Findings Of Fact Based upon the record evidence, the following findings of fact are made: Okeechobee Health Care Facility (OHCF) is a licensed nursing home facility located in Okeechobee County, Florida. OHCF was formerly owned and operated by Okeechobee Health Care Facility, Ltd. (Okeechobee). Okeechobee was a limited partnership. Faye Williamson and her husband were its general partners. In March, 1988, Okeechobee was granted, pursuant to its request, a certificate of need (CON 5454) to add a 30-bed wing to OHCF at a cost of $810,000.00. On December 8, 1989, Okeechobee filed its final project cost report with Respondent. The report reflected that actual expenditures had exceeded the approved cost of the project by more than $650,000.00. By letter dated December 13, 1989, Respondent advised Okeechobee that it was necessary for Okeechobee "to request an expedited review for a cost overrun on this project." On February 22, 1990, Okeechobee filed a certificate of need application (CON application 6150) seeking such expedited review. The application was accompanied by a check in the amount of $750.00. Ms. Williamson, who submitted the application on behalf of Okeechobee, did so thinking that the application was complete. Following her submission of the application, she awaited Respondent's response. Based upon her prior experiences with Respondent in these matters, it was her understanding that if Respondent determined that the application was incomplete, it would so notify her. On or about March 2, 1990, Williamson, who was identified on the application as Okeechobee's authorized representative and contact person, was telephoned by an employee of Respondent's who advised her that she needed to remit an additional $1,990.04 on behalf of Okeechobee to cover the full application filing fee. Immediately following this telephone conversation, Williamson wrote out a check in the amount of $1,990.04 and mailed it to Respondent. On or about April 11, 1990, Williamson was informed that, notwithstanding what she had been telephonically advised the previous month, the $2,740.04 that already had been remitted did not constitute payment in full of the application filing fee and another $1,990.00 was still required. Upon being provided this information, Williamson sent a third check, in the amount of $1,990.00, to Respondent. In the aggregate, Respondent received $4,730.04 from Okeechobee in connection with the filing of CON application 6150. On or about April 23, 1990, Respondent, by certified mail, sent to Williamson at the address indicated on the application as her mailing address (Post Office Box 728, Okeechobee, Florida 34973), an "omissions" letter, which read in pertinent part as follows: Your application on behalf of Okeechobee Health Care Facility, Ltd. has been received for a certificate of need for a cost overrun on Certificate of Need Number 5454, to be located in Okeechobee, Florida. Certain specified elements are omitted from your proposal which are nee to implement formal review. Please respond to the items noted below. For an existing health care facility, HMO or hospice, audited financial statements of the applicant for the two previous years. (The applicant's most recent complete fiscal years of operation immediately preceding the 120 day period described above). Update for period ending December 31, 1989. 7B. Please furnish a certified copy of the resolution of the board of directors pursuant to 381.709(1)(c), Florida Statutes. Conditions predicated upon award. 2C1. Terms of Financing (Appendix 5(2C1)). Letter of commitment omitted. Section 381.709(3)(a), Florida Statutes, requires that you respond to the above omissions by May 14, 1990. Failure to provide responses by this date may result in your application being deemed incomplete and administratively withdrawn from further consideration. The United States Postal Service delivered this "omissions" letter on April 27, 1990. Kasee Wherrell was the person to whom delivery was made. At the time, Wherrell was an employee of Professional Accounting Systems of Okeechobee (PASO), which had contracted with Okeechobee to perform certain clerical and administrative services in connection with the operation of OHCF. Among Wherrell's duties as an employee of PASO was to go to the post office, pick up the regular mail in the OHCF post office box, bring it back to the OHCF business office and distribute it to the appropriate person(s). She was not authorized, however, to sign for and receive any certified mail. Wherrell never gave Williamson the "omissions letter she had retrieved from the post office. Consequently, neither Williamson nor any other Okeechobee representative responded to the letter within the time frame specified in the letter. Not having received such a response, Respondent sent Williamson the following letter, dated May 25, 1990: In accordance with the provisions of Section 381.707 and 381.709, Florida Statutes, you were given until May 14, 1990 to respond satisfactorily to the omissions noted in the correspondence from this office dated April 23, 1990 relative to your proposal for a cost overrun on Certificate of Need Number 5454. Because of your failure to provide a detailed listing of the needed capital expenditures, including sources of funds; and a certified copy of a resolution by the board of directors, your proposal has been withdrawn from further consideration, effective May 14, 1990. You have the right to request an administrative hearing on this decision under the provisions of Florida's Administrative Procedure Act, Chapter 120, Florida Statutes, and under Department Rule 10-5.010, Florida Administrative Code. A request for hearing, if any, must be actually received by this department within 21 days of the first day of publication of notice of the withdrawal in the Florida Administrative Weekly. A request for hearing must contain the information required in Rule 28-5.201, Florida Administrative Code, and must make reference to the "CON Action Number" referred to in this lit The original and one copy of each request for hearing may be filed with or mailed to the following location: Sam Power, Agency Clerk, Assistant General Counsel, Department of HRS, 1323 Winewood Blvd., Building 1, Suite 406, Tallahassee, Florida 32399-0700. Upon receiving this letter, Williamson contacted her attorney, who in turn telephoned Amy Jones, Respondent's Deputy Assistant Secretary for Regulation and Health Facilities, to explain the circumstances surrounding Okeechobee's failure to timely respond to the "omissions" letter. After Williamson's attorney made his presentation, Jones advised him that, if he desired to have Respondent formally consider the matter, he would have to submit a petition for an administrative hearing in accordance with the May 25, 1990, letter that had been sent to Williamson. Such a petition was filed with Respondent's Agency Clerk on June 21, 1990. Okeechobee no longer owns or operates OHCF. The current owner and operator of the facility is Lifestyles and Healthcare, Ltd., (Lifestyles) which acquired the facility from Okeechobee in the spring of 1990, following the submission of CON application 6150. Okeechobee was dissolved upon Lifestyles' acquisition of OHCF. On or about September 14, 1990, Lifestyles was issued a license by Respondent's Office of Licensure and Certification authorizing Lifestyles to operate OHCF. The effective date of the license, as indicated on its face, was June 19, 1990.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Health and Rehabilitative Services enter a final order (1) dismissing the instant petition on the ground that the issue raised therein has become moot as a result of Okeechobee's voluntary withdrawal of CON application 6150, and (2) declining to refund the certificate of need application filing fee paid by Okeechobee in connection with the submission of CON application 6150. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 28th day of December, 1990. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of December, 1990.
The Issue The issue in this case is whether the Department of Insurance acted according to the requirements of law in reviewing submissions of vendors responding to the Department's request for proposals for provision of licensure and examination services.
Findings Of Fact The Department of Insurance is the state agency responsible for licensure and regulation of insurance agents in Florida pursuant to the Insurance Field Representative Licensing Procedures Law set forth at Chapter 626, Florida Statutes. Persons seeking to become licensed by the Department are required to take and pass an examination. Insurance Testing Corporation (ITC) develops and administers insurance licensure examinations in other states. Assessment Systems Incorporated (ASI) develops and administers insurance licensure examinations in other states. Since 1990, the Department has contracted with the University of South Florida (USF) for exam administration. The contract was to expire on September 30, 1994. It has been twice extended and is currently set to expire on September 30, 1996. The parties have standing to participate in this proceeding. On December 29, 1995, the Department of Insurance issued a Request for Proposal Number 95/96-07 (RFP) seeking the provision of testing development and administration services. The RFP was prepared through a collaborative effort within the Department. In issuing the RFP, the Department intended to broaden the level of services obtained from a contracted vendor and to take advantage of the expertise of companies already in the business of regulatory examination provision. The Department issued an RFP to permit vendors to generate their own programs for licensure and examination programs. The alternative, an Invitation to Bid, would have required vendors to bid on a program designed by the Department. The RFP provided that the contract between the Department and the successful vendor would consist of the RFP, addenda and amendments to the RFP, and the successful vendor's proposal. The RFP also provided that Department reserved the right to negotiate with the selected contractor, to waive minor irregularities and to reject all submissions. The RFP provided a schedule and deadlines as follows: submission of questions and requests for clarification by vendors, January 15, 1996; the preproposal conference with vendors, January 22, 1996; submission of proposals, February 12, 1996; oral presentations by vendors, February 19, 1996; and posting of the intended award, February 23, 1996. There was no protest to the RFP's specifications. Submissions were received from five vendors. The RFP evaluation panel scheduled separate oral presentations by the five vendors submitting proposals. The purpose of oral presentations was to permit the vendors to present their proposals and to respond to questions from the evaluation committee. The first thirty minutes of each one-hour presentation were reserved for the vendor presentation; the second thirty minutes were reserved for questions from the evaluation panel to vendor representatives. Vendors were not invited to and did not attend the oral presentations of other vendors. For reasons discussed herein, ITC's proposal was deemed non-responsive and was not evaluated. After completion of oral presentations, the evaluation panel independently reviewed and scored the proposals (other than ITC's) and submitted the scores to the Department's purchasing office. The purchasing office opened and scored the vendors cost proposals, then calculated the vendors' total scores. Of the proposals which were evaluated, ASI's received the highest total score of 134.5 points. The second highest score, 115 points, was received by USF. The Department posted a Notice of Intended Award to ASI on February 23, 1996. On February 23, 1996, ITC contacted the Department purchasing director and requested a copy of the ASI proposal. At that time, ITC was advised that a notice of protest would be due on February 28, 1996. ITC filed a Notice of Protest on February 28, 1996. ITC filed a formal protest on March 8. 1996. Although the State of Florida insurance licensure tests are currently administered by USF, the Department retains ownership of the questions ("test items") used in the examination. Upon the expiration of the contract with USF, all test items are to be returned to the Department. The test items used in Florida insurance exams are developed by employees of the Department with experience in the subject matter being tested. Test items have been revised and updated by USF according to psychometric principles. The Department desires to continue ownership of the "Florida bank" of test items. Section 2.1B of the RFP, "EXAMINATION DEVELOPMENT," states: The Department currently retains ownership of all test items in use for existing exams. The Department shall maintain exclusive owner- ship of the items developed, item bank(s), examinations, and all related materials deve- loped for use in fulfilling the requirements of this RFP. The Contractor will be respons- ible for continued development and maintenance of an item bank for use in preparing the examinations.... Section 2.2 of the RFP, "Related Requirements and Information," states: Use of any test items owned by the Department or developed to fulfill obligations resulting from a contract entered into as a result of this RFP for any purpose other than those covered by said contract is prohibited with- out advance written authorization by the De- partment. Any violation of this provision will result in immediate cancellation of the contract and/or legal actions against the contractor. Vendors were allowed to submit questions and requests for clarification by January 15, 1996. At the preproposal conference, an addendum to the RFP was issued which included the Department's responses to vendor requests for clarification. All potential vendors received the addendum. As did other vendors, ITC submitted question and requests for clarification. ITC question Number 8 states: The Department claims ownership of all existing test questions and requires owner- ship of all items, examinations, and related materials used in the Florida tests. This requirement precludes the use of previously developed, calibrated, and validated banks of items owned by the major providers of insur- ance license examinations. It thus requires the development and maintenance of a completely separate bank of test questions for Florida. This can be done only at considerable expense, which must be reflected in the test fees. Is it truly the Department position that all questions used in Florida insurance tests will be or become the property of the Depart- ment? Is this a negotiable item? The Department's response to ITC's question Number 8 states: The desire of the Department to retain owner- ship of its test items does not preclude the use of previously developed, calibrated and validated banks of items. Subject to the approval of the Department, the selected vendor may use test items it has already de- veloped as long as the subject/line of auth- ority listings for Florida are adhered to and are in accordance with Florida law and administrative rules. It is the Department's position that all items currently owned by the Department or developed for the Department in fulfillment of services requested through this RFP, re- main the property of the Department. This is not a negotiable item. ITC question Number 22 states: Will the Department grant the contractor the right to use test items owned by the Depart- ment in other states where it has testing contracts. If so, what guarantees will the Department offer that the Department will treat these questions as confidential material in the future, when they are used in other states. The Department's response to ITC's question Number 22 states: Yes, the Department will grant the vendor authority to use test items owned by the Department in other states where it has testing contracts. However, some agreement would have to be reached regarding the vendor's liability and responsibility should any test item become compromised as a result of such use. The question relating to the Department offering a guarantee that it will treat such questions as confidential when they are in use in other states is not understood. Obviously, the Department would not want to compromise its own test items. By February 12, 1996, the deadline for submission of proposals, five vendors had submitted responses to the RFP, including ITC, ASI and USF. On the question of test item creation, ITC's proposal states: Generally, we provide the entire bank of questions that are used in the tests of a state we serve. Florida is unusual in providing a bank of questions to start with. Our approach to questions for the Florida tests will follow three tracks. First, we will use the questions in the current Florida tests. Second, we will identify those ques- tions in our own bank that are appropriate for use in Florida. Third, we will write additional questions where shortages are identified in the banks, or to cover add- itional topics in the study manuals. ITC's proposal further states, "ITC staff will write and develop all of the new test questions. We will not rely upon Department staff or the Florida insurance industry...to write any of the new questions required for your tests." On the question of test item ownership, ITC's proposal states: Since you currently own a bank of test ques- tions, we understand that you will want to own a bank of test questions when a contract you may establish with us comes to an end. We currently own our bank of questions and would not want to relinquish ownership to that bank as a result of contracting with Florida. Therefore, our proposal is to divide the bank ownership according to four criteria: (1) Ownership of questions in the original Florida bank will remain with Florida; (2) ownership of questions in ITC's bank as of contracting will remain with ITC; (3) owner- ship of ITC-developed questions that are Florida specific and not applicable to other states will be assigned to Florida; (4) ownership of ITC-developed questions that are applicable to other states will remain with ITC. Florida questions that are materially revised by ITC will be considered ITC questions. During the ITC oral presentation, the evaluation panel sought clarification of ITC's position on test item ownership. ITC indicated that its position was as set forth in the proposal. The issue of test item ownership was the central question discussed at ITC's oral presentation. Essentially, the ITC proposal provides that at the close of any potential contract period, the Department will own the questions it currently owns and only those ITC-developed questions that are specific to Florida and to no other state. Further, under the proposal, ITC would be able to "materially revise" any question in the current Florida test item bank and claim ownership of the revised question. Neither ITC's proposal nor its oral presentation provided reliable information as to what would constitute a "material revision" of a test item. After the oral presentations were concluded, the evaluation panel and Department purchasing personnel determined that the ITC proposal did not comply with RFP's requirement related to test item ownership. The ITC proposal was disqualified and was not evaluated by the panel. The evidence fails to establish that the Department acted improperly in disqualifying the ITC proposal. The evidence establishes that the ITC proposal fails to meet the requirements of the RFP relating to ownership of test items, and was properly disqualified from further evaluation. As set forth in the RFP, the Department requires "exclusive ownership of the items developed, item bank(s), examinations, and all related materials developed for use" in providing examination and licensure services to the Department. RFP Addendum Number 1 clearly states "the Department's position that all items currently owned by the Department or developed for the Department in fulfillment of services requested through this RFP, remain the property of the Department" and further states that the item is not negotiable. The purpose of the Department's insistence on ownership of test items is to assure that, at the conclusion of the contract period, the Department will own the questions which have been prepared by the successful vendor for use in Florida exams. ITC's proposal fails to provide the Department with test item ownership as specifically required by the RFP and addendum. ITC asserts that on the question of test item ownership, its proposal is essentially the same as the proposal submitted by ASI. The evidence fails to support the assertion. ASI's proposal states: ASI acknowledges that the Department currently owns all examination items in use for existing exams. Furthermore, the Depart- ment will also retain ownership of all items developed for use in Florida examinations. Unlike the ITC proposal, the ASI proposal clearly states that the Department will own all items developed for use on the Florida exam. Items developed for the Florida exam will be owned by the Department, whether or not the items are applicable to other states. ITC asserts that the inclusion of cost information within the body of the RFP warrants disqualification of the ASI proposal. The evidence fails to support the assertion. Each vendor was evaluated on compliance with Florida Certified Minority Business Enterprise (CMBE) contracting goals. Evaluation points were awarded if a vendor established that CMBE firms would receive at least 10 percent of the contract award. Section 2.4 of the RFP, "Proposal Form and Content," provides instructions on how to structure a vendor proposal and states: ...ATTENTION IS CALLED TO SECTION 1.8. ANY REFERENCE TO COST IN PARAGRAPHS (A) THROUGH (G) BELOW MAY DISQUALIFY THAT PROPOSAL. Paragraphs (A) through (G) include items related to technical portions of vendor proposals. Section 1.8 addresses copies of proposals and states, "[c]ost proposals must be labelled as such and be submitted in a separate envelope." ASI's proposal included the following statement: ...ASI has signed a Letter of Agreement with Stallion Properties Management of Tallahassee to provide certain real estate and property management services specifically related to the Department's RFP and this Proposal. In total, it is estimated that ASI's Letter of Agreement with Stallion Properties Management will provide a total income of approximately $600,000.00 to Stallion over the term of ASI's three year contract with the Department. This project income to Stallion represents ten percent of the total projected income that ASI will earn should we be awarded the Department's contract. The requirement for submission of sealed cost proposals is intended to assure that the technical review of proposals is not influenced by cost factors. Other than to note compliance with the CMBE goal, the members of the evaluation panel did not extrapolate the ASI disclosure to determine the total ASI cost proposal. There is no evidence that the ASI disclosure affected the panel's evaluation of the proposal. Had the ASI technical proposal included its total cost proposal, evaluation panel members would have referred the issue to the Department's purchasing office. Apparently because the panel members did not note the inclusion of the CMBE total and did not extrapolate cost information based on the CMBE disclosure, the members did not refer the matter to purchasing. Because no other vendor included cost information within the technical portion of the proposals, there was no comparative cost information available for evaluation until the cost proposals were opened by Department purchasing personnel. Cost proposals were reviewed after the evaluation of technical factors was completed. ITC asserts that ASI's proposal modification after the proposals had been opened and during the oral presentation warrants rejection of ASI's proposal. The evidence fails to support the assertion. Section 2.1L of the RFP, "COLLECTION AND REMITTANCE OF FEES," states: The Department requires the collection of certain fees from applicants for services related to the licensure and examination process. It is intended that the Contractor collect these fees, as necessary and appropri- ate, and remit these fees daily (exclusive of weekends and State of Florida holidays) in a manner acceptable to the Department. It is intended that the Contractor retain its fee for services as provided for in the contract and remit the balance to the Department as appropriate. The Department is currently not prepared to accept electronic funds transfers in this area, however, it is interested in proposals which could accommodate such tran- sactions during the contract period. The Department contemplates technological enhance- ments in the Receipt's database within the contract period, however it is unable to specify the details of such at this time. Contractor must be able to accommodate such technological changes and enhancements. If any invoices are required to be submitted by the contractor to the Department, they must be submitted in a manner acceptable to the Department and in detail sufficient for a pre- audit and postaudit thereof. The Contractor shall have a system which maintains certain data, as specified by the Department, related to its activities in this area. The Department had indicated that a vendor could collect the total fee, deduct the vendor service charge, and remit the balance of the fee to the Department. Prior to the preproposal conference, ITC submitted a question (Number 21) seeking information on how fees were to be conveyed to the Department. In Addendum Number 1, the Department indicated that a response to the question would be provided in a second addendum to be issued after the preproposal conference. In the second addendum, the Department's response to ITC's question Number 21 states: The Department intends for the vendor to receive, on behalf of the Department, certain fees currently paid by licensure applicants and/or exam candidates. These fees may be paid by personal check, certified check or money order. Cash cannot be accepted. All checks or money orders must be made payable to the Florida Department of Insurance and must be deposited by the vendor into a state concentration account (with Barnett Bank) or a clearing fund in the name of the Department. The Department will assist in establishing these accounts. The Department will require a daily accounting of all monies collected and/or deposited. This information must be in the format prescribed by the Department. This information must be transmitted via an automated system compatible with the Department's existing information systems in this area. The vendor will be required to submit in- voices to the Department for services rendered on a monthly basis. Such invoices must be in sufficient detail for pre-audit and post-audit purposes and be in a format prescribed by the Department. The Department's response in addendum Number 2 specifically noted that the Department's position had changed. ASI's proposal states: Fees will be collected on the day of examina- tion and/or license issuance. This method will eliminate late payment processing. We will collect examination fees payable to ASI. This will minimize reconciliation tasks for the Department, and will allow accounting efforts to focus on those fees collected on behalf of the Department. Application re- venues will be shared with the vendor, based on prices stipulated in the price proposal and associated processing volumes. Appli- cation and fingerprinting fees will be collected via checks made payable to the Department. ASI will provide a reconcilia- tion of these fees, and daily deposits will be made to the Department's account. ASI will invoice the Department for its applica- tion screening services on a monthly basis. ASI's proposal further states: As part of the standard project planning process, [ASI will work side-by-side with the Department to identify specific requirements to be included in the implementation plan, including fee collection procedures], de- tailed invoice requirements, and the most appropriate method to transmit detailed tran- saction information to the Department.... [emphasis supplied] The proposed fee collection process suggested by ASI is inconsistent with applicable Florida law and does not follow the procedure set out by the Department in Addendum Number 2. Section 2.4 of the RFP, "Proposal Form and Content," subsection (C) "Work Plan" states: Describe in narrative form your plan for accom- plishing the work described....Modifications of requirements of this RFP are permitted, however, reasons for changes should be fully explained and justified. " At the oral presentation, and prior to evaluation of the proposals, the evaluation panel advised ASI that the fee collection proposal was not legally appropriate. ASI representatives indicated that they were attempting to provide an improved fee reconciliation process and were not aware that Florida law prohibited their fee collection plan. ASI utilizes the two-check fee payment system in some of the states where ASI administers licensing exams. At the oral presentation, ASI representatives assured that, as specifically stated in the proposal, ASI was committed to working with the Department "...to identify specific requirements to be included in the implementation plan, including fee collection procedures...." ASI representatives stated that the fee collection procedure desired by the Department would be accomplished within the costs set forth in the proposal. Although ASI's fee collection procedure does not follow the method suggested in the RFP, such does not warrant rejection of the ASI proposal. As stated in the RFP, ASI's modification of the RFP requirement was permitted where the reasons for changes were fully explained and justified. ITC implies that ASI can't provide the services offered in the ASI proposal within the fee and cost structure set forth in the response to the RFP. There is no credible evidence supporting the implication.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance enter a Final Order DISMISSING the case and awarding the contract to Assessment Systems, Incorporated. DONE and ENTERED this 21st day of May, 1996 in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of May, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1330BID To comply with the requirements of Section 120.59(2), Florida Statutes, the following constitute rulings on proposed findings of facts submitted by the parties. Petitioner The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 6. Rejected, not supported by the weight of the evidence. Rejected, subordinate. Rejected, not supported by the weight of the evidence. Rejected, comment on testimony is not finding of fact. Rejected, unnecessary. The ITC proposal is not responsive to the Department's requirement of test item ownership. 12-13. Rejected, contrary to the weight of the evidence. Rejected, immaterial. Rejected, subordinate. Rejected, not supported by the weight of the evidence. 22. Rejected, subordinate. 23-24. Rejected, unnecessary. Rejected, subordinate. Rejected, unnecessary. Rejected, not supported by the weight of the evidence. Respondent The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 2. Rejected, subordinate. 3-5. Rejected, unnecessary. 7-8. Rejected, unnecessary. 14. Rejected, irrelevant. 20-23. Rejected, unnecessary. 34-37. Rejected, cumulative. 48-59. Rejected, cumulative. 61-62. Rejected, irrelevant. 63-69. Rejected, cumulative. Rejected, unnecessary. Rejected, cumulative. 83. Rejected, cumulative. 96. Rejected, unnecessary. Intervenor ASI Intervenor ASI's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: Rejected, unnecessary. Intervenor USF Intervenor USF's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows: 20-21. Rejected, unnecessary. Rejected, subordinate. Rejected, subordinate. Rejected, unnecessary. Rejected as to use of phrase "final offer;" the ASI RFP specifically committed to working with the Department on fee collection procedures. Rejected, unnecessary. 45. Rejected, subordinate. 50. Rejected, unnecessary. COPIES FURNISHED: Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner, General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300 Carl D. Motes, Esquire Maguire, Voorhis and Wells, P.A. 2804 Remington Green Circle, Suite 4 Tallahassee, Florida 32317-2429 Frank Fernandez, Esquire Thomas Valentine, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 William B. Graham, Esquire Richard N. Sox, Jr., Esquire Bateman and Graham, P.A. 300 East Park Avenue Tallahassee, Florida 32301 Regina L. DeIulio, Esquire Office of the General Counsel University of South Florida 4202 East Fowler Avenue, ADM 250 Tampa, Florida 33620-6250
The Issue The issue is to determine the amount of the fee to be awarded to Florida Medical Center. FEE CALCULATION Florida Medical Center was represented before the Department in its attempt to obtain a hearing and before the District Court of Appeal, First District in Florida Medical Center vs. Department of Health and Rehabilitative Services and Humana, Inc., appellate case no. BD-46, by Eric B. Tilton, who has been a member of The Florida Bar since 1977. He also handled the appeal of the denial of Florida Medical Center's petition for a hearing on the approval of additional beds for University, appellate case BD-45. An associate, Thomas W. Stahl, assisted Mr. Tilton in both those cases. Mr. Tilton filed, on behalf of Florida Medical Center, the following pleadings: a petition seeking a Section 120.57 hearing to challenge the certificate of need HRS agreed to grant to Humana Bennett. The petition was denied in a final order of the Department without referral to the Division of Administrative Hearings for the assignment of a hearing officer or other proceedings; a notice of appeal to the District Court of Appeal, First District; a consolidated initial brief for both cases BD-46 (challenging the Humana Bennett certificate of need) and BD-45 (challenging the University certificate ofneed); a consolidated reply brief in both cases. The following papers also were filed by Mr. Tilton in case 50-46: motion for expedited review; petition for stay; reply to response to petition for stay; request for oral argument; motion to consolidate; response to motion to transfer to Fourth District Court of Appeal; response to notion to supplement record; response to motion for judicial notice; motion to strike portion brief of HRS; motion to strike answer brief of Humana Bennett; motion to strike amended answer brief of University; response to motion to correct record; response to Humana's motion to consolidate; motion for attorney's fees; motion for rehearing; response to Humana Bennett's motion for rehearing. The record on appeal before the Court of Appeals in Case BD-46 was quite brief, consisting of a petition for a hearing, a final order denying a hearing and a notice of appeal, which total 16 pages. The criteria found in Chapter 4 of the Rules Regulating The Florida Bar, Rule 4-1.5(B)(1)-(8) and (C) govern the determination of a reasonable fee. These are the criteria which had been contained in the former Code of Professional Responsibility, and applied by the Supreme Court of Florida in Florida Patient's Compensation Fund v. Rowe, 472 So.2d 1145, 1150 and n.6 (Fla. 1985) when the Court adopted the lodestar approach for fee determinations developed by the federal courts. Time and Labor Required, Novelty and Difficulty of Questions and Skill Requisite to Perform Legal Service Properly. Rule 4-1.5(B)(1) Mr. Tilton and his associate, Mr. Stahl, devoted 219.15 and 142.3 hours to this litigation, respectively. These hours were included in billings sent to the client, which were paid as presented without protest. The first step in determining a reasonable fee is to find the number of hours reasonably expended on the litigation. Rowe, supra, 472 So.2d 1150. The United States Supreme Court held in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), when assessing attorney's fees in civil rights litigation under identical ethical principles that [t]he most useful starting point for deter- mining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of value of a lawyer's services. 461 U.S. at 433, 103 S.Ct. at 1939. The Department of Health and Rehabilitative Services has not argued that any of the hours claimed were not reasonably expended on the litigation, in the sense of being the product of inaccurate or questionably reconstructed time records. The records were contemporaneously kept. Neither is there evidence of over staffing e.g., that more than one attorney attended or participated in oral argument without proof that such multiple representation was necessary. The appeal was not simply one in which the appellant argued that, as a competitor, it was entitled to a hearing as a matter of law. After initially indicating an intention to deny additional beds to both applicants, a hearing had been conducted which resulted in a Hearing Officer's recommendation that both 1931 applications be denied and the Department had entered a final order to that effect. Florida Medical Center's attorneys canvassed the entire record of the administrative proceeding on the 1981 applications of Humana Bennett and University to see whether there was any basis in it for the Department's abrupt change of position. Granting Humana Bennett and University new beds to settle the appeals in the Fourth District Court of Appeal was a fundamental shift in Department policy. The time spent in reviewing that record while preparing Florida Medical Center's appellate filings was appropriate. The time devoted to research on Florida, federal and other states' law on the authority of an agency to abandon a position taken after the conclusion of formal proceedings in order to settle an appeal from the agency's final action, while also refusing to allow others to challenge the agency's new and directly contrary position, was reasonable. Of course, "[a] lawyer in private practice ethically is obligated to exclude [excessive, redundant, or otherwise unnecessary] hours from his fee submission . . . . Hours that are not properly billed to one's client also are not properly billed to one's adversary . . . Nestle v. Eckerhart, 461 U.S. at 434, 103 S.Ct. at 1940, quoting, Copeland v. Marshall 205 U.S.App.D.C. 390, 401, 641 F.2d 880, 891 (1980) (en banc) (emphasis by the Court). There has been no suggestion that the bills submitted to Florida Medical Center were not the product of a proper exercise of billing judgment. Payment of the bills as presented also betokens the reasonableness of the hours claimed. Complaint or objection by the client to the hours billed would suggest that the hours expended may have been excessive. The evidence that Mr. Tilton expended 219.15 hours and Mr. Stahl 142.3 hours on the case is accepted. The Fee Customarily Charged iii the Locality for Similar Legal Services. Rule 4-1.5(B)(3). Much of the case law concerning a reasonable hourly rate has grown up in civil rights litigation where determining a reasonable hourly rate requires after-the-fact construction. When the services were rendered in those cases, the lawyer was not working for the client at an agreed hourly rate. A survey of hourly rates paid by clients seeking legal services on an hourly basis becomes a proxy for reasonable hourly compensation for the fee claimant's lawyer. Blum v. Stenson, 465 U.S. 886, 895 & n.11, 104 S.Ct. 1541, 1547 & n.11, 79 L.Ed.2d 891 (1984). Here, in an arms-length transaction, Florida Medical Center paid Mr. Tilton $150 per hour and Mr. Stahl $100 per hour. The $100 hourly rate for Mr. Stahl may be at the upper end of the market for attorneys admitted to the bar in 1982, but he had experience in health care law as a law clerk before admission to the bar which should be considered. These hourly rates are paid by other clients to these lawyers. Free market transactions are powerful evidence of what a reasonable hourly rate is. For lawyers of the experience of Mr. Tilton and Mr. Stahl, the rates claimed are reasonable. No persuasive evidence has been presented that these rates are exorbitant, or are out of line with a prevailing market rate for other private counsel of comparable experience, skill and reputation. Based on these calculations the lodestar amount is: HOURS HOURLY RATE Tilton 219.15 x $150.00 = $32,872.50 Stahl 142.3 x $100.00 = $14,230.00 $47,102.50 TOTAL FEE Results Obtained. Rule 4-1.5(B)(4). The Department of Health and Rehabilitative Services objects to paying for all hours billed. A major issue raised by Florida Medical Center in its appellate brief was that after having entered a final order denying Humana Bennett's 1981 application for additional beds (the subject of the appeal in the Fourth District Court of Appeal), the Department could not recede from or modify that order as part of a settlement. This argument was rejected by the First District Court of Appeal, and the Department believes the lodestar amount should be reduced to recognize Florida Medical Center's limited appellate success. The short answer to this objection is that the District Court of Appeal certainly knew this, but did not specifically condition the attorney's fee award on some segregation of the amount of work devoted to different issues on the appeal. The Court did condition its order granting attorney's fees upon proof that Florida Medical Center had not waived its point of entry; it also could have limited the fee award to the standing issue on which Florida Medical Center prevailed, but it did not. Florida Medical Center met the only condition the Court imposed and is entitled to fees for all services rendered by its attorneys. If the issue whether fees should be reduced for incomplete appellate success is open, it would be inappropriate to reduce the number of compensable hours here. The erroneous decision of the Department denying a hearing caused Florida Medical Center to incur appellate fees. The issue of the authority of an agency to recede from a final order in a settlement was one of first impression in Florida law. Although unsuccessful, the argument advanced in the appellate court was reasonable. To be made whole, Florida Medical Center should be reimbursed for hours attributable to that issue. If a party brings unrelated claims which carry attorney's fees to federal court and fails to prevail on all claims, fees are not granted for the unsuccessful claims. The focus, however, is on whether the partially successful party pursued "distinctly different claims for relief that are based on different facts and legal theories". Hensley v. Eckerhart, 461 U.S. at 434, 103 S.Ct. 1940. Here, the relief sought was reversal of the order denying Florida Medical Center the right to participate in the Department's decision to grant additional beds to Humana Bennett. That same relief was available on either theory proposed by Florida Medical Center: that its status as a competitor of Humana Bennett conferred standing as a matter of law under Section 381.494(6)(c), Florida Statutes, or that HRS was not entitled to rescind through settlement a final order denying Humana Bennett additional beds after denial had been recommended by a Hearing Officer following a Chapter 120 formal proceeding in which the applicant, competitors and the Department had been heard, and HRS had adopted that order as its final agency action. Florida Medical Center did not advance distinctly different claims for relief based on different facts and legal theories; it presented a single claim for relief based on alternate theories. Cf., Taylor v. Sterrett, 640 F.2d 663, 669 (5th Cir. 1981) ("[T]he proper focus is whether the plaintiff has been successful on the central issue as exhibited by the fact that he has acquired the primary relief sought.") As the Supreme Court said in Hensley, "The result is what matters." id., 461 U.S. at 435, 1030 S.Ct. at 1940. As the result of its appeal Florida Medical Center has participated in a lengthy Section 120.57 formal proceeding on remand which has permitted it to oppose the addition of 53 beds to a competitor. The potential competitive impact on Florida Medical Center of the opening of those new beds is sufficiently serious to make the hours reasonably expended a satisfactory basis for the fee award. That the record on appeal was brief, and the consolidated initial and reply briefs succinct (totaling 23 pages) does not mean the hours expended on the appeal are not properly compensable. Other Factors None of the other factors in Rule 4-1.5(B) would vary the lodestar amount. "When . . . the applicant for a fee has carried his burden of showing that the claimed rate and number of hours are reasonable, the resulting product is presumed to be the reasonable fee to which counsel is entitled." Pennsylvania v. Deleware Valley Citizens Council, U.S. , 106 S.Ct. 3088, 3398 (1986) quoting, Blum v. Stenson, 465 U.S. 886, 897, 104 S.Ct. 1541, 1548, 79 L.Ed.2d 891 (1984) (emphasis by the Court). The fee is not contingent, and no special time limitations were imposed by the client or the circumstances, Rule 4-1.5(B)(8), (5). The nature and length of the professional relationship with the client is not significant here since that factor is encompassed in the determination of the hourly rate to which Florida Medical Center and its attorneys agreed, as is the factor on experience, reputation and ability of the lawyer performing the services. Rule 4-1.5(B)(6), (7). Equal Access to Justice Act The argument of the Department of Health and Rehabilitative Services that the $15,000 cap on fees which may be awarded under the Equal Access to Justice Act, Section 57.111, Florida Statutes, should be applied to this case is rejected. The fees the District Court of Appeal ordered HRS to pay were not awarded pursuant to that Act. That cap is permissible because an award of fees is in derogation of the American rule that a party shall bear its own fees. See, e.g., Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Having statutorily created the entitlement to fees, the legislature may also cap those fees. The record shows that Florida Medical Center's motion to the Court which prompted this fee award was one based on Section 120.57(1)(b)(9), Florida Statutes (1985), which authorizes the courts to award "reasonable attorney's fees and costs" without any cap. The purpose of the award is to make Florida Medical Center whole for the fees and costs incurred as the result of Departmental action which was a gross abuse of agency discretion." Section 120.57(1)(b)(9), Florida Statutes (1985). The fee will not go to Florida Medical Center's attorneys--they have already been paid. As the statute prescribes, the court has awarded the fee to "the prevailing party." It is no defense to an award under the statute that the hourly rate assessed is more than the agency pays to counsel it hires. The argument advanced by the expert witness for the Department that the focus should not be on the amount the private client was willing to pay, but on what the public will approve is not accepted. The statutory standard is that the fee shall be reasonable, and the provisions of the Rules Regulating The Florida Bar identify factors for applying the test of reasonableness. Public antipathy to awards made to private parties with public funds to redress grossly abusive agency conduct lacks legal significance. Costs Florida Medical Center is entitled to recover the $50.00 filing fee for Case No. BD-46, the cost of the record on appeal of $4.00, and $63.74 for printing of the reply brief. The total allowable costs are $117.74.
Recommendation Based on the foregoing, it is RECOMMENDED that fees in the amount of $47,102.50 be awarded with costs of $117.74. DONE AND ORDERED this 7th day of April 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 7th day of April 1987. COPIES FURNISHED: Eric B. Tilton, Esquire Post Office Drawer 550 Tallahassee, Florida 32302 R. S. Power, Esquire Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Raymond E. Rhodes, Clerk District Court of Appeal First District State of Florida Tallahassee, Florida 32399-1850
The Issue The issue for determination is whether Intervenors are entitled to reasonable attorney fees and costs pursuant to Section 120.595, Florida Statutes (2003).1
Findings Of Fact Petitioner is an insurer and carrier within the meaning of Subsections 440.02(4) and 440.02(38), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(w).2 Petitioner is licensed in the state as a workers' compensation insurance carrier (carrier).3 Respondent is a state agency within the meaning of Subsection 440.02(3), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(b). In relevant part, Respondent is responsible for resolving reimbursement disputes between a carrier and a health care provider. Intervenors are health care providers within the meaning of Subsection 440.13(1)(h), Florida Statutes (2005), and Florida Administrative Code Rule 69L-7.602(1)(u). Each Intervenor is a health care facility within the meaning of Subsection 440.13(1)(g), Florida Statutes (2005). Intervenors seek an award of attorney fees and costs against Petitioner pursuant to Sections 57.105 and 120.595, Florida Statutes (2003). The proceeding involving Section 57.105, Florida Statutes (2003), is the subject of a separate Final Order entered on the same date as this Recommended Order. The scope of this Recommended Order is limited to Section 120.595, Florida Statutes (2003). Intervenors allege that Petitioner is the "non- prevailing adverse party" in an underlying proceeding and participated in the underlying proceeding for an "improper purpose" as the quoted terms are defined, respectively, in Subsections 120.595(1)(e)3. and 120.595(1)(e)1., Florida Statutes (2003). The underlying proceeding involves eight consolidated Petitions for Administrative Hearing. Petitioner filed each Petition for Administrative Hearing after Respondent determined Petitioner had improperly discounted the amount of reimbursement Petitioner paid for hospital services that Intervenors provided to eight patients from March 13, 2004, through February 11, 2005. From April 13 through May 23, 2005, Respondent issued separate orders directing Petitioner to pay the disputed amounts pursuant to Subsection 440.13(7), Florida Statutes (2005). From June 1 through June 21, 2005, Petitioner filed eight separate Petitions for Administrative Hearing. The eight petitions were subsequently consolidated into one underlying proceeding. Petitioner is the non-prevailing adverse party in the underlying proceeding. On December 8, 2005, Petitioner filed a Notice of Voluntary Dismissal in the underlying proceeding. On December 9, 2005, Intervenors filed their motion for attorney fees based on Section 120.595, Florida Statutes (2003). The formal hearing in the underlying proceeding was set for January 18, 2006. The ALJ amended the issue for the formal hearing to exclude the original reimbursement dispute and to limit the scope of the formal hearing to the fee dispute. The ALJ did so to avoid delay in the resolution of the proceeding. The fee dispute at issue in this proceeding includes only six of the original eight reimbursement disputes because Intervenors were not the medical providers in two of the original eight disputes.4 In the six reimbursement disputes involving Intervenors, Respondent ordered Petitioner to pay additional reimbursements in the aggregate amount of $54,178.52. Approximately $51,489.27 of the $54,178.52 in additional reimbursement involved inpatient hospital services provided to one patient.5 The remaining $2,689.25 in additional reimbursement involved outpatient hospital services in the emergency room.6 Subsection 440.13(12), Florida Statutes (2005), mandates that a three-member panel must determine statewide schedules for reimbursement allowances for inpatient hospital care. The statute requires hospital outpatient care to be reimbursed at 75 percent of "usual and customary" charges with certain exceptions not relevant to this proceeding. Notwithstanding the statutory mandate to schedule reimbursement rates for hospital inpatient services, the inpatient services at issue in the underlying proceeding were apparently unscheduled inpatient services. By letter dated April 13, 2005, Respondent ordered Petitioner to pay Intervenor, Holmes Regional Medical Center, Inc. (Holmes), an additional reimbursement in the amount of $51,489.27. The total reimbursement to Holmes was 75 percent of the charges that Holmes submitted to Petitioner for reimbursement.7 Respondent interprets Subsection 440.13(12), Florida Statutes (2005), to authorize reimbursement of both unscheduled inpatient hospital services and outpatient hospital services at the same rate. There is no dispute that Respondent reimburses unscheduled inpatient hospital services and outpatient hospital services at 75 percent of the "usual and customary" charges. The dispute in the underlying proceeding was over the meaning of the phrase "usual and customary" charges. Petitioner challenged the interpretation asserted by Respondent and Intervenors. Respondent and Intervenors contended that the quoted statutory phrase means Intervenors' usual and customary charges evidenced in a proprietary document identified in the record as the "charge master." Each Intervenor maintains its own charge master, and the information in each charge master is proprietary and confidential to each Intervenor. Petitioner asserted that the statutory phrase "usual and customary" charges means the usual and customary charges imposed by other hospitals in the community in which Intervenors are located. Petitioner maintains a data base that contains information sufficient to determine the usual and customary charges in each community. Petitioner did not participate in the underlying proceeding for an improper purpose within the meaning of Subsection 120.595(1)(e)1., Florida Statutes (2003). Rather, Petitioner presented a good faith claim or defense to modify or reverse the then-existing interpretation of Subsection 440.13(12), Florida Statutes (2005). Petitioner had a reasonable expectation of success. The statutory phrase "usual and customary" charges is not defined by statute. Nor has the phrase been judicially defined. Respondent bases its interpretation of the disputed phrase on two agency final orders and relevant language in the Florida Workers' Compensation Reimbursement Manual for Hospitals (2004 Second Edition) (the Manual). The Manual is developed by the Florida Department of Financial Services (DFS).8 The Manual interprets the quoted statutory phrase to mean the "hospital's charges." However, after the effective date of the Manual in 2004, DFS developed a proposed change to the Manual that, in relevant part, interprets "usual and customary" charges to mean the lesser of the charges billed by the hospital or the median charge of hospitals located within the same Medicare geographic locality.9 The trier of fact does not consider the new interpretation of the disputed statutory phrase as evidence relevant to a disputed issue of fact. As Respondent determined in an Order to Show Cause issued on February 16, 2006, and attached to Intervenors' PRO, "what constitutes 'usual and customary' charges is a question of law, not fact." The ALJ considers the new interpretation proposed by DFS for the purpose of determining the reasonableness of the interpretation asserted by Petitioner in the underlying proceeding. The ALJ also considers the new DFS interpretation to determine whether the interpretation asserted by Petitioner presented a justiciable issue of law. Intervenors assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to initially explain its reduced reimbursement to Intervenors with one of the codes authorized in Florida Administrative Code Rule 69L-7.602(5)(n) as an explanation of bill review (EOBR). None of the EOBR codes, however, contemplates a new interpretation of the statutory phrase "usual and customary" charges. Intervenors further assert that Petitioner's improper purpose in the underlying proceeding is evidenced, in relevant part, by Petitioner's failure to respond to discovery. However, responses to discovery would not have further elucidated Petitioner's rule-challenge. Petitioner stated eight times in each Petition for Administrative Hearing that Florida Administrative Code Rule 69L-7.501, the DFS rule incorporating the Manual by reference: [S]hould be read to allow recovery of 75% of the usual and customary fee prevailing in the community, and not 75% of whatever fee an individual provider elects to charge. Respondent and Intervenors were fully aware of the absence of statutory and judicial authority to resolve the issue. Petitioner did raise at least one factual issue in each Petition for Administrative Hearing. Petitioner alleged that Respondent's decision letters ordering Petitioner to pay additional reimbursement amounts had no legal effect because Respondent acted before each provider requested and received the carrier's reconsidered reimbursement decision. The absence of a formal hearing in the underlying proceeding foreclosed an evidential basis for a determination of whether each provider in fact requested and received a reconsidered reimbursement decision before the date Respondent ordered Petitioner to pay additional reimbursements. In this fee dispute, Petitioner presented some evidence to support the factual allegation and thereby established the presence of a justiciable issue of fact. It is not necessary for Petitioner to present enough evidence to show that Petitioner would have prevailed on that factual issue in the underlying proceeding. If the letters of determination issued by Respondent were without legal effect, Petitioner would not have waived its objections to further reimbursement within the meaning of Subsection 440.13(7)(b), Florida Statutes (2005). A determination that Petitioner did, or did not, submit the required information is unnecessary in this proceeding. During the formal hearing in this proceeding, Petitioner called an expert employed by a company identified in the record as Qmedtrix. The testimony showed a factual basis for the initial reimbursement paid by Petitioner. It is not necessary for Petitioner to show that this evidence was sufficient to prevail on the merits in the underlying case. The evidence is sufficient to establish justiciable issues of fact in the underlying case. In this proceeding, Petitioner submitted some evidence of justiciable issues of fact in the underlying proceeding. Petitioner need not submit enough evidence in this fee dispute to show Petitioner would have prevailed on these factual issues in the underlying proceeding. Intervenors are not entitled to a presumption that Petitioner participated in this proceeding for an improper purpose in accordance with Subsection 120.595(1)(c), Florida Statutes (2003). Although Petitioner was the non-prevailing party in two previous administrative hearings involving the same legal issue, the two proceedings were not against the same prevailing hospital provider and did not involve the same "project" as required in the relevant statute. Intervenors seek attorney fees in the amount of $36,960 and costs in the amount of $2,335.37 through the date that Petitioner voluntarily dismissed the underlying proceeding. Absent a finding that Petitioner participated in the underlying proceeding for an improper purpose, it is unnecessary to address the amount and reasonableness of the attorney fees and costs sought by Intervenors. If it were determined that Petitioner participated in the underlying proceeding for an improper purpose, the trier of fact cannot make a finding that the proposed attorney fees and costs are reasonable. Such a finding is not supported by competent and substantial evidence. The total attorney fees and costs billed in the underlying proceeding were charged by six or seven attorneys or paralegals employed by the billing law firm. However, the fees and costs at issue in this proceeding exclude any time and costs charged by paralegals and include only a portion of the total fees and costs charged by the attorneys. The total amount of time billed and costs incurred in the underlying proceeding is evidenced in business records identified in the record as Intervenors' Exhibits 20-23. However, those exhibits do not evidence the reasonableness of the fees and costs billed by the attorneys.10 Either the testimony of the billing attorneys or the actual time slips may have been sufficient to support a finding that the attorney fees and costs are reasonable. However, Intervenors pretermitted both means of proof. Intervenors asserted that the time slips contain information protected by the attorney-client privilege. However, Intervenors neither submitted redacted time slips nor offered the actual time slips for in-camera review. Nor did Intervenors allow the attorneys to testify concerning unprivileged matters. The absence of both the testimony of the attorneys and the time slips is fatal. The fact-finder has insufficient evidence to assess the reasonableness of the fees and costs, based on the novelty and difficulty of the questions involved. Intervenors' expert opined that the attorney fees and costs are reasonable. The expert based her opinion, in relevant part, on her review of the actual time slips maintained by each attorney. However, Petitioner was unable to review the time slips before cross-examining the expert. In lieu of the actual time slips, Intervenors submitted a summary of the nature of the time spent by each attorney. The summary is identified in the record as Intervenors' Exhibit 2. Petitioner objected to Intervenors' Exhibit 2, in relevant part, on the ground that it is hearsay. The ALJ reserved ruling on the objection and invited each side to brief the issue in its respective PRO. The paucity of relevant citations in the PROs demonstrates that neither side vigorously embraced the ALJ's invitation. Intervenors' Exhibit 2 is hearsay within the meaning of Subsection 90.801(1)(c), Florida Statutes (2005).11 The author of Intervenors' Exhibit 2 summarized the unsworn statements of attorneys from their time slips and submitted those statements to prove the truth of the assertion that the time billed was reasonable. Intervenors made neither the attorneys nor their time slips available for cross examination.12 Even if the summary were admissible, the summary and the testimony of its author are insufficient to show the attorney fees and costs were reasonable. The insufficiency of the summary emerged during cross-examination of its author. The author is the lone attorney from the billing law firm who testified at the hearing. Q. What other information did you look at to decide what time to actually bill . . .? A. The information I used was the information from the actual bill. Q. If we look at the first entry . . . were you the person that conducted that telephone conference? A. No, I wasn't. Transcript (TR) at 510-511. Q. In other words, [the entries] go with the date as opposed to the event [such as a motion to relinquish]? A. That's correct. Q. So if I wanted to know how much time it took you to actually work on the motion to relinquish, I would have to look at each entry and add up all the hours to find out how long it took you to do one motion. Is that how I would do that? A. It would be difficult to isolate that information from this record, we bill and explain in the narrative what work is performed each day, and unless that was the single thing worked on for several days, there would be no way to isolate the time, because we don't bill sort of by motion or topic. . . . Q. Well, if I'm trying to decide whether the time billed is reasonable, wouldn't I need to know how much time was spent on each task? A. I'm not sure how you would want to approach that. . . . Looking at this document, it does not give you that detail. It doesn't provide that breakout of information. Q. Is there a way for us to know who you spoke with on those entries? A. The entry . . . doesn't specify who participated in the conference. I don't recall what the conference entailed . . . . And many of these entries are from months ago, and I can't specifically recall on that date if I was involved in a conference and who else might have been there. . . . And so my guess is where the conference is listed on a day when lots of activity was performed on behalf of the client, most of it in this case was research. TR at 516-521.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order denying the motion for attorney fees and costs. DONE AND ENTERED this 27th day of April, 2006, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 27th day of April, 2006.
Conclusions THIS CAUSE came on for consideration before the Agency for Health Care Administration, which finds and concludes as follows: 1. The Agency issued the attached Notices of Intent to Deny Initial licensure to the Petitioner, Ultracare Imaging Services Inc. (Ex. 1) The Agency issued the attached Notice of Intent to Deny Renewal licensure to the Petitioner, X-Ray, Inc. (Ex. 2) The parties have entered into the attached Settlement Agreement. (Ex. 3) The Settlement Agreement is approved and adopted as part of this Final Order and the parties shall comply with the terms of the Settlement Agreement. 2. The Petitioners, Ultracare Imaging Services, Inc. and X-Ray, Inc., jointly and severally, are assessed, and will pay the Agency, an administrative fine of $25,000.00 in five monthly payments of $5,000.00. The initial payment is due on September 30, 2012. The remaining four payments are due on the last day of each of the four successive months. Unpaid amounts are subject to statutory interest and may be referred to collections. 3. Checks should be made payable to the “Agency for Health Care Administration,” with a reference to the ten-digit AHCA number, should be sent to: 1 Filed July 31, 2012 4:31 PM Division of Administrative Hearings Agency for Health Care Administration Office of Finance and Accounting Revenue Management Unit 2727 Mahan Drive, MS #14 Tallahassee, Florida 32308 4. Any requests for an administrative hearing are withdrawn. The parties shall bear their own costs and attorney’s fees. This matter is closed. — ORDERED at Tallahassee, Florida, on this 3/ day of July , 2012.
Other Judicial Opinions A party that is adversely affected by this Final Order is entitled to seek judicial review which shall be instituted by filing one copy of a notice of appeal with the agency clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE 1 HEREBY CERTIFY that a true and correct copy of this Final Order was served on the below- named persons/entities by the method designated on this ay of Je S , 2012. Agency for Health Care Administration 2727 Mahan Drive, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone (850) 412-3630 Jan Mills Facilities Intake Unit Agency for Health Care Administration (Electronic Mail) Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration (Electronic Mail) Roger Bell Health Care Clinic Unit Manager Agency for Health Care Administration (Electronic Mail) Amy W. Schrader, Esquire Gray Robinson, P.A. Post Office Box 11189 Tallahassee, Florida 32302 (U.S. Mail) Warren J. Bird Troy A. Kishbaugh, Esquire Assistant General Counsel Gray Robinson, P.A. Office of the General Counsel Post Office Box 3068 Agency for Health Care Administration Orlando, Florida 32802 (Electronic Mail) (U.S. Mail) Stuart M. Lerner Administrative Law Judge Division of Administrative Hearings (Electronic Mail)
