STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MEDNET CONNECT, INC.; ASPEN ADMINISTRATORS; AND FLORIDA GOLD CITRUS, INC.,
Petitioners,
vs.
AGENCY FOR HEALTH CARE ADMINISTRATION,
Respondent.
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) Case No. 04-2978
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RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in this case on July 19, 20, and 21, 2004, in Orlando, Florida, before Carolyn S. Holifield, the designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioners: George F. Indest, III, Esquire
The Health Law Firm
220 East Central Parkway, Suite 2030 Altamonte Springs, Florida 32701
For Respondent: Joanna Daniels, Esquire
Agency for Health Care Administration
200 East Gaines Street Tallahassee, Florida 32399-4229
STATEMENT OF THE ISSUES
The issues in this case are: (1) whether the Agency for Health Care Administration (Agency) properly determined that
Petitioners should reimburse South Bay Hospital 60 percent of the amount charged for the outpatient surgery performed on a workers' compensation claimant; (2) whether the charges were undocumented, excessive, erroneous, incorrect, and/or duplicative; (3) whether the Agency complied with applicable rules in making its decision; (4) whether the employee who made the determination for the Agency had been delegated the authority to do so; and (5) whether the Agency has adopted guidelines and procedures for its employees to follow in making decisions in reimbursement disputes decided under
Section 440.13, Florida Statutes (2003).1
PRELIMINARY STATEMENT
In a letter dated June 11, 2003, the Agency directed Petitioners to pay an additional $10,092.36 to South Bay Hospital for outpatient surgical services provided to a workers' compensation claimant on January 23, 2004.2
Petitioners timely filed a Petition for Administrative hearing (Petition) in which they challenged the Agency's decision. The Agency referred the Petition to the Division of Administrative Hearings on August 19, 2004. By notice issued September 15, 2004, the final hearing was scheduled for December 7 and 8, 2004. Prior to the final hearing, the parties requested and were granted several continuances. Thus, the
final hearing was rescheduled several times before it was finally conducted as noted above.
Prior to the evidentiary part of the hearing, several motions were considered, including the Agency's Motion to Leave the Record Open to Take Trial Testimony by Deposition or Motion to Continue, filed on Friday, July 15, 2005, four days prior to the hearing, and Petitioners' Motion to Amend the Petition. The Agency's Motion to Continue the hearing was denied; Petitioners' Motion to Amend the Petition was granted3; and the Agency's Motion to Leave the Record Open was granted.4
The Agency filed a Motion in Limine on July 18, 2005, the day before the hearing. When the hearing convened, neither Petitioners' counsel nor the Administrative Law Judge had received a copy of the motion. Petitioners objected to the motion as being untimely. The undersigned reserved ruling on the Motion in Limine due to the fact that the Agency had failed to timely provide a copy of the motion to Petitioners and indicated that for purpose of the hearing, the Motion in Limine should be deemed denied. Counsel for the Agency provided a copy of the Motion in Limine to Petitioners' counsel on July 20, 2005. After carefully considering the Motion in Limine, the motion is, hereby, denied.
Prior to the evidentiary part of the hearing, the Agency admitted all the admissions in the Request for Admissions served
by Petitioners on January 11, 2005.5 The Agency also admitted Requests 1, 2, 3, 10, and 27 of Petitioners' Second Request for Admissions served on May 27, 2005. Therefore, the admissions in the Request for Admissions and in the Second Request for Admissions are admitted as facts and require no proof at hearing.
The Agency requested that official recognition be taken of the Florida Workers' Compensation Law, Chapter 440, Florida Statutes, that was in effect on January 23, 2004; the Florida Workers' Compensation Reimbursement Manual for Hospitals,
2004 Edition (effective January 1, 2004), which is incorporated by reference into Florida Administrative Code Rule 69L-75.01; and the Final Order in Horitica Insurance and West Michigan Floral Supply v. the Agency for Health Care Administration, AHCA Case No. 2003006535. The undersigned agreed to take official recognition of the foregoing as well as any relevant statutes, rules, and cases.
Petitioners requested that official recognition be taken of certain facts related to the location of the provider, South Bay Hospital, and to the location and name of certain bones in the arm. The Agency did not object to the request, and the undersigned agreed to officially recognize the enumerated facts, which are included in the Findings of Fact below.
At the final hearing, Petitioners presented the testimony of the five witnesses: Vincent Drucker, president of Mednet Connect, Inc., d/b/a Medical Analysis and Review Service; Marc Chapman, a consultant and former hospital administrator, who was accepted as an expert in the area of hospital reimbursement; Robert A. Beiseigel, president of Business Decisions, Inc., who was accepted as an expert in the areas of forensic financial analysis and regulatory financial analysis; Robert Weatherford,6 president of Medical Compliance Associates, who was accepted as an expert in the areas of medical billing and coding, medical billing review, and healthcare compliance (fraud and abuse); and John F. Scoggins, Ph.D., an economist with Research and Planning Consultants, L.P., who was accepted as an expert in the areas of economics and statistics and public policy, fiscal policy, and public finance. Petitioners' Exhibits Numbered P-1 through
P-24, P-27 through P-42, P-44, P-45, P-46, P-48 through P-51,
and Composite Exhibit P-52 were admitted into evidence.
Petitioners' Exhibits P-53 through P-59 (introduced on cross-examination of Donna Reynolds during her post-hearing deposition) and Petitioners' Exhibits P-A, P-B, and P-C, from the post-hearing deposition of Samuel Willis, III, are renumbered as Petitioners' Exhibits P-61, P-62, and P-63, respectively, and are received into evidence.
The Agency presented no witnesses at the final hearing, but presented the June 2 and 9, 2005, deposition testimony of Donna Reynolds. The two-volume deposition Transcript was admitted as Respondent's Exhibit 1. As discussed below, Petitioner also presented the post-hearing testimony of Ms. Reynolds and
Mr. Willis.7 Respondent's Exhibits R-A through R-H from the post-hearing deposition of Ms. Reynolds are renumbered as Respondent's Exhibits R-2 through R-9, respectively.
Respondent's Exhibits R-A through R-D, from the deposition of Mr. Willis are renumbered as Respondent's Exhibits R-10 through R-13, respectively. Respondent's Exhibits R-2 through R-13, are received into evidence.
At the conclusion of the hearing, the record was left open so that the parties could take the depositions of the witnesses who the Agency indicated were unavailable to testify at the hearing. However, the Administrative Law Judge ordered that all depositions of the Agency's witnesses be completed as of
August 8, 2005.8
The post-hearing deposition of Mr. Willis, an Agency employee, was conducted on August 4, 2005. Counsel for the Agency tendered Mr. Willis as an expert in the areas of the administration and application of the Workers' Compensation medical services law, specifically Section 440.13, Florida Statutes (2003), and the reimbursement manuals referenced
therein. Petitioners objected to Mr. Willis' being accepted as an expert in those areas. The undersigned accepts Mr. Willis as an expert in the areas designated above.
The post-hearing deposition of Ms. Reynolds, an employee of the Agency, was conducted on August 8, 15, 16, and 18, 2005.9 The Agency tendered Ms. Reynolds as an expert in the areas of "utilization review" and Florida Workers' Compensation medical reimbursement. Upon consideration of the pertinent testimony of Ms. Reynolds, she is accepted as an expert in the areas noted above.
After Ms. Reynolds' deposition was completed on August 18, 2005, no further testimony was offered by Petitioners.10 Pursuant to an Order issued on October 6, 2005, in response to the Agreed Notice of Completion of Case, filed October 3, 2005, the record in the case was deemed closed on September 30, 2005.
At the conclusion of the hearing, the time for filing proposed recommended orders was set for ten days after the hearing transcript was filed. The four-volume Transcript and exhibits from the hearing were filed on September 23, 2005. The parties filed several joint requests to extend the time for filing proposed recommended orders,11 all of which were granted. Ultimately, the time for filing proposed recommended orders was set for December 2, 2005. Both parties timely filed Proposed Recommended Orders under the extended time frame.
The Agency filed the deposition Transcript of Mr. Willis on January 23, 2006, and filed Volumes I, II, and III of the deposition Transcript of Ms. Reynolds on January 24, 2006, almost two months after the Proposed Recommended Orders were filed. Volumes I, II, and III were Transcripts of Ms. Reynolds' post-hearing deposition taken on August 8, 15, and 18, 2005, respectively. Petitioners filed the cross-examination portion of Ms. Reynolds' post-hearing deposition, taken on August 16, 2005, on February 13, 2005, more than two months after the Proposed Recommended Orders were filed. Petitioners filed the exhibits attached to the August 16, 2005, deposition Transcript of Ms. Reynolds on March 9, 2006. Notwithstanding Petitioners' objection, Volumes I, II, and III of Ms. Reynolds' post-hearing deposition Transcript and the deposition Transcript of Mr.
Willis were received and are deemed to be a part of the record in this case.12 Likewise, the cross-examination portion of Ms. Reynolds' post-hearing deposition Transcript and the exhibits attached are also deemed to be a part of this record.
FINDINGS OF FACT
Based on the testimony of the witnesses, the evidence received at the final hearing, the parties' stipulations, the testimony and evidence from the post-hearing proceeding, and the record in this case, the following findings of fact are made:
Petitioner, Mednet Connect, Inc. (Mednet), is a professional review service, which does business as Medical Review and Analysis Service (MAARS). As a professional review service, it contracts with insurance carriers, employers, and health care providers, including hospitals, to conduct specialized reviews of medical bills. Mednet's activities include auditing hospital bills and reviewing procedural codes and charges on hospital bills.
Petitioner, Aspen Administrators (Carrier), is a subdivision of the workers' compensation carrier and is a carrier within the meaning of Subsection 440.02(4), Florida Statutes (2003).
Petitioner, Florida Gold Citrus, Inc. (Employer or Florida Gold Citrus), is the employer of the injured workers' compensation patient, R.G.
South Bay Hospital is a health care provider and is owned by Hospital Corporation of America (HCA). South Bay Hospital is located in Sun City Center, Florida, which is in the Tampa Bay area.
The Agency is charged with the review and resolution of disputes regarding the payment of providers by carriers for medical services rendered to individuals receiving Workers' Compensation benefits. Pursuant to Subsection 440.13(11)(c),
Florida Statutes (2003), the Agency has exclusive jurisdiction over reimbursement disputes and over utilization disputes.
At all times relevant to this proceeding, the Agency included the Division of Health Quality Assurance (Division). Within the Division was the Bureau of Managed Health Care (Bureau) and within the Bureau was the Workers' Compensation Section or Unit. The foregoing units are identified in the Agency's organizational chart and comport with the requirements of Subsection 20.04(3), Florida Statutes (2003).
At all times relevant to this proceeding and at the time of the hearing, Mr. Willis was employed by the Agency as an administrator. As an Agency administrator, Mr. Willis is the unit manager for the Workers' Compensation Unit of the Agency.
The Workers' Compensation Unit is specifically designated to review and determine disputes brought pursuant to
Subsection 440.13(7), Florida Statutes (2003). As unit manager, Mr. Willis is required to report directly to the bureau chief.
Mr. Willis is responsible for administering the provisions of Section 440.13, Florida Statutes (2003), related to provider reimbursement disputes and utilization review programs. As unit manager, Mr. Willis supervises a team of professionals in the Workers' Compensation Unit of the Bureau, including the registered nurse consultants and the registered nurse specialists, who are charged with reviewing utilization
and reimbursement disputes. These registered nurse consultants or registered nurse specialists are responsible for reviewing utilization and reimbursement disputes and writing determination letters based on their reviews.
There are no written internal procedures or guidelines for registered nurse consultants to perform this task. However, the registered nurse consultants are required to "utiliz[e] [the] standards and policies" in the applicable Workers' Compensation laws and rules.
This case involves a workers' compensation utilization and reimbursement dispute and a review of the same, conducted pursuant to Subsection 440.13(7), Florida Statutes (2003). The dispute arose out of what the Carrier perceived to be excessive and incorrect medical bills submitted to the Employer and the Carrier by South Bay Hospital, the health care provider that treated R.G., an injured workers' compensation employee.
On January 5, 2004, an employee of Florida Gold Citrus, "R.G.," sustained a work-related injury while working. Following the accident, R.G. was taken to South Bay Hospital where she was diagnosed with a fractured humerus and dislocated elbow. R.G. was also determined to have "other and unspecified injury to her elbow, forearm, and wrist." R.G. received emergency treatment at South Bay Hospital, for which HCA billed the Carrier $3,370.19.
South Bay Hospital's charges for the emergency treatment on January 5, 2004, were initially at issue, and information concerning those changes will be addressed only as they relate to the later hospital charges. However, all issues surrounding the hospital charges for the January 5, 2004, services have been resolved and are no longer in dispute.
As a result of her work-related injury, R.G. was scheduled for outpatient surgery at South Bay Hospital on January 23, 2004. On that date, she had a scheduled outpatient surgery at the hospital, an open reduction, internal fixation (ORIF) performed to repair the fractured arm. On or about April 26, 2004, the hospital submitted to the Employer and the Carrier a bill of $24,013.93 for this outpatient surgery.
Petitioners are statutorily required to review all bills, invoices, and other claims for payment submitted by health care providers to identify over-utilization and billing errors.
Upon initial receipt and review of the bills for each date of service, the Carrier noted several discrepancies and irregularities, including charges that were in excess of what it deemed to be usual, reasonable, and usual and customary; duplicate charges; charges for undocumented services; charge explosion; and charge unbundling. Therefore, the Carrier forwarded the bills to Mednet for analysis.
The term "bundling" means or refers to an all- inclusive charge for a particular procedure. Under the health industry standard, all items and services needed to accomplish a procedure are included in one charge.
The term "unbundling" means that a charge included in the "packaged bundling," is also separately billed. When this occurs, it is considered a duplicate charge.
According to the Complete Global Service Data for Orthopedic Surgery, Volume 1, 2004, if services are "bundled," they are billed as part of the total package, and it is inappropriate to then bill separately for those services. This publication was published by the American Academy of Orthopedic Surgeons and is included as a reference document in Florida Administrative Code Rule 69L-7.020, which adopts and incorporates by reference the Florida Workers' Compensation Health Care Provider Reimbursement Manual (Health Care Provider Reimbursement Manual). The Health Care Provider Reimbursement Manual is listed as a resource document in the Reimbursement Manual for Hospitals.
Ms. Reynolds is familiar with the Complete Global Service Data, 2004 Edition, and has used it in her role as a registered nurse consultant. In the instant case, however, she did not use this as a reference document.
The term "charge explosion" means a procedure by which a hospital's billing department automatically includes a certain list of medications, supplies, and equipment on a patient's hospital bill for a certain procedure, whether those items are actually used or not. In such instances, no credit is given if any of the listed supplies, medications, and/or equipment are not used.
Mednet received the bill for the January 23, 2004, date of service on May 6, 2004. Upon analysis of the bill, Mednet specifically identified what it perceived to be numerous billing irregularities associated with each date of service.
Mednet uses a third party computer software to assist it in analyzing hospital bills. This computer software is the industry standard and uses industry benchmarks or reference data to assist in determining the usual and customary charge for a procedure, treatment, or service.
Based on its initial review of the hospital bill, Mednet concluded that the hospital bill included billing for multiple and duplicate charges for the same items and services; charges for treatment, supplies, and services that were not documented by medical records as having been delivered or used in the treatment of the patient; "charge explosion"; incorrect charges; and inflated, excessive, and unreasonable charges, when
compared with those of other similar hospitals in the area for the procedure.
On May 12, 2004, Mednet forwarded an Explanation of Review (Explanation of Review or EOR) to HCA in relation to the January 23, 2004, date of service. The Explanation of Review reflected an adjusted reimbursement amount of $4,316.
The Explanation of Bill Review, otherwise referred to as the Explanation of Review, is defined as the "codes and written explanation of an insurer's reimbursement decision sent to the health care provider."
On the Explanation of Review related to the
January 23, 2004, date of service, and submitted to South Bay Hospital, Mednet adjusted or disallowed the amount billed for most, if not all, of the procedures, supplies, and equipment listed on the health care providers' itemized bill. On the Explanation of Review, next to each billed amount, Mednet listed one or more codes, which indicated the reason that amount was either disallowed or reduced.
The three codes used on the Explanation of Review were 017, S01, and S04. The EOR indicated the meanings of the various codes as follows:
017 Review based on guidelines set forth per the applicable State Workers' Compensation Fee Schedule
S01 The fee was reviewed to a standard or reasonableness based on comparisons to industry benchmarks of charges and reimbursement for comparable services in the providers' area
S04 This item is packaged or bundled into another basic service or surgical procedure fee performed on the date of service and, therefore, additional reimbursement is disallowed.
As a result of its analysis of the provider's bill, Mednet advised the Carrier to pay the amount that Mednet determined to be the usual and customary charge for this particular procedure performed on January 23, 2004, by similar hospitals in the Tampa Bay area, $4,316.00. Based on Mednet's analysis and advice, the Carrier reimbursed HCA $4,316.00 on or about May 20, 2004.
Upon completion of its analysis, Mednet, acting for the Carrier, also notified HCA, of its determination that the Carrier should pay HCA only $4,316.00, and not sixty percent of the charges billed, $24,013.93.
On or about May 24, 2004, HCA forwarded a request for reconsideration to Mednet in regard to the adjusted reimbursement for both the January 5, 2004, and the January 23, 2004, services. Soon after receiving the request, Mednet began the reconsideration. As part of that process, on or about
June 3, 2004, Mednet requested that the hospital provide Mednet with the "medical records and other documentation" to support
its charges and billing, but did not receive it until months after the Petition was filed.
The medical record would have assisted the Carrier in connection with its review of the hospital's billed charges. Without the medical records or other supporting documents related to the services rendered to the claimant on January 23, 2004, Mednet had no way of verifying if the bill from South Bay Hospital and/or HCA contained billing errors, excessive charges, or duplicate charges.
On or about June 1, 2004, only a few days after requesting that the Carrier reconsider the adjusted reimbursement, HCA filed a Petition with the Agency. The Petition requested that the Agency resolve the reimbursement dispute related to both the January 5 and 23, 2004, charges. When the Petition was filed with the Agency, Mednet was still in the process of completing its reconsideration of the charges related to the January 5, 2004, and January 23, 2004, dates of service.
The Petition related to the January 23, 2004, date of service, stated in relevant part the following:
Per a review of this claim we have found it was paid incorrectly pursuant to the Florida's Workers' Compensation Reimbursement Manual for Hospitals, 2004 edition which refers to a facility/Hospital in ([R]ule 38F-7.501).
P.8 Section 10: Reimbursement C. Outpatient Charges (1) All medically necessary charges related to scheduled outpatient surgeries shall be reimbursed at 60 percent of the hospital's charges.
Total charges for this claim are $24,013.93. We expected 60% of the billed charges ($14,408.35)[.] We received payment of
$4,316.00. This claim is underpaid
$10,092.35.
In addition to the foregoing, the Petition stated that the claim was billed on February 12, 2004, but the initial payment was not made until May 25, 2004. According to the Petition, this delay in payment violated Subsection 440.20(2)(b), Florida Statutes (2003), which requires the carrier to pay, disallow, or deny all medical, dental, pharmacy, and hospital bills submitted to the carrier no later than
45 calendar days after the carrier's receipt of the bill.
Attached to the Petition that was submitted to the Agency were the following documents related to the January 23, 2004, date of service: (1) South Bay Hospital/HCA's completed UB-92, the form on which charges must be submitted; (2) South Bay Hospital's itemized bill; (3) the Explanation of Review, which had been previously submitted to the provider by Mednet, on behalf of the Carrier; and (4) the Explanation of Benefits, prepared by the Carrier and previously submitted to the provider.
The UB-92 included the date and description of the services provided, the Current Procedural Terminology (CPT) Codes, and the charges for the services. Also, there was a notation on the UB-92 that the itemized bill and the medical records were attached. As noted on the UB-92, the itemized bill for the January 23, 2004, date of service was attached to the Petition. However, the medical records were not attached to the UB-92 nor was it provided to the Agency prior to its resolution of the reimbursement dispute.
The Petition related to the January 23, 2004, date of service, was assigned to Ms. Reynolds, a registered nurse consultant, employed by the Agency and assigned to its Bureau of Rehabilitation and Medical Services. Ms. Reynolds is a registered nurse, who has a bachelor's degree in nursing and a master's degree in surgical nursing. As a registered nurse consultant, Ms. Reynolds' official job responsibilities include reviewing and making determinations regarding disputes under Subsection 440.13(7), Florida Statutes (2003).
In carrying out her job responsibilities, relative to assigned disputes, Ms. Reynolds first reviews the petition and validates that it is a workers' compensation claim.
Ms. Reynolds also reviews applicable workers' compensation laws and rules, including Section 440.13, Florida Statutes (2003) and Florida Administrative Code Rule 69L-7.501. As part of
Ms. Reynolds' review, she refers to American Medical Association's CPT Code to make sure that the CPT Code listed on the UB-92 is correct for the procedure described. If Ms.
Reynolds determines that it is necessary in a given case, she may also refer to medical textbooks.
Ms. Reynolds developed a checklist that she utilizes in the review process. On the checklist, Ms. Reynolds records relevant dates and various components to ensure compliance with the required statutory and rule provisions.
Pursuant to Subsection 440.13(7)(b), Florida Statutes (2003), within ten days after receipt of the Petition and all documents, the Carrier must submit to the Agency all documentation substantiating the Carrier's disallowance.
On or about June 10, 2004, Mednet provided HCA and the Agency with a detailed response regarding the January 5, 2004, date of service. This was within ten days of the Carrier's receiving the Petition related to the January 5, 2004, charges.
With regard to the Petition related to the January 23, 2004, date of service, Mednet and/or the Carrier submitted no documentation to substantiate the Carrier's disallowances to the Agency within ten days of receipt of the Petition. Petitioners do not dispute that they failed to provide documentation to substantiate the Carrier's disallowance within ten days of receiving the Petition. However, Petitioners believed that
because HCA's Petition did not include the medical records referred to on the UB-92, HCA had not, in fact, filed the Petition and "all documentation."
Thus, in Petitioners' view, the ten-day period had not started to run. Despite this opinion, neither Mednet nor the Carrier corresponded or otherwise communicated with the Agency to advise that they had requested and were waiting to receive the medical records from South Bay Hospital.
Mednet provided HCA and the Agency with a detailed response regarding the Petition related to the January 23, 2004, date of service, on or about June 29, 2004, more than two weeks after the Agency made its determination. Mednet did not have or rely on the hospital record for this response. When the Agency received the response, it had already made its determination.
Ms. Reynolds reviewed the Petition related to the January 23, 2004, date of service and validated that it was a Workers' Compensation claim. Based on that review, Ms. Reynolds believed this was a reimbursement dispute. She then reviewed the Explanation of Benefits prepared by the Carrier and the Explanation of Review prepared by Mednet, that were submitted with the Petition.
Both the Explanation of Benefits and the Explanation of Review noted the Carrier's reasons for the disallowance and/or reduction of the charges. However, because the Carrier
failed to submit documents to substantiate its disallowance and/or adjustment, Ms. Reynolds apparently concluded that there was no basis for the Carrier's doing so. Having failed to receive any documentation from the Carrier, Ms. Reynolds did not consider or independently investigate the validity of the disallowance and/or adjustment. Furthermore, Ms. Reynolds made no determination as to whether the charges of South Bay Hospital were reasonable.
Prior to issuing the determination letter,
Ms. Reynolds believed that she had all the information she needed. Therefore, she did not request additional information from the health care provider such as the medical records or use documents which were in the Agency's possession and accessible to her. Moreover, Ms. Reynolds did not refer to the CPT Code Manual because she believed that the procedures performed, as reflected on the UB-92 Form, appeared to be consistent with the diagnosis that was presented.
The UB-92 for the January 23, 2004, date of service, indicated that the outpatient surgical procedure was CPT
Code 24665, which indicated "repair radius fracture." At some point after the Agency issued the determination letter, Mednet expressed concern that this code appeared to be a discrepancy with the apparent diagnosis and treatment rendered on January 5, 2004, which indicated treatment related to the humerus. Given
that the humerus is the only bone in the upper arm and the radius is one of two bones in the lower arm or forearm,13 Mednet's concern was reasonable and could perhaps have been definitively cleared up by reviewing the medical record of R.G. However, Mednet never raised this concern in its Explanation of Review.
In making the decision relative to the Petition, Ms. Reynolds appropriately relied on Section 440.13, Florida Statutes (2003), and the Florida Workers' Compensation Reimbursement Manual for Hospitals (Reimbursement Manual for Hospitals), 2004 Edition, which is incorporated by reference into Florida Administrative Code Rule 69L-7.501.
Subsection 440.13(12), Florida Statutes (2003), provides in pertinent part:
. . . All compensable charges for hospital outpatient care shall be reimbursed at 75 percent usual and customary
charges. . . .
It is the intent of the Legislature to increase the schedule of maximum reimbursement allowances for selected physicians effective January 1, 2004, and to pay for the increases through reductions in payments to hospitals. Revisions developed pursuant to this subsection are limited to the following:
* * *
3. Outpatient reimbursement for scheduled surgeries shall be reduced from
75 percent of charges to 60 percent of charges.
The Reimbursement Manual for Hospitals provides the guidelines for the maximum reimbursement allowance, including the reimbursement for outpatient services. Section 10, C. of the Reimbursement Manual for Hospitals, states:
Section 10: Reimbursement.
C. Outpatient Charges
All compensable charges for hospital outpatient care shall be reimbursed at
75 percent of the hospital's charges with the following exceptions:
1. All medically necessary charges related to scheduled outpatient surgeries shall be reimbursed at 60 percent of the hospital's charges.
The Reimbursement Manual for Hospitals defines the term "charge" as "the dollar amount billed."
The Reimbursement Manual for Hospitals defines "charge master" as a comprehensive-coded list "developed by a hospital or an ambulatory surgical center representing the usual charges for specific services." Such document is required to be developed and maintained by the healthcare providers in accordance with Subsection 440.13(12)(d), which provides that "each health care provider . . . receiving workers' compensation payments shall maintain records verifying their usual charges."
Ms. Reynolds interpreted the above-quoted provisions of the Reimbursement Manual for Hospitals and Subsection 440.13(12), Florida Statutes (2003), to require the carrier to reimburse the provider 60 percent of charges billed by the hospital, irrespective of whether the charges were the hospital's usual charges or were reasonable. Consistent with the foregoing interpretation, Ms. Reynolds multiplied the hospital's total charges, as reflected on its bill, by
60 percent and determined that the Employer and the Carrier must pay the hospital 60 percent of $24,013.93 or $14,408.36. Based on the payment of $4,316 that the Carrier made on May 24, 2004, Ms. Reynolds determined that the outstanding balance due was
$10,092.36.
Ms. Reynolds' interpretation of applicable Workers' Compensation statutory provisions and the Reimbursement Manual for Hospitals is inconsistent with the Agency's interpretation of those provisions. The Agency has interpreted the "charges" referred to in Subsection 440.13(12)(b)3., Florida Statutes (2003), and the Reimbursement Manual for Hospitals to mean the hospital's "usual charges," and not "any" charges or the "usual and customary" charges.
The Agency's analysis and resolution of a disputed reimbursement requires a determination, at a minimum, of what the hospital's usual charges are for the services or procedures
and whether the billed charges are reasonable. The hospital's usual charges can be verified by looking at its charge master.
In this case, the Agency had the charge master for South Bay Hospital and that charge master was accessible to Ms. Reynolds. However, Ms. Reynolds did not review the charge master for South Bay Hospital to determine its "usual charges" for the services and procedures it billed for the January 23, 2004, date of service.
The determination letter dated June 11, 2004, signed by Ms. Reynolds, stated that the reimbursement for the services rendered on June 23, 2004, "has not been paid correctly and finds an improper disallowance/improper adjustment of payment to provider has been made."
The determination letter also refers to the statutory and rule requirement that carriers must pay, disallow, or deny bills within 45 days. The Agency's determination appears primarily based upon Ms. Reynolds' perception that the Carrier violated this requirement. However, this reason was abandoned by the Agency at hearing and through the testimony of its expert witness.
Petitioners contend that the Agency's secretary is designated to make final agency decisions, and, in order for a Agency employee to issue a determination letter in a reimbursement dispute, the Agency's secretary must delegate such
authority to that employee. Petitioners claim that in absence of such letter or other specific delegation, the decision made by Ms. Reynolds cannot be properly attributed to the Agency.
Despite this assertion, Petitioners presented no evidence to support their position.
Notwithstanding any error she made, Ms. Reynolds' review of the reimbursement dispute and issuance of the determination letter were within the scope and consistent with her assigned duties as a registered nurse consultant in the Workers' Compensation Unit. In performing those duties,
Ms. Reynolds was properly acting on behalf of the Agency, and her actions with regard to the Petition appeared to be ratified by the Agency.14
Mednet's analysis determined what the services rendered at South Bay Hospital on January 23, 2004, would have cost if they had been performed in a different setting (i.e. inpatient surgery versus same day outpatient surgery).
Mednet's analysis concluded that if this same surgery had been performed on an inpatient basis instead of an outpatient basis, the hospital would have been limited to a maximum reimbursement allowance of about $3,400, under the Workers' Compensation laws of most states, including those of Florida.
In its analysis, Mednet considered whether the charges billed by South Bay Hospital were the "usual and customary" charges for the services rendered.
The term "usual and customary charges" is a term used in the health care industry and refers to the average price for a particular service or procedure charged by similar healthcare providers in the same geographic area.
The usual and customary charge for this procedure in the area where South Bay Hospital is located, the metropolitan statistical area of Tampa-St. Petersburg-Sarasota, is
$4,574.08.15
In this particular case, by comparison South Bay Hospital's charge for the surgical procedure alone to those of other hospitals in the area, appears to be unreasonable and excessive. South Bay Hospital charged $12,548.00 for CPT
Code 24665, alone, and $24,013.93 for the entire one-day outpatient visit.
Mednet has access to data banks and reports of hospitals' costs, which come from mandatory reports which both the state and federal governments require them to file annually. Mednet performed an analysis of this data and determined that South Bay Hospital's costs for performing this procedure is approximately $3,518.01.
Mednet's analysis determined that based on South Bay Hospital's own departmental cost to charge ratios, the Non Fee Schedule procedures should have been billed at $14,771.60 and that the fee schedule items that are paid per the Florida Fee Schedule total $161.00. Accordingly, the health care provider's charges should have been $14,771.60. Sixty percent of this amount would be $8,863.
The data upon which Mednet based its analysis is reliable and valid. However, Mednet's analysis made no determination of South Bay Hospital's usual charge for the services performed on June 23, 2004.
The Reconsideration Process
In its initial response to the Agency regarding the Petition, the Carrier indicated that the health care provider had requested reconsideration of the disallowance or adjustment of certain charges. Because the request was made pursuant to Florida Administrative Code Rule 59A-31.001(5), the Carrier believed that the parties should have been allowed to attempt to resolve the matter prior to the Agency undertaking the dispute resolution process.
Florida Administrative Code Rule 59A-31.001 prescribed a procedure whereby health care providers and carriers may attempt to resolve reimbursement issues prior to submitting requests for utilization or reimbursement disputes to the
Agency. The rule provides that a provider may request the carrier to reconsider charges that are reduced or disallowed and that this reconsideration process must be sought by the healthcare provider prior to sending a request for resolution to the Agency.
Mednet contends that the "reconsideration process" provides the carrier with an opportunity to resolve most concerns without the intervention of the Agency. By reviewing and acting on the Petition prior to completion of the reconsideration process, Petitioners assert that the Agency shortcut the system outlined in Florida Administrative Code Rule 59A-31.001(5) and deprived the Carrier of an opportunity to reconsider its disallowance and adjustments.
The June 11, 2004, determination letter indicated there was no need for the Agency to delay resolving the reimbursement dispute pending the outcome of the reconsideration process. According to the letter, the Carrier's reliance on Florida Administrative Code Rule 59A-31.001 was misplaced because "the rule is currently being rescinded from the Florida Administrative Code as it is without statutory support."
Contrary to Petitioners' view that the Agency should have complied with Florida Administrative Code Rule 59A- 31.001(5), for the reasons discussed in the Conclusions of Law,
at the time the Petition was filed, the rule had been repealed and was no longer in effect.
CONCLUSIONS OF LAW
Jurisdiction
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Sections 120.569 and 440.13 and Subsections 120.57(1) and 440.44(8), Florida Statutes (2005).
Pursuant to Subsection 440.13(11)(c), Florida Statutes (2003), the Agency has exclusive jurisdiction to decide any matter concerning reimbursement and to resolve any overutilization dispute under Subsection 440.13(7), which arose after January 1, 1994.
Burden of Proof
Neither Section 440.13 nor any other provisions of law dictate the burden of proof in this proceeding. Therefore, the party asserting the affirmative of an issue has the burden of proof. See Dept. of Transportation v. J.W.C. Co., 396 So. 2d 778, 788 (Fla. 1st DCA 1981); Balino v. Dept. of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977).
HCA, the healthcare provider, initiated this proceeding before the Agency by filing a petition challenging the Carrier's notice of disallowance or adjustment of payment. See § 440.13(7)(a), Fla. Stat. (2003). As such, HCA is the
party seeking an affirmative determination from the Agency that the billed charges should be reimbursed at the statutorily prescribed rate. Therefore, in a case such as this, the burden of proof is on the provider.
The burden of proof in this case is somewhat complicated by the fact that South Bay Hospital and/or HCA, though parties with a legal interest affected by this reimbursement dispute, have not intervened in this case. In the health care providers' absence, the burden of proof is on the Agency.
J.W.C. Co. is instructive and supports the conclusion that the provider in this case, or in its absence, the Agency, has the ultimate burden of persuasion in this proceeding. As the provider who initiated the reimbursement dispute under Subsection 440.13(7)(a), Florida Statutes (2003), South Bay Hospital and/or HCA are akin to the permit applicant in J.W.C. Co., and Petitioners are akin to the third party in J.W.C. Co. that was contesting the notice of intent issued by the Agency in that case. See Recommended Orders in Specialty Risk Services v. Agency for Health Care Administration, Case No. 01-4148 (DOAH January 9, 2003), paragraph 89, page 31, citing CAN Ins. Cos. v. Agency for Health Care Administration, Case No. 01-4147 (DOAH August 26, 2002), paragraph 101, page 36.
On this point, the Recommended Order in CNA Ins. Cos., at page 39 and paragraph 102, concluded:
Applying those standards [from J.W.C. Co.] in the context of a dispute under Section 440.13(7), the carrier has the initial burden (of pleading) to allege a factual basis for its contention that the information relied upon by the Agency in reaching its preliminary determination is insufficient to demonstrate that the disputed services did not constitute overutilization. Once that burden is met
. . . , the burden of production is on the provider or, in his or her absence, the Agency to demonstrate that the information relied upon by the Agency in reaching its preliminary determination is accurate, reliable, credible, and credited evidence that the disputed services did not constitute overutilization. Such information will be sufficient to establish the provider's prima facie case in the absence of evidence showing its inaccuracy or unreliability.
If a prima facie case is established, the burden of production then shifts to the carrier to prove the truth of the facts asserted in its petition, and unless contrary evidence of equivalent quality is presented by the carrier demonstrating that the disputed services constitute overutilization, then it will be concluded that the provider met its ultimate burden of persuasion.
The standard of proof is a preponderance of the evidence. See § 120.57(1)(j), Fla. Stat., (2005).
Subsection 440.13(7), Florida Statutes (2003), which sets out the procedures for initiating the dispute resolution process, provides:
(7) UTILIZATION AND REIMBURSEMENT DISPUTES.--
Any health care provider, carrier, or employer who elects to contest the disallowance or adjustment of payment by a carrier under subsection (6) must, within 30 days after receipt of notice of disallowance or adjustment of payment, petition the agency to resolve the dispute. The petitioner must serve a copy of the petition on the carrier and on all affected parties by certified mail. The petition must be accompanied by all documents and records that support the allegations contained in the petition. Failure of a petitioner to submit such documentation to the agency results in dismissal of the petition.
The carrier must submit to the agency within 10 days after receipt of the petition all documentation substantiating the carrier's disallowance or adjustment. Failure of the carrier to timely submit the requested documentation to the agency within
10 days constitutes a waiver of all objections to the petition.
Within 60 days after receipt of all documentation, the agency must provide to the petitioner, the carrier, and the affected parties a written determination of whether the carrier properly adjusted or disallowed payment. The agency must be guided by standards and policies set forth in this chapter, including all applicable reimbursement schedules, practice parameters, and protocols of treatment, in rendering its determination.
If the agency finds an improper disallowance or improper adjustment of payment by an insurer, the insurer shall reimburse the health care provider, facility, insurer, or employer within 30 days, subject to the penalties provided in this subsection.
Subsection 440.13(12), Florida Statutes (2003), provides for a three-member panel to establish maximum reimbursement allowances, and provides in pertinent part the following:
(12) CREATION OF THREE-MEMBER PANEL; GUIDES OF MAXIMUM REIMBURSEMENT ALLOWANCES.--
A three-member panel is created, consisting of the Chief Financial Officer, or the Chief Financial Officer's designee, and two members to be appointed by the Governor, subject to confirmation by the Senate, one member who, on account of present or previous vocation, employment, or affiliation, shall be classified as a representative of employers, the other member who, on account of previous vocation, employment, or affiliation, shall be classified as a representative of employees. The panel shall determine statewide schedules of maximum reimbursement allowances for medically necessary treatment, care, and attendance provided by physicians, hospitals, ambulatory surgical centers, work-hardening programs, pain programs, and durable medical equipment.
The maximum reimbursement allowances for inpatient hospital care shall be based on a schedule of per diem rates, to be approved by the three-member panel no later than March 1, 1994, to be used in conjunction with a precertification manual as determined by the department, including maximum hours in which an outpatient may remain in observation status, which shall not exceed
23 hours. All compensable charges for hospital outpatient care shall be reimbursed at 75 percent of usual and customary charges, except as otherwise provided by this subsection. Annually, the three-member panel shall adopt schedules of maximum reimbursement allowances for physicians,
hospital inpatient care, hospital outpatient care, ambulatory surgical centers, work- hardening programs, and pain programs. An individual physician, hospital, ambulatory surgical center, pain program, or work- hardening program shall be reimbursed either the agreed-upon contract price or the maximum reimbursement allowance in the appropriate schedule.
It is the intent of the Legislature to increase the schedule of maximum reimbursement allowances for selected physicians effective January 1, 2004, and to pay for the increases through reductions in payments to hospitals. Revisions developed pursuant to this subsection are limited to the following:
* * *
3. Outpatient reimbursement for scheduled surgeries shall be reduced from 75 percent of charges to 60 percent of charges.
* * *
(d) Reimbursement for all fees and other charges for such treatment, care, and attendance, including treatment, care, and attendance provided by any hospital or other health care provider, ambulatory surgical center, work-hardening program, or pain program, must not exceed the amounts provided by the uniform schedule of maximum reimbursement allowances as determined by the panel or as otherwise provided in this section. This subsection also applies to independent medical examinations performed by health care providers under this chapter. In determining the uniform schedule, the panel shall first approve the data which it finds representative of prevailing charges in the state for similar treatment, care, and attendance of injured persons. Each health care provider, health care facility, ambulatory surgical center, work-hardening
program, or pain program receiving workers' compensation payments shall maintain records verifying their usual charges. In establishing the uniform schedule of maximum reimbursement allowances, the panel must consider:
The levels of reimbursement for similar treatment, care, and attendance made by other health care programs or third-party providers;
The impact upon cost to employers for providing a level of reimbursement for treatment, care, and attendance which will ensure the availability of treatment, care, and attendance required by injured workers;
The financial impact of the reimbursement allowances upon health care providers and health care facilities, including trauma centers as defined in s. 395.4001, and its effect upon their ability to make available to injured workers such medically necessary remedial treatment, care, and attendance. The uniform schedule of maximum reimbursement allowances must be reasonable, must promote health care cost containment and efficiency with respect to the workers' compensation health care delivery system, and must be sufficient to ensure availability of such medically necessary remedial treatment, care, and attendance to injured workers; and
The most recent average maximum allowable rate of increase for hospitals determined by the Health Care Board under chapter 408. (Emphasis supplied)
While the Agency has exclusive jurisdiction to decide any matters concerning reimbursement disputes pursuant to Subsection 440.13(11)(c), Florida Statutes (2003), it has no statutory authority to create fee schedules or maximum
reimbursement allowances for health care providers. Nor is the Agency authorized to define the terms of such schedules or allowances. Those responsibilities are clearly and exclusively within the purview of the Department of Financial Services. See
§ 440.13(12)(a), Fla. Stat. (2003).
In accordance with its statutorily prescribed duty, the Department of Financial Services adopted the Reimbursement Manual for Hospitals by Florida Administrative Code Rule 69L- 7.501, which incorporates that manual by reference of Section 10
1., of the Reimbursement Manual for Hospital, which provides in relevant part:
All compensable charges for hospital outpatient care shall be reimbursed at 75 percent of the hospital's charges with the following exceptions:
All medically necessary charges related to scheduled outpatient surgeries shall be reimbursed at 60 percent of the hospital's charges. (Emphasis supplied)
The Department of Financial Services has defined the term "charge" in the Reimbursement Manual for Hospitals as "the dollar amount billed." See Appendix A, Subsection (5), Reimbursement Manual for Hospitals.
In the Reimbursement Manual for Hospitals, the Department of Financial Services had defined the term "charge master" as "a comprehensive-coded list developed by a hospital or an ambulatory surgical center representing the usual charges
for specific services. See Appendix A, Subsection (6), Reimbursement Manual for Hospitals.
The Department of Financial Services has interpreted Subsections 440.13(12)(a) and (b)3., Florida Statutes (2003), through rulemaking (i.e. by adopting the Reimbursement Manual for Hospital).
When, as in this case, the Department of Financial Services has interpreted a statute through rulemaking, there is a strong presumption that the agency's interpretation is correct, even though another interpretation may be possible. As the court in Dept. of Administration v. Nelson, 424 So. 2d 852, 858 (Fla. 1st DCA 1982), stated:
[W]e have repeatedly held that when the agency committed with the statutory authority to implement a statute has construed the statute in a permissible way under the APA disciplines, that interpretation will be sustained though another interpretation may be possible.
When the agency so interprets the statute through rulemaking, the presumption of correctness is stronger.
When Subsection 440.13(12)(a) and (b)1., Florida Statutes (2003), and the Reimbursement Manual for Hospitals are read in pari materia, it is clear that outpatient reimbursement for scheduled surgeries is 60 percent of the hospital's charges. The objective determination of the hospital's charges can be derived from the hospital's charge master.
Consistent with its ruling in other cases, the Agency interpreted Subsection 440.13(12), Florida Statutes (2003), and the Reimbursement Manual for Hospital to require the Carrier to reimburse South Bay Hospital and/or HCA, the healthcare provider, 60 percent of the hospital's "usual" charges. See Section 10 C. 1., Reimbursement Manual for Hospitals. However, in this case, the Agency did not make an objective determination of what South Bay Hospital's "usual" charges were for the surgical procedure at issue in this proceeding.
In this case, the Agency interpreted its role as simply applying the 60 percent formula to whatever amount the hospital billed the carrier. The Agency reached this conclusion by interpreting the term "charge" in Subsection 440.13(12)(b)3., Florida Statutes (2003), and as defined in the Reimbursement Manual for Hospitals to mean "the dollar amount billed," regardless of the amount.
The literal interpretation of Subsection 440.13(12)(b)3., Florida Statutes (2003), by the Agency in this case leads to an unreasonable and absurd result and disregards the language in Section 10 C. 1. of the Reimbursement Manual for Hospitals, which clearly and unambiguously states that the all medically necessary charges related to scheduled outpatient surgeries shall be reimbursed at "60 percent of the hospital's
charges" and the definition of "charge master," which requires a hospital to maintain a list of its "usual charges."
Petitioners argue that the Agency should have used an objective standard to determine what the hospital's charges were prior to applying the 60 percent formula and not accepted, as accurate, the charges billed by the hospital. Petitioners assert that the "usual and customary" charge, as defined in the health care industry, is the standard that should be used. According to that definition, the hospital's usual and customary charges would be the amount charged for the same procedure by other hospitals located in the same geographic area.
Petitioners' argument has been considered but is rejected as inconsistent and in conflict with the Department of Financial Services' interpretation, as reflected through rulemaking which adopted the Reimbursement Manual for Hospitals. In accordance with the clear and unambiguous language of Section 10 C. 1. of the Reimbursement Manual for Hospitals, all medically necessary charges related to outpatient services shall be reimbursed at "60 percent of the hospital's charges."
Based on the foregoing, the Agency's interpretation of Subsections 440.13(12)(a) and (b)1., Florida Statutes (2003), and Section 10 C. 1. of the Reimbursement Manual for Hospitals, the Carrier should reimburse the healthcare provider, South Bay Hospital and/or HCA 60 percent of the hospital's usual charges.
However, in this case, the Agency failed to determine the hospital's usual charges for the subject outpatient procedure. It simply accepted at face value the amount billed by the South Bay Hospital.
Pursuant to Section 440.13(12)(d), Florida Statutes (2003), a health care provider receiving reimbursement under the Workers' Compensation law in Florida is required to maintain a charge master.
The "charge master" for South Bay Hospital was not offered into evidence, and no evidence was presented as to the information included therein.
It is undisputed, that at all times relevant to this proceeding, the Agency had possession and access to the Charge Master for South Bay Hospital. Nonetheless, in carrying out its mandate in Subsection 440.13(11)(c), Florida Statutes (2003), the Agency failed to apply or utilize the charge master or any other objective standard to determine South Bay Hospital's "usual charges" for the procedure at issue.
The Reimbursement Manual for Hospitals clearly contemplates that a charge master may be used to verify the accuracy of a hospital's charges. This may be used by the Agency as well as by the Carrier. See Reimbursement Manual for
Hospitals, Section 11, A. and Appendix A, Subsection (24), and
§ 440.13(11)(a), Fla. Stat. (2003).
The Agency's objective determination of the hospital's usual charge is a prerequisite to determining the reimbursement amount the Carrier is required to pay. The reimbursement amount is accurate only to the extent the
60 percent formula is applied to the "hospital's usual charge," as objectively determined. To do otherwise disregards the Agency's own previous interpretation of the Reimbursement Manual for Hospitals.
In this case, the Agency's interpretation of Section 10 C. 1. of the Reimbursement Manual for Hospitals, allows the Agency to require carriers to pay 60 percent of the charges billed by the hospital, even when such charges are not the hospital's "usual charges." Moreover, this interpretation
does not consider the reasonableness of the charges or any other possible billing errors.
Petitioners waived their right to challenge inaccuracy of charges by their failure to timely respond to the Petition as required by Subsection 440.13(7)(b), Florida Statutes (2003), and to conduct an on-site audit as prescribed in Section 11 of the Reimbursement Manual for Hospitals. However, that does not excuse the Agency from its duty to objectively determine if the amount billed by the health care provider is, in fact, the hospital's "usual charge."
The Agency failed to establish that South Bay Hospital's usual charge for the procedure at issue in this case and the services provided on January 23, 2004, was $24,013.19, the amount billed to the health care provider. In absence of the Agency's making or relying on any objective standard to determine if the amount billed was the health care provider's "usual charge," prior to applying the "60 percent" formula, it failed to establish a prima facie case.
In this case, the undisputed evidence established that based on South Bay Hospital's own departmental cost to charge ratios, the Non-Fee Schedule procedures should have been billed at $14,771.60 and that the fee schedule items that are paid per the Florida Fee Schedule total $161.00. Accordingly, the health care provider's charges should have been $14,771.60. Sixty percent of this amount would be $8,863.
In the absence of the Agency presenting any objective criteria to substantiate South Bay Hospital's charges,
$14,771.60 is determined to be an accurate determination of South Bay Hospital's cost of performing the procedures/services at issue in this case.
The Reconsideration Process and Applicability of Florida Administrative Code Rule 59A-31.001
Florida Administrative Code Rule 59A-31.001(5) requires that a provider must seek reconsideration from the
employer/carrier prior to sending a request for reimbursement dispute resolution to the Agency.
Florida Administrative Code Rule 59A-31.001(5) states, in relevant part:
Reconsiderations must be sought by the provider prior to a Request for Resolution of a Disputed Reimbursement being sent to the Agency. This process provides the carrier an opportunity to resolve most concerns and facilitates a timely review of disputed reimbursements by the Agency.
A provider may request the carrier to reconsider charges that are reduced or disallowed which appear to be inconsistent with the reimbursement manual or acceptable medical practices. A Request for Reconsideration:
Must be in writing and sent to the carrier within 60 days of the receipt of the applicable EOMB.
Should include pertinent, supporting documentation.
Carriers must respond to the provider within 60 days of receipt of said request. Responses from the carrier must include, as appropriate: . . . (Emphasis supplied)
Petitioners argue that the Agency disregarded the mandate in Florida Administrative Code Rule 59A-31.001(5) that the health care provider request reconsideration of the disallowed or adjusted payment prior to submitting a request for resolution. Petitioners contend that by accepting HCA's Petition only four days after it had requested that the Carrier
reconsider the disallowance and adjustment of payment, and then issuing a determination letter, the Agency denied the Carrier the time prescribed by Florida Administrative Code Rule 59A- 31.001(5)(a) and (b) and, thus, failed to comply with the rule.16
Petitioners rely on Florida Administrative Code Rule 59A-31.002 as further support for their position that Florida Administrative Code Rule 59A-31.001 contemplates that
the "reconsideration process" be undertaken and completed within the prescribed time period prior to the provider filing and the Agency's acting on any related Petition.
Florida Administrative Code Rule 59A-31.002 provides, in relevant part, the following:
Disputed Reimbursement Resolution.
In those instances when a provider does not agree with a carrier's reconsidered reimbursement decision, the Agency will, upon request, provide for a settlement of such reimbursement dispute through a review process conducted by the Agency's Bureau of Managed Health Care.
It is axiomatic that an administrative agency is bound by its own rules and that rules duly-promulgated have the force and effect of law.
While Petitioners' assertion that the Agency is bound by its own rules is not disputed, that principle is applicable only when the rule has been duly-promulgated and has not been repealed.
Contrary to the assertion by Petitioners, the Agency was under no obligation to comply with the reconsideration process prescribed in Florida Administrative Code Rule 59A- 39.001(5) because that portion of the rule was not in effect in January 2004, having been repealed by implication in 1994 and expressly in 1997.
An administrative rule or regulation is operative and binding on those coming within its terms from its effective date until it is modified or superceded by subsequent regulations adopted in compliance with duly-ordained standards or administrative procedure, and it expires with the repeal of the statute from which it gains life. Canal Insurance Co. v. Continental Casualty Co., 489 So. 2d 136 (Fla. 2nd DCA), (Fla. 2nd DCA 1986); and Hulmes v. Department of Retirement, Dept. of
Administration, 418 So. 2d 269, 270 (Fla. 1st DCA 1982).
When Florida Administrative Code Rule 59A-39.001 was promulgated on May 15, 1991, the "Law Implemented" section indicated that the rule implemented Subsections 440.13(2)(a) and (i), Florida Statutes (1990 Supp.). As of the date of this proceeding, the rule had never been challenged, amended, or repealed pursuant to the applicable provisions of Chapter 120, Florida Statutes (2003), the Administrative Procedures Act.17
Subsection 440.13(2)(a), Florida Statutes (1990 Supp.), one of the two statutory provisions that Florida
Administrative Code Rule 59A-39.001 implements, mandates that employers furnish medically necessary medical treatment and, subject to some exceptions, prohibits health care providers from referring employees to other health care providers. Therefore, it is apparent that Florida Administrative Code 59A-39.001(1) implements Subsection 440.13(2)(a), Florida Statutes (2003).
This part of the rule is not in dispute and will not be discussed.
A reading of the aforementioned Florida Administrative Code Rule 59A-39.001(5) and the provisions of law, cited as the "Law Implemented" by the rule, indicates that Subsection 440.13(2)(i), Florida Statutes (1990 Supp.), is the law that portion of the rule implements. In fact, the only subsections of that statutory provision that are related to the reimbursement process and could possibly be considered as the basis for the "reconsideration process" established in Florida Administrative Code Rule 59A-39.001(5) are Subsections 440.13(2)(i)1. and 2., Florida Statutes (1990 Supp.),18 which state in relevant part:
1. The division [Division of Workers' Compensation] shall . . . also resolve reimbursement disputes based on criteria to be established by rule. . .
2. Upon receipt of a request to resolve a reimbursement dispute, the division shall provide to the requesting party, the employer, and the carrier within 60 days, a
written determination of whether the employer or carrier properly complied with the reimbursement policies of this chapter.
The above-quoted language in Subsection 440.13(2)(i), Florida Statutes (1990 Supp.), remained the same through 1993, with the exception of Subsection 440.13(2)(i), Florida Statutes being renumbered as Subsection 440.13(2)(j), Florida Statutes.19
During the November 1993 special session, the Legislature substantially amended Section 440.13, Florida Statutes (1993), by enactment of Section 17, Chapter 93-415, Laws of Florida. The latter provision states that this amendment is a "[s]ubstantial rewording of section" and directs readers to "s.440.13 for present text." This amended version of Section 440.13, Florida Statutes (1993), omitted the language included in Subsections 440.13(2)(i)1. and 2., Florida Statutes, which was later renumbered Section 440.13(2)(j), Florida Statutes.
Section 440.13, Florida Statutes, as substantially amended by Section 17, Chapter 93-415, Laws of Florida, provides a detailed scheme which mandates how the Agency (then Division of Workers' Compensation) was to address utilization and reimbursement disputes. This substantially reworded and amended version of Section 440.13, Florida Statutes, which does not include any of the language in Subsection 440.3(2)(i), Florida
Statutes (1990 Supp.), became effective January 1, 1994. See Section 112, Chapter 93-415, Laws of Florida.
Section 11.242, Florida Statutes, provides the powers, duties, and functions of the Office of Legislative Services relative to the operation and maintenance of a statutory revision program. Pursuant to Subsection 11.242(5)(i), Florida Statutes (1993):20
All statutes and laws, or parts thereof, which have expired, become obsolete, been held invalid by a court of last resort, have had their effect or have served their purpose, or which have been repealed or superceded, either expressly or by implication, shall be omitted through the process of the reviser's bills duly enacted by the Legislature.
Section 11.2422, Florida Statutes (1997), enacted by Section 2, Chapter 97-97, Laws of Florida (became law May 23, 1997), provides:
Statutes repealed.--Every statute of a general and permanent nature enacted by the State or by the Territory of Florida at or prior to the regular 1995 legislative session, and every part of such statute, not included in Florida Statutes 1997, as adopted by s. 11.2421, as amended or recognized and continued in force by reference therein or in ss. 11.2423 and 11.2424, as amended is repealed.[21]
For the reasons stated above, Florida Administrative Code Rule 59A-31.001(5) was effectively repealed on January 1, 1994, the effective date of the law which that portion of the
rule implemented was repealed. See Section 17, Chapter 93-415, Laws of Florida. That law was expressly repealed on May 23, 1997, by the enactment of Section 2, Chapter 97-97, Laws of Florida.
Even if Florida Administrative Code Rule 59A- 31.001(5) had not been repealed, the rule would still have no effect because, with the 1993 amendment to Section 440.13, Florida Statutes, there is clearly a conflict between the statute and the rule.
When any conflict exists between the statute and the regulation, the statute, of course, controls. Nicholas v. Wainwright, 152 So. 2d 458 (Fla. 1963); State, Dept. of Business Regulation v. Salvation Ltd., 452 So. 2d 65 (Fla. 1st DCA 1984).
In this case, a reading of Subsection 440.13(7), Florida Statutes, as amended in 1993, and Florida Administrative Code Rule 59A-31.001(5) together reveals that a conflict exists that can not be resolved in a way to give effect to both. For example, the statute requires the health care provider to file a petition with the Agency within 30 days of receiving the notice of disallowance and gives the carrier 10 days to respond; the Agency then has 60 days to resolve the dispute. On the other hand, Florida Administrative Code Rule 59A-31.001(5) allows the health care provider 60 days to request reconsideration and gives the carrier 60 days to respond. As prescribed in the
rule, the reconsideration process timeline would make it virtually impossible to comply with the statutorily prescribed timeline for the Agency resolution process.
Petitioners assert that even if it is assumed that the Agency had the authority to bypass the "reconsideration process," the Agency still should not have considered and determined the Petition because it did not include required documentation (i.e. medical records).
Subsection 440.13(7)(a), Florida Statutes (2003), requires the Agency to dismiss a petition when the petitioner fails to submit all documents in support of the allegations in the petition. In this case, Ms. Reynolds, improperly allowed the dispute resolution process to continue in violation of the unambiguous requirements of Subsection 440.13(7)(a), Florida Statutes (2003).
Finally, Petitioners assert that Ms. Reynolds was not authorized to issue and sign the determination letter in absence of a delegation letter from the Secretary of the Agency.
Petitioners' contention that Ms. Reynolds was not authorized to sign the determination is rejected for the reasons set forth below.
Subsections 20.42(1) and (2), Florida Statutes (2003), create the Agency, and provide that the head of the Department is the secretary of the Agency. Subsection (3) of
that provision enumerates numerous responsibilities of the Agency and also provides that the Agency is responsible for "any other duties prescribed by statute."
Section 440.44, Florida Statutes (2003), provides that it is the intent of the Legislature that the Agency, along with other named departments "assume an active and forceful role" in the administration of the Workers' Compensation Law, Chapter 440, Florida Statutes.
Subsection 440.13(7), Florida Statutes (2003), specifically requires the Agency to resolve utilization and reimbursement disputes between health care provides, carriers, and/or employers in Workers' Compensation cases.
Subsection 20.04(7), Florida Statutes (2003), states in pertinent part:
Unless specifically authorized by law, the head of a department [or in this case, the Agency] may not reallocate duties, and functions specifically assigned to a specific unit of the department. Those functions or agencies assigned generally to the department without specific designation to a unit of the department may be allocated and reallocated to a unit of the department at the discretion of the head of the department [Agency]. (Emphasis supplied)
Section 20.05, Florida Statutes (2003), provides the powers and duties of the heads of departments and states in relevant part the following:
(1) Each head of a department, except as otherwise provided by law, must:
* * *
Have authority, without being relieved of responsibility, to execute any of the powers, duties, and functions vested in the department or in any administrative unit thereof through administrative units and through assistants and deputies designated by the head of the department from time to time, unless the head of the department is explicitly required by law to perform the same without delegation;
Section 440.13, Florida Statutes (2003), specifies that the responsibilities related to utilization and reimbursement disputes are assigned to the Agency and does not explicitly require those functions to be performed by the head of the Agency. Thus, the Agency's secretary, though not relieved of responsibility, may authorize that powers, duties, and functions vested in the Agency be delegated to assistants and deputies designated by the head of the Agency.
Here, the evidence established that the Agency's structure required the professional staff in the Workers' Compensation Section to review and send out decision letters, under their signature, in utilization and reimbursement disputes. These professionals were supervised by Mr. Willis the Workers' Compensation Unit manager, who reported directly to the chief of the Bureau, which was under the Agency's Division.
To support their position that Ms. Reynolds had no authority to issue the determination letter, Petitioners rely on White Construction Co. v. Dept. of Transportation, 281 So. 2d
194 (Fla. 1973). White Construction involves final agency action taken by an employee which effectively deprived a duly- certified company from bidding on a project for which it was qualified to bid. Here, no such situation exists. The determination letter by Ms. Reynolds is not final agency action as evidenced by the fact that Petitioners challenged the determination letter and requested and participated in the subject formal hearing. Also, Petitioners have not been deprived of any of their rights or privileges or otherwise penalized as a result of the determination letter. See Donaldson v. State of Florida, Department of Health and
Rehabilitative Services, 425 So. 2d 145, 146 (Fla. 1st DCA 1983). In fact, as of the date of the hearing, Petitioners had not paid the additional reimbursement amount that Ms. Reynolds indicated they should pay.
Based on the foregoing, Petitioners failed to prove that Ms. Reynolds was not authorized or delegated the authority to determine the reimbursement dispute and send out the determination letter.
Accordingly, Ms. Reynolds is deemed to have been properly performing her duties and acting for the Agency when
she reviewed the dispute and wrote and signed the determination letter based on that review.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that the Agency for Health Care Administration enter a final order which:
Finds that South Bay Hospital's charge for the January 23, 2004, date of service, was $14,771.60;
Finds that the Carrier, Aspen Administrators, is required to pay 60 percent of South Bay Hospital's charge, or
$8,863.00;
Gives the Carrier, Aspen Administrators, credit for the
$4,316.00, it has already paid; and
Requires the Carrier to pay the remaining balance of $4,547.00.
DONE AND ENTERED this 9th day of August, 2006, in Tallahassee, Leon County, Florida.
S
CAROLYN S. HOLIFIELD
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 9th day of August, 2006.
ENDNOTES
1/ Issues 3 through 5 were included in Petitioner's Amended Petition, filed July 18, 2005. The remaining statements and issues in the Amended Petition related to alleged rule violations by the Agency were withdrawn by counsel for Petitioners during the final hearing.
2/ The letter also indicated that administrative fines and penalties could be levied against Petitioners. However, at the final hearing the Agency waived any such fines and penalties and indicated that it had not intended to seek them.
3/ See comment in endnote 1.
4/ The Agency initially indicated that it would be taking the post-hearing deposition of Donna Reynolds, an employee of the Agency. However, after Petitioners were allowed to amend their Petition, the Agency requested that it be allowed to depose an additional witness on the additional issues and facts in dispute. Counsel for the Agency indicated that she would be taking the deposition of Donna Reynolds and Samuel Willis, III.
5/ The Agency did not file answers to the Request for Admissions.
6/ Mr. Weatherford's name was consistently misspelled in the transcript as "Wetherford."
7/ The objections made by Petitioners' counsel during these depositions are overruled, and the motions to strike made by said counsel are denied.
8/ Petitioners were ordered to give notice by August 15, 2005, as to whether they needed to depose additional witnesses based on the testimony of the Agency's witnesses presented in the post-hearing depositions.
9/ On August 15, 2005, the parties requested 15 additional days to complete the deposition of Ms. Reynolds and to allow Petitioners adequate time to determine what, if any, additional witnesses they would depose.
10/ On August 30, 2005, Petitioners requested and, by Order issued September 7, 2005, were granted an additional 20 days to coordinate and schedule the deposition of George Ellis, M.D., as a "rebuttal" expert witness. However, on October 3, 2005, in an Agreed Notice of Completion of Case and Request for Record to be Closed, Petitioners advised that they had been unable to schedule the deposition of Dr. Ellis and, thus, decided to forego his testimony and not call any other witnesses.
11/ The reasons for these extensions included the temporary disruption of computer network and telecommunications in Petitioners' counsel's office due to Hurricane Wilma and the extended time frames associated with the Agency's moving its office to a new building.
12/ Pursuant to the Order Denying Petitioners' Motion to Strike the late-filed post-hearing deposition Transcripts, the undersigned determined that this ruling was not prejudicial to Petitioners in that they participated in the depositions, both of which were taken prior to the record being closed, and even referred to the post-hearing deposition testimony in their Proposed Recommended Order.
13/ Official Recognition was taken of this at the request of Petitioners and with no objection by the Agency.
14/ For example, after Petitioners filed their Petition requesting a formal hearing based on the decision letter prepared by Ms. Reynolds, the clerk of the Agency forwarded a Notice and the Petition to the Division of Administrative Hearings. By so doing, it was evident that there was no challenge or dispute within the Agency that the determination letter written and signed by Ms. Reynolds was, in fact, the Agency's determination letter. Ms. Reynolds decision was, in fact, the Agency's decision. The record clearly reveals that from the outset of this matter, the Agency has not only acknowledged the decision in the determination letter, but also has vigorously defended this action, using its own legal counsel.
15/ This takes into consideration all hospitals in that area. 16/ Rule 59A-39.001(5)(b) gives the Carrier 60 days to respond. 17/ The Agency noticed Florida Administrative Code Rule 59A-
39.001 for repeal in the Florida Administrative Law Weekly,
Vol. 31, No. 39, (September 30, 2005), and the rule was repealed on April 2, 2006. See Fla. Admin. Code, Repeal and Transferred Table, Part II, p. 828-1.
18/ Subsection 440.13(2)(i)3.a. through 3.b., Florida Statutes (2003), specifies when a judge of compensation claims is required to order an injured employee to be evaluated; when and to whom such evaluation should be sent; and issues related to liability of health care providers and attorney's fees.
19/ Pursuant to Section 3, Chapter 91-269, Laws of Florida, "[p]aragraphs (f)-(k) of subsection (2) of section 440.13, Florida Statutes, 1990 Supplement, are renumbered as paragraphs (g)-(l),respectively . . ." Consequently, Subsection 440.13(2)(i), Florida Statutes, was renumbered as 440.13(2)j).
20/ This statute remains in effect today.
21/ Section 11.2422, Florida Statutes (1995), is similar except it repeals all statutes enacted at or prior to "the regular and special session of May 24 to May 28, 1993, and every part of such statute, not included in Florida Statutes 1995, as adopted by s.11.2421. . . ." The Legislature's substantial rewording and amendment of Section 440.13, Florida Statutes (2003), occurred in November 1993.
COPIES FURNISHED:
Joanna Daniels, Esquire
Agency for Health Care Administration
200 East Gaines Street Tallahassee, Florida 32399-4229
George F. Indest, III, Esquire The Health Law Firm
220 East Central Parkway, Suite 2030 Altamonte Springs, Florida 32701
Richard Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Christa Calamas, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308
Tamela I. Perdue, Esquire Stiles, Taylor & Grace Post Office Box 1140
Tallahassee, Florida 32301
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 |
|---|---|---|
| Jan. 01, 2007 | Agency Final Order | |
| Aug. 09, 2006 | Recommended Order | Respondent failed to establish any objective basis for its determination that the charges billed by the hospital accurately reflected the cost of the services by the health care provider. The amount due by the carrier cannot be based on that amount. |
