STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MSS BIOMEDICAL CORPORATION, d/b/a IMMUNECARE INFUSION,

Petitioner,

vs.

AGENCY FOR HEALTH CARE ADMINISTRATION,

Respondent.

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) Case No. 01-2242F

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FINAL ORDER

Pursuant to notice, a formal hearing was held in this case on December 10, 2001, in Tallahassee, Florida, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Geoffrey D. Smith, Esquire

Blank, Meenan & Smith, P.A.

204 South Monroe Street Post Office Box 11068

Tallahassee, Florida 32302-3068

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 ISSUE

Whether the Petitioner is entitled to fees as a prevailing small business party pursuant to Section 57.111, Florida Statutes.

PRELIMINARY STATEMENT

On June 5, 2001, the Petitioner, MSS Biomedical Corporation, d/b/a Immunecare Infusion, filed a Petition for Attorneys' Fees in connection with DOAH Case No. 00-4708. Such petition alleged that the Petitioner had been the prevailing party in the underlying case (DOAH Case No. 00-4708) and that as a small business, it was entitled to recover attorneys' fees pursuant to the Section 57.111, Florida Statutes. A Notice of Hearing was entered scheduling the matter for a formal hearing on July 20, 2001.

Thereafter, the parties requested that the case be rescheduled on three occasions. The Respondent, Agency for Health Care Administration (Respondent or Agency), filed a response to the petition for fees that maintained the Agency had been substantially justified in its actions in the underlying case. Ultimately, the matter was heard on December 10, 2001.

At the hearing, the Agency presented testimony from Dana Kenneth Yon, William Thomas, Susan Williams, and JoAnn Jackson. Mark Kenneth Sachs, M.D., testified on behalf of the Petitioner.

The Petitioner's Exhibit 1 and Respondent's Exhibits 1 and 2 were received into evidence.

The transcript of these proceedings was filed with the Division of Administrative Hearings on January 14, 2002.

Thereafter the parties requested an extension of the time to file their proposed orders. Such request was granted and the parties filed their proposed orders on February 8, 2002. The Petitioner's Motion to Strike or to Re-Open and Supplement the Record filed on February 20, 2002, has been rendered moot by the parties' Stipulation to Supplement Record filed on March 1,

2002.

FINDINGS OF FACT

1. The Respondent is the state agency charged with the authority to oversee and govern the Medicaid Program in Florida.

2. To that end the Agency has established a Medicaid Program Integrity Bureau that seeks to detect and prevent fraud and abuse by Medicaid providers.

3. The Petitioner is a pharmacy provider within the purview of the Florida Medicaid Program. As such, it is accountable to the Agency for its accounting practices and records.

4. At all times material to the underlying case in this matter (DOAH Case No. 00-4708) the Agency employed auditors who

   routinely review the records of Medicaid providers being reimbursed through the Medicaid Program.

5. In DOAH Case No. 00-4708 such auditors determined that the records maintained by the Petitioner did not accurately reflect information needed to verify and support the billings for which the Medicaid Program had reimbursed the Petitioner. In one instance, the Petitioner did not produce authorizations for a substitution of a prescribed drug.

6. In a separate claim, the Agency maintained that the records indicated an invoice shortage for a prescribed medication. In other words, the provider had allegedly billed for a certain amount of drugs but the acquisition records and invoice records did not establish that quantities in a corresponding amount had been purchased for dispensing.

7. The Agency hired Heritage Information Systems to perform an independent audit of the Petitioner. That audit supported findings unfavorable to the Petitioner in that it identified a substitution problem.

8. The substitution of a more expensive drug for a less expensive prescribed drug is not permissible under the Medicaid Program guidelines without authority from the prescribing physician.

9. As it relates to this case, the prescribing physician was Dr. Sachs. Coincidentally, Dr. Sachs owns the Petitioner.

10. At all times material to the auditing period, the Agency interviewed Dr. Sachs, reviewed all records provided to it at the Petitioner's office, and believed that Dr. Sachs had not authorized the substitution of the more expensive drug for the drug prescribed. Thus, when the records indicated the Petitioner had substituted and billed Medicaid for the more expensive drug, a substitution issue was documented. This claim formed the basis for DOAH Case No. 00-4708.

11. Dr. Sachs appeared before the auditors on more than one occasion and did not indicate that he had authorized any substitution for the prescribed item. At all meetings with Dr. Sachs the Agency believed that the doctor had written prescriptions for IVIg. In fact, Dr. Sachs wrote prescriptions for IVIg, Dr. Sachs did not write prescriptions for CytoGam.

12. As to all prescriptions written for IVIg, the Medicaid Program was billed for a drug known as CytoGam. The substitution of CytoGam for IVIg formed the crux of the auditing dispute.

13. Based upon the substitution issue, the Agency elected to attempt recovery against the Petitioner for the unauthorized substitution of the more expensive drug. Not once during the auditing process did the Petitioner or Dr. Sachs allege that the substitution had been authorized. No records were produced during the audit to support the substitution.

14. Nevertheless, in anticipation of trial and within a short time before hearing on the underlying case, the Petitioner produced documents that supported the Petitioner's claim that Dr. Sachs had authorized the substitution. This assertion was directly opposite of the position formerly held by the doctor. Moreover, given the short time remaining until hearing, the Agency had no opportunity to verify the authenticity of the exculpatory documents.

15. Rather than proceed to hearing on the unauthorized substitution claim, the Agency filed a Motion to Relinquish Jurisdiction based upon its decision to rescind the action against the Petitioner. Such motion was treated as a voluntary dismissal. Subsequently, the hearing was canceled and the Division of Administrative Hearings relinquished jurisdiction to the Agency.

16. A final order was entered by the Agency on July 19, 2001.

17. The Agency has not contested the timeliness of the Petitioner's claim for fees and costs pursuant to Section 57.111, Florida Statutes.

18. The Agency does not dispute that the Petitioner is a small business as defined by Section 57.111, Florida Statutes.

19. The Agency maintains its actions were substantially justified in the underlying case and that the Petitioner is not a prevailing party as a matter of law.

20. The Petitioner argues that had the Agency done its job of auditing more thoroughly the actions against the Petitioner would have been avoided. As such, the Petitioner maintains it is entitled to recover fees and costs in the amount of $15,000.

21. The Agency does not dispute that the Petitioner incurred fees and costs in excess of the statutory cap in defense of the underlying case.

22. One of the complicating factors in the case was the issue of whether CytoGam was a permissible substitution to fill a prescription written for IVIg. The issue of permissible substitution then was clouded by the fact that until preparations for hearing were being finalized the Agency did not know that Dr. Sachs had authorized the substitution. Presumably, had there been no authorizations, the question of permissible substitution of the drugs would have been the focus for trial. Once the exculpatory documents were produced by the Petitioner, the Agency's theory of the case was left questionable. Permissible or not, the doctor had authorized the substitution.

23. Because the Petitioner had dispensed the drug billed to the Medicaid Program, the billing of the substituted more expensive drug would have been authorized.

24. Additionally, had Dr. Sachs written prescriptions for CytoGam, the auditing process would have supported the records initially produced by the Petitioner.

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings. Sections 57.111 and 120.57, Florida Statutes.

26. Section 57.111, Florida Statutes, provides, in pertinent part:

    1. The Legislature finds that certain persons may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense of civil actions and administrative proceedings. Because of the greater resources of the state, the standard for an award of attorney's fees and costs against the state should be different from the standard for an award against a private litigant. The purpose of this section is to diminish the deterrent effect of seeking review of, or defending against, governmental action by providing in certain situations an award of attorney's fees and costs against the state.

    2. As used in this section:

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       (c) A small business party is a "prevailing small business party" when:

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       3. The state agency has sought a voluntary dismissal of its complaint.

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       (e) A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency.

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

       1. 1. To apply for an award under this section, the attorney for the prevailing small business party must submit an itemized affidavit to the court which first conducted the adversarial proceeding in the underlying action, or to the Division of Administrative Hearings which shall assign an administrative law judge, in the case of a proceeding pursuant to chapter 120, which affidavit shall reveal the nature and extent of the services rendered by the attorney as well as the costs incurred in preparations, motions, hearings, and appeals in the proceeding.

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

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

       3. The court, or the administrative law judge in the case of a proceeding under chapter 120, shall promptly conduct an evidentiary hearing on the application for an award of attorney's fees and shall issue a judgment, or a final order in the case of an administrative law judge. The final order of an administrative law judge is reviewable in accordance with the provisions of s. 120.68. If the court affirms the

       award of attorney's fees and costs in whole or in part, it may, in its discretion, award additional attorney's fees and costs for the appeal.

       1. No award of attorney's fees and costs shall be made in any case in which the state agency was a nominal party.

       2. No award of attorney's fees and costs for an action initiated by a state agency shall exceed $15,000.

       1. If the state agency fails to tender payment of the award of attorney's fees and costs within 30 days after the date that the order or judgment becomes final, the prevailing small business party may petition the circuit court where the subject matter of the underlying action arose for enforcement of the award by writ of mandamus, including additional attorney's fees and costs incurred for issuance of the writ.

       2. This section does not apply to any proceeding involving the establishment of a rate or rule or to any action sounding in tort.

       
       

27. The actions of the Agency in the underlying case were based upon the best-known information at the times such information became known to the Respondent. None of the auditors (and more than one auditor reviewed the Petitioner's records) saw the exculpatory records until very near the time for hearing. Had the Petitioner timely provided any of the records, the initial claim of unauthorized substitution would have been resolved. CytoGam is an expensive drug. It was reasonable that auditors would be concerned that the prescription records did not authorize the substitution of the more expensive drug.

28. None of the documents authorizing the substitution of CytoGam were known to the Agency until close to hearing. Had the Agency not rescinded the action, the Petitioner would have incurred additional expenses in hearing and post-hearing proceedings. At the first opportunity, the Agency prudently elected to abandon the claim and close the matter. Its actions were substantially justified given the facts of this case.

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the Petitioner's claim for fees and costs pursuant to Section 57.111, Florida Statutes, is hereby denied.

DONE AND ENTERED this 28th day of March, 2002, in Tallahassee, Leon County, Florida.

J. D. PARRISH 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 28th day of March, 2002.

COPIES FURNISHED:

L. William Porter, II, Esquire

Agency for Health Care Administration 2727 Mahan Drive, Suite 3431

Fort Knox Executive Center III Tallahassee, Florida 32308-5403

Geoffrey D. Smith, Esquire Blank, Meenan & Smith, P.A.

204 South Monroe Street Post Office Box 11068

Tallahassee, Florida 32302-3068

Virginia A. Daire, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building, Suite 3431 Tallahassee, Florida 32308

William Roberts, Acting General Counsel Agency for Health Care Administration 2727 Mahan Drive

Fort Knox Building, Suite 3431 Tallahassee, Florida 32308

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.

Docket for Case No: 01-002242F

Orders for Case No: 01-002242F