The Issue This consolidated proceeding involves protests by Prison Health Services, Inc. (“PHS”), Physician Healthcare Plans, Inc. (“PHP”), and Wexford Health Sources, Inc. (“Wexford”), contesting notices of intended decisions to award contracts posted by the Florida Department of Corrections ("Department") following review and evaluation of proposals submitted pursuant to the Department's Request for Proposals No. 00-DC-7342, “Comprehensive Healthcare at Twelve Institutions in Region IV” (“RFP”). Pursuant to Section 120.57(3)(f), Florida Statutes (2000), the Administrative Law Judge is to conduct a de novo proceeding to determine whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the proposal specifications.
Findings Of Fact Stipulated facts In their Prehearing Stipulation filed on March 13, 2001, the parties stipulated that the following facts were admitted to by all parties and were to be taken as true without the need for further proof: The Department issued request for proposals 00-DC-7342 for Comprehensive Healthcare Services at Twelve Correctional Institutions in Region IV (the “RFP”) on or about September 1, 2000. The RFP divided Region IV into an East Cluster and a West Cluster and permitted the Department to award separate contracts to separate vendors for each cluster or both clusters to a single vendor. CMS, PHP, PHS, and Wexford each submitted a timely proposal to the RFP. The proposals submitted by CMS, PHP, PHS, and Wexford are submitted as Joint Exhibits 5-12. The Department concluded that each proposal was responsive to the RFP. Each proposal was scored by the Department’s technical evaluation committee. The RFP specified separate price and technical proposal scores. The technical evaluation scores were determined by an evaluation team and a certified public accountant retained by the Department to evaluate financial documentation submitted by the proposers (See Joint Exhibit 27 for identity of members of evaluation team). The Department’s evaluation team scored the proposals (except for financial components) and awarded points, for both East and West Clusters, in the areas of Corporate Qualifications, Project Staff, and Service Delivery Approach. A certified public accountant evaluated and scored the financial information submitted by each proposer. The price scores were awarded pursuant to a numerical formula. The RFP specified 1000 points as the highest possible score. The RFP specified 550 possible Cost Proposal Points and 450 possible Project Proposal Points. The Department evaluators used information set forth on the scoring sheets and the Proposal Evaluation Manual which are Joint Exhibits 4 and 13-19 during their evaluation of the proposals. The Department evaluators assigned scores to each of the questions found on the scoring sheets. The Department then determined the numeric average of the scores assigned by the evaluators. Those average scores for each question were multiplied by weights assigned to each question by the Department to derive a final score for each question. Those scores were summed and then added to scores assigned by Mr. Law [the CPA retained by the Department] based upon his review of Financial Documentation required by Section 5.3.1 of the RFP. The RFP required the vendors to specify a per inmate per diem cost price. For the West Cluster, the Final Project Scores are as follows: Cost Proposal Points Wexford: 550.00 PHP: 539.65 PHS: 463.09 CMS: 457.29 Project Proposal Points Wexford: 407.97 CMS: 405.29 PHS: 445.1 PHP: 360.84 Vendor Total Calculations Wexford: 957.97 PHS: 908.19 PHP: 900.50 CMS: 862.58 For the East Cluster, the Final Project Scores are as follows: Cost Proposal Points Wexford: 529.57 PHP: 550.00 CMS: 521.89 PHS: 483.19 Project Proposal Points Wexford: 407.97 CMS: 405.29 PHS: 445.1 PHP: 360.84 Vendor Total Calculations Wexford: 937.54 PHS: 928.29 CMS: 927.18 PHP: 910.85 On or about December 11, 2000, the Department posted a notice of intent to award the West Cluster to Wexford. On the same day, with regard to the East Cluster, the Department posted a notice of intended decision to negotiate with each proposer, in descending rank order, based on each vendor's combined price and technical evaluation scores. The descending order for the East Cluster vendor negotiations was Wexford, PHS, CMS, and PHP. On January 2, 2001, at 3:15 p.m., the Department posted its notice of intended decision in the East Cluster; the notice provides that CMS is the intended recipient of the East Cluster. On or about January 23, 2001, the Secretary of the Department executed a document entitled “Agency Statement Supporting Continuation of Bid Solicitation Process or Contract Award Process” (“Agency Statement”). The geographic service area approved by the Agency for Health Care Administration for PHP does not include Desoto, Hardee, Hendry, Indian River, Martin, or Okeechobee Counties. From the time PHP submitted its proposal to the present, Bruce L. Carpenter has never been licensed by the Florida Department of Insurance as a health insurance agent. PHP has not made any filings with the Florida Department of Insurance pursuant to Section 641.31, Florida Statutes, seeking approval of its rates or rating methodologies for the proposed contract with the Department of Corrections. PHP is the only proposer which holds a valid Certificate of Authority issued by the Florida Department of Insurance for the operation of an HMO. Facts proved at hearing The RFP was issued at the express direction of the Florida Legislature to privatize health care services in Region IV. (See Chapter 00-166, Laws of Fla. (2000), proviso language accompanying specific appropriations 737 through 750.) The Legislature required the Department to retain a contractor to provide such services at a cost savings when compared to the Department's fiscal year 1999-2000 expenditures for providing those services in-house. The RFP bears out this Legislative instruction in Section 2.2 of the RFP: Proposals are to be submitted by qualified vendors who will be required to provide services at a cost saving when compared to the Department’s actual FY 1999-2000 healthcare expenditures as shown in Composite Attachment 9. The referenced Composite Attachment 9 revealed that the Department’s cost of providing health care averaged $8.00 per inmate per day in the West Cluster, and $13.24 per inmate per day in the East Cluster. The RFP established the qualification of vendors to submit a response based on prior experience. That requirement was that the vendor must have provided comprehensive health services to at least 9500 “clients” for at least three of the last five years. The RFP did not require that any of such services had to have been performed in the State of Florida. The RFP does not contain any language that would reasonably put a vendor on notice that competition was limited to licensed HMOs. The RFP does not contain the phrase “Health Maintenance Organization” or the abbreviation “HMO”. The RFP contains the following statement: Florida law mandates that all Medicaid recipients, with certain exceptions, be enrolled in a managed care plan. While it is recognized that inmates are not Medicaid recipients, the Department does expect the Contractor(s) to apply the principles of managed care in the treatment of inmates in Region IV. Currently, many aspects of managed care are being utilized in the correctional healthcare delivery system throughout the state including, but not limited to, pre-hospital admission certification, continued stay review, retrospective admissions review, ambulatory surgery and discount contracting for specialty medicine and diagnostic care. However, the Department is looking to the private sector with its flexibility, purchasing power, business acumen and innovation to apply these principles of managed care in Region IV at a cost saving to the State of Florida while maintaining a minimal constitutionally adequate level of care for the inmates. (Emphasis added.) No other provision of the RFP addresses managed care. The RFP also contains the following language: Applicable provisions of all Federal, State, county and local laws, and of all ordinances, rules, and regulations shall govern development, submittal and evaluation of all proposals received in response hereto and shall govern any and all claims and disputes which may arise between person(s) submitting a proposal response hereto and the State of Florida, by and through its officers, employees and authorized representatives, or any person, natural or otherwise; lack of knowledge by any proposer shall not constitute a cognizable defense against the legal effect thereof. * * * The Contractor and the Department shall work cooperatively to assure a high standard of service delivery and compliance with all Federal, State of Florida and Department laws, statutes, rules, policies and procedures. Each of the proposers was afforded the opportunity to submit questions to the Department concerning the RFP requirements prior to submitting a proposal. In that process, CMS posed the following question and received the following response from the Department: Question: Are there any licensures or certificates that will need to be secured or maintained in order for us to deliver the services during the contract? Answer: Whatever is required by the State of Florida for health care providers. If any others are required it is the vendor’s responsibility to meet all such requirements. Pursuant to the RFP, the contractor providing these comprehensive health care services will be paid a fixed monthly sum, and nothing more, regardless of the actual cost incurred by the contractor to render any necessary services for the applicable prison inmate population. In other words, the contractor will be “at risk” with regard to whether or not it achieves financial profits or losses under the contract. As stated in the RFP: The Contractor in each cluster will be completely and totally responsible for the cost of all healthcare delivered to inmates in their respective cluster institutions. There will be no stop/loss provision for hospitalization or any other care. The RFP at Section 7.4.2 provides: “[t]he contractor agrees to request compensation on a monthly basis through submission to the Department of a properly completed invoice within fifteen (15) days following the end of the month for which payment is being requested. . . .” Payment under the contracts contemplated by the RFP is based on the average daily population (“ADP”) of inmates at an institution for the preceding month times the per diem rate in the contract. In all instances the contractor will be paid for services provided during a specific month at some time after the services have been performed. Under the prison health services contracts that will result from the RFP, the contractor will not be “prepaid” for the services it performs for the Department. The Department knew that its current contractors for similar health care services were not licensed as HMOs. The Department has never previously contracted with an HMO for inmate health services. The Department had no intention to eliminate its current contractors from competition for the subject contracts. The services contemplated under the RFP, health care services for Department inmates, do not include certain benefits and protection afforded “enrollees” under the State’s Health Maintenance Organization laws. The "Comprehensive Health Care Services" sought by the instant RFP are described in the RFP as follows: “Provision of medically necessary and appropriate health care to meet the minimal adequate constitutional level established by federal law. This includes physical, dental and mental health care both on site and off site.” The scope and nature of the health care services described in the RFP is a lesser level of care than that mandated by the Florida HMO Act. As noted in the Department of Insurance Consumers Guide, HMOs must provide a broad range of coverages and HMO subscribers have numerous rights inconsistent with the rights of inmates to receive health care in a prison setting, such as: (1) the right to receive a contract, certificate or member handbook clearly stating services and limitation of membership; (2) the right to convert from a group to an individual contract if the group contract is canceled; (3) the right to fair rates—HMOs are prohibited from charging rates that DOI deems excessive, inadequate or discriminatory; (4) the right to receive a list of all hospitals and primary care physicians employed by or under contract with the HMO; (5) the right to a second medical opinion; (6) the right to a 45-day notification before a contract is canceled or non-renewed; the right to appeal to the Statewide Provider and Subscriber Assistance Program Panel; and (8) the right to receive a converted contract if coverage has been continuous for at least three months. These "rights" exceed the minimum constitutionally required standard of care to which prison inmates are entitled, and are not rights otherwise available to prison inmates. Section 6 of the RFP states, in part: “Selection of the successful proposer will be based on the proposal that is determined to be in the best interest of the Department, taking into consideration the criteria set forth in the RFP.” (Emphasis added.) Section 6 continues: “The Department reserves the right to make an award with or without further negotiations with the highest scoring proposer.” Section 4.3.11 of the RFP, as revised by Addendum 1, specifically prohibits proposers from communicating with the Department regarding cost at any time prior to the posting of a notice of intended award. “Any discussion by the proposer with any employee or authorized representative of the Department involving cost information, occurring prior to the posting of the recommended award will result in rejection of said proposer’s proposal.” And paragraphs 6.4, 6.5, and 6.6 of the RFP add the following provisions regarding the selection of the successful proposer: Final Proposal Scores/Total Points Scored The points awarded for the Business/Corporate Qualifications, Project Staff and Service Delivery Approach categories will be totaled and added to the points awarded for the Cost Proposal to determine the final scores of all proposals. Identical Tie Proposals In the event of an identical tie in the evaluation scores of proposals from this RFP, preference will be given to businesses with drug free workplace programs. Attachment 6 describes such programs and how proposers may obtain this advantage. Final Determination In the event that the Department receives identical evaluation scores from two or more responsive proposers with drug-free workplace programs, the final determination of the award shall be decided through the toss of a coin in a public meeting. The RFP described the evaluation process for the proposals. The evaluation criteria for the proposals included two categories for which no points would be awarded to proposers: Mandatory Responsiveness Requirements, and Transmittal Letter and Executive Summary. The other four review categories would be scored, resulting in scores being assigned up to a maximum possible score of 1,000 points, as follows: Category 1 Business/Corporate Qualification 100 points Category 2 Project Staff 100 points Category 3 Service Delivery Approach 250 points Category 4 Cost 550 points The RFP explained that an Evaluation Committee would be established to score the proposals on Categories 1, 2, and 3 above. The scoring system for these three categories was a curved system designed such that the vendor receiving the highest number of points in a given category would be awarded the maximum score (100 or 250) for that category, and the other, lower scoring vendors would receive proportionally fewer points. Section 5.11.1 of the RFP requires the submission of a sealed cost proposal. That section of the RFP goes on to provide that the cost proposals "should be submitted with the most favorable terms the proposer can offer." The cost proposals were to be separately scored by Department staff, separate and apart from the scoring of the project proposals. The lowest per diem rate offered by any vendor in each of the two clusters would be awarded 550 points, with the other vendors’ higher per diem rates assigned proportionally fewer points based on a formula contained in the RFP. Section 6 of the RFP further informs the proposers that the “factors to be considered” by the evaluators in scoring the “Business/Corporate Qualifications, Project Staff and Service Delivery Approach sections” of each proposal “are listed in Attachment 8” to the RFP. Attachment 8 to the RFP is titled: “Evaluation Criteria for Project Proposal.” When the RFP was initially issued on September 1, 2000, Attachment 8 listed evaluation criteria for each of the proposal areas (Corporate Qualifications, Project Staff, and Service Delivery Approach) to be evaluated. Section 4.3.8.2 of the RFP notified each proposer of its responsibility to assure that the RFP requirements were clearly stated and to request changes if they were not. RFP Section 4.3.8.2 (“The proposer shall examine this RFP to determine if the Department's requirements are clearly stated.”) Unless a proposer requested changes, it was deemed to have accepted the specifications. Submission and Evaluation of Proposals In response to the RFP, four vendors – Wexford, CMS, PHP, and PHS – submitted proposals. The Department assembled a team of seven Department employees to evaluate and score the project proposals in the areas of Business/Corporate Qualifications (except as to financial statements submitted by the vendors), Project Staff, and Service Delivery Approach. The evaluators received instructions from the Department’s Bureau of General Services staff on how to evaluate the proposals and assign scores. The evaluators were given a Proposal Evaluation Manual designed specifically for this solicitation. The Evaluation Manual identified six criteria for each evaluator to assign a score for each vendor’s Business/Corporation Qualifications; eighteen criteria for each evaluator to score for Project Staff; and thirty-four criteria for each evaluator to score for Service Delivery Approach. A portion of the scoring of the "Business/Corporate Qualifications" section of the proposals was performed by Richard Law, a certified public accountant in private practice retained by the Department to assist with several competitive solicitations that the Department was pursuing. Before the September issuance of the RFP, Mr. Law drafted what he considered fairly "generic" requirements for financial documents to be submitted by vendors with their proposals. The financial statement evaluation accounted for 40 of the 100 points available for Business/Corporate Qualifications. Mr. Law allocated the 40 points among six review criteria devised by him. A possible 28 of the 40 points were assigned to Mr. Law's review of the auditor’s report on financial statements for an opinion without qualification or adverse comment (8 points); review of the auditor’s letter to management for no material weaknesses in internal controls (10 points); and review of the audited financial statements for no indication of a "going concern" problem (10 points). Mr. Law also allocated up to four points each to three "ratios" calculated from information in the vendor’s balance sheet; a current ratio, an acid-test ratio, and a debt-to-equity ratio. Mr. Law was provided with a copy of each vendor’s entire proposal for scoring. Employing the six criteria devised by Mr. Law, an accountant in Mr. Law’s firm calculated scores for those criteria for the four vendors, which Mr. Law reviewed and adjusted slightly to the following: PHP, 39; CMS, 38; PHS, 37; and Wexford, 32. Mr. Law filled out a single evaluation sheet for each vendor covering all six of his review criteria, and returned them to the Department. At that point, Mr. Law believed his involvement in this RFP was done. Scores Assigned Mr. Law’s scores were added to the criteria weighted scores assigned by the Department Evaluation Committee members in the area of Business/Corporate Qualifications. This resulted in a total weighted score for each of the vendors in the area of Business/Corporate Qualifications. Pursuant to Section 6.3.1 of the RFP, the vendor with the highest total weighted score in the Business/Corporate Qualifications received a score of 100, and the other vendors received a proportionally lower score, as follows: CMS, 100.00; PHS, 98.85; Wexford, 92.27; and PHP, 85.94. Scores were assigned to the vendors for the eighteen criteria for Project Staff in much the same way, except without scores from non-Department employees such as Mr. Law. After determining total weighted scores for each vendor in this area, and assigning 100 points to the highest scoring vendor, the final Project Staff scores were: PHP, 100.00; PHS, 96.25; Wexford, 88.75; and CMS, 85.95. Similarly, scores were assigned to vendors for the thirty-four criteria for Service Delivery Approach, again without scores from non-Department employees. The total weighted scores for the four vendors in this area were adjusted to give the highest scoring vendor 250 points, with the other vendors receiving proportionately fewer points, as follows: PHS, 250.00; Wexford, 226.95; CMS, 219.34; and PHP, 174.90. Adding the adjusted scores for each of these first three criteria together for each vendor produced a final "project proposal" score, out of a maximum possible 450 points, as follows: PHS, 445.1; Wexford, 407.97; CMS, 405.29; and PHP, 360.84. The scoring of the vendors’ cost proposals was accomplished as follows: Within each cluster, the vendor offering the lowest per diem rate received the full 550 points, and the vendors offering higher per diem rates received proportionally lower scores, as described in Section 6.3.4 of the RFP. In the West Cluster, Wexford offered $7.30; PHP, $7.44; PHS, $8.67; and CMS, $8.78. These rates translated into adjusted cost proposal scores for the West Cluster as follows: Wexford, 550.00; PHP, 539.65; PHS, 463.09; and CMS, 457.29. For the East Cluster, the per diem rates proposed were PHP, $12.44; Wexford, $12.92; CMS, $13.11; and PHS, $14.16. [Jt. Exhs. 6, 8, 10, 12] These rates translated into adjusted cost proposal scores for the East Cluster as: PHP, 550.00; Wexford, 529.57; CMS, 521.89; and PHS 483.19. A total score was arrived at for each vendor in each cluster by adding the vendor’s "project proposal" adjusted score to its "cost proposal" adjusted score for that cluster. The total scores for the West Cluster were: Wexford, 957.97; PHP, 900.50; PHS, 908.19, and CMS, 862.58. For the East Cluster, the final totals were: Wexford, 937.54; PHS, 928.29; CMS, 927.18; and PHP, 910.85. Notwithstanding the prohibition in Section 4.3.11 of the RFP, PHS faxed a three-page letter to the Secretary of the Department, Michael Moore, six days before the posting of the recommended awards for the East and West Clusters on December 11, 2000, but after the proposals had been opened. PHS did not give notice of this communication to any other proposer. The essence of the information in the PHS letter was that PHS had erred in calculating its cost proposal, that PHS had erred by including costs that the RFP did not require, and that PHS wanted an opportunity to lower its price. The obvious purpose of the letter was an effort to affect the Department's decision- making process and to give PHS an advantage not enjoyed by other bidders. Mr. Law’s Second Review According to the date Mr. Law signed his scoring sheets, his scoring of the financial statements from the proposals was completed November 22, 2000. The RFP, as revised by the Department’s addendum had established an anticipated date for the "Posting of Recommended Award/Notification to Proposers" of Monday, December 11, 2000. Shortly before the anticipated posting date, however, Richard Prudom, the Department’s Deputy Director of Administration, called Mr. Law and asked him to perform additional analysis regarding the financial capability of the vendors. This was reduced to writing in a letter faxed to Mr. Law on Wednesday, December 6, 2000. Omitting the formal parts, the letter read as follows: Thank you for your financial evaluation of the bids submitted in response to the Requests for Proposals for the delivery of comprehensive healthcare to inmates in Region IV. The evaluations were an integral part of the corporate qualifications section of the project proposal scoring process. With the evaluation process now complete the Department is ready to award contracts for the delivery of services of which the anticipated value is approximately $17 million for the West cluster of Region IV and $41 million for the East cluster. Since the Department has an obligation to award contracts that are in the best interests of the State of Florida, what further commentary/analysis could you provide regarding the ability of each proposer to fulfill the obligations of contracts at those anticipated values? Your assistance in this matter is appreciated. In response to the request for additional comments and analysis, Mr. Law reviewed the financial materials submitted by each of the proposers in light of the anticipated dollar values of the contracts for each cluster. He then made calculations comparing the 1999 health care revenue for each of the proposers to the anticipated dollar values of the contracts for each cluster. On December 8, 2000, Mr. Law sent a letter by fax to the Department containing a table demonstrating the comparisons he had calculated, as well as some additional comments. The additional comments in Mr. Law's letter of December 8, 2000, included the following: In my judgment, a proposer in the healthcare industry is more likely to fulfill all of the terms and conditions of the proposed contract if the dollar value of the contract is within a reasonable range of its existing level of operations. * * * The burden of fulfilling the terms and conditions of the contract will obviously be much greater for Wexford than the other three vendors because of the relative impact of adding 24.6% (for $17 million) or 59.4% (for $41 million) more in services than they provided in 1999. * * * Wexford does not currently perform any services in Florida, whereas the other three providers already provide a substantial amount of services in Florida. Since they have no management or staff in place in Florida, and considering the impact of fulfilling a $17 million or $41 million contract relative to their existing revenue base, the risk of failure is high. The comments and analysis set forth in Mr. Law's letter of December 8, 2000, do not address any of the criteria in the RFP on which Mr. Law relied when he performed his original scoring of the financial documents of each proposer. Rather, his comments and analysis in the December 8, 2000, letter are predicated on two criteria that do not appear in the RFP. In this regard, it it significant to note that in response to the Department's request for additional comments and analysis, Mr. Law did not suggest that any changes should be made to his earlier assignment of scores to each of the proposers. This is no doubt due to the fact that the criteria upon which Mr. Law based his December 8, 2000, comments are criteria that do not appear in the RFP, and the December 8 comments, even if correct, would have no bearing on the scores assigned to the proposers pursuant to the criteria that are included in the RFP. Based upon the letter written by Richard Law, the Department decided by December 11, 2000, that Wexford would not be awarded the East Cluster contract. Notably, December 11 was the day on which the Department posted its notice of intent to negotiate for the East Cluster contract, identifying Wexford as the first vendor with whom it would negotiate. In effect, based on Richard Law’s letter of December 8, 2000, Wexford was disqualified from being eligible to propose on the East Cluster. This occurred even though pursuant to the terms of the RFP Wexford was clearly a qualified and responsible bidder for that contract under the terms of the RFP. Mr. Law acknowledges that he has no understanding of the correctional health care industry, or of what it would take for a vendor to perform a contract for health services in a correctional setting. Rendering an opinion on the impact of a new contract on a company would require an understanding of how the business works, not just the amount of revenue the contract would generate. An analysis of a vendor’s ability to perform this contract which is based on existing and anticipated revenues is not a meaningful or relevant analysis. A more useful analysis would compare the number of inmates and number of institutions covered by the contract to the vendor’s existing level of service. Such a comparison in Wexford’s case shows that Wexford is already performing contracts in other states that cover a comparable or greater number of inmates and a comparable or greater number of prisons. Posting of Awards and Decisions On December 11, 2000, the Department posted a Notice of Intended Award for the West Cluster contract, indicating its intent to award that contract to Wexford. The Department also posted on that date a "Notice of Intended Decision" for the East Cluster, stating its intent to negotiate. The East Cluster Notice identified an order of negotiation that tracked the final scores in the East Cluster: Wexford, then PHS, then CMS, then PHP. The only written information the Department provided to the vendors concerning the negotiations was contained in its Notice of Intent to Negotiate. The East Cluster notice contained the following description of the negotiation process: Pursuant to the provisions of the State Purchasing Rule 60A-1.002, F.A.C., the Department of Corrections announces its intention to negotiate a contract for the East Cluster service area. The Department intends to negotiate with the highest- ranking proposer. If no contract is successfully negotiated with this proposer, the Department will proceed to the next highest-ranking proposer. If no contract is successfully negotiated with this proposer, negotiation will continue with the third- highest and then fourth-highest ranking proposer, as necessary. In other words, the negotiations were to be sequential rather than concurrent, and would be exclusively with the highest- ranked vendor until it was determined that a contractual agreement could not be reached. The Department issued no further written information concerning the negotiation until it issued its notice of intent to award the East Cluster contract to CMS on January 2, 2000. Prior to commencing the negotiations, the Department instructed one of its employees to contact each of the four proposers and tell them the following. That negotiations had to be concluded on December 15: That each vendor had not more than 2 hours to conclude negotiations; That if negotiations concluded with a vendor without an agreement, such vendor would not be given another chance to negotiate with the Department for the East Cluster. The greater weight of the evidence is to the effect that the Department's employees failed to advise any of the four proposers of the negotiation rules described immediately above at any time prior to the negotiations. During the negotiations none of the proposers were advised of the negotiation rules. The Department never provided written notice of the negotiation rules to any of the proposers. The "negotiations" referenced in the December 11 East Cluster notice were scheduled for Friday, December 15, by telephone. The Department scheduled conference calls with three of the four vendors for December 15, commencing with Wexford at 9:30 a.m. The Department apparently intended to conclude the negotiations in a single day, although this intent was not communicated to the proposers. Wexford attempted to obtain information from the Department in the days leading up to the December 15 conference call as to an agenda for the call or subjects to be discussed or negotiated, in order to be better situated to promptly respond. The Department provided no information other than the identity of its "negotiation team": Mr. Prudom, Ms. Bassett, and Deputy Secretary Michael Wolfe. Following introductory comments, the Department’s call to Wexford began with the Department's notifying Wexford that Wexford would not be awarded the East Cluster contract, despite the December 11 East Cluster notice that ranked Wexford first. When pressed for an explanation, the Department responded that a CPA retained by the Department to review the proposals had expressed concern over Wexford’s financial capabilities. This was apparently a reference to the December 8, 2000, letter from Mr. Law to Mr. Prudom. The Department refused Wexford’s request to submit documentation to respond to those concerns. At some point during the conference call with Wexford, Deputy Secretary Mike Wolfe requested that Wexford’s representative, Mr. Matonte, engage in a one-on-one telephone conversation with him. Mr. Matonte did so, at which time Mr. Wolfe made it clear that Wexford was not going to receive the East Cluster contract, and that Wexford needed to stop contesting the Department's position if it wanted to receive the West Cluster contract. This conversation took place at about 10:00 a.m. on Friday, December 15, and Mr. Wolfe gave Wexford until noon to give him a response. If Wexford did not respond, then Wolfe indicated Wexford would end up with nothing. Following the conference call with Wexford, the Department had conference call sessions with PHS and then with CMS. In both of those sessions, the Department invited those vendors to lower their per diem rates offered for the East Cluster. The negotiations effectively ended on the afternoon of December 15, when Mr. Wolfe, Ms. Bassett, and Mr. Prudom made the decision to award the East Cluster to CMS, but Mr. Wolfe continued to negotiate with PHS for most of the week following December 15, 2000. These negotiations culminated in PHS’s written “best and final offer” on December 21, 2000, at which time PHS offered a price of $13.17. By then, the Department had already decided to award the East Cluster contract to CMS. Most of the negotiations between PHS and Mr. Wolfe occurred after the Department commenced negotiations with the third-ranked vendor, CMS, and after the Department had already decided to award the East Cluster contract to CMS. This course of conduct by the Department was inconsistent with the negotiation rules the Department purports to have applied to the negotiation process. A notice of intent to protest had been filed by PHP, the fourth ranked bidder in the East Cluster, on December 12, 2000. The Department made the determination that the bid procurement should continue and ultimately set forth facts and circumstances in writing to support that determination in an Agency Statement signed by the Secretary. On January 2, 2001, the Department posted notice of its intent to award the contract for the East Cluster to CMS. On January 8, 2001, PHP amended its Initial Protest to contest the Department's continuation of the procurement process subsequent to PHP’s initial petition. Wexford History and Experience Wexford was founded in 1992 as a service company providing health care in correctional settings. Wexford is one of the three largest companies nationally performing correctional health care, along with CMS and PHS. Wexford’s officers and key employees have extensive experience in health care in Florida and in correctional health care in Florida and throughout the nation. Wexford’s CEO, Kevin Halloran, has been with Wexford since its inception, and prior to Wexford’s founding had health care experience in the U.S. Army Medical Corps and, beginning in 1971, the nursing home business in Florida and the hospital rehabilitation business in Florida and nationally, for a total of 36 years in health care. Wexford’s Vice President of Business Development, Bob Matonte, has over 25 years' experience in health care management and delivery, both clinically and administratively, including 3 years overseeing health care delivery in the Broward County jail immediately before joining Wexford in 1992. Wexford’s Regional Manager for this project, Kathy Harkis, has 30 years' experience in health care, including 19 years (since 1982) in correctional health care, the last 5 of which have been in Florida. Wexford’s Medical Director for this contract, Gary Schecodnic, M.D., served as medical director for state prisons and county jails in Florida for over 12 years, from 1987 to 1999. Wexford’s first contract for correctional health care was for prisons in the state of Illinois, with a population of about 7,500 inmates. Wexford grew rapidly after the Illinois contract, picking up contracts for 8 prisons and 13,000 inmates in Pennsylvania, and 17 prisons and 19,000 inmates in New York state. Wexford currently serves over 70,000 inmates in over 68 facilities in 11 different states; including a contract for about 500 inmates in the Martin County, Florida, jail since October 2000. Wexford’s current contract revenues projected forward for 12 months, are about $95 million, and Wexford expects to break the $100 million barrier soon. The "staffing up" process in the private correctional health care industry typically involves the vendor interviewing and often hiring the doctors, nurses, and other staff who are already in place at a particular prison providing the health care. This occurs regardless of whether the health care was being provided in-house by the prison system’s own employees, or under contract with a vendor. Wexford’s standard practice is to hire every single person already providing health care in a facility on a 90-day probationary period. Thus, the RFP’s requirement at Section 3.2.3.1, that the contractor interview the Department's existing employees, is consistent with Wexford’s standard practice. Wexford has not experienced problems in performing contracts where it had no presence prior to the contract award. The RFP requirement for interviewing current employees, as well as Wexford’s standard staffing practice and the staffing practice standard to the industry, demonstrate that Mr. Law’s statement concerning the "lack of presence in Florida" is not a significant basis for concern. Wexford anticipated "start-up costs" for the two clusters at between $3 million and $5 million. The single largest element of start-up costs is the employee salaries that Wexford will have to pay before it starts receiving payment from the Department. Wexford assumed 45 to 60 days of incurring salary costs before payments would be received from the Department. Under the terms of this RFP, vendors must submit an invoice for payment by no later than 15 days after the end of the month for which payment is sought. The invoice amount is calculated by multiplying the contract per diem rate by the ADP in the cluster prisons for that month. Obviously, it is in the contractor’s best interest to submit the invoice as soon after the end of a month as the ADP figure is available. It is the Department’s practice to pay invoices as quickly as it can. The other costs which a vendor will incur during both start-up and the entire period of the contract are primarily medical in nature. These include payment for inmate care at hospitals and doctor’s offices. Such services would not be paid for at the time of delivery, but would typically be paid 45 to 60 days after the contractor received an invoice. Thus, any such costs incurred by Wexford during the start-up period would not be paid by Wexford during the start-up period, but might be paid months later. As reflected in the notes to the audited financial statements contained in Wexford’s proposal, Wexford maintains a $10 million line of credit with a financial institution that it can expand if necessary. A line of credit is a borrowing line established with a financial institution on which a company can draw and repay as needed to finance its daily operations. As of the end of 1999, the amount drawn on this line of credit was $94,223, showing that it had been significantly paid down since the end of 1998. As noted by Wexford’s Chief Financial Officer at the time of final hearing, there were no funds drawn on the line of credit as of the week of final hearing. Wexford’s $10 million line of credit provides an ample resource for Wexford to financially perform this contract even during the start-up period before revenue begins to flow.
Recommendation On the basis of all of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department issue a Final Order in this case awarding to Wexford contracts for both the West Cluster and the East Cluster, and denying all relief sought by all other proposers. DONE AND ENTERED this 4th day of May, 2001, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of May, 2001.
The Issue The issue in the case is whether the Petitioner is entitled an exemption from disqualification under the provisions of Sections 400.512(1) and 435.07(3), Florida Statutes.
Findings Of Fact C. A. N. (Petitioner) was arrested on December 17, 1985, for shoplifting and was convicted of grand larceny. The Petitioner was arrested on February 23, 1989, for larceny and was convicted of grand larceny. The Petitioner was arrested on August 11, 1992, for passing a forged instrument and was convicted. The Petitioner was arrested on November 23, 1993, for passing a forged instrument and was convicted. The Petitioner was arrested on May 11, 1994, for grand larceny and was convicted. The Petitioner was arrested on October 26, 1994, and was convicted of forgery, grand larceny and welfare fraud. Based on a number of offenses and an apparent violation of an probationary sentence, the Petitioner was sentenced on July 28, 1994, to serve four years and six months in prison. Although the prison sentence does not appear to have run its course, the Petitioner has been released from incarceration. The actual date of her release was not established at the hearing. The Respondent suggests that the short duration of her present rehabilitation is insufficient to establish that the Petitioner is of good moral character and fails to support the award of an exemption from disqualification. The Respondent asserts that given the Petitioner's regular pattern of arrests for property-related crimes, her chosen profession of nursing presents a continuing opportunity for the theft of patient property. There is no evidence that the Petitioner's prior criminal activity was directed towards individual victims. Based on the testimony of the Petitioner and the supporting witnesses, the evidence establishes that the Petitioner poses no serious danger if she becomes exempt from disqualification. There is no evidence of any inappropriate activity of any kind since her release from incarceration. At the hearing, the Petitioner spoke articulately of her criminal history and the reasons she believes that she will not encounter further criminal entanglement. She talked about the differences between her previous life and the life she now leads. During the period of her criminal activity, the Petitioner was married to an abusive spouse. Since her release, she has completed a domestic violence support group program. She is obtaining a dissolution of the marriage. None of the Petitioner's convictions are directly drug- related. Her convictions are all related to theft of funds, either by improper use of credit cards, improper receipt of public assistance funds, or retail shoplifting. According to her uncontroverted testimony, the major reason for her criminal activity was related to drug use by the Petitioner and by her spouse. Funds were illegally obtained, either to directly purchase drugs or to purchase food for her children when their regular food money was used to buy drugs. Since her release from incarceration, she has completed an early intervention training program related to drug dependency. There is no evidence that the Petitioner has used drugs since her incarceration. The Petitioner is currently attending business school, and is making acceptable progress, but desires to become employed in the nursing field, for which she is trained. The Petitioner appears to have substantial support from family and friends. At the hearing, her daughter, her prison counselor, her career counselor, and a friend from her church all spoke well of her behavior and strongly believe that she has made a permanent change in her life. Her career counselor predicted that the Petitioner could successfully enter the nursing field.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Agency for Health Care Administrative enter a Final Order granting the Petitioner's request for exemption from disqualification. RECOMMENDED this 26th day of February, 1997, in Tallahassee, Florida. COPIES FURNISHED:WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 1997. Jerome W. Hoffman, General Counsel Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Douglas M. Cook, Director Agency for Health Care Administration 2727 Mahan Drive Tallahassee, Florida 32308 Sam Power, Agency Clerk Agency for Health Care Administration Fort Knox Building 3, Suite 3431 2727 Mahan Drive Tallahassee, Florida 32308 C. A. N., Pro Se 2931 Ivanhoe Way South St. Petersburg, Florida 33705 Thomas W. Caufman, Esquire Agency for Health Care Administration 7827 North Dale Mabry Highway Suite 100 Tampa, Florida 33614
Findings Of Fact Upon consideration of the evidence adduced at the hearing, the following relevant facts are found: At all times material to this case, the Respondent was certified by the Petitioner, Criminal Justice Standards Training Commission (Commission) as a correctional officer, having been issued certificate number 14-82-502-17 on November 18, 1982. Respondent is currently employed with the State Of Florida, Department of Corrections at New River Correctional Institution. The Respondent has been employed with the Department of Corrections as a correctional officer since September 10, 1982. Respondent's duties and responsibilities as a correctional officer include the care, custody and control of inmates. Respondent serves as a dormitory officer at New River Correctional Institution and his duties require that he ensures the inmate dormitory runs in a smooth, trouble free fashion. On January 27, 1989, while off duty, the Respondent visited the Sears department store in the Oaks Mall located in Gainesville, Florida. Although the Respondent testified that he had consumed "some" alcoholic beverage prior to visiting Sears, there was no evidence that he was under the influence of alcohol or that alcohol influenced his actions while in Sears or at any other time relevant to the incident on January 27, 1989. After entering Sears, the Respondent proceeded to the hardware department carrying a large empty shopping bag bearing a "Burdine's" logo. While in the hardware department, the Respondent examined several power drills. Unbeknown to the Respondent, his actions were being observed by the Sears security officers because of his somewhat suspicious actions. After picking up several drills and examining them, the Respondent placed a power drill in the empty shopping bag and exited the store without paying for the drill even though his exit route carried him past five cash registers. The retail value of the drill was $79.99. Sears Security Officer Martin Krpan followed Respondent into the common area of the mall and confronted him about the drill. The Respondent denied taking the drill, saying he had put it back. Krpan observed the drill in the shopping bag at this time. Respondent accompanied Krpan back into Sears and an Alachua County Deputy Sheriff was called to the scene. During the period of detention prior to the arrival of the deputy sheriff, the Respondent was uncooperative and denied any involvement with removing the power drill from Sears. At this time Respondent refused to identify himself. When Deputy Briggette of the Alachua County Sheriff's Department arrived on the scene Respondent identified himself and advised the deputy sheriff that he was a correctional officer with the Department of Corrections. Respondent told the deputy sheriff that he had not taken the drill but that it had been placed in the shopping bag by Krpan. Respondent was arrested and charged with retail theft, i.e. shoplifting, which is a misdemeanor. Respondent entered a plea of nolo contendere to the charge and paid a fine in addition to 20 hours of community service for the violation. The Court withheld adjudication of guilt and placed Respondent on 6 months probation. Upon returning to work after the incident, the Respondent advised his supervisor of his arrest as required by the Department of Corrections' rules. After the Department investigated and reviewed the situation, the Respondent was disciplined by the Department by issuing him a reprimand. The only other disciplinary action taken against Respondent during his employment with the Department was an oral reprimand. Except for his arrest on January 27, 1989, the Respondent has never been arrested or found guilty of any crime. Since the incident, the Respondent has returned to work and has encountered no problems in the performance of his duties or dealing with the inmates. The Respondent has received "exceeds standards" on his performance appraisal for the period May 1989 through May 1990. Despite the incident, the Respondent continues to enjoy a reputation of honesty, integrity and hard work at the New River Correctional Institution. Respondent recognizes that his conduct on January 27, 1989 was wrong and appears to be sincerely embarrassed by the incident. Not only did the Respondent admit to stealing the drill at the hearing, but the facts surrounding the incident on January 27, 1989 at Sears in the Oaks Mall located in Gainesville, Florida established that the Respondent committed petit theft (retail theft), a misdemeanor, in violation of Section 812.014(1) (d), Florida Statutes.
Recommendation In making the following recommendation I am aware that only in those instances where the certified officer "fails to maintain good moral character" does the Commission have the discretion to impose other penalties in lieu of revocation as required under Section 943.1395(5), Florida Statutes. Likewise, I am not unmindful of Respondent's lack of a criminal record prior to this incident, his remorse over the incident or that he still maintains a "good reputation" among his peers and superiors subsequent to the incident. Having considered the foregoing Finding of Facts, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the mitigating circumstances, it is, therefore, RECOMMENDED that the Commission enter a Final Order finding that Respondent, Barry A. Bogart has failed to maintain good moral character, and in accordance with Section 943.1395(6), Florida Statutes, suspend his certification as a correctional officer in the state of Florida for a period of one month and place Respondent on probation for a period of six months under the terms and conditions deemed appropriate by the Commission. DONE and ENTERED this 6th day of August, 1990 in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 6th day of August, 1990. APPENDIX TO RECOMMENDED ORDER The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner 1. - 3. Adopted in Findings of Fact 1, 4, and 5, respectively. 4. - 10. Adopted generally in Findings of Fact 6 and 7. Otherwise rejected as not material or relevant or necessary. 11. - 13. Adopted in Finding of Fact 8. 14. Rejected as not material or relevant or necessary. 15. - 17. Adopted in Finding of Fact 9. 18. - 19. Adopted in Finding of Fact 10. 20. Rejected as not material or relevant or necessary. 21. - 23. Adopted in Findings of Fact 11, 12 and 12, respectively. Rulings on Proposed Findings Of Fact Submitted by the Respondent 1. - 3. Adopted in Findings of Fact 1, 2 and 3, respectively. First sentence adopted in Finding 4. The balance rejected as not material or relevant or necessary. Rejected as not material or relevant or necessary. - 7. Adopted generally in Findings of Fact 4, 5, 7, 8, 9, 10 and 11. Otherwise rejected as not material or relevant or necessary. 8. - 10. Adopted in Findings of Fact 12, 13 and 14, respectively. Adopted in Findings of Fact 15 and 17. Adopted in Finding of Fact 16. Copies Furnished To: James T. Moore Commissioner Post Office Box 1489 Tallahassee, Florida 32302 Jeffery Long, Director Criminal Justice Standard Training Commission Post Office Box 1489 Tallahassee, Florida 32302 Joseph S. White, Esquire Florida Department of Law Enforcement Post Office Box 1489 Tallahassee, Florida 32302 Gene "Hal" Johnson, Esquire General Counsel Florida Police Benevolent Association, Inc. Post Office Box 11239 Tallahassee, Florida 32302
