The Issue The issues are whether Respondent committed the acts and omissions alleged in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact At all material times, Respondent has been licensed in Florida as a life, life and health, general lines--property and casualty, and health agent. His license number is A081006. Respondent was initially licensed on July 24, 1978. He was licensed as a health insurance agent in May 2000. At no time has Local 16, United States Workers of America Local 16 National Health Fund, IIAWU National Health Fund, or Local 16 National Health ever been licensed or authorized to do business in Florida as a life and health insurance company or reinsurance company. All references in this Recommended Order to "Local 16" include all of these entities. Patricia Holdridge is the owner of Patty Contracting Corporation, doing business as East Coast Electric and Mr. Electric (East Coast Electric) in Sebastian, Florida. She has owned East Coast Electric for 11 years. In May 2000, Ms. Holdridge served as the manager of East Coast Electric. In that capacity, she met with Respondent, who was an agent employed by Stuart Insurance, Inc., in Palm City, Florida. Respondent visited Ms. Holdridge's office and dropped off literature on group health insurance. Ms. Holdridge spoke with Respondent about her company's insurance needs. At the time, the company had temporary health insurance, following the insolvency of the prior health insurer. Respondent said that he could provide health insurance for the company's ten or eleven employees. After agreeing to the details of the new health insurance, Ms. Holdridge met with Respondent another time to sign the papers. At this time, she learned that a labor union was somehow involved. She told Respondent that there was no way that a labor union could be involved because her company could not afford to pay union wages to its employees. Respondent assured Ms. Holdridge that the union's participation in the health insurance was a "technicality." He told her that the union would never contact her or interfere with her business. Ms. Holdridge accepted this explanation, emphasizing again that no union could be involved with her company. The paperwork that Respondent produced for Ms. Holdridge to complete included an application for health insurance. One form was a Member Enrollment Application with the Local 16 National Health Fund in Newton, New Jersey. The application is for health insurance and asks basic questions concerning the insureds' medical and claims history. Another form in the package that Respondent gave Ms. Holdridge was a Membership Application with "USWA, Local 16, TCIU, AFL-CIO, CLC," also in Newton, New Jersey. Another form in the package was an "Application and Representatvie [sic] Authorization [for] Affiliated Business Trade Services," in Jacksonville. The materials that Respondent supplied Ms. Holdridge included descriptions of two plans, with differing co-payment amounts, with premiums set by the age groups containing the employee and his or her covered family members. The two plans were the "80/60" plan and the "90/70" plan. The Summary of Benefits for the 80/60 plan lists numerous covered types of services and assures 80 percent payment after deductible for listed providers and 60 percent payment after deductible for nonlisted providers. The Schedule of Benefits Summary for the 90/10 plan lists numerous covered types of services and assures 90 percent payment, purportedly without any copayment, for listed providers and 70 percent payment after deductible for nonlisted providers. A second Schedule of Benefits Summary for the 90/10 plan also bears the heading, "Local 16 National Health Fund." Respondent also provided Ms. Holdridge with insurance identification cards. The health insurance card is entitled, "USWA Local 16 TCU-AFL-CIOP, CLC National Health Fund." The dental insurance card is entitled, "Local 16 National Health Fund." After signing up for the insurance, East Coast Electric received invoices from Local 16. These invoices were broken down by employee and included entries for "welfare fund," "dues," and "ABTS." The amount entered for "welfare fund" is the premium for each employee's health insurance, based on the type of coverage and numbers and ages of dependents. The invoices directed East Coast Electric to pay this sum to Local 16, National Health Fund." The amount entered for "dues" is for union membership dues. The invoices directed East Coast Electric to pay this sum to Local 16, TCIU. The amount entered for ABTS is for the Affiliated Business Trade Services. The invoices directed East Coast to pay this sum to Affiliated Business Trade Services. The invoices directed East Coast Electric to send all of its payments to Affiliated Business Trade Services. At some point after signing up for the insurance, Respondent provided Ms. Holdridge with a Labor Agreement to sign. This detailed agreement provided that USWA Local 16 TCIU, AFL-CIO, CLC had been designated by a majority of the employer's employees to act as the exclusive bargaining agent. Ms. Holdridge refused to sign the agreement, and she heard nothing about her refusal to sign. East Coast Electric paid Local 16 a total of $32,000 from June 1, 2000, for group health insurance for its employees. Numerous employees of East Coast Electric signed up for the group health insurance offered by Local 16. Each of them signed forms indicating that he or she was joining the union, but none of them intended or wanted to join Local 16. Each employee understood that he or she was merely signing up for group health insurance. Allen Baurley was an electrician with East Coast Electric when the company purchased health insurance from Local After obtaining coverage with Local 16, Mr. Baurley suffered a sudden illness for which he submitted covered medical bills of over $34,000. Local 16 never paid any of these claims, in whole or in part. Mr. Baurley has paid $5000 of this debt through monthly payments and incurred $3500 in legal fees defending himself in a collection action brought by the hospital. Holly Emard was the office manager of East Coast Electric when the company purchased health insurance from Local 16. She signed up for group health insurance from Local 16. She incurred $300 in covered medical expenses, which Local 16 did not pay. Ms. Emard also handled communications between East Coast Electric and Local 16. As medical expenses went unpaid, she would contact Respondent, who offered to relay medical bills to Local 16. Sometimes, when she followed up, Respondent would claim not to have received the bill, and sometimes he would say that the union would be cutting checks later in the month. One time, Respondent suggested that Ms. Emard send an unpaid bill to a specified person with Local 16. Respondent was always very nice to Ms. Emard, but he did not help much with the payment problems. Eventually, Ms. Emard was spending half of her day on health insurance matters. Maurice Gay, Jr., was a scheduler and estimator with East Coast Electric when the company purchased health insurance from Local 16. Of the $1700 of covered medical expenses that he submitted to Local 16, the union health fund paid only $12. Mr. Gay's then-wife had a serious, lifetime pre-existing condition that had been covered by other health insurance. Induced by Respondent's representations of coverage from Local 16, she dropped her other insurance and enrolled with Local 16. When she tried to obtain health insurance elsewhere, after her adverse experience with Local 16, she found that insurers treated her situation as a lapse in coverage, so she incurred over $4000 in uncovered medical expenses--resulting in monthly payments to her health care providers and referrals to collection agencies. Catherine Desmarais was the only witness who was victimized by the sale of Local 16 group health insurance, but was not an employee of East Coast Electric. Ms. Desmarais was an accountant employed by Beacon Accounting Services, Inc., in Palm City, Florida, when the company purchased health insurance from Local 16. Ms. Desmarais testified that she never met Respondent. She signed up for group health insurance from Local 16 for herself, her husband, and two of her children sometime in 2000. Her supervisor at work informed her that she had to join Local 16, and Ms. Desmarais did so, although there was no union, shop steward, or other evidence of union activities at Beacon Accounting after she enrolled. Beacon Accounting employees joked at times, saying a supervisor could not do something, or else they would call the union. Ms. Desmarais' first attempt to use the Local 16 health insurance was when she tried, unsuccessfully, to fill a prescription. When the pharmacy refused to honor her insurance card, Ms. Desmarais told her supervisor, who suggested that she speak with Respondent. Ms. Desmarais telephoned Respondent, who said that someone else had had a similar problem and that he had already called someone in New Jersey and had corrected the problem. However, Ms. Desmarais eventually incurred about $3500 in covered medical expenses, for which Local 16 paid nothing. Later, in November 1991, after learning that Local 16 had filed for bankruptcy, Ms. Desmarais contacted Respondent, who informed her and her employer of another self-insured plan. However, Beacon Accounting elected to purchase group health insurance elsewhere. On November 15, 2002, a general adjuster for Fireman's Fund Insurance Company wrote Ms. Desmarais a letter in connection with its insured, Stuart Insurance. The letter attempts to initiate a process to conclude outstanding claims that arose when Local 16 became insolvent. The letter explains that its author was having difficulty linking Ms. Desmarais to a Local 16 group health policy. However, Ms. Desmarais produced at the hearing a copy of her Local 16 National Health Fund insurance identification card, which bears her name. Given the numerous administrative problems that East Coast Electric had with Local 16, the obvious explanation is that Local 16's poor recordkeeping resulted in the misplacing of Ms. Desmarais' insurance file. The employees of East Coast Electric never organized, never joined Local 16, never engaged in collective bargaining, and never negotiated the subject plan pursuant to any collective bargaining or union membership. At all material times, Respondent was aware of all of these facts, as he fraudulently required the employees of East Coast Electric to falsely indicate that they were or were applying to become members of Local 16. As marketed to persons who were not members or participants of Local 16, the subject plan was not an "employee benefit plan," as that term is described below. The subject plan was never an insured plan, as described below. If it had qualified as an "employee benefit plan," the subject plan would have been a "multiple employer welfare arrangement," as described below. United States Workers of America Local 16 National Health Fund filed for protection under Chapter 7 of the Bankruptcy Code the United States Bankruptcy Court, District of New Jersey (Newark Division), Case No. 01-42881, on November 27, 2001. The case is still pending.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order revoking Respondent's license. DONE AND ENTERED this 30th day of December, 2003, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 30th day of December, 2003. COPIES FURNISHED: Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 David J. Busch Philip M. Payne Department of Financial Services and Chief Financial Officer Division of Legal Services 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Edward Michael Farley Post Office Box 1696 Palm City, Florida 34991
The Issue The ultimate issue in this case is whether Respondent's proposed Florida Administrative Code Rule 69O-149.022(3), which would incorporate by reference Form OIR-B2-2112, constitutes an invalid exercise of delegated legislative authority. Before that issue may be reached, however, it is necessary to determine whether Petitioners have standing to challenge the proposed rule.
Findings Of Fact The Financial Services Commission ("Commission") is a four-member collegial body consisting of the governor and cabinet. The Office of Insurance Regulation ("Office") is a structural unit of the Commission. Giving rise to this case, the Office initiated rulemaking and made recommendations to the Commission concerning an amendment to rule 69O-149.022, which would incorporate by reference Form OIR-B2-2112, titled "Consumer Notice [Regarding] The Impact of Federal Health Care Reform on Health Plan Costs" ("Form 2112"). Whenever the Commission or the Office engages in rulemaking, the members of the Commission serve as the agency head. The Commission thus has the ultimate responsibility for approving and adopting the proposed rule. CHAIN is a nonprofit corporation which operates solely within the state of Florida. CHAIN is subject to the oversight of a voluntary board of directors. As a health-care advocacy organization, CHAIN is exempt from taxation under section 501(c)(3) of the Internal Revenue Code and derives its income primarily from grants and contributions. CHAIN provides services to low- and moderate-income individuals who lack health insurance coverage or perceive their coverage to be unaffordable or inadequate. CHAIN provides health insurance purchased through Florida's small-group health insurance market to each of its five full-time employees. Greg Mellowe is a full-time employee of CHAIN who receives health insurance coverage through such employment. During the 2013 regular session, the Florida Legislature passed a bill, which the governor approved, enacting section 627.410(9), Florida Statutes. This section requires that insurers provide to policyholders of individual and small-group nongrandfathered plans a notice that describes the estimated impact of the federal Patient Protection and Affordable Care Act ("PPACA")——popularly and more commonly known as Obamacare——on monthly premiums.1/ An insurer that issues a nongrandfathered plan must give this notice one time——when the policy is issued or renewed on or after January 1, 2014——on a form established by rule of the Commission. (A "nongrandfathered" plan is a health insurance plan that must comply with all of Obamacare's requirements. For ease of reference, such plans will be referred to as "compliant plans.") Having been directed to act, the Office commenced rulemaking to establish the form of the notice to be sent to persons insured under compliant, individual and small-group plans, eventually proposing to adopt Form 2112. The Commission approved this form at a hearing on August 6, 2013. Form 2112 fills a single, one-sided page2/ and looks like this: CHAIN will receive the Obamacare notice when it renews its small-group health insurance plan, or purchases a new plan, on or after January 1, 2014.
Findings Of Fact At all times material hereto, Respondent is and has been a physician licensed to practice medicine under the laws of the State of Florida, having been issued license number ME 0034162. Between the dates of approximately December 1982 and July 1953, Respondent was associated with Felix Garcia-Loredo in the practice of medicine under the name of Hialeah Family Practice at 777 East 25th Street, Hialeah, Florida 33013, pursuant to a verbal agreement. At the time that they entered into that verbal agreement, Garcia-Loredo was not licensed as a physician or as a physician's assistant, and Respondent knew that Garcia-Loredo had no license. What Garcia-Loredo did have, however, was that which Respondent lacked: the money and community contacts which Respondent needed in order to start a medical practice which might have been otherwise out of reach for Respondent, who was new to the Miami area where he knew almost no one and where he earned a living by working as a physician at two clinics. In furtherance of their agreement, Garcia-Loredo borrowed $10,000 from a bank in order to open the office and hired a secretary. Since Respondent had the only medical license between the two of them, he signed the lease for the office space in a complex of medical offices next to Hialeah Hospital. Name signs were placed outside the door of the Hialeah Family Practice: one sign bore Respondent's name, and the other read "Dr. Felix Garcia-Loredo." Although the office was open thereafter for six days a week, the only person working on a regular schedule was the secretary. Xiormma Perez was the secretary at Hialeah Family Practice during substantially all the time that the office was open. She believed she worked for Felix Garcia-Loredo, since he was the one who hired her and since she did not meet Respondent until approximately a month after she had begun working for Felix Garcia-Loredo. She also believed that Garcia-Loredo was a medical doctor, since he introduced himself to her as such when she interviewed with him for employment. Additionally, the many people who came to the office to see Garcia- Loredo referred to him as Dr. Garcia-Loredo. If anyone telephoned the office requesting an appointment to see a doctor, Perez gave that person an appointment to see Respondent at 5:00 p.m. or later, since Respondent was employed full-time at two clinics and that was the earliest time when he could be at the office to see a patient. According to Perez, Respondent saw only a "handful of patients" during the entire time that the office was open. Felix Garcia-Loredo, however, had numerous friends and relatives appear at the office to see him. Garcia-Loredo would take those persons into an interior office, and Perez had no knowledge as to what occurred behind the closed door. When Perez prepared insurance claim forms, she left them with Garcia-Lore do for review and did not give the insurance claim forms to Respondent, although the forms were to be signed by the physician who had rendered the medical services for which reimbursement was being sought. In fact, Garcia-Loredo signed numerous insurance claim forms on behalf of Hialeah Family Practice, and Respondent signed none. The parties have stipulated that the following acts constitute medical service in the practice of medicine: performing examinations, ordering or performing laboratory tests, ordering or performing x-rays, ordering or performing treatment, and prescribing or dispensing medication. Between January 1983 and March 1983, Garcia-Lore do performed the following medical services to patient Leslie Andrews at the office of Hialeah Family Practice at 777 East 25th Street, Hialeah, Florida: Garcia-Loredo gave Andrews a complete physical examination; he ordered for Andrews laboratory tests and x-rays; he evaluated those laboratory tests and x-rays and diagnosed Andrews' symptoms based thereon; he placed Andrews on a special diet and wrote Andrews a prescription for medication. He thereafter filed a health insurance claim form for payment of medical services rendered by him to Andrews in the amount of $1,739, and he signed that form where the form requires the signature of physician or supplier. Not only was Respondent not present during any of the treatment rendered to Andrews, Respondent and Andrews have never met. All of the patient records were kept in files in the reception area in the office of Hialeah Family Practice. Copies of the insurance claim forms were also kept in that location. Although these records were available to Respondent at all times, the only time that Respondent ever examined a file or any business record was when Garcia-Loredo needed him to admit a patient into the hospital, something which Garcia-Loredo could not do. Other than examining a patient's file for the purpose of admitting that patient into the hospital and performing whatever follow-up was required during that patient's hospitalization, Respondent never reviewed or even asked questions about any financial aspects of the medical office. During the entire time that the office was open, Respondent never received a salary or any draw from that office and did not know if the secretary or Garcia-Loredo were paid a salary or received any money in compensation for their services. Respondent had no knowledge of any insurance claim forms that were filed or of any insurance payments received. Respondent had no knowledge as to any charges made to any patient for services rendered or whether anyone had paid any of the charges. Respondent was not even aware of whether the business had any books and records.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondent guilty of the allegations contained in Count One of the Amended Administrative Complaint, dismissing Count Two of the Amended Administrative Complaint with prejudice, and assessing against Respondent an administrative fine in the amount of $1,000 to be paid by a date certain. DONE and RECOMMENDED this 4th day of May 1984, in Tallahassee, Leon County, Florida. LINDA M. RIGOT 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 4th day of May 1984. COPIES FURNISHED: Spiro T. Kypreos, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Manuel E. Oliver, Esquire 275 SW 13th Street Miami, Florida 33130 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Dorothy Faircloth, Executive Director Board of Medical Examiners 130 North Monroe Street Tallahassee, Florida 32301 =================================================================
Findings Of Fact At all times relevant to these proceedings, the Petitioner was an applicant for licensure as a life including variable annuity and health insurance agent. On or about February 2, 1994, the Petitioner was scheduled to take the life including variable annuity and health insurance agent examinations at Florida Technical College in Orlando, Florida. On February 2, 1994, the Petitioner chose to take only the life including variable annuity examination. He did not receive a passing grade on this examination. On February 4, 1994, the Petitioner returned to the Florida Technical College after the test had started. He attempted to use another test admittance authorization card to be able to re-test. At that time, the Petitioner was advised by Tom Bastedo, Test Site Computer Operator, that he could not use the authorization card to gain admittance to the examination since the Petitioner had already taken the life including variable annuity examination and the computer scoring system would report that the examination had already been scored. The Petitioner became angry and tore up the card. The Petitioner then discussed his personal situation with Tom Bastedo, which included a reference to some "emeralds" that the Petitioner owned. The Petitioner removed from his briefcase what appeared to be real emeralds and offered them as a bribe to Mr. Bastedo if he would make it look like the Petitioner had passed the examination which he had previously failed on February 2, 1994. Mr. Bastedo refused the offer and advised the Petitioner that he must reapply to be tested. The Petitioner hung around the testing site for awhile and then left the area. This incident was reported immediately by Mr. Bastedo to his supervisors. On or about March 9, 1994, the Petitioner's application for license as a life including variable annuity and health insurance agent was denied because of the events which had occurred at the Florida Technical College on February 4, 1994. Petitioner's explanation of the events that occurred on February 4, 1994 is not credible.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Insurance and Treasurer enter an Order denying the license application of Dario Albert Alvarez for licensure as a life including variable annuity and health insurance agent. DONE AND ENTERED this 27th day of September, 1994, in Tallahassee, Florida. DANIEL M. KILBRIDE 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 27th day of September, 1994. APPENDIX Petitioner did not submit proposed findings of fact. Respondent's proposed findings of fact. Accepted in substance: paragraphs 1-7. COPIES FURNISHED: Dario Albert Alvarez 13329 Laver Lane Orlando, FL 32824 John R. Dunphy, Esquire Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Tom Gallagher State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, FL 32399-0300
The Issue Whether Petitioner's application for licensure as a life, variable annuity, and health insurance agent should be granted.
Findings Of Fact In 1995 and part of 1996 Petitioner was licensed by the Department as a life and health insurance agent in Quincy, Florida. Around July 5, 1995, J.B. Price, M.D., a long-time friend and customer of Petitioner, filed a civil complaint against Petitioner for an unrefunded premium of $7,200 that was paid by Dr. Price to Petitioner for a life insurance policy. The life insurance policy was for a whole life policy and was intended to replace a term policy on Dr. Price. The insurance company rejected Dr. Price's application and the whole life policy was never issued. A final judgment was entered against Petitioner in the amount of the refund due on the failed policy. Within about a month from the entry of the final judgment, Petitioner borrowed sufficient funds and paid the amount of the judgment to Dr. Price. However, Petitioner did not obtain a formal satisfaction of judgment from Dr. Price at the time he paid the judgment. Petitioner had also paid the premiums and kept in force the premiums on the insurance Dr. Price had hoped to replace with the rejected insurance policy. Petitioner's license was suspended by the Department when it filed an Emergency Suspension Order dated May 21, 1996. The Emergency Suspension Order charged that Petitioner failed to refund a $7,200 premium to J.B. Price, M.D., a former customer in violation of Sections 626.561, 626.611(4), 626.611(7), 626.611(9), 626.611(10), 626.611(13), 626.621(2), and 626.621(6), Florida Statutes. Simultaneously with the Emergency Suspension Order, Petitioner filed an Administrative Complaint against Petitioner based on the same facts as the suspension order. Petitioner did not respond to the Administrative Complaint. Consequently, on July 7, 1996, Petitioner's license was revoked by the Department. After Petitioner's license was revoked, Petitioner continued to engage in business for which a license is required under the insurance code. On August 1996, Petitioner prepared and signed, as broker, an application for insurance on Minnie and Henry Sudduth. The Suddaths were friends of Petitioner. However, Petitioner accepted and submitted the application even though he knew his license had been revoked. Moreover, after revocation, during 1996-1999, Respondent had several convictions for passing worthless checks. One such incident occurred while Petitioner was on probation for an earlier sentence for passing worthless checks. Petitioner's bank ordinarily covered Petitioner's overdrafts. However, in these instances, the bank declined to cover the overdrafts. On June 1, 2000, Petitioner filed an application for licensure with the Department. The Department discovered that a judgment had been entered in the Price suit and advised Petitioner that no satisfaction of judgment had been recorded. Petitioner immediately obtained a satisfaction of judgment from Dr. Price and recorded it. All of these incidents demonstrate Petitioner is not qualified to engage in the business of insurance. Therefore, Petitioner's application for licensure should be denied.
Recommendation Based upon the foregoing findings of fact and Conclusions of Law, it is RECOMMENDED that A final order be entered denying Respondent's application for a license as a life, variable annuity, and health insurance agent. DONE AND ENTERED this 26th day of July, 2001, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER 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 26th day of July, 2001. COPIES FURNISHED: Frederick Benjamin Hodges, Jr. 3600 Thomas Drive Suite 109-D Panama City Beach, Florida 32408 Richard J. Santurri, Esquire Department of Insurance Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Honorable Tom Gallagher State Treasurer/Insurance Commissioner Department of Insurance The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300 Mark Casteel, General Counsel Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
The Issue The issue for consideration in this hearing is whether Respondent's license as a chiropractor in Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Board of Chiropractors, was the state agency responsible for the licensing of chiropractic physicians and the regulation of the chiropractic profession in Florida. Respondent was a licensed chiropractic physician holding license number CH-0004760, issued on January 2, 1985. Shortly after beginning his licensed practice, Respondent requested a provider number under both the Medicare and the Blue Cross/Blue Shield insurance programs, and was assigned provider number 70616. Application for a Blue Cross/Blue Shield provider number does not automatically result in the issuance of a Medicare provider number. That requires a separate request. However, Blue Cross/Blue Shield is the contract manager for the Medicare Part B program in Florida and is responsible for issuing provider numbers to physicians submitting claims to either or both programs, and the number for both may be the same, modified with a PIN number for one of them. On or about September 26, 1985, Respondent entered into an agreement with Medicare Part B to be a participating physician or supplier, as well as with Blue Cross/Blue Shield. A participating physician is a provider of medical services who agrees by contract to file claims directly with the carrier for the Medicare Part B program and agrees to accept no more than the Medicare approved charge for service of treatment rendered to a patient within the program. The participation agreement is automatically renewed on an annual basis until the provider requests, in writing, to be disenrolled. Respondent did not submit such a request, and, therefore, from January 1, 1986 through such time in 1995 as his status was terminated, he was a participating physician under the Medicare Part B program. In mid-September, 1992, S.M., a 70 year old woman, needed chiropractic treatment. Since she had just moved into the Winter Haven area, she contacted a referral service from which she obtained Respondent's name, among others. Because she knew where his office was, she called him to make an appointment, After asking her over the phone if she had Medicare and supplemental insurance coverage, (she did not ask him if he took Medicare patients), he made an appointment with her for an examination. S.M. contends that prior to providing any treatment, Respondent had her fill out a case history form which bears some notations which she did not put there. The Confidential Patient Case History form filled out by the patient on July 18, 1992, in the section entitled "Insurance Information", specifically asks for the name of the patient's insurance carrier and if the patient is covered by Medicare, to each of which questions the patient answered affirmatively and gave the pertinent coverage information. She also gave Respondent's staff her insurance cards for copying in support of the information noted on the form. The same form also has a provision in it which states in part, just above the patient's signature line: .... I understand that this Chiropractic Office will prepare any necessary reports and forms to assist me in making collection from the insurance company and that any amount authorized to be paid directly to this Chiropractic office will be credited to my account on receipt. However, I clearly understand and agree that all services rendered me are charged directly to me and that I am personally responsible for payment. Respondent took two x-rays of the patient's back and then treated her. She visited Respondent's office for treatment on at least two occasions and he wanted her to come back for further visits. However, because she felt better she did not do so. Respondent's records reflect that S.M. was treated by the Respondent with spinal adjustment or manipulation on both September 21 and September 28, 1992, and according to the Board's expert, Dr. Lucido, he also performed spinal acupressure trigger therapy on her. Spinal adjustment is covered by Medicare. Spinal acupressure trigger therapy is not. After each visit, S.M. was requested to pay in full in cash for all services provided and was given a receipt for the payments made. S.M. paid Respondent $170.00 for the first visit and paid $30.00 for each succeeding visit. According to Dr. Lucido, if Respondent performed services covered by private insurance, the filling out of the form for the patient would be a courtesy. If, however, the patient were covered by Medicare for the service rendered, it would be mandatory. If a chiropractor is going to perform a therapy which, as here, is not covered by Medicare, he is required to notify the patient of this in advance. Since in this case Respondent was performing a service not covered by Medicare, he was obliged to so advise the patient prior to doing the treatment, and this advice should have been reduced to writing and acknowledged by the patient. If a non-covered service was to be the exclusive service provided, Respondent would not have been required to file for Medicare coverage for the patient unless it were necessary in order to get a denial of coverage by Medicare prior to payment by private insurance. This is the standard in the community, according to Dr. Lucido. Respondent claims to recall vividly the treatment he rendered to S.M. and asserts he did only non-covered therapy which did not require him to fill out a Medicare claim form. He also claims that at the time in issue he was no longer a Medicare provider, asserting that one of the memoranda in the Blue Cross/Blue Shield personnel files relative to his status bears a signature thereon that is not his. Nonetheless, this testimony must be considered in light of Respondent's admission that he was once convicted of a crime involving dishonesty or the making of a false statement. Respondent admits signing up with Medicare early on and there is no evidence that he ever initiated his disenrollment from the program in a manner consistent with the procedure outlined by Ms. Esposito, the agency's enrollment official. The testimony of Respondent's office assistant, Ms. Miller, suggests that the receipts in this case are inaccurate and based on the medical records and her mistaken supposition of what happened in the treatment room. Respondent agrees and claims that when he discovered what had happened and how S.M. had been billed, he tried to retract the incorrect receipts which Ms. Miller had mistakenly issued. Notwithstanding all the above, in Dr. Lucido's opinion, S.M. was given both covered and non-covered treatment, and in this case, he contends, Respondent was obliged to file the Medicare claims form for S.M. After an evaluation of the testimony given by both Respondent and his assistant, it is found that Dr. Lucido's analysis of the situation is more credible and is adopted here. Ordinarily, S.M. would wait for the Medicare Explanation of Benefits form which she would then use to seek reimbursement from her supplemental carrier. The physician providing Medicare covered treatment is required to submit the Medicare claims form, and some physicians, as a courtesy, will prepare and submit the supplemental insurance claim form as well. After the last visit with Respondent, S.M. requested that he submit her insurance claim form to Medicare on her behalf so that she could be reimbursed for the money paid by her to him. Respondent told her he didn't go to school for five years to learn to fill out forms, but if she would get the forms, he would help her fill them out. When she went to the Social Security office to get the forms, at first she could not get them. S.M. was told it was up to the doctor to obtain and fill them out. However, she finally prevailed and got the forms which she filled out as best she could, except for the diagnosis. She then took them to Respondent. He not only refused to file the claim form with Medicare for S.M., he also refused to complete the diagnosis portion of the form. As a result, S.M. was required to submit the claims forms to Medicare herself, but payment for the services rendered her was denied by Medicare because the claims forms were not filed by Respondent directly with the carrier. When S.M. called Respondent's office to report that, he was not in and she left word for him to call back. He has never done so. Respondent's assistant, Ms. Miller, claims that on none of the three visits did S.M. indicate she was on Medicare nor did she ever present a Medicare card. Her testimony is not considered reliable, however, and S.M.'s account of the relationship is more credible. Federal law, at 42 U.S.C. 1395 provides that for services rendered after September 1, 1990, and within one year after the date on which the service is rendered for which payment is sought, a physician or provider: ... shall complete and submit a claim for such service on a standard claim form specified by the Secretary to the carrier on behalf of a beneficiary, and ...may not impose any charge relating to completing and submitting such a form.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the Board of Chiropractic enter a Final Order in this case placing Respondent, Jerald M. Jervis', license to practice chiropracty in Florida on probation for six months, assessing an administrative fine of $500.00, and issuing a reprimand. RECOMMENDED this 7th day of September, 1995, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 7th day of September, 1995. COPIES FURNISHED: Jon M. Pellett, Esquire Agency for Health Care Administration Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Jerald M. Jervis, D.C. 1100 East Lake Silver Drive, N.E. Winter Haven, Florida 33881-4155 Sam Power Agency Clerk Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Jerome W. Hoffman General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32309 Diane Orcutt Executive Director Board of Chiropractors 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether the charges contained in the Administrative Complaint, which is the subject of Case Number 01-2295, reflect statements of agency policy which should have been adopted as rules pursuant to Chapter 120, Florida Statutes.
Findings Of Fact The Parties United is a foreign insurer, domiciled in the State of Wisconsin holding a certificate of authority from the Department to transact the business of insurance in this state. It is a wholly-owned subsidiary of American Medical Securities Group, Inc. The Department, through its agency head, the Treasurer and Insurance Commissioner, has regulatory jurisdiction over United in connection with certain matters set forth in the Complaint. The regulatory scheme for out-of-state health insurance companies Health insurance companies operating pursuant to in-state regulatory schemes are subject to oversight regulation of the corporate entity including financial solvency and market conduct. Rates are required to be filed and approved prior to being used in the state. The review process involves a review of the rates to determine if they are reasonable in relation to the benefits provided. In regard to this, the Department has rules which it has adopted pursuant to Chapter 120, Florida Statutes, which it uses to determine the standards and formulae for making that determination. Certain out-of-state health insurers, such as United, are not subject to such stringent regulation. No review of premium rates is conducted by the Department in the case of these insurers, but it would be incorrect to state that they are not subject to regulation by the Department at all. Approximately 40 percent of the health insurance market in Florida is written through out-of-state group arrangements that do not provide policyholders consumer protections afforded to policyholders holding in-state policies regulated by the Department. United is required by Florida law to provide certain types of coverage. United must also ensure that certificates of coverage provided to residents of Florida contain the following language: The benefits of the policy providing your coverage are governed primarily by the law of a state other than Florida. Indent Background At all times pertinent, American Medical Security, Inc. (AMS), was a Florida-licensed administrator authorized to market and administer United's out-of-state group health insurance plans in Florida. AMS, like United, is a wholly-owned subsidiary of American Medical Securities Group, Inc. In May 1993, United, through AMS, filed for approval with the Department pursuant to Section 627.5515(2), Florida Statutes (1993), as an out-of-state group health insurer who would provide policies to be offered through an Alabama entity called the Prescription For Good Health Trust, which was formed primarily for the purpose of providing group insurance. The Department approved this filing. On March 2, 1995, the Department participated by conference call in a Regulatory Task Force of the National Association of Insurance Commissioners. The mission of the task force was to attempt to address a number of problems facing the insurance market. One of the problems discussed was rate protection for consumers when faced with "tier rating" or "tier blocking." The two terms are synonymous and mean, as to group health insurance, reclassifying insureds subsequent to having been initially placed in a class. This practice will be discussed in more detail below. In 1996, United made a filing for the Prescription For Good Health Trust which proposed tier rating. Sometime during 1996, after the Department objected to the filing, United withdrew it. The Department had never seen such a filing previously. United is the only health insurer to assert before the Department that reclassification by movement between classes would be permissible under the Florida Insurance Code. Section 627.6515(1), Florida Statutes, provides that a group health insurance policy issued or delivered outside this state under which a resident of Florida is provided coverage, shall comply with the provisions of Part VII, of Chapter 627, Florida Statutes, in the same manner as health policies issued within the state. Part VII of Chapter 627, Florida Statutes, provides for a comprehensive regulatory scheme for group health insurance. Section 627.6515(2), Florida Statutes, however, sets forth a number of exemptions. Section 627.6515(2), Florida Statutes, provides an exemption for an insurer like United, which provides health insurance through an association formed for a purpose other than that of offering insurance, which provides the language referred to in paragraph 5, supra, on the face of the certificate, and which offers the bundle of coverages provided in Subsection (c). This exemption applied to the Prescription For Good Health Trust. The Department concedes that it has no authority to set premium rates for out-of-state insurers like United. In November 1996, United through AMS, filed with the Department, pursuant to Section 627.6515(2), Florida Statutes, a request for approval of an out-of-state group health insurance policy termed the "MedOne Choice" plan. This plan was to be offered through an Ohio association called the Taxpayers' Network, Inc. (TNI). The association was formed primarily for purposes other than providing insurance. In January, 1997, the filing was accepted by the Department as meeting the requirements of Section 627.6515(2), Florida Statutes. Chapter 96-223, Laws of Florida, created Section 627.6425, Florida Statutes, effective May 25, 1996. When created, the section only addressed the renewability of individual coverage. Chapter 97-179, Laws of Florida, substantially amended Section 627.6425, Florida Statutes, effective May 30, 1997. Subsequent to the amendment, the section addressed certificates of coverage offered to individuals in the state as part of a group policy. This statute, along with Sections 627.6571 and 627.6487, Florida Statutes, implemented the federal Health Insurance Portability and Accountability Act (HIPAA). The basic theory of the HIPAA legislation is that an insurance company cannot simply cancel a health insurance policy without providing other options. On or about September 25, 1998, United, through AMS, notified all Prescription For Good Health Trust certificate holders that the policy forms through which their coverage had been provided were being discontinued, effective as of each certificate holder's 1999 renewal date. Upon discontinuance of the Prescription For Good Health Trust Plans, the only United health insurance plans available in Florida were the MedOne Choice plans offered through TNI. Membership in TNI was available to anyone upon submitting an application form and paying the membership fee. Membership in TNI was a prerequisite to continuance of a persons' health insurance coverage under United's MedOne Choice plan. United guaranteed each certificate holder, upon joining TNI, that upon request, they would be issued coverage under the Classic Benefit Plan (one of the TNI MedOne Choice plans) without regard to their health status. However, there was no guarantee that premiums would not rise. Certificate holders were also advised that if they desired coverage under a MedOne Choice plan other than the guaranteed issue Classic Benefit plan, they could apply for any of the other TNI plans. Only if the applicant met the underwriting guidelines for the plan for which they applied, would they be issued coverage under another MedOne Choice plan. Between October 1998 and early January 1999, United responded to questions and concerns raised by the Department about the decision to discontinue the Prescription For Good Health Trust plan, and whether the plan of discontinuance was in compliance with Section 627.6425, Florida Statutes. Specifically, discussions were had concerning the movement of insureds from the class in which they were originally assigned to another class at the time of renewal. United entered an agreement with the Department on January 14, 1999, whereby United would offer to certificate holders an additional guaranteed issue TNI plan and would cap the rate for the guaranteed issue plans at no more than twice the premium then currently being paid for the discontinued Prescription For Good Health Trust plan. In accordance with this agreement, United notified certificate holders of the additional guaranteed issue option available to them. Later in 1999, United discontinued the trust plan in accordance with their agreement with the Department. During the process of discontinuance, no certificate holder requested conversion coverage under Section 627.6675, Florida Statutes. Section 627.6675, Florida Statutes, provides that an insured may assert his or her right to a "converted policy," which provides for certain health insurance continuation rights. The Department determined that United's rate for the conversion policy, pursuant to the agreement, was within 200 percent of the standard risk rate and that the notice of the conversion privilege was contained in the certificate of coverage issued to Florida residents. Thus, the Department concluded that United was in compliance with the agreement of January 14, 1999. On May 19, 1999, a Department letter informed a consumer that the discontinuance of her coverage by United did not mean she was being discriminated against because the policy had been terminated for all members. The letter further recited that the Department did not have the ability to regulate United because it was not domiciled in Florida and her insurance was being provided to a group, referring to TNI, that was not registered in Florida. On July 27, 1999, a Department letter informed a consumer that United had an obligation to offer a replacement policy but that United had the right to underwrite the policy and charge additional premium. This statement also referred to TNI. Section 627.6425(1), Florida Statutes, provides that "except as otherwise provided in this section, an insurer that provides individual health insurance coverage to an individual shall renew or continue in force such coverage at the option of the individual." For the purpose of the aforementioned Section, the term "individual health insurance" means health insurance coverage, as described in Section 627.6561(5)(a)2, Florida Statutes, offered to an individual in the state, "including certificates of coverage offered to individuals in the state as part of a group policy issued to an association outside this state. " As noted earlier, Section 627.6425, Florida Statutes, is one of the statutes enacted in Florida which implemented HIPAA. HIPAA provides for continuation of health insurance of an insureds health policy but does not limit the premiums which an insurer can charge for coverage. Although Section 627.6425, Florida Statutes, does not have the words "guaranteed renewable" contained within the statute, the gist of the statute is that if a person has a health policy, the person has the right to continued coverage. The Department contends that the statute also means that there can be no reclassification or movement between classes at the time of renewal. On March 30, 2000, the Department notified United that it believed the discontinuance of Prescription For Good Health Trust plan, in accordance with the January 1999 agreement, may have violated Section 627.6425, Florida Statutes. A Department publication dated January 4, 2001, entitled, "The Florida Health Insurance Market, Issues and Possible Market Reform Measures," noted that there are "an increasing number of carriers attempting to establish HIPAA eligible individuals as a separate rating class with premium charges ranging from 300 to 500 percent of standard rates. While the Department has found such a rating practice to be in violation of the Florida Insurance Code, many carriers have continued to protest this interpretation. Carriers contend the surcharge practice is both actuarially sound and interpreted as a HIPAA permissible practice by other states." In the 2001 legislative session, the Department sought additional regulatory authority concerning out-of-state group insurers, such as United, along with numerous other changes to the Florida Insurance Code which are unrelated to the issues addressed in this Order. The Florida Legislature failed to approve the requested legislation. Tier rating When a group health policy is underwritten, the members of the group may be divided into classes. The classes are based on risk, which is a function of the probability of claims and the cost of claims. Classes may be denominated, for example, as preferred, manual, and substandard. Very healthy persons are put in the preferred class and pay lower premiums relative to other classes. Average persons are put in the manual class because the likelihood and cost of claims may be average. Persons who for actuarial reasons are determined to have an above-average likelihood of claims and whose claims are apt to be costly, are placed in the substandard class. It, perhaps, goes without saying that the individuals in the substandard class must pay higher premiums for the same coverage as others in the group. If the group health policy is guaranteed renewable, certificate holders may continue their coverage. However, premiums within a class can be increased. It is general industry practice to increase the premiums by class when the time for renewal occurs, if the loss experience is such that there is a requirement to increase premiums. As earlier noted, the Department asserts that only by raising premiums for an entire class may premiums be raised. The Department insists that this requirement is part of the definition of "guaranteed renewable." It became United's practice to move insureds between classes. Therefore, for instance, if a person in the group who had been a member of the preferred class experienced the need for costly medical services, then that person might be moved to the manual or substandard class. This would inevitably result in that person paying an increased premium. On the other hand, a person in the substandard class, who was subsequently determined to be a good risk, might be moved to the preferred or manual class and experience reduced premiums as a result. When a substandard class becomes populated with persons who cause the payment of costly claims, premiums increase within that class. Premiums may increase to the point where persons egress the plan, which leaves the class with fewer and sicker members. Eventually, under such a plan, there will be no members, because the premiums will inflate to the point that the benefits, in relation to the amount of the premium, will render the plan uneconomical. This sequence of events is often referred to as the health insurance "death spiral." One of the asserted evils which the Department seeks to combat in the Complaint is the "death spiral." HIPAA eligibles In 1996, when HIPAA became law and Florida enacted laws to implement it, a practice sometimes referred to as "rating up" occurred among some carriers in the industry. As noted earlier, HIPAA and the state statutes implementing it, guarantee that an individual, who through no fault of his own, loses his or her group health insurance coverage has the opportunity to obtain substitute health insurance. A person in this category is referred to as HIPAA eligible. Companies providing insurance under these laws are cognizant of the fact that persons in good health generally decline to purchase this type of insurance but that persons who are in bad health, and who will, therefore, likely have costly claims, will purchase it if they can afford it. This results in a desire on the part of insurers, to charge higher premiums for HIPAA eligible persons than they might charge persons in a comparable, non-HIPAA plan. It is a permissible underwriting practice to take into consideration age, health, and a myriad of other actuarial considerations when developing premium rates for HIPAA eligibles. If an insurer factors in the knowledge that unhealthy persons are more likely than healthy persons to obtain a policy based on HIPAA and charge higher premiums as a result, then "rating up" occurs. The Department contends in its Complaint that "rating up" is discriminatory and, therefore, forbidden by the Unfair Insurance Trade Practices Act (UITPA), Section 626.951, et seq., Florida Statutes. United allegedly arrives at rates for HIPAA eligibles solely based on the fact that the individuals are HIPAA eligible which if true, would be "rating up." Immediately prior to April 30, 1998, the Department received a memorandum from the federal Health Care Financing Administration addressing three general problems with insurance practices regarding HIPAA eligibles. One of the three problems addressed in the memorandum was the practice of "rating up." In response, the Department issued Informational Memorandum 98-103M on April 30, 1998, addressing the three problems. The Department announced that it had concerns similar to that of the Health Care Financing Administration, and would address them in administrative rules implementing HIPAA and Chapter 97-179, Laws of Florida. However, no rules addressing these concerns have been adopted. Insurance carriers disagree with the Department as to whether "rating up" is unfairly discriminatory and therefore a violation of the UITPA. The Department is addressing these differences on a case-by-case basis in the course of market conduct examinations. The evidence adduced at the hearing did not elucidate exactly what "addressing these differences on a case-by-case basis in the course of market conduct examinations" means. Count Three in the Complaint represents the first time an administrative action has been brought against an insurer addressing this practice. The definition of guaranteed renewable Chapter 4-149, Florida Administrative Code, is entitled "Filing of Forms and Rates for Life and Health Insurance." Rule 4-149.006(4)(o)3, Florida Administrative Code, provides for a definition of "guaranteed renewable." However, Chapter 4-149, Florida Administrative Code, does not address out-of-state group health insurers, such as United, because the Department has no authority to require the filing of forms and rates in the case of out-of-state health insurers like United. A life and health insurance treatise written by Black and Skipper states that the definitions of the categories of renewable health insurance policies are not uniform among the states. It is the Department's position that Section 627.6425, Florida Statutes, applies to out-of-state trusts, such as United's Prescription For Good Health Trust, even though the word "trust" is not used in the statute. It is apparent that if there is no limit on the amount of premium a health insurer can charge at the time of renewal, a guarantee of renewal can be meaningless. This fact is ameliorated by rate-setting in the case of highly regulated health insurers such as domestic insurers. In the context of this case, it is not the renewability of a policy that is the gist of the problem. Rather, it is whether rates can be increased on persons through the movement of insureds from one class to another. The allegations of the Complaint In order to determine which statements are alleged to be unadopted rules, it is necessary to refer to Counts Two through Seven of the Complaint. These counts will be summarized, in seriatim. Count Two alleges that persons who continued their participation in TNI were unlawfully and unfairly discriminated against because some members were reclassified based on their health status present at that time (1999), rather than being retained in the class in which they resided when the policy was initially issued. The Petition alleges, inter alia, that this practice violated Section 626.9541(1)(g)2., Florida Statutes, which is a section in the UITPA. This statement is alleged in the Petition to be a statement of general applicability. Count Three alleges that all of those individuals formerly covered through the Prescription For Good Health Trust who were at the time of their discontinuance HIPAA eligible, were, arbitrarily and without regard to health status, assigned a premium rate of either three or five times the base rate for TNI as a whole. Count Three alleges that this assignment unfairly discriminated against the HIPAA eligible individuals who were of the same actuarially supportable class and essentially the same hazard. Count Three further alleges, inter alia, that this violated Section 626.9541(1)(g)2., Florida Statutes. This statement is alleged in the Petition to be a statement of general applicability. Count Four alleges that the enactment of Section 627.6425, Florida Statutes, in 1996, as amended in 1997, statutorily determined that the Prescription For Good Health Trust plan was "guaranteed renewable" as that term is used and understood in the insurance industry. It further alleged that the term "guaranteed renewable” means that once an insurer classifies an individual as a member of an actuarially supportable class for rate and premium applicable to the specified coverage, that individual may not thereafter be charged a premium which is different from any other member of the same class and cannot be moved to another class. The complaint states that United unlawfully moved insureds from one class to another. Count Four additionally alleged that when United discontinued the Prescription For Good Health Trust, the prerequisite for individuals to obtain renewed health insurance coverage was reclassification of some of those individuals to different actuarially supportable classes based on their health status then pertinent to those individuals. It was further alleged that higher premiums were charged to approximately 70 percent of those who renewed or continued, and that premium increases of 200 percent to 300 percent were experienced. Count Four asserted that Section 627.6425(3), Florida Statutes, prohibits such reclassification. Count Four also alleges, inter alia, that this violated Section 626.9541(1)(g)2., Florida Statutes, because such reclassification was discriminatory. This statement is alleged in the Petition to be a statement of general applicability. Count Five alleges that on the one year anniversary of renewal with TNI, United unlawfully reclassified additional individuals which resulted in a premium increases of up to 60 percent. Count Five alleges, inter alia, that this violated Section 626.9541(1)(g)2., Florida Statutes, because this action was discriminatory. This statement is alleged in the Petition to be a statement of general applicability. Count Six alleges that within the tier blocks described in Count Two, United unlawfully established numerous sub- classifications based on health related factors pertinent to each individual within that class. It is alleged in the Complaint that these sub-classifications resulted in individuals within the same class being charged a different premium than are other members of the class. Count Six alleges, inter alia, that this violated Section 626.9541(1)(g)2., Florida Statutes, because this action was discriminatory. This statement is alleged in the Petition to be a statement of general applicability. Count Seven alleges that United used a point debit system where an arithmetic number of points are assigned to a corresponding health hazard. The higher the cumulative debit score, the higher the premium. United will decline to insure at all if the cumulative debit score gets sufficiently high. Count Seven alleges that the assignment of points with no criteria for decision-making results in arbitrary and discriminatory point scores. Count Seven alleges, inter alia, that this violated Section 626.9541(1)(g)2., Florida Statutes. This statement is alleged in the Petition to be a statement of general applicability. In summary, the three statements alleged to be rules are: Practicing tier rating is discriminatory and violates the UITPA. Placing HIPAA-eligible individuals in a premium classification solely on the basis of their HIPAA eligible status is discriminatory and violates the UITPA. The term "guaranteed renewable" prohibits the classification of individuals in a health insurance group at a time other than at the inception of coverage.
The Issue The Board filed a ten count complaint in this matter. The central issue is whether Dr. Horstmann billed Medicaid for office visits for children who he did not see and who, in fact, did not exist. The Board of Medicine contends that Dr. Horstmann's conduct violated Section 458.331(1)(i), Florida Statutes, by making or filing a report the licensee knew to be false, violated Sections 817.234 and 458.331(1)(h), Florida Statutes, by failing to perform a legal obligation placed upon a licensed physician, and that his conduct violated Section 458.331(1)(1), Florida Statutes, by making deceptive, untrue or fraudulent representations in the practice of medicine or employing a trick or scheme in the practice of medicine when that trick or scheme fails to conform to the generally prevailing standards of treatment in the medical community. The Board also contends that by pleading no contest to a criminal charge of Medicaid fraud, Dr. Horstmann is subject to discipline.
Findings Of Fact Dr. Horstmann is a 63 year old Cuban-born medical doctor. He had been licensed to practice medicine and had been doing so in Cuba for 35 years. He was permitted to leave Cuba in 1979. He was licensed to practice medicine in the State of Florida on February 14, 1983. At the time of the investigation which gave rise to these charges he had been licensed to practice medicine in Florida for 4 months. In early 1983, the Auditor General's Office of the State of Florida, Medicaid Fraud Unit, investigated certain pharmacists which computer audits showed to have excessive Medicaid charges. Dr. Horstmann was not a target of this investigation, which was headed by Detective John Nulty. The Mariano Gonzalez pharmacy was targeted. Dr. Horstmann knew Mariano Gonzalez since childhood. He had given Gonzalez business cards, asking Gonzalez to refer patients to him with allergy- related problems who did not have a doctor, as Dr. Horstmann wished to concentrate on allergy-related health problems. Those business cards were available at the pharmacy. During the investigation of the Mariano Gonzalez pharmacy, agent Vivian Perez entered the pharmacy and acted as a Medicaid recipient using the name Vivian Toledo. At the Mariano Gonzalez pharmacy on June 5, 1983, she was advised to see Dr. Horstmann and was given a Horstmann business card with the pharmacy stamp on the back of it. Apparently, the Mariano Gonzalez pharmacy was engaged in a scheme to defraud Medicaid. It allowed Medicaid recipients to present scripts for prescriptions which were to be paid by Medicaid, and to purchase merchandise rather than prescription drugs or medicine for an amount equal to what would have been charged for the medication. In the course of her investigation, agent Perez went to Dr. Horstmann's office on June 7, 1983. She presented Dr. Horstmann's secretary with a Medicaid card issued to her as part of the investigation bearing the name Vivian Toledo, and the names of the three fictitious children, Julio, Roger and Rafael Toledo. Dr. Horstmann did not examine agent Perez or any of the fictitious children, but as a result of the visit he gave agent Perez prescriptions for her and the three children. Agent Perez took these prescriptions to the Mariano Gonzalez pharmacy and used them to purchase non-pharmaceutical items. These prescriptions were not signed by Dr. Horstmann, but by Dr. Rodriguez-Cuellar, with whom Dr. Horstmann worked. Dr. Horstmann did not sign the prescriptions because, although he was a licensed physician, he had not yet received a Medicaid provider number of his own. Agent Perez again visited Dr. Horstmann on July 12, 1983. He did not examine her or the fictitious children but gave agent Perez additional prescriptions for herself and the children, which he signed. They were used to purchase non- pharmaceutical items at the Mariano Gonzalez pharmacy. Agent Perez visited Dr. Horstmann on a second occasion in July and in August 1983. Each time she received prescriptions for herself and the fictitious children which were used to purchase non-pharmaceutical items at the Mariano Gonzalez pharmacy. Dr. Horstmann prepared medical charts for each of the fictitious children, which were introduced into evidence, indicating that these children had been examined by him. Dr. Horstmann signed the Medicaid health insurance claim forms for the children dated July 9, 12, 20 and 27; and August 17 and 23. Medicaid was billed a total of $100.00 for Julio Toledo, $70.00 for Roger Toledo and $90.00 Rafael Toledo based on these forms. Dr. Horstmann understood when he wrote on the chart that he had seen the children that a bill would be prepared and sent to Medicaid. He signed all of the reimbursement forms. He received payment from Medicaid on the claims he submitted. Dr. Horstmann was charged with Medicaid fraud and entered a plea of no contest. A certified copy of the order placing him on probation was offered for identification but not received in evidence. After the certified copy of the probation order was obtained, an order was entered by the Circuit Court for the 11th Judicial Circuit sealing the records of Dr. Horstmann's conviction.
Recommendation Based upon the violations of the Medical Practice Act which Dr. Horstmann committed, including filing false Medicaid reports and billing Medicaid for treating fictitious children, as well as making deceptive, untrue and fraudulent representations in the practice of medicine, it is RECOMMENDED: That Dr. Horstmann's license be suspended for a period of six (6) months. DONE AND ORDERED this 5th day of February, 1987, in Tallahassee, Florida. WILLIAM R. DORSEY, JR. Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 1987. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1753 The following constitute my specific rulings pursuant to Section 120.59(2), Florida Statutes (1985), on the proposed findings of fact submitted by the parties. Rulings on Proposed Findings of Fact Submitted by Petitioner (Treating the paragraphs of the findings of fact as if they had been serially numbered.) Covered in Findings of Fact 2 and 4. Covered in Finding of Fact 8. Covered in Finding of Fact 9. Covered in Finding of Fact 10. Covered in Findings of Fact 11 and 12. Rulings on Proposed Findings of Fact Submitted by Respondent Covered in Finding of Fact 2. Sentence 1 covered in Finding of Fact 3. Sentence 2 covered in Finding of Fact 2. Sentence 1 covered in Finding of Fact 5. Sentence 2 rejected as unnecessary. Sentence 1 covered in Finding of Fact 5. Sentences 2 and 3 rejected as unnecessary. Covered in Finding of Fact 6. Rejected as unnecessary Covered in Finding of Fact 1. Covered in Finding of Fact 4. Generally rejected as a recitation of testimony rather than findings of fact. Rejected because whether Dr. Horstmann was familiar with Medicaid procedures is not relevant. It is clear that he understood that he submitted bills for visits which never occurred. Rejected because Dr. Horstmann's beliefs as to agent Perez' financial condition in no way justifies submitting fraudulent medicaid reimbursement requests. Covered in Finding of Fact 11. Rejected because I accepted the testimony of agent Perez that she did not provide the symptoms to Dr. Horstmann that are found in the charts for the fictitious children. Accepted in the Conclusions of Law because there was no evidence concerning bills submitted by Dr. Rodriguez- Cuellar being reimbursed by Medicaid. Covered in Finding of Fact 9. Covered in Finding of Fact 11. Covered in Finding of Fact 12. The amount received was greater than $45.00. To the extent necessary, covered in Finding of Fact 10. Covered in Findings of Fact 10 and 11. Rejected because I find that Dr. Horstmann knew that he was billing Medicare for visits which never occurred. This was not merely the result of an error by a receptionist. Rejected as irrelevant. Covered in Finding of Fact 12. Rejected as a recitation of testimony, not a finding of fact. COPIES FURNISHED: Joel S. Fass, Esquire COLODNY, FASS & TALENFELO, P.A. 626 N.W. 124th Street North Miami, Florida 33161 John W. Thornton, Jr., Esquire THORNTON & ROTHMAN, P.A. 2860 Southeast Financial Center Miami, Florida 33131 Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Wings Benton, General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Dorothy Faircloth, Executive Director Board of Medicine Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
