Findings Of Fact As a result of an audit report submitted December 13, 1976 for the Shore Acres Nursing and Convalescent Center for the fiscal year ending December 31, 1975, an adjustment in the Cost of Operations totaling $119,387 was made which resulted in an overpayment to Respondent of $6,109 (Exhibit 1). A similar audit for the period ending December 31, 1976 produced adjustments resulting in an overpayment of $3,419. Petitioner contends that the laws and regulations pertaining to Medicaid payments require an adjustment be made for certain costs paid by Medicare. It is this Medicare adjustment that is in dispute. Medicare will pay for certain costs which will not be paid by Medicaid, such as drugs and physical therapy. Medicare has a coinsurance requirement which can be paid by the individual, his insurance carrier, or Medicaid. Medicaid is a full coverage program but all services, e.g. drugs, physical therapy and speech therapy, are not covered by Medicaid. It is the Medicaid payments that are here involved and which Petitioner contends are computed after deductions in operating costs are made for those costs associated with Medicare. Some of these costs involve services that are not part of the covered services of the Medicaid program. Indirect costs associated with the direct costs for services associated with Medicare are also deducted. Using the figures supplied by Respondent, the auditor deducted indirect costs due to depreciation, operation and maintenance of plant of $1,432; other indirect various general services costs of $2,309; ancillary costs of $16,772 for physical therapy; drugs costs of $15,732; speech therapy of $2,983; outpatient costs of $4,515; the distinct part of room and board charge of $164,621 less $65,475 for non-Medicaid per diem costs; and less adjustment for return on equity for inpatient days and outpatient days. After these adjustments are made, the audit resulted in overpayments as noted above. Respondent contends, and Petitioner concurs, that when the first audits were made (and the 1975 audit here involved was the first), none of the nursing homes were deducting the Medicare adjustment in submitting their claim for payments to HRS. Respondent contends that making the adjustments here involved resulted in removing costs which affect the average cost per patient day. It is also contended that the majority of those deductions come from the full-care patients which have the highest per diem costs and this results in lower payments to the providers.
The Issue The issue to be determined in this matter is whether the Agency for Health Care Administration (“AHCA”) is entitled to recover its attorney’s fees and costs, pursuant to section 409.913(23), Florida Statutes, incurred prosecuting a matter pursuant to section 409.913.
Findings Of Fact AHCA is the state agency responsible for administering the Florida Medicaid Program. Medicaid is a joint federal/state program to provide health care and related services to qualified individuals, including hospice services. Covenant is a provider of hospice and end-of-life services and at all times relevant to this matter, the program was an authorized provider of Medicaid services pursuant to a valid Medicaid provider agreement with AHCA. AHCA is authorized to recover Medicaid overpayments, as deemed appropriate, pursuant to section 409.913. The U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services (“CMS”), contracted with Health Integrity, a private vendor, to perform an audit of Covenant. Health Integrity retained a company called Advanced Medical Reviews (“AMR”) to provide peer physician reviews of claims to determine whether an overpayment occurred. Based on the audit findings in the Overpayment Case, AHCA prosecuted claims against Covenant for Medicaid overpayment. On August 9, 2016, AHCA provided a Final Audit Report (“FAR”) to Covenant seeking $715,518.14 in overpayments, $142,903.63 in fines, and $131.38 in costs. On August 29, 2016, Covenant timely filed a Petition for Formal Administrative Hearing. The undersigned conducted a final hearing on March 19 through 23, 2018, on Covenant’s Petition filed in the Overpayment Case. At the time of the final hearing, AHCA sought a modified overpayment of $677,023.44, and a fine of $135,404.68. On August 15, 2018, the undersigned issued a Recommended Order in the Overpayment Case finding AHCA is entitled to collect an overpayment of $637,632.15, and a fine of $127,526.43. The Recommended Order noted that AHCA reserved its right to amend its cost worksheet in this matter and, pursuant to section 409.913(23), file a request with the undersigned to recover all investigative and legal costs, if it prevailed. On October 17, 2018, AHCA issued a Final Order in the Overpayment Case finding AHCA is entitled to recover $637,973.10 in overpayments and to impose a fine of $127,594.62. The Final Order concluded, “[a]dditionally, since the Agency has prevailed in this matter, it is entitled to recover its investigative, legal, and expert witness costs it incurred in this matter. § 409.913(23), Fla. Stat.” Further, it provided that if the parties are unable to reach an agreement as to costs, either party may file a request with the Division requesting a final hearing within 30 days of the date of the rendition of the Final Order. On November 15, 2018, AHCA timely filed its Petition for Recovery of AHCA’s Legal Fees and Costs. On February 7, 2018, AHCA amended its Petition. Covenant opposed AHCA’s Petition and disputed whether AHCA is entitled to legal fees. Covenant has appealed the Final Order in the Overpayment Case, and the appeal is pending before the First District Court of Appeal in Covenant v. AHCA, Case No. 1D18-4797. The final hearing was held on a stipulated record, Petitioner’s Memorandum of Law in Support of Petitioner’s Amended Petition for Legal Fees, and Covenant’s Brief in Opposition to AHCA’s Petition for Recovery of Costs and Fees (with exhibits). Legal issues were framed by the Joint Stipulation. There was no testimony of any witnesses offered by either party. The exhibits constituting the record were exhibits to Respondent’s Brief and Petitioner’s Memorandum of Law. The parties have stipulated to the reasonableness of AHCA’s claimed attorney’s fees, in accordance with the parties’ agreement stated in the Joint Motion for Case Management Conference dated March 11, 2019. The issue that remains is whether AHCA is entitled to recovery of $330,186.14 in attorney’s fees under section 409.913(23). For the reasons explained below, the undersigned finds that Florida law does not support a finding that AHCA is entitled to the attorney’s fees in dispute.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Health Care Administration enter a final order that section 409.913(23)(a) does not authorize the Agency for Health Care Administration to recover its attorney’s fees under the guise of “legal costs” for the audit related to this matter. DONE AND ENTERED this 12th day of June, 2019, in Tallahassee, Leon County, Florida. S YOLONDA Y. GREEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of June, 2019.
The Issue The issue in this case is whether the intended contract award to Intervenor pursuant to Request for Proposals P2056 for a Community Based Intervention Services Program in Brevard County, Florida, is contrary to Respondent’s governing statutes, Respondent’s policies and rules, and the request for proposals.
Findings Of Fact The Department is an agency of the State of Florida and is the procuring agency for the RFP at issue in this proceeding. Eckerd is a not-for-profit corporation duly-organized under the laws of the State of Florida. White is a not-for-profit corporation duly-organized under the laws of the State of Florida. On September 4, 2009, the Department issued the RFP to select a provider to operate a 44-slot Community Based Intervention Services Program for youth ages ten through 21 in Brevard County, Florida. Eckerd did not protest the specifications of the RFP nor the methodology that the Department had historically used in scoring proposals for similar services within 72 hours of the issuance of the RFP. Eckerd and White submitted timely responses to the RFP on or before October 14, 2009. Under the RFP, one of the categories that the Department evaluates is the “Evaluation of the Past Performance for Non-Residential Programs.” One of the three components of the past performance standard is: Part I—Evaluation for Past Performance in Florida. This includes, as a subcomponent, the provider’s “Combined Success Rate” (CSR), with an assigned value of 200 points. The RFP defines CSR as “Percentage of youth who do not recidivate,” and further provides, “Points are awarded based on the combination of successful youth program completions, and the percentage of youth who do not recidivate.” Each proposer was required to complete and submit with its proposal Attachment C to the RFP entitled “Data Sheet: Past Performance of Non-Residential Programs” (Data Sheet). The Data Sheet was to provide certain information for non-residential programs that the proposer had operated in Fiscal Year (FY) 2006-2007, including program name, contract number, number of completions during FY 2006-2007, and FY 2006-2007 Recidivism Rates. Some of the information, such as the completions and the recidivism rates, was to be based on information found in the Department’s 2008 Florida Comprehensive Accountability Report [CAR].1 The CAR is prepared by the Department and includes program outcomes, including total releases, number of completions, completion rates, and success rates for all types of probation and community intervention programs that released youth in FY 2006-2007. The information is reported by judicial circuit. The CAR may report information on different programs in a judicial circuit, and some of the programs may be included in one contract with a provider. For example, White has one contract in the Second Judicial Circuit, contract number P2028, but the CAR reports information for two programs under contract number P2028. In the Fourth Judicial Circuit, White has one contract, contract number D7102, under which services are provided in Duval and Nassau Counties. The CAR treats the counties as being separate programs and provides separate data for the services provided in Duval County and for the services provided in Nassau County. As set forth in the Data Sheet, the number of completions is defined as “[t]he number of youth completing the program during FY 2006/2007 documented in the Department’s 2008 Florida Comprehensive Accountability Report.” In the CAR, the column titled “N4” provides the number of youth who successfully completed a specific program. The recidivism rate is the percentage of youth who later offended. The Data Sheet provides that the recidivism rate is found in the “2006-2007 Recidivism Column as reported in the Department’s 2008 Florida Comprehensive Accountability Report.” The CAR does not report recidivism rates; it reports success rates. Instead of providing the percentage of youth who completed the program and reoffended, the CAR reports the percentage of youth who did not reoffend. Thus, the recidivism rate is calculated by subtracting the success rate from 100. The Department relies on data from the CAR in determining the percentage of recidivism because the success completion percentages that are reported in the CAR have been calculated already. Therefore, it is easy to calculate the recidivism percentages using the CAR success rates. Paul Hatcher, senior management analyst for the Department, is the individual responsible for determining the CSR for providers who have submitted proposals in response to requests for proposals issued by the Department. Mr. Hatcher is the only individual who performs this function for the Department and has been in this position, performing this task, for over nine years. Mr. Hatcher processes the proposals through a standard procedure. The RFP provides that the information submitted in the Data Sheet “will be verified by the Department [and] [a]ny inaccurate or omitted information will be corrected.” After receiving the proposals, Mr. Hatcher verifies the accuracy of the information provided, including the number of completions and the recidivism rate reported on the Data Sheets submitted with each proposal, against the information provided in the corresponding CAR. If the information regarding a program is reported incorrectly, Mr. Hatcher corrects it to conform to the information in the appropriate CAR. The information submitted on the Data Sheet is submitted by contract number. The contract number is how the Department identifies quality assurance reviews, as well as fiscal and other data sources. For example, for contract number P2028, White submitted the completions for both programs in the Second Judicial Circuit. One program had 19 completions and the other program had 29 completions, for a total of 48. White intended to combine the completions for placement under Column 9 of the Data Sheet but erroneously used the combined number of releases. Pursuant to the RFP, Mr. Hatcher corrected the data to reflect the combined completions as reported in the CAR.2 The CAR reported a success rate of one program as 63% and the success rate of the other program as 69%, which equated to recidivism rates of 37% and 31%. White recorded the recidivism rates for the contract on the Data Sheet as 37%/31%. The same approach was used for reporting the information on contract number D7102 for the services provided in Duval County and Nassau County in the Fourth Judicial Circuit. The services provided in Duval and Nassau Counties were considered by the Department to be one program; however, the CAR reported the information by county as if they were separate programs. The completions for both counties were intended to be combined for reporting on the Data Sheet, but White recorded the combined number of releases on the Data Sheet.3 Mr. Hatcher corrected the data to reflect the combined completions as reported in the CAR. The CAR reported the success rates for the Duval County program as 62% and the success rate of the Nassau County program as 100%. These success rates equated to recidivism rates of 38% and 0%. Because the Department is looking for the recidivism rate for each contract, and the CAR reports the success rates used to calculate recidivism rates by program as in the Second Judicial Circuit or by county as in the Fourth Judicial Circuit, Mr. Hatcher averages the combined recidivism rates to come up with one recidivism rate for each contract in the Second and Fourth Judicial Circuits. Thus, the recidivism rates for contract number P2028 for the Second Judicial Circuit were averaged, resulting in one recidivism rate of 21%. The same method was applied to the recidivism rates for the Fourth Judicial Circuit, resulting in one recidivism rate of 19%. After checking the reported numbers and making all necessary changes, including making corrections to the data to match the data reported in the CAR and averaging the recidivism rates for contracts encompassing more than one program or more than one county, Mr. Hatcher inputs the number of completions and the recidivism rate for each contract into a standardized Microsoft Excel spreadsheet (Spreadsheet), which performs the actual calculations and computes the total CSR for each individual proposal. The Spreadsheet uses fixed formulas to perform the mathematical calculations necessary to determine the CSR for each proposal. The last two columns on the right hand side of the Spreadsheet relate to the CSR, and the numbers shown therein are generated by the fixed formulas. The Spreadsheet performs several calculations. It multiplies the number of completions by the recidivism rate for each contract to obtain the number of youth recidivating. Then, from each contract, the number of youth recidivating was subtracted from the number of total completions to obtain the number of successful youth for each contract. It then adds each of these successful youth figures together and divides the total by the combined total number of completions, resulting in the total CSR. The Department awarded Eckerd a score of 129 points based on a 64.5% Combined Success Rate. The Department awarded White a score of 160 points based on an 80% Combined Success Rate. On December 11, 2009, the Department posted its Notice of Agency Action, which indicated its intent to award the contract to White. The Department awarded White the highest overall score of 1554.49 points. The Department awarded Eckerd the second highest overall score of 1544.49 points. On December 28, 2009, Eckerd filed the Petition pursuant to Subsection 120.57(3), Florida Statutes (2009),4 and Florida Administrative Code Rule 28-110.004. The same Spreadsheet had been used by the Department for several years in calculating the CSR for proposals submitted in response to requests for proposals. Additionally, the Department’s practice of averaging scores for single-contract programs with more than one set of data was not a new scoring concept for the procurement at issue. In 2007, Eckerd submitted a response to Request for Proposal P2303 (RFP P2303) issued by the Department and was awarded the contract by achieving the highest score that was calculated in the same manner as the scores for the procurement at issue.5 In the Data Sheet submitted by Eckerd for RFP P2303, under program name, it entered in one cell, a single-contract program (contract number P70444) operated by Eckerd in the Tenth and Twelfth Judicial Circuits as “Circuit 10, 12, West/EYDC.” In its Data Sheet for RFP P2303, Eckerd took the total number of completions from the 2006 CAR for the Tenth Judicial Circuit and the Twelfth Judicial Circuit for contract number P7044, 19 and 31, respectively, and added them together for a total of 50 completions, which it entered under the “Number of Completions” column. The 2006 CAR reported recidivism rates for the Tenth and Twelfth Judicial Circuits as 26% and 23%, respectively, for contract number 7044. Eckerd listed both recidivism rates in its Data Sheet for RFP P2303 under the “2004-2005 Recidivism Rate.” Mr. Hatcher averaged the recidivism rates for contract number 7044 resulting in a single recidivism rate of 25%. This figure was used in the Spreadsheet to calculate the CSR. The Data Sheet submitted by Eckerd for RFP P2303 also contains two boxes at the bottom of the page that contain statements indicating that each circuit was reported separately and that the cell contains both circuits. The boxes have arrows that point to the relevant combined data cells in the “Number of Completions” and “2004-2005 Recidivism Rate” columns. The information contained in the data cells was derived from the 2006 CAR, which listed separate data for the Tenth and Twelfth Judicial Circuits even though the services provided were through a single contract. Eckerd has also submitted responses for other requests for proposals, RFP P2028, RFP P2032, and RFP P2034, using the same data for each Data Sheet as it used for the Data Sheet submitted for RFP P2303. On February 15, 2010, the Department changed its policy on the scoring methodology to be used in procurements such as the one at issue. The change in policy was expressed in an addendum to RFP P2062. The addendum stated in part: If the 2008 CAR Report lists a program with more than one recidivism percent, list all of the percentages and the number of completions for the program on Attachment C [Data Sheet], and the Department will be treating a Provider’s program with more than one recidivism rate as separate programs for the purposes of calculating success rate and will not be averaging the programs. The Department verifies all program information from the CAR Report. This change in policy was in response to the anticipated changes to the 2009 CAR, which will report and identify multiple areas of information, including more programs with several separately reported recidivism rates. The change in policy was implemented upon evaluation of the 2009 CAR and in anticipation of the release of the 2009 CAR. Eckerd claims that the policy of averaging recidivism percentages for contracts in which the CAR lists more than one recidivism rate resulted in an inaccurate recidivism percentage for White’s contracts for the Second and Fourth Judicial Circuits. For example, in the Fourth Judicial Circuit, the recidivism rate for Duval County was 38%, and the recidivism rate for Nassau County was 0%. Eckerd contends that the multiple recidivism rates as calculated from the CAR should have been used in the Spreadsheet rather than an average of multiple recidivism rates for a single contract. When the recidivism rate that is calculated from the CAR report for Duval County is used, the number of youth reoffending is 87.4, and the number of youth reoffending in Nassau County is 0%. When the average recidivism rate of 19% is used for Duval and Nassau Counties, the number of youth reoffending drops to 44.08, which is not an accurate accounting of the actual number of youth who reoffended. When the recidivism rate is lowered, the success rate will rise. Therefore, if the method espoused by Eckerd was used, White would have received a 71.9 score for CSR, resulting in a decrease of the points awarded to White of 16 points for CSR and a corresponding decrease in the total points awarded to White. Using Eckerd’s methodology, Eckerd would have received the highest number of points.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing the Petition filed by Eckerd. DONE AND ENTERED this 28th day of April, 2010, in Tallahassee, Leon County, Florida. S SUSAN B. HARRELL Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 2010.
Conclusions Having reviewed the Administrative Complaint, and all other matters of record, the Agency for Health Care Administration finds and concludes as follows: 1. The Agency has jurisdiction over the above-named Respondent pursuant to Chapter 408, Part II, Florida Statutes, and the applicable authorizing statutes and administrative code provisions. 2. The Agency issued the attached Administrative Complaint and Election of Rights form to the Respondent. (Ex. 1) Respondent requested a formal administrative hearing by a Petition, however, Respondent failed to file any response to the Administrative Law Judge’s Order to Show Cause, which resulted in the Judge’s Order Relinquishing Jurisdiction and Closing File. (Ex. 2) This Order found that Respondent’s failure to file any response to the Court’s Order to Show Cause resulted in a finding that Respondent’s request for formal administrative hearing was deemed withdrawn and there were no remaining material disputed facts to resolve. Based upon the foregoing, it is ORDERED: 1. The findings of fact and conclusions of law set forth in the Administrative Complaint are adopted and incorporated by reference into this Final Order. 2. The Respondent shall pay the Agency $1,000. If full payment has been made, the cancelled check acts as receipt of payment and no further payment is required. If full payment has not been made, payment is due within 30 days of the Final Order. Overdue amounts are subject to statutory interest and may be referred to collections. A check made payable to the “Agency for Health Care Administration” and containing the AHCA ten-digit case number should be sent to: Office of Finance and Accounting Revenue Management Unit Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 14 Tallahassee, Florida 32308 1 Filed December 17, 2013 10:37 AM Division of Administrative Hearings ORDERED at Tallahassee, Florida, on this_'3 day of Deeerber 2013. poms Elizayeth Dudgk,\Secretary Ageficy for Heafth Care Administration
Other Judicial Opinions A party who is adversely affected by this Final Order is entitled to judicial review, which shall be instituted by filing one copy of a notice of appeal with the Agency Clerk of AHCA, and a second copy, along with filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the Agency maintains its headquarters or where a party resides. Review of proceedings shall be conducted in accordance with the Florida appellate rules. The Notice of Appeal must be filed within 30 days of rendition of the order to be reviewed. CERTIFICATE OF SERVICE I CERTIFY that a true and correct_c of this Final Qrder was served on the below-named persons by the method designated on this 3 otay of , 2013. CY i Richard Shoop, Agency Clerk Agency for Health Care Administration 2727 Mahan Drive, Mail Stop 3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Finance & Accounting Facilities Intake Unit Revenue Management Unit (Electronic Mail) (Electronic Mail) 4 Deborah E. Leoci, Senior Attorney Tamas Kovacs, Administrator Office of the General Counsel SWOF, LLC, d/b/a Gulf Winds Agency for Health Care Administration 2745 East Venice Avenue (Electronic Mail) Venice, Florida 34292 (U.S. Mail) Elizabeth W. McArthur, Administrative Law Judge Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399 (Electronic Mail)
The Issue What amount should be awarded Petitioners as attorney's fees and costs in the underlying case in this matter, Savona et al. v. AHCA, Case No. 97-5909RU (DOAH Amended Final Order On Remand issued November 6, 1998).
Findings Of Fact Petitioners challenged a non-rule statement and policy of Respondent which limited physicians' Medicare cost-sharing reimbursement to the rate for Medicaid. Petitioners submitted an itemized statement of the requested hours, a summary of hours by stages of the case, and a summary of total hours, rates, and expenses requested. The hours and rates are supported by the testimony of Petitioners' counsel, David K. Miller, and corroborated by testimony of Attorney Samatha Boge and Attorney Nancy Linnan. An affidavit of Attorney Barry Richard in a related case adds further corroboration to hourly rates submitted by Petitioners' counsel. Respondent did not present independent evidence concerning proper number of hours, rates or expenses. Respondent did challenge some portions of the hours claimed by Petitioners' counsel and opposed the claim for fees and costs in its entirety. As established by testimony of David K. Miller, Samantha Boge, and Nancy Linnan, all attorneys licensed and practicing in Florida, the time spent by Petitioners’ attorneys in the initial proceeding and their hourly rates were reasonable. Further corroboration of testimony regarding hourly rates was presented by an affidavit from Barry Richard, an attorney in a related case. Petitioners have revised the number of hours properly allocated to this case and reduced same by 1.9 hours from hours allocated to M. Stephen Turner, one of the Petitioners’ attorneys. Respondent also challenges 3.9 hours charged by Petitioners' attorneys for monitoring of legislation, specifically senate bill 384, amending the law governing Petitioners rights to payment on crossover claims. The claim of counsel for Petitioners that this 3.9 hours (performed by Attorney Jody Chase) is relevant to proceedings in the underlying action, is not credited and these hours are also deducted from Petitioners’ claim for fees and costs. Petitioners request as adjusted is summarized as follows: M. Stephen Turner 73.7 hours@ $300/hr.= $22,110.00 David K. Miller 240.4 hours@ $225/hr.= 54,090.00 15.0 hours@ $225/hr.= 3,375.00 Other Partners .10 hours@ $225/hr.= 22.50 Associate .3 hours@ $175/hr.= 52.50 Paralegals 2.4 hours@ $ 75/hr.= $180.00 Fees $79,830.00 Expenses 2,280.00 Total $82,110.00 As modified above, the hours and rates requested are found to be reasonable in view of the novelty and complexity of issues, level of legal skills required, and the amount potentially at stake to Petitioners. Particularly, the amount awarded is justified in view of customary amounts charged or awarded for comparable services. The requested expense reimbursement is also reasonable. The expenses are of the kind typically billed to clients in addition to the hourly rate charged.
The Issue At issue in this proceeding is whether the Respondent, The Gardner Group, Inc. (Gardner Group) failed to abide by the coverage requirements of the Workers' Compensation Law, Chapter 440, Florida Statutes, by not obtaining workers' compensation insurance for its employees; and whether the Petitioner properly assessed a penalty against the Respondent pursuant to Section 440.107, Florida Statutes.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made: The Department is the state agency responsible for enforcing the requirement of the workers' compensation law that employers secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Gardner Group is an insurance broker located in Neptune Beach, Florida. The company has a total of six employees. Gardner Group stipulated that all persons listed in the Second Amended Order were its employees, and to the correctness of the calculation of payroll for which the penalty was assessed. On June 25, 2009, Lou Cabrera, the Department's investigator, visited Gardner Group's place of business at 810 Third Street in Neptune Beach, where he spoke with Gardner Group employee Corinne Carter. Mr. Cabrera later spoke with Beverly Carter, Gardner Group's Vice President for Administration. Ms. Gardner told Mr. Cabrera that Gardner Group had four employees in addition to her and Corrine Carter. The company's business records later verified that these persons, Kayla Hauk, Sandra Moore, Brian Cook, and Howard Dunlap, were employees of Gardner Group. Because Gardner Group had four or more employees, it appeared to meet the threshold for "employment" requiring workers' compensation coverage. § 440.02(17)(b)2., Fla. Stat. A corporate officer may elect to be exempt from the requirements and benefits of Chapter 440, Florida Statutes, by filing a notice and receiving a certificate of election to be exempt from the Department. See Florida Administrative Code Rule 69L-6.012 for details of the process employed to obtain an exemption. As of June 25, 2009, Howard Dunlap and Trace Milam were the only corporate officers of Gardner Group holding valid workers' compensation exemptions. Trace Milam was no longer working for Gardner Group on June 25, 2009. As of June 25, 2009, Gardner Group did not have workers' compensation insurance. Mr. Cabrera issued and personally served the SWO on Gardner Group. Mr. Cabrera also issued and personally served a request for production of business records for the purpose of accurately calculating a penalty assessment for Gardner Group. Gardner Group promptly complied with the Department's request for business records. Based on those records, the Department issued the Amended Order on July 13, 2009, ordering Gardner Group to pay a penalty of $15,595.93, pursuant to Subsection 440.107(7)(d), Florida Statutes. On July 17, 2009, the Department issued the Second Amended Order, ordering Gardner Group to pay a penalty in the amount of $15,264.24. The Second Amended Order is the basis of this proceeding. The SWO was conditionally released when Gardner Group entered into a periodic payment agreement and came into compliance with Section 440, Florida Statutes, by obtaining exemptions for three corporate officers (Mr. Dunlap, Mr. Cook, and Beverly Carter) and maintaining three employees. Sole proprietors and partners not engaged in the construction industry are not considered employees for purposes of workers' compensation coverage unless they affirmatively elect to be covered. § 440.02(15)(c)1., Fla. Stat. At the hearing, Beverly Carter testified that she is a partner in Gardner Group. She produced documents demonstrating that she owns 5 percent of the outstanding shares in Gardner Group. Mr. Dunlap owns 85 percent of the outstanding shares, and Mr. Milam owns 10 percent of the outstanding shares. The shares are not publicly traded, and a cross purchase agreement places restrictions on the manner in which the shareholders may dispose of their holdings. Section 440.02(21), Florida Statutes, defines "partner" to mean: any person who is a member of a partnership that is formed by two or more persons to carry on as co-owners of a business with the understanding that there will be a proportional sharing of the profits and losses between them. For the purposes of this chapter, a partner is a person who participates fully in the management of the partnership and who is personally liable for its debts. As Vice President for Administration, Ms. Carter does participate in the management of the business. However, Gardner Group is a C corporation, formed pursuant to Chapter 607, Florida Statutes, meaning that the shareholders are not personally liable for the debts of the business. Ms. Carter testified that she is paid a salary that constitutes her main compensation from Gardner Group. She testified that she may receive a dividend if the corporation shows a profit. Gardner Group is a corporation, not a partnership, and Ms. Carter therefore cannot meet the definition of "partner" set forth in Section 440.02(21), Florida Statutes. Ms. Carter credibly testified that Gardner Group was unaware that its corporate officers were required to file a notice of election in order to be exempt from workers' compensation coverage. She noted that it was a simple matter for the company to obtain those exemptions, and stated that it was unfair to penalize Gardner Group more than $15,000.00 for the "minor technicality" of failing to file exemption notices for its three corporate officers. The Department lacks discretion to overlook the requirements of Section 440.05, Florida Statutes, regarding the method by which a corporate officer must elect exemption from workers' compensation coverage, or the requirements of Section 440.107, Florida Statutes, regarding enforcement of workers' compensation coverage requirements. Therefore, Gardner Group's unawareness of the filing requirement does not excuse the payment of the amount set forth in the Second Amended Order.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Financial Services, Division of Workers' Compensation, assessing a penalty of $15,264.24 against The Gardner Group, Inc. DONE AND ENTERED this 24th day of December, 2009, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 24th day of December, 2009. COPIES FURNISHED: Paige Billings Shoemaker, Esquire Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-4229 Howard Dunlap The Gardner Group, Inc. 810 Third Street Neptune Beach, Florida 32266 Tracey Beal, Agency Clerk Department of Financial Services 200 East Gaines Street Tallahassee, Florida 32399-0390 Benjamin Diamond, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307 Honorable Alex Sink, Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0307
The Issue The issue in this proceeding is the amount payable to the Agency for Health Care Administration (AHCA) to satisfy a Medicaid lien under section 409.910, Florida Statutes (2015).1/
Findings Of Fact On November 2, 2012, the Petitioner, then 20 years old, was a restrained passenger in his girlfriend's Ford Mustang when it was t-boned on the passenger side by a Chevy pickup truck operated by Eddie Ellison. On November 2, 2012, immediately prior to the collision, Eddie Ellison, who was driving eastbound on Harney Road in Hillsborough County, Florida, failed to stop at the stop sign at Williams Road. Eddie Ellison was negligent in the operation of his Chevy Truck on November 2, 2012, and caused it to strike the Ford Mustang occupied by the Petitioner. Eddie Ellison's wife, Alberta Ellison, was the co-owner of the Chevy truck. The Petitioner was wearing his seatbelt at the time of the collision, and there was no negligence on the part of the Petitioner that was a proximate cause of any injury suffered by him as a result of the motor vehicle collision. There was no negligence on the part of any person other than Eddie Ellison that was a proximate cause of the motor vehicle collision on November 2, 2012. When the Hillsborough County Fire and Rescue team arrived at the accident scene at approximately 8:20 p.m., the Petitioner was unresponsive and exhibiting decorticate posturing. He was extricated from the vehicle, intubated at the scene and immediately transported via ambulance to Tampa General Hospital (TGH). The Petitioner arrived at TGH by approximately 8:39 p.m., presenting in critical condition. He was admitted to the Intensive Care Unit (ICU), where he remained for 11 days. The Petitioner suffered serious injuries as a result of the collision, including: injuries to the brain; multiple fractures to the skull, face, jaw, and other head injuries; multiple pelvic fractures; pulmonary contusions; acute respiratory failure; dysphagia; and splenic lacerations. On November 3, 2012, Stephen Reintjes, M.D., performed a ventriculostomy, wherein he drilled through the right parietal region of the Petitioner's skull and placed an external ventricular drain (EVD) into the right lateral ventricle to relieve the Petitioner's elevated intracranial pressure. The EVD was removed on November 12, 2012. On November 6, 2012, David Ciesla, M.D., and a TGH resident, performed a percutaneous tracheostomy, wherein he created an opening through the Petitioner's neck and placed a windpipe because of the Petitioner's prolonged respiratory failure. That same day, John Cha, M.D., performed a percutaneous endoscopic gastrostomy (PEG), wherein a feeding tube was placed into the Petitioner's stomach due to the Petitioner's dysphagia. The Petitioner's PEG tube was removed on January 3, 2013. On November 9, 2012, Michael Harrington, M.D., performed an open reduction and internal fixation (ORIF) of the Petitioner's right zygomaticomaxillary fracture, and a closed reduction with maxillomandibular fixation (MMF) of the Petitioner's right zygomatic arch fracture. Essentially, screws and plates were implanted into the Petitioner's right cheekbone and then his jaw was wired shut to facilitate healing. The Petitioner's jaw remained wired shut until December 3, 2012, and the MMF hardware was surgically removed on December 20, 2012. On November 13, 2012, the Petitioner was transferred from the ICU to a surgical trauma unit. Once the Petitioner became medically stable on December 6, 2012, he was transferred to the Tampa General Rehabilitation Center (TGRC). There, the Petitioner received intensive physical and occupational therapy, speech and swallow therapy, psychological services, and 24/7 rehabilitation nursing care. The Petitioner remained at TGRC until January 16, 2013, 75 days after the crash, when he was discharged to his home. Medicaid paid a total of $147,019.61 for the Petitioner's past medical expenses. For nearly two years following his discharge, the Petitioner was unable to perform the tasks of daily living and was completely dependent on his parents and girlfriend for his care and supervision. The Petitioner was toileted, bathed, and dressed by his parents and his girlfriend. The Petitioner could not walk without assistance. All of the Petitioner's meals were prepared for him. The Petitioner would become obsessive over minor things, easily agitated, and frequently combative. The Petitioner had violent outbursts which required all three of his caretakers to physically restrain him. If left unattended at meals, the Petitioner would overeat until he would vomit. The Petitioner gained a life-threatening 100 pounds over this period. Beyond the most basic level, the Petitioner could not use a computer, play video games, or engage in an active social life, much less skateboard or participate in any of the other physical activities he once enjoyed. The Petitioner spent the majority of his time at home with his parents and girlfriend watching television, with occasional supervised trips outside the home. On June 12, 2013, the Petitioner filed suit against Eddie Ellison and Alberta Ellison in the Circuit Court of the Thirteenth Judicial Circuit, in and for Hillsborough County, Florida, Case No: 13-CA-008277 ("the underlying lawsuit"), seeking to recover damages in excess of $15,000. In the underlying lawsuit, the Petitioner seeks to recover damages for the following: medical expenses incurred in the past; medical expenses to be incurred in the future; lost earnings incurred in the past; loss of earning capacity in the future; property damage incurred in the past; pain, suffering, disability, physical impairment, disfigurement, mental anguish, inconvenience, aggravation of a disease or physical defect, and loss of capacity for the enjoyment of life sustained in the past; and pain, suffering, disability, physical impairment, disfigurement, mental anguish, inconvenience, aggravation of a disease or physical defect, and loss of capacity for the enjoyment of life to be sustained in the future. The Petitioner also seeks to recover costs incurred by the Petitioner in the underlying lawsuit, pre-judgment interest at the statutory rate for actual, out-of-pocket pecuniary losses from the date of the loss, and attorney's fees to the extent allowed by law. In the underlying lawsuit, the Petitioner sued his uninsured motorist carrier, 21st Century Centennial Insurance Company (21st Century), seeking to recover $10,000 in uninsured motorist benefits owed to the Petitioner under an automobile insurance policy paid for by the Petitioner's parents, Richard and Linda Willoughby. The insurer denied coverage and refused to pay the uninsured motorist benefits. In the underlying lawsuit, the Petitioner also sued 21st Century for violation of section 624.155, Florida Statutes, seeking to recover the total amount of the Petitioner's damages from 21st Century as provided in section 627.727(10), Florida Statutes. The Petitioner also sought to recover from 21st Century applicable pre-judgment interest, attorneys' fees pursuant to sections 624.155, 627.727(10), and 627.428 and taxable costs. On February 13, 2015, the Petitioner agreed to settle his claims against 21st Century for $4,000,000. The Petitioner received the settlement proceeds from 21st Century on March 16, 2015. On March 20, 2015, the Petitioner and 21st Century filed a joint stipulation to dismiss the Petitioner’s claims against 21st Century with prejudice. As of March 20, 2015, the Petitioner had incurred a total of $50,375.32 in taxable costs, which the Petitioner repaid to the Petitioner's counsel out of the 21st Century settlement proceeds. On May 14, 2015, a total of $147,844.16 was transferred into an interest-bearing trust account for the benefit of AHCA pending an administrative determination of the agency's right to benefits under section 409.910. The parties to this proceeding stipulated that, of the $4 million paid by 21st Century, $3.99 million was “bad faith damages,” paid to settle the Petitioner's claim for damages under section 627.727(10), on account of 21st Century's wrongful failure to pay the Petitioner's uninsured motorist claim and other violations of section 624.155. The settlement agreement between the Petitioner and 21st Century does not specifically attribute any of the $4 million settlement amount to “bad faith” and states that “all sums set forth herein constitute damages on account of personal injuries or sickness.” The settlement agreement further states as follows: The parties agree and acknowledge that this agreement is a settlement of claims which are contested and disputed. Any payments are not to be construed as an admission of liability on the part of 21st Century, which expressly denies any liability for this action. The Petitioner also received a total of $20,000 from Esurance Property and Casualty Insurance Company, reflecting the $10,000 limit of bodily injury liability insurance and $10,000 limit of uninsured motorist coverage under the automobile insurance policy that insured the driver of the Ford Mustang, Kayliegh Lewis, at the time of the crash. The Petitioner's claims against Eddie Ellison and Alberta S. Ellison remain pending in the underlying lawsuit. As of the July 30, 2015, filing of the Pre-hearing Stipulation, the Ellisons' insurer has only offered the $100,000 limit of bodily injury liability insurance to settle all of the Petitioner's claims against the Ellisons. The $4,020,000 paid to the Petitioner does not fully compensate him for the full monetary value of all of his damages. The full monetary value of all of the Petitioner's damages is at least $10 million. At the time of the settlement with 21st Century, the full monetary value of all of the Petitioner's damages was at least $10 million. At the time of the settlement with 21st Century, the Petitioner had suffered not less than $23,800 in lost wages. At the time of the settlement with 21st Century, the Petitioner's work life expectancy through age 67 was 45 years. At the time of the settlement with 21st Century, the Petitioner's loss of future earning capacity was within the range of $794,135.92 and $2,093,950.12. At the time of the settlement with 21st Century, the Petitioner's future medical expenses were projected to exceed $5 million. At the time of the settlement with 21st Century, the Petitioner's past non-economic damages exceeded $1 million. At the time of the settlement with 21st Century, the Petitioner's life expectancy was 59.7 years. At the time of the settlement with 21st Century, the Petitioner's future non-economic damages were within the range of $5 million to $10 million. Although the parties to this proceeding stipulated that the Petitioner has recovered less than $147,019.61 as payment for past medical expenses, the settlement agreement between the Petitioner and 21st Century states that “all sums set forth herein constitute damages on account of personal injuries or sickness.” The Petitioner is no longer eligible for Medicaid. Medicaid has not paid or committed to pay any funds for the Petitioner's future medical care.
The Issue The issue for the undersigned to determine is the amount payable to Respondent, Agency for Health Care Administration (AHCA or Respondent), as reimbursement for medical expenses paid on behalf of Petitioner pursuant to section 409.910, Florida Statutes (2020),1 from settlement proceeds he received from third parties.
Findings Of Fact AHCA is the state agency charged with administering the Florida Medicaid program, pursuant to chapter 409. On September 6, 2019, Mr. St. Surin was severely injured when his motorcycle struck a car. In this accident, Mr. St. Surin suffered severe and permanent injury to his back, neck, scapula, ribs, and knee. 1 All references to Florida Statutes are to the 2020 codification, unless otherwise indicated. Mr. St. Surin’s medical care related to the injury was paid by Medicaid. Medicaid, through AHCA, provided $28,482.15 in benefits. In addition, Medicaid, through a Medicaid managed care organization known as WellCare of Florida, paid $7,278.25 in benefits. The combined total amount of these benefits, $35,760.40, constitutes Mr. St. Surin’s entire claim for past medical expenses. Mr. St. Surin pursued a personal injury claim against the owner and driver of the car who caused the accident (collectively the “Tortfeasors”) to recover all of his damages. The Tortfeasors’ insurance policy limits were $100,000, and the Tortfeasors had no other collectable assets. Mr. St. Surin’s personal injury claim was settled for the insurance policy limits of $100,000. During the pendency of Mr. St. Surin’s personal injury claim, AHCA was notified of the claim and AHCA asserted a Medicaid lien in the amount of $28,482.15 against Mr. St. Surin’s cause of action and the settlement proceeds. AHCA did not commence a civil action to enforce its rights under section 409.910, or intervene or join in Mr. St. Surin’s action against the Tortfeasors. AHCA was notified of Mr. St. Surin’s settlement by letter. AHCA has not filed a motion to set aside, void, or otherwise dispute Mr. St. Surin’s settlement. Application of the formula found in section 409.910(11)(f) would require payment to AHCA of the full $28,482.15 Medicaid lien given the $100,000 settlement. Petitioner has deposited the Medicaid lien amount in an interest- bearing account for the benefit of AHCA pending a final administrative determination of AHCA’s rights. Petitioner presented testimony from Scott Kimmel, Esquire. Mr. Kimmel represented Mr. St. Surin in his personal injury claim against the Tortfeasors. Mr. Kimmel is a personal injury attorney and has practiced law for 30 years. Mr. Kimmel testified that he placed a conservative value of $1 million on Mr. St. Surin’s personal injury claim, but that the personal injury claim was settled for policy limits of $100,000 because the Tortfeasors had no other collectable assets. Using the pro rata allocation methodology, Mr. Kimmel testified that $3,576 of the $100,000 settlement proceeds should be allocated to past medical expenses because the personal injury claim was settled for ten percent of its conservative value. Mr. Kimmel’s testimony was credible, persuasive, and uncontradicted. AHCA did not challenge Mr. Kimmel’s valuation of the personal injury claim, or his use of the pro rata allocation methodology to determine the amount of settlement proceeds that should be allocated to past medical expenses, nor did AHCA offer any evidence from which the undersigned could arrive at a different valuation or allocation. There is no reasonable basis to reject Mr. Kimmel’s testimony, and it is accepted here in its entirety. The undersigned finds that the value of Mr. St. Surin’s personal injury claim is $1 million, and that $3,576.04 of the $100,000 settlement proceeds should be allocated to past medical expenses.
