to be purveyed to Medicaid recipients and to be billed to Medicaid determined in 59G-9.030(4)(c)3., F.A.C., multiplied by the average price per unit, including dispensing fee, if applicable, paid to the provider by Medicaid during the audit period. The average price per unit for a product is the total amount paid to the provider by Medicaid for the product determined in 59G-9.030(4)(c)1., F.A.C., divided by the total number of units of the product comprehended by the same claims used to determine the total payment in 59G-9.030(4)(c)1., F.A.C.
The overpayment amount, if any, will be determined. It will be the total dollar value of payments by Medicaid determined in 59G-9.030(4)(c)1., F.A.C., less the dollar value available to be billed to Medicaid determined in 59G-9.030(4)(c)4., F.A.C. If a provider fails to furnish information and documentation that fully supports billings to Medicaid and if, consequently, an overpayment is determined respecting any product, the provider has made a mistake as that term is used in 409.335, F.S. In the event that the total dollar value of payments by Medicaid is less than the dollar value available to be billed to Medicaid, there is no underpayment, but rather the provider has demonstrated having available a sufficient quantity of the product to support billings to Medicaid. . . .
Documentation by Provider
Documentation shall be maintained by the provider for a period of five years from the date of service respecting the services or products billed to Medicaid. A Medicaid provider shall furnish to the Agency such
information as the agency finds necessary to determine whether Medicaid payments are or were due to the provider and the amounts thereof. If a provider does not supply such information, the agency shall exclude the provider from further participation in the Medicaid program in conformity with provisions of the federal Social Security Act. Accordingly, upon reasonable request by the agency, a provider shall furnish promptly to the agency legible and accurate documentation specified by the agency for determination by the agency of the provider's entitlement to Medicaid payments. Such documentation may relate to the provider's business or profession and to both Medicaid recipients and non-Medicaid customers, clients or patients, only to the extent that the documentation is shown by the agency to be necessary to a determination of the provider's entitlement to Medicaid payments. If such documentation is not furnished by the provider, it will be concluded that the provider was not and is not entitled to payments for any products or services comprehended by the unfurnished documentation.
During an aggregate analysis, the agency shall arrive at a preliminary finding based on all documentation furnished up to that time by the provider. The agency shall notify the provider of the preliminary finding and of any discrepancies provisionally determined in the audit. The agency shall grant the provider 60 days from the date of such notice to furnish any additional documentation and to attempt to resolve the discrepancies identified in the notice before the agency institutes final agency action against the provider. . . .
A provider who is the subject of an audit report that reveals overpayments is entitled to an administrative hearing pursuant to Chapter 120, Florida Statutes, before AHCA takes final agency action ordering repayment.
Petitioner requested, and was granted, such a hearing in the instant case.
At the hearing, AHCA had the burden of establishing, by a preponderance of the evidence, that overpayments in the amount it is seeking to recoup from Petitioner ($4,247,497.70) had been made to Petitioner. See South Medical Services, Inc.
v. Agency for Health Care Administration, 653 So. 2d 440, 441 (Fla. 3d DCA 1995); Southpointe Pharmacy v. Department of Health and Rehabilitative Services, 596 So. 2d 106, 109 (Fla. 1st DCA 1992); and Full Health Care, Inc. v. Agency for Health Care
Administration, No. 00-4441, 2001 WL 729127 (Fla. DOAH 2001)(Recommended Order).
Relying on an analytical method ("aggregate analysis") authorized by statute and rule to establish Petitioner's liability, 21/ ACHA met its burden of proof.
At the final hearing, AHCA presented not only documentary evidence sufficient to make a prima facie showing (pursuant to Subsection (21) of Section 409.913, Florida Statutes) of entitlement to the monies sought from Petitioner; it also thwarted Petitioner's attempt to overcome this prima
facie showing by presenting evidence affirmatively establishing the lack of genuineness of the IV Pharmaceutical Wholesalers, Inc., "invoices" relied upon by Petitioner to demonstrate that the "variances between the quantities of products that [Petitioner] had on hand and available to be purveyed to Medicaid recipients during the review period and the quantities of the same products paid for by the Medicaid program for the same period" were not nearly as great as AHCA determined them to be in its "final agency audit" report.
AHCA's key witness, Mr. Pinkoff, testified (in person) that his business, IV Pharmaceutical Wholesalers, Inc., had never supplied any drugs to Petitioner, and that the "invoices" submitted by AHCA had been fabricated by him, for a fee, at the request of Mr. Taylor and Ms. Bills. This testimony was in conflict with the testimony of Mr. Taylor that Petitioner offered into evidence.
Having carefully considered the matter, the undersigned has determined that Mr. Pinkoff was telling the truth about the "invoices," while Mr. Taylor, Petitioner's lone witness, was lying to protect himself against the adverse consequences he would suffer if the fraudulent scheme in which he and Mr. Pinkoff had participated was discovered. 22/
Mr. Pinkoff, whose demeanor the undersigned had the opportunity to observe, testified with apparent candor and
sincerity about his wrongdoing. Petitioner argues, in its Proposed Recommended Order, that Mr. Pinkoff should not be believed because he is a "person convicted of Medicaid Fraud," who is receiving "benefit[s] . . . for his cooperation with the State" in this matter. What Petitioner overlooks is that Mr.
Pinkoff's current status as a "person convicted of Medicaid Fraud" is the result of his having admitted, in his Plea Agreement, to engaging in the very same fraudulent conduct about which he testified at the final hearing in this case. "[R]easonable people, even reasonable people who are not especially honest, tend not to make self-inculpatory statements [like the one made by Mr. Pinkoff in his Plea Agreement 23/] unless they believe them to be true." Williamson v. U.S., 114 S.Ct. 2431, 2435 (1994). This is so even if they are "promised a 'good deal' by the government" in exchange for their admission of guilt. U.S. v. Centracchio, 265 F.3d 518, 526 (7th Cir.
2001).
Mr. Taylor did not take the stand at the final hearing in this case, but rather testified outside the presence of the undersigned (by deposition). Mr. Taylor, as an owner of Petitioner, unlike Mr. Pinkoff, has an interest in the outcome of this proceeding. His testimony that the "invoices" were genuine and represented actual drug transactions between IV Pharmaceutical Wholesalers, Inc., and Petitioner served that
interest. The undersigned has rejected this testimony, finding it less credible than Mr. Pinkoff's conflicting testimony, not only because of its self-serving nature, but also because it simply does not seem plausible, given the record as a whole, including, most significantly, the evidence of Petitioner's failure, prior to December of 1999 when the "invoices" were submitted to AHCA, to have made any mention of IV Pharmaceutical Wholesalers, Inc., in its correspondence and communications with AHCA and its agents, including the Questionnaire for Medicaid Providers Mr. Taylor filled out in October of 1998; and the evidence that the only payments that Mr. Pinkoff received from Petitioner were first made in November of 1999 and totaled only
$800,000.18, more than $3 million less than the total amount of the "invoices." 24/ See Walls v. State, 641 So. 2d 381, 387 (Fla. 1994)("We recognize that Walls himself claimed a loss of emotional control. However, judge and jury were within their discretion to reject this statement of opinion as self-serving, or inconsistent with the facts, based upon the present record."); and N. K. D. v. State, 799 So. 2d 428, 430 (Fla. 1st DCA 2001)("In our view, this type of self-serving statement is the kind that the trier of fact, in consideration of the remaining evidence, was free to weigh and reject.").
In view of the foregoing, AHCA should enter a final order finding that Petitioner was overpaid a total $4,247,497.70
by the Medicaid program for claims covering the period from September 10, 1997, through August 31, 1998.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
RECOMMENDED that AHCA enter a final order finding that Petitioner received $4,247,497.70 in Medicaid overpayments for claims covering the period from September 10, 1997, through August 31, 1998, and requiring Petitioner to repay this amount to AHCA.
DONE AND ENTERED this 3rd day of October, 2002, in Tallahassee, Leon County, Florida.
STUART M. LERNER
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of October, 2002.
ENDNOTES
1/ In fact, AHCA filed its Witness and Exhibit List on February 28, 2002, and Petitioner filed its Witness and Exhibit List on March 4, 2002.
2/ Mr. Porter, during the ensuing discussion on the motion, gave the following explanation as to why Mr. Pinkoff had asserted his Fifth Amendment privilege at the deposition despite having previously entered into a "cooperation agreement" with the State of Florida:
[T]here was an administrative subpoena for Mr. Pinkoff to give his deposition. Mr.
Pinkoff was not satisfied at the time that the administrative subpoena awarded him the protection that he had bargained for in his plea agreement and he required that the government subpoena him under the specific provisions of [Chapter] 914, [Florida Statutes] which is how he is here today, which is exactly what we did.
(By signing the Plea Agreement, Mr. Pinkoff "agree[d] to make himself accessible upon notice to receive and testify truthfully pursuant to any subpoena lawfully issued compelling such testimony pursuant to §914.04, Florida Statutes.")
3/ In his argument in support of his motion, Mr. Diamond stated that, although he had not sought to depose Mr. Pinkoff, he had dispatched an investigator, in February of 2000, to speak with Mr. Pinkoff and that Mr. Pinkoff had made statements to the investigator "totally inconsistent" with the statements later made by Mr. Pinkoff in his Plea Agreement (in the "Factual Predicate" portion thereof). In his cross-examination of Mr.
Pinkoff, Mr. Diamond inquired about this February 2000 meeting. Mr. Pinkoff testified that he remembered the meeting, but that he did not recall specifically what was discussed during the meeting. Other than Mr. Pinkoff's testimony, there was no evidence elicited at the hearing about the meeting. See State v. Gosier, 737 So. 2d 1121, 1122 n.1 (Fla. 4th DCA 1999)("That is all the evidence that could have been relied upon by the trial judge to justify a departure sentence. Although defense counsel made a number of statements concerning the defendant, the defendant's life, the crime, and supposed remorse, those statements do not constitute evidence."); Bassette v. Health Management Resources Corporation, 661 So. 2d 317, 319 (Fla. 2d DCA 1995)("In the absence of a stipulation, a trial court may not consider as fact an attorney's unsworn statements."); Sabina v. Dahlia Corporation, 650 So. 2d 96, 99 (Fla. 2d DCA 1995)("[T]his statement by Sabina's attorney does not constitute competent evidence before the trial court in this matter because it was an unsworn statement of a relevant fact in issue. In the
absence of a stipulation . . . 'a trial court cannot make a factual determination based on an attorney's unsworn statements' and 'is precluded from considering as fact unproven statements documented only by an attorney.'"); and Leon Shaffer Golnick Advertising v. Cedar, 423 So. 2d 1015, 1017 (Fla. 4th DCA 1982)("It is essential that attorneys conduct themselves as officers of the court; but their unsworn statements do not establish facts in the absence of stipulation. Trial judges cannot rely upon these unsworn statements as the basis for making factual determinations; and this court cannot so consider them on review of the record. If the advocate wishes to establish a fact, he must provide sworn testimony through witnesses other than himself or a stipulation to which his opponent agrees."). The investigator to whom Mr. Diamond referred during his cross-examination of Mr. Pinkoff was not called to the stand at the final hearing to testify.
4/ See F.T.C. v. Kitco of Nevada, Inc., 612 F.Supp. 1282, 1290-
91 (D. Minn. 1985)("The FTC contends that the testimony of defendant Farkas should be stricken because he precluded its pretrial discovery by refusing to answer deposition questions based upon a claim of fifth amendment privilege. It argues that fairness requires that it be protected from surprise at trial from previously undisclosed information. . . . After carefully considering the parties' position[s], the court finds that the testimony of Farkas should be admitted. . . . In the instant case the court finds that the FTC has not been unfairly surprised or prejudiced by Farkas' assertion of privilege and subsequent decision to testify at trial. The FTC thoroughly prepared its case and seemed able to anticipate through other witnesses what Farkas' testimony might be. It was not solely dependent upon the testimony of Farkas for pertinent information. Therefore, the testimony of Farkas has been considered in setting forth the facts in the previous section.").
5/ Had the undersigned not allowed Mr. Pinkoff to testify, Mr. Diamond would not have had the opportunity to cross-examine Mr. Pinkoff about these statements and, furthermore, because, under such circumstances, Mr. Pinkoff would have been "unavailable as a witness," these statements, which are "statements against interest," as described in Subsection (2)(c) of Section 90.804, Florida Statutes, would have constituted hearsay evidence that "would be admissible over objection in civil actions" and, as such, would have been sufficient, pursuant to Subsection (1)(c) of Section 120.569, Florida Statutes, in and of themselves, to support a finding of fact notwithstanding their hearsay nature.
6/ The undersigned, Mr. Porter, and AHCA's witnesses participated in the hearing from the Tallahassee hearing site. Mr. Diamond and the court reporter were at the Miami hearing site.
7/ Even assuming, arguendo, that it was reasonable for Mr. Diamond to have assumed that Mr. Pinkoff would refuse, on the ground of Fifth Amendment privilege, to give testimony at the hearing regarding his dealings with Petitioner, Mr. Diamond still should have been prepared to attack Mr. Pinkoff's credibility at hearing inasmuch as the Plea Agreement (containing Mr. Pinkoff's statements concerning these dealings) was included on AHCA's Witness and Exhibit List. See Thomas v. State, 778 So. 2d 482, 483 (Fla. 4th DCA 2001)("Section 90.806(1) provides that where a hearsay statement is admitted into evidence, the credibility of the non-testifying declarant can be impeached by the same methods as if the declarant had testified."); and Section 90.806(1), Florida Statutes ("When a hearsay statement has been admitted in evidence, credibility of the declarant may be attacked and, if attacked, may be supported by any evidence that would be admissible for those purposes if the declarant had testified as a witness. Evidence of a statement or conduct by the declarant at any time inconsistent with the declarant's hearsay statement is admissible, regardless of whether or not the declarant has been afforded an opportunity to deny or explain it.").
8/ Rule 28-106.210, Florida Administrative Code, which governs requests for continuances made in administrative proceedings, provides as follows:
The presiding officer may grant a continuance of a hearing for good cause shown. Except in cases of emergency, requests for continuance must be made at least five days prior to the date noticed for the hearing.
9/ Subsection (22) of Section 90.803, Florida Statutes, provides that "former testimony [that is relevant and not excludable pursuant to Section 90.403, Florida Statutes] given .
. . in a deposition taken in compliance with law in the course of the same . . . proceeding" is admissible, "even though the declarant is available as a witness," provided "the party against whom the testimony is now offered . . . had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination." This provision,
however, has been declared "unconstitutional as an infringement on the authority conferred on the Florida Supreme Court by article V, section 2(a), of the Florida Constitution; and as a violation of article II, section 3, of the Florida Constitution, because it obviates and conflicts with section 90.804, Florida Statutes; and with Florida Rule of Civil Procedure 1.330; and denies due process." Grabau v. Department of Health, Board of Psychology, 816 So. 2d 701, 709 (Fla. 1st DCA 2002). In the absence of any contrary appellate court decision, the First District Court of Appeal's finding of unconstitutionality in Grabau is binding on the undersigned. See Pardo v. State, 596 So. 2d 665, 666 (Fla. 1992)("[W]e note that the district court erred in commenting that decisions of other district courts of appeal were not binding on the trial court. This Court has stated that '[t]he decisions of the district courts of appeal represent the law of Florida unless and until they are overruled by this Court.' Stanfill v. State, 384 So. 2d 141, 143 (Fla.
1980). Thus, in the absence of interdistrict conflict, district court decisions bind all Florida trial courts."); and Mikolsky v. Unemployment Appeals Commission, 721 So. 2d 738, 740 (Fla.
5th DCA 1998)("An agency of this state, such as the [Unemployment Appeals] Commission, must follow the interpretations of statutes as interpreted by the courts of this state. Like trial courts, if there is a controlling interpretation by a district court of appeal in this state, the Commission must follow it, even if the court of appeal is located outside the district of the trial court. If there is a conflict between interpretations by different courts of appeal, that may provide a basis to reach the supreme court for a final interpretation. Thereafter, the supreme court's interpretation of the statute must prevail, barring future legislative changes to the statute."). Accordingly, Subsection (22) of Section 90.803, Florida Statutes, does not provide "a proper basis for the admission into evidence of [Mr. Taylor's] deposition in th[is] administrative proceeding." Grabau v. Department of Health, Board of Psychology, 816 So. 2d at 709; see also Friedman v. Friedman, 764 So. 2d 754, 755 (Fla. 2d DCA 2000)("We hold that the admissibility of a discovery deposition of a nonparty witness as substantive evidence continues to be governed by rule 1.330(a)(3). We reach this conclusion for two reasons. First, rule 1.330(a)(3) has not been amended and continues to require certain prerequisites before the deposition of a nonparty is admissible at trial. Second, section 90.803(22) requires that 'the party against whom the testimony is now offered . . . had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination.' (Emphasis added [by appellate court].) An
attorney taking a discovery deposition does not approach the examination of a witness with the same motive as one taking a deposition for the purpose of presenting testimony at trial.").
10/ Compare with Ikerd v. Lapworth, 435 F.2d 197, 205 (7th Cir. 1970)(trial court's admission of deposition upheld where offering counsel represented that deponent was out of state and could not be present for trial; opposing counsel indicated they would attempt to verify offering counsel's representation; and trial court advised opposing counsel that, "unless they established to the contrary, [the] deposition would be accepted upon the representation made that [the witness] was outside the jurisdiction of the court."); and F.D.I.C. v. Jahner, 506 N.W.2d
57 (N.D. 1993)(trial court's admission of deposition upheld where offering counsel represented that deponent was "in South Dakota and unavailable as a witness" and opposing counsel "did not dispute that representation, but [rather] argued that the trial court could not accept a statement of counsel as evidence.").
11/ These "invoices" were offered by AHCA as part of Respondent's Exhibit 36 (and received into evidence without objection).
12/ Both Mr. Porter and Mr. Diamond agreed, in response to the undersigned's inquiry at the end of the final hearing, that the issue of the genuineness of these invoices was the "focus" of the instant case.
13/ Ms. Bills also made contact with a confidential informant working for the Florida Attorney General's Medicaid Fraud Control Unit in an effort to obtain the needed "invoices." She had approximately nine separate telephone conversations with the informant that were secretly recorded and heard by William Avery, a special agent with the Medicaid Control Unit who testified about these telephone conversations at the final hearing. Mr. Avery also testified at hearing about a follow-up meeting (also recorded by the Medicaid Fraud Control Unit) that Ms. Bills and Mr. Taylor had with an undercover special agent (wearing a wire) in a cocktail lounge at a Holiday Inn near Calder Racetrack. (Mr. Diamond "move[d] for a mistrial" when AHCA presented this testimony, relief the undersigned declined to grant. Cf. Reynolds v. Alabama Department of Transportation, 4 F.Supp.2d 1055, 1063 (M.D. Ala. 1998)("[M]istrials are typically declared in the context of a jury trial, and only when prejudice results for one party that is so serious that it cannot be adequately cured by the court without resort to a new
jury. Although, based on the notion that one should 'never say never,' the court is reluctant to make the absolute statement that a mistrial is never appropriate in a nonjury or bench trial, the court is comfortable in saying that the circumstances that would warrant such would be extremely rare. In a nonjury trial, such as this one, all that need be done, typically, to correct an error would be for the court simply to disregard any inappropriate evidence and, if necessary, allow the parties to supplement the record with appropriate evidence. Therefore, even if the underlying contention in the defendants' motion were true, it would not warrant scuttling the current trial and starting anew.")). Because there is no other record evidence concerning the follow-up meeting about which Mr. Avery testified, and it is unclear whether Mr. Avery, in testifying about the matter, was relating what he himself had actually heard or simply what the undercover agent may have told him, no findings of fact have been made based upon this testimony. See Strickland v. Florida A & M University, 799 So. 2d 276, 279 (Fla. 1st DCA 2001)("[A]lthough hearsay is admissible in administrative proceedings, determinations of the Administrative Law Judge may not be based on hearsay alone."); and Section 120.57(1)(c), Florida Statutes ("Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.").
14/ It should be noted that, although Mr. Diamond was the one who, on behalf of Petitioner, submitted these fabricated "invoices" to AHCA, there is no record evidence suggesting that he knew that these "invoices" were anything other than what they purported to be.
15/ Mr. Pinkoff had never been in trouble with the law before.
16/ The investigation of this unrelated matter is still "ongoing." No further criminal charges have yet been filed against Mr. Pinkoff.
17/ Mr. Pinkoff and Mr. Petrillo had had prior business dealings. Mr. Petrillo owned three medical clinics in the Liberty City area whose patients a pharmacy owned by Mr. Pinkoff had "dispensed to." Mr. Petrillo had charged Mr. Pinkoff a fee to have the "ability" to "service[]" these patients.
18/ The meeting took place at the office of another of Mr. Pinkoff's businesses, Magic Tree Investments, Inc. The office
was approximately 1200 to 1500 square feet. There were two employees of the business, Monty Dillow and Donald Lapaletano, in the office at the time of the meeting. Neither Mr. Dillow nor Mr. Lapaletano testified at the final hearing in this case. In its Proposed Recommended Order, Petitioner suggests that an adverse inference should be drawn against AHCA because AHCA called neither Mr. Dillow nor Mr. Lapaletano to the stand to testify about the meeting. The undersigned has declined to follow this suggestion inasmuch as there has been no showing that Mr. Dillow and Mr. Lapaletano were peculiarly within AHCA's power to produce (as opposed to being equally available to both AHCA and Petitioner) or that AHCA even knew about these two gentlemen prior to Mr. Pinkoff's testimony at hearing. See Lowder v. Economic Opportunity Family Health Center, 680 So. 2d 1133, 1135-36 (Fla. 3d DCA 1996). Furthermore, even if AHCA did exercise some control over Mr. Dillow and Mr. Lapaletano, "[t]he weight of authority supports the general rule that the failure of a party to introduce an available witness does not give rise to any inference or presumption that the testimony of the witness, if he had been called, would have been unfavorable to such party, where other qualified witnesses have testified for the party concerning the same matters [as Mr. Pinkoff did in the instant case], and the testimony of the uncalled witnesses would have been merely cumulative or corroborative." Weeks v.
Atlantic Coast Line Railroad Company, 132 So. 2d 315, 316 (Fla. 1st DCA 1961).
19/ At the time of the Plea Agreement, World Savings Bank already held a mortgage in the amount of approximately
$900,000.00 on this 6001 North Ocean Drive property.
20/ It has been said that this provision enables AHCA to "make a prima facie case without doing any heavy lifting: it need only proffer a properly-supported audit report, which must be received in evidence." Full Health Care, Inc. v. Agency for Health Care Administration, No. 00-4441, 2001 WL 729127 (Fla.
DOAH 2001)(Recommended Order).
21/ In its Proposed Recommended Order, Petitioner criticizes AHCA for not using an "end-user audit" to determine Petitioner's liability. AHCA, however, was not required to use such an analytical method in making its determination of overpayment.
22/ At the time Mr. Taylor gave his deposition, Mr. Pinkoff had not yet entered into his Plea Agreement.
23/ Mr. Pinkoff's statement was not only an admission of criminal wrongdoing, but it was against his pecuniary interest. (If, contrary to his statement, the "invoices" were in fact genuine and represented actual drug transactions between IV Pharmaceutical Wholesalers, Inc., and Petitioner (as Mr. Taylor claimed in his deposition testimony), and the $800,000.18 that Mr. Pinkoff was paid was partial payment for the drugs itemized in these "invoices" (as further claimed by Mr. Taylor in his deposition testimony), IV Pharmaceutical Wholesalers, Inc., (of which Mr. Pinkoff is an owner) would be owed a considerable amount of money by Petitioner (in excess of $3 million).)
24/ It stretches credulity to believe that IV Pharmaceutical Wholesalers, Inc., would have continued to supply Petitioner with drugs during the Audit Period (which ended August 31, 1998) at the intervals and in the dollar amounts reflected by the "invoices" even though it had not received any payments at all from Petitioner during that time. (Each of the 50 "invoices" indicated that payment was due within 30 days of the date of the "invoice.")
COPIES FURNISHED:
Nathan P. Diamond, Esquire
1221 Brickell Avenue, Suite 1020
Miami, Florida 33131
L. William Porter, II, Esquire
Agency for Health Care Administration 2727 Mahan Drive, Suite 3431
Fort Knox Executive Center III Tallahassee, Florida 32308-5403
Rhonda M. Medows, M.D., Secretary Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3116 Tallahassee, Florida 32308
Valda Clark Christian, General Counsel Agency for Health Care Administration 2727 Mahan Drive
Fort Knox Building, Suite 3431 Tallahassee, Florida 32308
Lealand McMharen, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3
Tallahassee, Florida 32308
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 10, 2003 | Agency Final Order | |
| Oct. 03, 2002 | Recommended Order | Proof established that pharmacy received $4.25 million in Medicaid overpayments; certain invoices relied upon by pharmacy deemed to be falsified. |
HAL COWEN vs AGENCY FOR HEALTH CARE ADMINISTRATION, 00-000113MPI (2000)
AGENCY FOR HEALTH CARE ADMINISTRATION vs RICARDO L. LLORENTE, M.D., 00-000113MPI (2000)
R & R MEDICAL SUPPLY, INC. vs AGENCY FOR HEALTH CARE ADMINISTRATION, 00-000113MPI (2000)
ARTHUR HENSON, D.O. vs AGENCY FOR HEALTH CARE ADMINISTRATION, 00-000113MPI (2000)
