The Issue The issue in this case is whether Respondent, Amelia Kay Jacobs, committed the offenses alleged in an Administrative Complaint entered by the Insurance Commissioner of the State of Florida on February 20, 1998.
Findings Of Fact Petitioner, the Department of Insurance (hereinafter referred to as the "Department"), is an agency of the State of Florida charged with the responsibility for, among other things, the licensing and discipline of insurance representatives in Florida. Chapter 626, Florida Statutes (1997). Respondent, Amelia Kay Jacobs, is currently licensed by the State of Florida as a nonresident life and health agent. Ms. Jacobs agent number is 510427789. On or about July 24, 1980, a Complaint/Information was filed in the District Court of the Eighteenth Judicial District in and for Sedgwich County, Kansas, charging Ms. Jacobs with one count of Giving a Worthless Check in violation of Section 21- 3707, Kansas Statutes, a Class E Felony. On or about April 28, 1981, Ms. Jacobs entered a plea of guilty to the charge of Giving a Worthless Check before the Kansas District Court. The Court adjudicated Ms. Jacobs guilty as charged, but withheld sentencing for a period of one year from June 26, 1981. Ms. Jacobs was subsequently released early from probation. On or about May 20, 1996, Ms. Jacobs swore to and signed an Insurance License Application (hereinafter referred to as the "Application") with the Department. Ms. Jacobs filed the Application seeking licensure as a nonresident life and health agent. On the Application Ms. Jacobs, while under oath, responded "NO" to the following questions: 13. Have you ever been convicted of, found guilty of, or pleaded no contest to a crime involving moral turpitude No (yes or no), or a felony No (yes or no), or a crime punishable by imprisonment of one (1) year or more under the law of any state, territory or country, whether or not a judgment of conviction has been entered? No (yes or no) If yes, give date(s): N/A Ms. Jacobs knew or should have known that her answers to question 13 were false and a material misrepresentation of fact. The Department relied upon the incorrect misrepresentation of Ms. Jacobs to question 13 on the Application in approving the Application. Ms. Jacobs was informed by the Department by letter dated August 14, 1996, that the Department had received information concerning the foregoing. The Department gave Ms. Jacobs an opportunity to explain the incident or to withdraw her Application because she was a first-time applicant still on probation. On or about February 20, 1998, the Insurance Commissioner entered an Administrative Complaint against Ms. Jacobs. The complaint was based, in part, on the incident described, supra. On or about February 28, 1998, Ms. Jacobs executed an Election of Rights form denying the factual allegations of the Administrative Complaint and requesting a formal administrative hearing. Rule 4-231.160(2), Florida Administrative Code, lists certain aggravating and mitigating circumstances which should be considered in determining the appropriate penalty for a violation of Sections 626.611(14) or 626.621(8), Florida Statutes (1997): The number of years since the criminal proceeding: It has been 18 years since Ms. Jacobs was charged with Giving a Worthless Check in violation of Section 21-3707, Kansas Statutes. Age of licensee at the time the crime was committed: Ms. Jacobs was 36 when the offense was committed. Whether licensee served time in jail: The evidence failed to prove that Ms. Jacobs served time in jail. Whether or not licensee violated criminal probation: Ms. Jacobs did not violate probation. She was released from probation early. Whether or not licensee is still on criminal probation: The evidence failed to prove that Ms. Jacobs is still on probation. Whether or not licensee's actions or behavior resulted in substantial injury to the victim: Ms. Jacobs made restitution of the amount of the worthless check. The victim, therefore, did not suffer substantial injury. Whether or not restitution was, or is being timely, paid: Ms. Jacobs made restitution. Whether or not licensee's civil rights have been restored: Ms. Jacobs' civil rights were not impacted. Other related factors: The evidence failed to prove that any other factors apply in this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Department of Insurance finding that Amelia Kay Jacobs has violated the provisions of Sections 626.611(2), (7), and (14), and 626.621(1) and (8), Florida Statutes (1997), as alleged in the Administrative Complaint. It is further RECOMMENDED that the portion of the Administrative Complaint alleging that Ms. Jacobs violated Sections 626.611(1) and (13), and 626.621(2), Florida Statutes (1997), be dismissed. It is further RECOMMENDED that the nonresident life and health agent license issued to Ms. Jacobs be suspended for a period of six months from the date of the Final Order. DONE AND ENTERED this 9th day of July, 1998, in Tallahassee, Leon County, Florida. LARRY J. SARTIN 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 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1998. COPIES FURNISHED: Robert F. Langford, Jr., Esquire Department of Insurance 645A Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Amelia Kay Jacobs Post Office Box 8073 Wichita, Kansas 67268-8073 Bill Nelson State Treasurer and Insurance Commission The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Daniel Y. Sumner, Esquire Department of Insurance The Capitol, Lower Level 26 Tallahassee, Florida 32399-0300
The Issue Whether the "voluntary surrender" of the Respondent's license as an insurance agent to the Department, and his statement that he will not seek to renew that license on or before the next expiration period, while an administrative complaint is pending before the Division of Administrative Hearings deprives the Division and the Department of jurisdiction from seeking discipline of that license under the provisions of Chapters 624 and 626, Florida Statutes.
Conclusions The Division of Administrative Hearings, has jurisdiction over the subject matter of and the parties to this proceeding. Chapters 624, 626, and Section 120.57(1), Florida Statutes. By the terms of Section 120.57(1), there are only three grounds upon which the Hearing Officer may relinquish jurisdiction: Determination that no substantial interest is affected by the proposed agency action; Determination that the proceeding does not involve a disputed issue of material fact; or Determination that the affected parties have waived their rights to a proceeding. In the instant case, it is undisputed that substantial interest of the Respondent will be affected by the proposed agency action. On December 10, 1993, Respondent voluntarily surrendered to the Department his insurance licenses and eligibility for appointment under the Florida Insurance Code, and simultaneously acknowledged that he does not intend to renew said licenses. By surrendering his insurance licenses to the Department, Respondent has evinced his intention not to contest the charges contained in the Second Amended Administrative Complaint. As such the factual allegations of the Complaint may be taken as true. Respondent asserts that he is unable to defend against the allegations of the Second Amended Administrative Complaint due to his assertion that he and his "essential witnesses" are targets of a federal criminal investigation. This argument is misplaced. See: Patchett v. Commission on Ethics, 18 FLW D2407 (Fla. 1st DCA 1993). Respondent further alleged that he does dispute the factual allegations in the Complaint but is financially unable to defend himself. However, Respondent may not hide from the consequences of his actions behind the surrender of his licenses. Boedy v. Department of Professional Regulation, 433 So.2d 544 at 544 (Fla. 1st DCA 1983). In Boedy, the Court adopted the rationale stated in the Final Order of the Board of Medical Examiners stating "to suggest that physicians should be able to immunize themselves from prosecution by simply going inactive suggests a form of self-regulation of the medical profession which was obviously rejected by the Legislature when it chose to enact Chapter 458, Florida Statutes.: Id. Likewise, it would be contrary to the Legislative mandates of Chapter 626, Florida Statutes and specifically the provisions of Section 626.641, Florida Statutes and specifically the provisions of Section 626.641, Florida Statutes to allow a licensee to avert prosecution for violations of the Florida Insurance Code by simply "surrendering" his license. This same line of reasoning was repeated by the Court in Couch v. Turlington, 465 So.2d 557 (Fla. 1st DCA 1985). The court in the Couch asserts that inherent in the regulatory agency's power to establish the terms of issuance of a certificate "is the implied power to govern the terms and conditions under which a certificate may be altered by the holder thereof." Id. at 559. Extending this rationale to the instant case, the Department seeks the imposition of a revocation pursuant to Section 626.641, Florida Statutes, and it is not for Respondent to set the conditions of his surrender as a means of avoiding the sanction. By surrendering his license to the Department Respondent has indicated his intent not to contest the charges contained in the Second Amended Complaint. Therefore, Respondent has waived his right to a formal administrative proceeding. The surrender has the same effect as the withdrawal of Respondent's request for a administrative proceeding and places him in the same position as if he had not responded to the Administrative Complaint within the twenty-one days as required pursuant to Rule 4-121.084, Florida Administrative Code. Rule 4-121.084(4), Florida Administrative Rules, states that failure to timely request a hearing "shall constitute a waiver of the licensee's right to such a hearing, and the Department is authorized to enter a final order imposing a penalty or to take other action without further proceeding." It is therefore appropriate for the Division to relinquish jurisdiction to the Department of Insurance to conduct informal proceedings, pursuant to Section 120.57(2), Florida Statutes or for entry of a Final Order. Rule 60Q-2.033(1), Florida Administrative Code. In view of the foregoing, it is ORDERED: Jurisdiction of this cause is relinquished to the Department of Insurance for the entry of a Final Order or other proceedings as deemed appropriate. The file of the Division of Administrative Hearings in this case is closed. DONE AND ORDERED this 2nd day of February, 1994, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of February, 1994. COPIES FURNISHED: Gary R. Dorst, Esquire J. Cheney Mason, Esquire Barnet Bank Center 390 North Orange Avenue, Suite 2100 Orlando, Florida 32801 John R. Dunphy, Esquire Division of Legal Services 612 Larson Building Tallahassee, Florida 32399 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
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 comect gepy of this Final Order was served on the below-named persons by the method designated on this {30-day of Fora , 2014. Agency for Health Care Administration 2727 Mahan Drive, Bldg. #3, Mail Stop #3 Tallahassee, Florida 32308-5403 Telephone: (850) 412-3630 Jan Mills Shaddrick Haston, Unit Manager Facilities Intake Unit Assisted Living Unit (Electronic Mail) Agency for Health Care Administration (Electronic Mail) Finance & Accounting Patricia R. Caufman, Field Office Manager Revenue Management Unit Areas 5 and 6 (Electronic Mail) Agency for Health Care Administration (Electronic Mail) Katrina Derico-Harris Medicaid Accounts Receivable Agency for Health Care Administration (Electronic Mail) Thomas J. Walsh II, Senior Attorney Office of the General Counsel Agency for Health Care Administration (Electronic Mail) Shawn McCauley Medicaid Contract Management Agency for Health Care Administration (Electronic Mail) Tracy George, Chief Appellate Counsel Office of the General Counsel Agency for Health Care Administration (Electronic Mail) Lynne A. Quimby-Pennock Administrative Law Judge Division of Administrative Hearings (Electronic Mail) Christina Mesa, Esquire MESA Law, P.A. P.O. Box 10207 Tampa, Florida 33679-0207 Thomas P. Crapps Administrative Law Judge Division of Administrative Hearings (Electronic Mail) NOTICE OF FLORIDA LAW 408.804 License required; display.-- (1) It is unlawful to provide services that require licensure, or operate or maintain a provider that offers or provides services that require licensure, without first obtaining from the agency a license authorizing the provision of such services or the operation or maintenance of such provider. (2) A license must be displayed in a conspicuous place readily visible to clients who enter at the address that appears on the license and is valid only in the hands of the licensee to whom it is issued and may not be sold, assigned, or otherwise transferred, voluntarily or involuntarily. The license is valid only for the licensee, provider, and location for which the license is issued. 408.812 Unlicensed activity. -- (1) A person or entity may not offer or advertise services that require licensure as defined by this part, authorizing statutes, or applicable rules to the public without obtaining a valid license from the agency. A licenseholder may not advertise or hold out to the public that he or she holds a license for other than that for which he or she actually holds the license. (2) The operation or maintenance of an unlicensed provider or the performance of any services that require licensure without proper licensure is a violation of this part and authorizing statutes. Unlicensed activity constitutes harm that materially affects the health, safety, and welfare of clients. The agency or any state attorney may, in addition to other remedies provided in this part, bring an action for an injunction to restrain such violation, or to enjoin the future operation or maintenance of the unlicensed provider or the performance of any services in violation of this part and authorizing statutes, until compliance with this part, authorizing statutes, and agency rules has been demonstrated to the satisfaction of the agency. (3) It is unlawful for any person or entity to own, operate, or maintain an unlicensed provider. If after receiving notification from the agency, such person or entity fails to cease operation and apply for a license under this part and authorizing statutes, the person or entity shall be subject to penalties as prescribed by authorizing statutes and applicable rules. Each day of continued operation is a separate offense. (4) Any person or entity that fails to cease operation after agency notification may be fined $1,000 for each day of noncompliance. (5) When a controlling interest or licensee has an interest in more than one provider and fails to license a provider rendering services that require licensure, the agency may revoke all licenses and impose actions under s. 408.814 and a fine of $1,000 per day, unless otherwise specified by authorizing statutes, against each licensee until such time as the appropriate license is obtained for the unlicensed operation. (6) In addition to granting injunctive relief pursuant to subsection (2), if the agency determines that a person or entity is operating or maintaining a provider without obtaining a license and determines that a condition exists that poses a threat to the health, safety, or welfare of a client of the provider, the person or entity is subject to the same actions and fines imposed against a licensee as specified in this part, authorizing statutes, and agency rules. (7) Any person aware of the operation of an unlicensed provider must report that provider to the agency.
The Issue The issue is whether Petitioner’s request for hearing should be dismissed as untimely.
Findings Of Fact In a letter dated January 29, 2009,1/ DSGI informed Petitioner that his Level II appeal was denied. The appeal concerned Blue Cross and Blue Shield of Florida’s denial of coverage for a Magnetic Resonance Imaging Spectography procedure that Petitioner underwent in July 2008. The letter informed Petitioner of his right to request an administrative hearing on the denial of his appeal, and also informed Petitioner that the request must filed with DSGI within 21 days of his receipt of the letter. Copies of Florida Administrative Code Rules 28-106.201 and 28-106.301 were attached to the letter, as was an “informational page” that stated in pertinent part: Your request (petition) for a formal hearing must be in writing. We recommend you send your request by certified mail so you will have proof of the date the Department of Management Services (DMS) receives it. You lose your right to a hearing if we do not receive your request on time. (Bold in original and underlining added). * * * If you dispute the facts we used in our decision, state them in your written request for a hearing. Your request must meet the requirements of rule 28-106.201, Florida Administrative Code. Petitioner received the letter denying his appeal on February 9, 2009. The 21-day period for requesting a hearing on that decision expired on March 2, 2009. Petitioner requested a hearing on the denial of his appeal through a letter dated March 1, 2009. The letter stated in pertinent part: I am writing in protest of the decision rendered against a health insurance claim I submitted in July of 2008 by DSGI. I believe that the decision to DENY my health insurance is improper, the reasons for which actually encourage further health risks by limiting my health care options to only procedures that are inherently dangerous by promoting the spread of cancer. I am writing to request a formal hearing.... Petitioner mailed this letter to DSGI. The postmark date on the envelope in which the letter was mailed was March 5, 2009, which is after the applicable filing deadline. Petitioner’s request for hearing was received by DSGI on March 9, 2009 (seven days after the deadline), and was filed with the Clerk of the Department of Management Services on March 10, 2009 (eight days after the deadline). Petitioner’s request for hearing was untimely because it was filed more than 21 days after he received the letter denying his Level II appeal. The Order to Show Cause issued on April 23, 2009, gave Petitioner an opportunity to explain why his untimely petition should not be dismissed. The letter filed by Petitioner in response to the Order to Show Cause stated in pertinent part: I apologize for missing the 21 day deadline to file a request for hearing. I do not waive my rights. I cannot afford legal representation in this matter. I received the letter dated January 29 from the Department of Management Services [and] I was led to believe that a full and complete response -- one that was equal to the five-page letter I received -- was necessary. Because of the amount of information I felt that I was required to assemble, and demands on my life circumstances I [was] unable to file in a timely manner. The response to the Order to Show Cause also articulates what Petitioner believes to be the merit of his case,2/ which he argues “outweighs dismissal because of procedural technicalities.”
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that DSGI issue a final order dismissing Petitioner’s request for hearing. DONE AND ENTERED this 5th day of May, 2009, in Tallahassee, Leon County, Florida. S T. KENT WETHERELL, II 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 5th day of May, 2009.
Findings Of Fact Petitioner applied to the Respondent for licensure as a general lines, and a life and health insurance agent on or about February 8, 1990. By letter dated May 17, 1990, the Petitioner was informed that his applications for examination were denied based upon a finding that he lacked fitness or trustworthiness to engage in the insurance business. Petitioner timely requested a hearing to determine if he is qualified to take these licensure examinations. On or about January 3, 1986, the Petitioner entered a plea of guilty to two counts in a superseding indictment filed in Case Number 84-00603(S)-05 in the United States District Court for the Eastern District of New York. Based upon this plea, the Petitioner was found guilty of conspiracy to defraud an insurance company and filing a false insurance claim, each count being a felony involving moral turpitude. He was sentenced to three years probation, and ordered to pay a fine of $10,000. Special conditions of probation included prohibiting the Petitioner from engaging in the insurance business, and requiring that he make restitution to the Hartford Insurance Group in the sum of $1,778.08. On or about August 15, 1986, the Insurance Department of the State of New York revoked the Petitioner's insurance broker's license, based upon his felony conviction as set forth above. The Petitioner successfully completed his period of probation in New York on January 2, 1989, including payment of the $10,000 fine and restitution in the amount of $1,778.08. On or about September 22, 1989, the Board of Parole of the State of New York issued a Certificate of Relief from Disabilities to the Petitioner which removes bars to employment and licensure automatically imposed by the laws of the State of New York as a result of his conviction. However, this Certificate specifies that it shall not prevent any administrative or licensing body or board from relying upon this conviction as a basis for the exercise of its discretionary power to refuse to issue a license. The Petitioner failed to disclose on his applications for examination that his insurance broker's license in New York had been revoked. In fact, he specifically answered "no" to the question on these applications concerning whether his license had ever been revoked in another state. The Petitioner did disclose on his applications for examination that he had been charged with a felony in New York, and indicated that he had entered a plea to a single charge. He stated on his applications, however, that he had not been convicted by any court. The Petitioner claims that he did not know that his New York license had been revoked. Rather, he testified that he had sought to surrender his license in New York after his conviction in 1986, and thought that the administrative action had been concluded with his license surrender. He claims he never was notified of any hearing, and did not receive a copy of the order of revocation issued by the Insurance Department in New York. The Petitioner also claims that he entered his plea of guilty as a matter of convenience in order to avoid a long and expensive trial, and on the advise of his counsel. He maintains that he did not file a false insurance claim and did not conspire to defraud any insurance company. Rather, he testified that he was very ill at the time, and did not expect to live. In order to avoid the strain and expense of a trial, and since he did not believe he would ever again be physically able to engage in the insurance business, he agreed to resolve the criminal charges against him with a plea of guilty to two counts in the superseding indictment issued against him. Finally, he testified that he indicated on his applications that he had not been convicted by any court since he had not had a jury trial, and he was under the impression that a person can be convicted only if found guilty by a jury. Based upon his demeanor at hearing, it is found that the Petitioner is a credible witness and that his claims that he did not know his New York license had been revoked and that he thought a person could only be convicted if found guilty by a jury are truthful. Nevertheless, the Petitioner was in error regarding both claims, and as a result, he answered questions on his applications in a false and incomplete manner. He was convicted on two felony counts, and his license was revoked in New York based on those convictions.
Recommendation Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing Petitioner's challenge to the determination that he is not qualified to take the examination for licensure as a general lines, and a life and health insurance agent. DONE AND ENTERED this 2nd day of April, 1991 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 1991. APPENDIX TO RECOMMENDED ORDER Rulings on the Petitioner's Proposed Findings of Fact: Adopted in Finding 1. Rejected as a summary of the evidence (Exhibit P-2) and not a proposed finding of fact. Adopted in Finding 1. Adopted and Rejected, in part, in Finding 6. Adopted, in part, in Finding 2, but otherwise rejected as unnecessary, simply a summation of testimony, and as not based on competent substantial evidence. Adopted in Finding 8. Rejected in Finding 9. Rejected as a comment on the record and not a proposed finding of fact. Rulings on the Respondent's Proposed Findings of Fact. COPIES FURNISHED: Mark E. Berman, Esquire 2450 Hollywood Boulevard Suite 401 Hollywood, FL 33020 Gordon Thomas Nicol, Esquire Division of Legal Services 412 Larson Building Tallahassee, FL 32399-0300 Bill O'Neil, Esquire General Counsel The Capitol, PLaza Level Tallahassee, FL 32399-0300 Honorable Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300
The Issue The following are the issues presented: Whether the Division of Administrative Hearings (“DOAH”) has jurisdiction to determine the claim of Petitioners Wal-Mart, Inc. (“Wal-Mart”) and Sedgwick CMS (“Sedgwick”) to relief under section 440.13(8) and (11), Florida Statutes; If DOAH has jurisdiction, whether Petitioners have standing to raise the issue of medical overutilization; If DOAH has jurisdiction and the Petitioners have standing, whether Petitioners are estopped from seeking reimbursement of any monies paid to Intervenors Florida Institute for Neurologic Rehabilitation (“FINR”) and Fruitville Holdings - Oppidan, Inc. (“Oppidan”); If DOAH has jurisdiction and Petitioners have standing and are not estopped, whether Intervenors engaged in overutilization of medical care in their care and treatment of the injured worker, D.F.; Whether Respondent, Department of Financial Services, Division of Workers’ Compensation (the “Department), has the authority to order Intervenors to reimburse Petitioners for payments related to overutilization by Intervenors in the medical care of D.F.; and If the Department has such authority, how much money should Intervenors be ordered to reimburse Petitioners.
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 administering the Workers’ Compensation Law, chapter 440, Florida Statutes. Section 440.13 governs the Department’s responsibilities and procedures for overseeing the provision by employers to their employees of “such medically necessary remedial treatment, care, and attendance for such period as the nature of the injury or the process of recovery may require, which is in accordance with established practice parameters and protocols of treatment as provided for in this chapter ” § 440.13(2)(a), Fla. Stat. Petitioner Wal-Mart is an “employer” as that term is defined in section 440.02(16). Petitioner Sedgwick acts as a workers' compensation servicing agent or “third party administrator” (“TPA”) for Wal-Mart and is a workers’ compensation “carrier” as defined in section 440.13(1)(c). D.F. is an “employee” as that term is defined in section 440.02(15). In 2003, during the course of his employment with Wal- Mart in Sarasota, D.F. fell approximately six feet from a ladder to the ground, landing on his left side and striking his head. D.F. was diagnosed with a traumatic brain injury. Through Sedgwick, Wal-Mart accepted the compensability of D.F.'s injuries under the law and began furnishing “medically necessary treatment, care and attendance” to D.F. as required by section 440.13(2). In the immediate aftermath of the accident, D.F. was treated at Sarasota Memorial Hospital, where he was diagnosed with cephalgia (headache), left flank contusion, and cervical strain. He was later seen at First Care in Sarasota with complaints of headache, and by a Dr. Barnea (no first name in the record) with complaints of headaches, dizziness, backaches, trouble with memory, and an inability to taste food. D.F. was also seen by Dr. Hal Pineless, a neurologist at the Neurocare Institute of Central Florida, who diagnosed D.F. with a cerebral concussion with post-concussive syndrome, post-concussive headaches, depression, and anosmia (loss of the sense of smell). In January 2005, D.F. took a handful of pills in what was at least a suicidal gesture, if not a serious attempt to kill himself. He was admitted to the Halifax Medical Center, and a Baker Act2/ proceeding was initiated against him. Although D.F. was found not to meet the criteria for involuntary hospitalization at that point, three months later he was referred by James Hutchens, his attorney, to Dr. Howard Goldman, a psychiatrist, because of the attorney's fear that D.F. would again attempt to harm himself. In February 2007, D.F. was evaluated at FINR, an inpatient neurologic rehabilitation facility in Wauchula. FINR recommended inpatient treatment for D.F. at their facility for an initial period of 30 to 60 days. The cost of the treatment was set at $950 a day. Susan Smith was the Sedgwick claims adjuster assigned to D.F.’s claim. Relying on the expertise of the physicians at FINR, Ms. Smith agreed to the admission and the price. Ms. Smith testified that when she took over the case, there were five physicians treating D.F., including a neurologist, a psychotherapist, a psychiatrist, and a physiatrist. The physicians were all requesting different courses of treatment and were prescribing medications that were in some instances contraindicated with each other. The physicians were not communicating with each other. D.F.’s case was “just a mess.” Ms. Smith stated that FINR seemed to present an opportunity for D.F. to receive all of his treatments in one place, with one physician in charge, in a coordinated fashion. D.F. was admitted to FINR in March 2007. Dr. Jorge J. Villalba, the medical director of FINR, diagnosed D.F.'s medical conditions as post-traumatic headaches, anxiety, and depression. FINR provided monthly reports of D.F.'s progress to Sedgwick. D.F.’s treatment was administered by a team of physicians at FINR and consisted of medical monitoring, occupational therapy, physical therapy, and speech therapy. D.F. was provided vocational rehabilitation in FINR’s computer lab and in the wood shop, where he worked on sanding, staining, and building wood products. In August 2007, D.F. was transferred to Oppidan, an assisted living facility, as a “step down” in treatment from the inpatient FINR facility. Oppidan is affiliated with FINR, which does all of the billing for both entities. Again relying on the expertise of the physicians, Ms. Smith agreed to the transfer and to the $850 per day cost of care at Oppidan. Oppidan provided monthly reports to Sedgwick similar to those provided by FINR. These reports, later characterized as "boilerplate" by the Department’s expert medical advisor, Dr. Matthew Imfeld, showed that D.F. was receiving treatment similar to that which he had received at FINR, i.e., medical monitoring, occupational therapy, physical therapy, speech therapy, and vocational therapy. D.F. remained at Oppidan from August 2007 until August 2011, more than four years after his initial admission to FINR. Ms. Smith testified that she was in constant contact with the treatment facility and persistently inquired as to when D.F. would be ready for release from the facility. Ms. Smith noted a pattern in which D.F. would seem to improve to the point of discharge and then suffer some form of relapse or new symptom that would preclude his discharge. Increased symptoms included complaints of personality changes, anxiety, syncopal episodes accompanied by frequent falls, medication adjustments, emotional withdrawal, suspected Parkinson's syndrome, ringworm, shoulder problems, ringing in the ears, and anhedonia.3/ Petitioners worked with Oppidan’s medical staff to determine conditions for D.F.’s discharge from Oppidan. On January 9, 2009, Petitioner’s then-counsel, Brian Bartley, discussed the situation with Dr. Villalba and Dr. Jeffrey Walden, D.F.’s neuropsychologist. They agreed that D.F.’s needs could potentially be met within an outpatient day program. At Mr. Bartley’s suggestion, Dr. Villalba and Dr. Walden investigated the Adult Daycare program at Manatee Glens, a behavioral health hospital with an outpatient component. Though they rejected Manatee Glens as an appropriate placement, Drs. Villalba and Walden sent Mr. Bartley a letter, dated January 15, 2009, that outlined the components they felt necessary for an acceptable outpatient program: [D.F.] requires comprehensive case management services to oversee his program, assist with making and following-up on appointments, assist in managing his benefits, and coordinate his care. [D.F.] will require oversight of his medications. We feel that a home health nurse or, alternately, a nurse on site at a potential discharge site, would be necessary to provide for this need by packing his medication box with him, assessing him for possible side effects, overseeing a schedule of routine labs, etc. His wife can assist with prompting him at his medication times as necessary during non-program hours, but we do not recommend that she have primary responsibility for managing his medications or medical status. [D.F.] will require reliable transportation to and from his program and ancillary appointments. His wife will not be able to be his sole source of transportation. First, the only licensed and tagged vehicle they own is an old van that has had multiple reliability issues. Second, his wife has her own ongoing medical concerns that may interfere with her capacity to provide reliable transportation even with a working vehicle. [D.F.] requires activities that challenge him to be in the community and addressing his anxiety and panic symptoms. As such, a club-house model day program will be inadequate. He requires a vocational program where he is in a workplace, managing interpersonal relationships, and working on specified tasks. He has thus far been able to manage such assignments only with the assistance of a one-to-one job coach on the site with him and working at his side. As such, job coaching services will be required for all vocational hours. [D.F.] requires community recreational activities to further challenge his capacity to cope and master anxiety-producing situations with less structure than a workplace. His present program addressed this need through one-to-one lunch outings, fishing trips, etc. During these activities, he is encouraged to use the coping strategies developed in his psychotherapy sessions to manage and persevere despite his debilitating anxiety. [D.F.] requires a quiet place to which he can temporarily retreat and regroup between community-based activities. He can become overwhelmed in busy and chaotic environments such as a room with loud music or television playing, a busy game room, or an activity center. He has coping strategies he utilizes when he must be in such environments, but the availability of a place where he can escape such over- stimulation is required to facilitate his participation in his activities. [D.F.] requires continued participation in weekly cognitive-behavioral psychotherapy. He also requires regular contact with a neurologist and a neuropsychiatrist. His current program includes massage therapy as well to address his shoulder and to assist with relaxation skills. He also receives assistance with the management of his personal budget, including development of computer-based budgeting program, planning of future expenses and anticipated income, and development of financial priorities. He will require continued assistance in this area as well. We hope this adequately describes the services we feel will be required to address [D.F.’s] needs in an outpatient environment. Please feel free to contact us with any comments or questions you may have. We will gladly review any proposed discharge site and offer our thoughts regarding the acceptability of such a site to meet his needs. The record indicates that Mr. Bartley suggested at least one more potential discharge site to the medical staff at Oppidan. In a letter dated March 27, 2009, Drs. Villalba and Walden stopped short of rejecting this option outright but did set forth a list of concerns and requests for further information regarding the details of the proposed treatment. The record does not indicate whether Mr. Bartley followed up on these concerns and requests, or whether Petitioners proposed another outpatient program for D.F. By the time of D.F.’s discharge, FINR and Oppidan’s billed charges for his treatment totaled $1,451,301.27. Wal- Mart, through Sedgwick, paid these bills in full without disallowance, adjustment, or reduction. At all times relevant, Ms. Smith relied upon the expertise of the medical staff at FINR and Oppidan’s facilities confirming that the treatment being provided was medically necessary. Ms. Smith also understood that D.F. had been "Baker Acted" and feared that he might harm himself if Oppidan discharged him upon her disallowance of the charges for his treatment. Though they continued paying the charges during D.F.’s stay at Oppidan, Petitioners noted the mounting costs and apparently endless course of treatment. Petitioners referred D.F. to Glenn J. Larrabee, Ph.D., a diplomate in clinical neuropsychology, who examined D.F. on September 28 through 30 and October 5, 2009, and reviewed all of his available medical records. Dr. Larrabee produced a 41-page report, dated November 9, 2009. The report concluded that D.F.’s medical records “suggest that at worst, he suffered a mild traumatic brain injury of an uncomplicated nature, given normal CT Scan the day of injury and multiple subsequent normal CT Scans of the brain.” Dr. Larrabee noted that recovery from such an uncomplicated injury is usually three months at most and that D.F. had no cognitive or emotional complaints in follow-up visits shortly after the injury. It was only a few weeks later that he displayed the symptoms of anosmia. Dr. Larrabee’s examination of D.F. showed “deliberate feigning of odor identification in the left nostril, with significantly worse- than-chance performance, strongly supporting the feigning of anosmia.” Dr. Larrabee further noted evidence of normal neuropsychological test performance in D.F.’s initial neuropsychological evaluation with a Dr. Frank in early 2004, in a second neurological evaluation conducted by a Dr. Bosco in 2007, and in Dr. Larrabee’s own current examination. These results “strongly contradict the presence of any persistent deficit from his original mild traumatic brain injury.” In each of these tests, Dr. Larrabee also noted “evidence of invalid test performance with failure of symptom validity tests and measures of response bias,” a further indication that D.F. was deliberately feigning responses. Dr. Larrabee wrote that “[o]ther health care professionals have noted a motivational basis or non-neurologic basis to symptomatic complaint.” Dr. Salter in 2005 included “factitious disorder” as one of his diagnoses, and Dr. Tatum noted that D.F. displayed seizures without any indication of actual epilepsy. Dr. Larrabee concluded that, while there was “compelling evidence of malingering” on the neuropsychological examinations, other professionals have noted “significant personality disorder features” that could lead one to be dependent on the inpatient hospitalization setting. Dr. Larrabee found that there could be “a mix of intentional (i.e., malingering) and unintentional (psychiatric) factors” in the case of D.F. He recommended a one-month stay in a psychiatric facility for evaluation and treatment. Without such hospitalization, it could not be determined whether D.F. had a legitimate psychiatric disorder or whether such disorder was a consequence of his workplace injury. At about the same time as the referral to Dr. Larrabee, Petitioners began to explore legal channels to procure D.F.’s discharge from Oppidan. Petitioners sent the case file to an attorney, Edward Louis Stern, who testified at the final hearing. Mr. Stern testified that he met with D.F.'s attorney for the purpose of obtaining his cooperation in having D.F. discharged. Mr. Stern provided D.F.'s attorney with a copy of Dr. Larrabee’s report. Mr. Stern stated that D.F.'s attorney agreed in principle to the discharge of D.F. but wanted to identify the parameters that would be allowed by FINR/Oppidan for his safe release. To this end, a meeting was set up for June 3, 2010, that included the program director at FINR, the treating neuropsychologist, a vocational consultant, D.F., D.F.'s spouse, and D.F.'s attorney. Mr. Stern reported that no one at the meeting was willing to definitively identify the parameters of D.F.'s discharge. Mr. Stern left the meeting with the definite impression that D.F.’s attorney would not agree to D.F.’s discharge. He also believed that no one at the facility would be willing to identify parameters for discharge. Therefore, Mr. Stern and his clients decided to initiate formal overutilization proceedings based on peer review, pursuant to section 440.13(6). Mr. Stern noted that peer review requires two or more "physicians" to make an evaluation of the care in question. Petitioners had in hand only the opinion of Dr. Larrabee, a neuropsychologist whose non-physician opinion would not be admissible before a Judge of Compensation Claims. After some negotiation, D.F.’s attorney agreed to an examination by a psychiatrist. On September 3, 2010, Dr. R.J. Mignone, a board- certified psychiatrist practicing in Sarasota, evaluated D.F. at Petitioners' request. Dr. Mignone’s 35-page report included a detailed narrative of D.F.’s treatment history, Dr. Mignone’s examination, and his impressions and recommendations. In brief answers to a series of questions propounded by Petitioners, Dr. Mignone concluded that D.F.'s industrial accident was not "the major contributing cause" for the psychiatric care he had been receiving at FINR/Oppidan. Dr. Mignone found no DSM-IV Axis I psychiatric injury to D.F. and concluded that D.F.’s treatment at FINR/Oppidan was actually "psychiatrically contraindicated." Dr. Mignone concluded that it would be appropriate to discharge D.F. from Oppidan with the understanding that some regression should be expected once his “Axis II characteropathy” ceased to be reinforced by the inpatient setting. Dr. Mignone believed that D.F.'s medical professionals had been guilty of "walking on eggshells" in their treatment of him and that D.F.'s "acting out" behavior had been a major factor in FINR/Oppidan's program design. Dr. Mignone concluded that because D.F.’s condition was unrelated to his work injury, all of the treatment he had received at FINR and Oppidan constituted overutilization. After a great deal more legal jockeying, a second peer review was performed by Dr. Thomas Goldschmidt on January 7, 2011. Dr. Goldschmidt is a specialist in neurology and psychiatry, and was specifically recommended by Dr. Mignone to perform an examination of D.F. However, because D.F.’s attorney declined to allow the examination, Dr. Goldschmidt’s opinion was based on his review of the medical record and Dr. Mignone’s evaluation. He summarized his findings as follows: The claimant experienced MTBI [mild traumatic brain injury] on May 9, 2003. He reported loss of consciousness for seconds and was able to drive himself home afterwards. Serial evaluations over time have chronicled multiple normal CT brain scans, normal forty-eight hour EEG monitoring suggesting PNES [psychogenic nonepileptic seizures, i.e., seizures with a psychological cause], symptom exaggeration/malingering on neuropsychological testing, pertinacious somatic preoccupation with trait characterological disturbance consistent with passive-dependent underpinnings, and counter-therapeutic institutionalization at OPPIDAN. As such, the claimant’s clinical course has iatrogenically served to enhance his misguided perception of being “brain injured” in pursuit of satisfying his formidable but chronically frustrated dependency needs. Furthermore, his clinical course is atypical for MTBI and cannot be objectivity [sic] reconciled with the neuropsychological or clinical data provided for my review. From a non-organic perspective, the claimant has parlayed his seven year old MTBI into a state of invalidism largely facilitated by OPPIDAN. In effect, his illness-behavior has been iatrogenically perpetuated by reinforcing the notion of “brain injury” and treatment of psychogenic-mediated symptomatology unrelated to his 2003 work injury. Negotiations continued and a private mediation resulted in a negotiated settlement between Petitioners and D.F. The parties agreed that Petitioners would no longer be responsible for workers’ compensation benefits as of the date the agreement was signed, though D.F. would continue to receive payments for lost wages and supplemental benefits. It was agreed that Petitioners would cease making payments to FINR/Oppidan on August 30, 2011, the date that D.F.’s residency would discontinue. In light of Petitioners’ suspicions regarding D.F.’s possible malingering, it is reasonable to ask why they never disallowed or adjusted any of the bills generated by FINR/Oppidan’s treatment of D.F. Mr. Stern testified that Petitioners did not unilaterally disallow payment out of fear that FINR/Oppidan might retaliate against D.F. by immediately discharging him, thereby risking another suicide attempt and possible tort liability for Petitioners.4/ Petitioners also feared that unilateral disallowance of payments could negatively affect their ongoing negotiations with D.F.’s counsel regarding voluntary discharge from Oppidan. On January 28, 2011, Petitioners filed the Reimbursement Petition with the Department, naming FINR and Oppidan as respondents and expressly disclaiming any direct reimbursement dispute with D.F. The Reimbursement Petition recited the history of D.F.’s treatment. It did not name a specific instance of overutilization; rather, it stated that all of D.F.’s treatment by FINR and Oppidan constituted overutilization. The Reimbursement Petition requested that the Department, “in accordance with Section 440.13(6), Florida Statutes . . . disallow the payment of services previously paid by the Petitioner[s] and reimburse Petitioners all sums paid.” The Reimbursement Petition also requested the return of payments made by Petitioners in accordance with section 440.13(11)(a).5/ Attached to the Reimbursement Petition was a copy of DFS Form 3160-0023, entitled “Petition for Resolution of Reimbursement Dispute,” executed by Wal-Mart and Sedgwick. Just below the title of DFS Form 3160-0023 is the following statement: “A Petition for Resolution of Reimbursement Dispute must be served on the Agency within 30 days after the Petitioner’s receipt of a notice of disallowance or adjustment of payment, pursuant to 69L-31.008, Florida Administrative Code.” Section 440.13(7)(a) likewise provides, in relevant part: Any health care provider, carrier, or employer who elects to contest the disallowance or adjustment of payment by a carrier under subsection (6) must, within 30 days after receipt of notice of disallowance or adjustment of payment, petition the department to resolve the dispute. The petitioner must serve a copy of the petition on the carrier and on all affected parties by certified mail. The petition must be accompanied by all documents and records that support the allegations contained in the petition. Failure of a petitioner to submit such documentation to the department results in dismissal of the petition. FINR and Oppidan filed a Motion to Dismiss the Reimbursement Petition arguing that jurisdiction for a reimbursement review can be invoked only where a medical bill has been disallowed or adjusted for payment. They further argued that Petitioners could not invoke the Department’s jurisdiction to conduct a mandatory utilization review under section 440.13(6) because of that subsection’s provision that if a carrier finds that overutilization of medical services has occurred, the carrier “must disallow or adjust payment for such services.” FINR/Oppidan argued that the dispute mechanism afforded a carrier under section 440.13 is limited to disallowing or adjusting a payment, which triggers the filing of a petition by the health care provider and a response from the carrier. Given that the Sedgwick did not disallow or adjust any payments, the Reimbursement Petition should be dismissed. As a result of the Reimbursement Petition, the Department initiated an investigation of FINR/Oppidan and of Dr. Villalba individually as medical director of FINR/Oppidan pursuant to section 440.13(11). Eric Lloyd, who at the time was program administrator of the office of medical services in the Division of Workers’ Compensation, testified that the Department did not then have a formalized method for reporting provider violations and that the language of 440.13(7) makes it clear that only a health care provider may pursue a petition for resolution of a reimbursement dispute. Mr. Lloyd stated that the Department therefore treated the Reimbursement Petition as a report of provider violation and converted the matter into a review under section 440.13(11). Delays in the resolution of the audit were caused by the need to advertise for and contract the services of an Expert Medical Advisor (“EMA”) pursuant to section 440.13(9). The Department’s initial contracting efforts were futile. Two contracted EMAs disqualified themselves for conflicts of interest. The Department finally engaged the services of a certified EMA, Dr. Imfeld, a specialist in the field of physical medicine and rehabilitation. Dr. Imfeld reviewed D.F.'s medical records from FINR/Oppidan, as well as the reports from the various doctors that were provided to the Department by the parties. Petitioners provided documents pursuant to a “Health Care Provider Violation Referral Document Request” issued by the Department on March 31, 2011, and a “Health Care Provider Violation Referral Document Request Addendum” issued by the Department on April 4, 2011. Both documents required the carrier to submit various forms of documentation. The Department’s initial document request states that the Reimbursement Petition alleged “that services rendered by Dr. Jorge Villalba, M.D. (hereinafter “Provider”), for the treatment rendered to the above referenced injured employee while an inpatient at FINR/OPPIDAN was in excess of established practice parameters and protocols of treatment established in Chapter 440, Florida Statutes.” In fact, the Reimbursement Petition made its allegations against FINR and Oppidan as institutions. Dr. Villalba was not mentioned by name in the Reimbursement Petition. The only reference to him was a statement that “[b]oth entities seemingly have the same medical director or attending physician.” Pamela Macon, bureau chief of the bureau of monitoring and audit in the Division of Workers’ Compensation, conceded at the hearing that it was her office that decided to include Dr. Villalba in the investigation because he was the medical director of the facilities. The language of the document requests plainly reflects an attempt to impute to Petitioners the Department’s own decision at the outset of the investigation to focus on Dr. Villalba individually. The end result of the investigation was that charges were brought against Dr. Villalba, but not against FINR or Oppidan as institutions. As explained more fully below, the case against Dr. Villalba was settled. No case was ever brought against the institutions. The following colloquy at the hearing is between Ms. Macon and counsel for Petitioners: Q. And as I understand it, you added Dr. Villalba to the case because he would have been, as the medical director, responsible for any medical care that was provided within the facility and he then should be responsible? A. Yes. Q. That’s why you added him? A. Correct. Q. But then you changed your mind and determined that he wasn’t involved with it at all, so you weren’t going to give – you weren’t going to penalize him? A. Right, that he didn’t render the direct care. Q. Okay. Did you ever make a determination who did the direct care? A. Not to my knowledge, no. Mr. Lloyd testified as to a policy dispute within the agency as to whether a “health care provider” violation may be brought only against individual health care providers or whether a facility can also be found in violation and sanctioned. He acknowledged that the statutory term “health care provider” explicitly includes health care facilities, but cited the difficulty involved in disciplining a facility such as FINR, which treats multiple injured workers. If the Department bars an entire facility, it would affect not just the individual injured worker whose treatment is in question but any others the facility is treating now or in the future.6/ In his report, dated August 12, 2013, Dr. Imfeld concluded that while D.F.'s 2003 accident resulted in a mild traumatic brain injury, it did not cause a seizure disorder or Parkinson's disease. He further concluded that all of the inpatient treatment from FINR/Oppidan was excessive and not medically necessary. On September 23, 2013, the Department entered its “Report of Health Care Provider Investigation and Notice of Intent to Impose Penalties Pursuant to §440.13, F.S.”7/ The Notice of Intent was directed to Dr. Villalba individually and stated as follows, in relevant part: The record in this matter, corroborated by the EMA opinion, evidences certain care that was neither medically necessary nor clinically appropriate for D.F.'s compensable condition. Accordingly, the Department finds that because of your role at FINR and OPPIDAN, you have directly or indirectly engaged in a pattern or practice of overutilization or a violation of Chapter 440, Florida Statutes, in the treatment rendered to D.F. Dr. Villalba filed a Petition for Formal Administrative Hearing on October 7, 2013, in response to the Notice of Intent. The Department and Dr. Villalba agreed to hold the case in abeyance rather than forward it to DOAH. The case was ultimately settled, the parties entering into a Settlement Stipulation for Consent Order on May 13, 2014. The settlement provided that the Department would withdraw and dismiss its Notice of Intent and that Dr. Villalba would withdraw and dismiss his petition for an administrative hearing with prejudice. Mr. Lloyd testified that after the Notice of Intent was filed against Dr. Villalba, the Department received a Recommended Order from an Administrative Law Judge in another DOAH case in which the Department had issued a Notice of Intent against an individual physician for overutilization. The Recommended Order was “pretty critical of the Department and the process that was involved,” and the Department felt obliged to enter a settlement for attorney’s fees. Mr. Lloyd testified that the Department believed Dr. Villalba’s case had “the same shortcomings” as that earlier case. Mr. Lloyd stated that this belief played a large role in the decision to settle with Dr. Villalba in lieu of trying to prove a difficult case of overutilization in a formal proceeding. Wal-Mart and Sedgwick were given no notice of the settlement negotiations or the entry of the Settlement Stipulation for Consent Order between the Department and Dr. Villalba. Mr. Lloyd testified that there is no statutory obligation for the Department to apprise the complainant of the status of the Department’s investigations. On March 23, 2015, the Department issued an order titled “Workers’ Compensation Medical Services Reimbursement Dispute Dismissal” that purported to dispose of the Reimbursement Petition filed by Wal-Mart and Sedgwick on January 28, 2011. The order provided as follows, in relevant part: There is no information to suggest that Wal- Mart, Inc. or Sedgwick CMS discontinued authorization for treatment and care for [D.F.] by the Respondent herein during the specified dates of service. * * * The issues raised by Wal-Mart, Inc. and Sedgwick CMS are utilization review issues, not appropriate for resolution in reimbursement dispute resolution proceedings under section 440.13(7), Florida Statutes. The utilization issues were resolved by the Department in its MSS Case No. ROV00039 and Department Case No. 143376 [i.e., the case against Dr. Villalba that was dismissed via Consent Order]. Therefore, this Petition for Resolution of Reimbursement Dispute in MMS Case No. 20110531-001 is hereby DISMISSED.
Recommendation Based on the foregoing, it is, therefore, RECOMMENDED that the Department of Financial Services, Division of Workers’ Compensation, issue a final order dismissing the Petition for Formal Administrative Hearing. DONE AND ENTERED this 19th day of February, 2016, 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 19th day of February, 2016.
Findings Of Fact The Respondent, Richard Sidney Cole, is currently eligible for licensure and licensed in this state as a Health Insurance Agent, and was so licensed at all times relevant to these proceedings. The Respondent, at all times relevant to these proceedings, was licensed in this state to solicit health insurance on behalf of National States Insurance Company (National States). Count I -- Edith Kastel. On or about June 24, 1988, the Respondent visited the home of Edith Kastel of St. Petersburg, Florida, for the purpose of soliciting health insurance. She had responded to a "lead card" National States had sent to her, and her request for follow- up information was referred to the Respondent. Since Kastel was not yet eligible for Medicare, and could not purchase a Medicare supplement policy, the Respondent showed her the National States Limited Medical-Surgical Expense policy. This policy pays 40% of doctors' charges, outpatient hospital charges and outpatient charges for diagnostic laboratory and x- ray examinations and ambulance charges. During the application process, Kastel disclosed to the Respondent that she had suffered from diverticulitis in the past. The Respondent took this opportunity to explain to Kastel that the policy would not pay on preexisting conditions (i.e., according to the policy, loss "which results from sickness or disease for which treatment was advised or received, or medical advice given by a doctor, during the 180 day period just before the Policy Date") until after the expiration of a six-month waiting period. Kastel fully understood this provision of the policy. Kastel did not disclose to the Respondent during the application process any other preexisting conditions to which the waiting period would apply. She did tell him that she had an eye examination appointment that she had just scheduled for July 6, 1988, but she gave no indication that she knew there was something wrong with her eyes or that the appointment was for anything other than a routine vision check. She continued to maintain at the hearing that she did not know, at the time she applied for coverage through the Respondent, that she had cataracts. She did vaguely ask whether she would be covered if the examination revealed that something was wrong with her eyes, and the Respondent assured her that she would be covered and that she should submit any bills she might get with a claim on the policy. Kastel bought the policy, effective July 1, 1988. At her eye examination on July 6, 1988, Kastel was diagnosed with cataracts and was advised that elective cataract surgery would be beneficial. Kastel scheduled the surgery and had it performed in October, 1988. When she submitted her bills with a claim on the policy, National States rejected the claim as a preexisting condition for which claim was made within the policy's six_month waiting period. When the claim was rejected, Kastel complained to the Respondent, who made a written request to National States that the claim be paid. He reasoned that the claim should be covered because Kastel maintained that she did not know of the condition at the time she applied for coverage. Kastel and the Respondent were not able to change National States' position, and the claim still has not been paid. It was not proven that the Respondent misrepresented to Kastel that the policy paid 40% of all charges (as opposed to 40% of only doctors' charges, outpatient hospital charges and outpatient charges for diagnostic laboratory and x-ray examinations and ambulance charges) or that Kastel would not have purchased the policy if the Respondent had communicated to her exactly what kinds of charges it covered. Up to the time of the hearing, there is no indication that Kastel had any complaint against National States or the Respondent except that her cataract surgery claim was rejected as a preexisting condition. 2/ (All other claims Kastel has made under the policy have been paid.) Kastel's testimony elicited at the hearing, that the Respondent told her only that the policy covered 40% of all expenses, was not persuasive. Count II -- The Ogletrees. Like Kastel, Jack and Margaret Ogletree of Palm Bay, Florida, responded to National States advertising by sending in a "lead card" that was referred to the Respondent. The Respondent visited the Ogletrees on or about August 11, 1988. Margaret Ogletree was not yet eligible for Medicare, and the Respondent sold both her and her husband a National States Limited Medical-Surgical Expense Policy. These were not Medicare supplement policies, and the policies themselves state in bold print: "THIS POLICY IS NOT A MEDICARE SUPPLEMENT POLICY." The Respondent explained that the policy was totally unrelated to Medicare and would pay under its terms regardless of Medicare coverage. The evidence did not prove that the Respondent said or did anything to lead the Ogletrees to believe that they were buying a Medicare supplement policy, except perhaps to say that the policy would pay for some things that Medicare would not pay for. It was not proven that Jack Ogletree had a Medicare supplement policy in force at the time or whether he planned to, or did, replace a Medicare supplement policy with the policy the Respondent sold him. It was not proven that the Respondent was required to submit a replacement form or indicate on the application that the policy was "intended to replace any accident or sickness insurance, health service or health maintenance contract." The evidence proved that the Ogletrees told the Respondent during the application process that Jack Ogletree had successful open heart surgery for an aortic valve replacement in April, 1984, and remained on medication for his heart condition. The Respondent led the Ogletrees to believe that losses resulting from the heart condition would be covered after the six-month waiting period for preexisting conditions. In completing Jack Ogletree's application, the Respondent wrote "no" in answer to: question 6.c., asking whether he had or ever had "high or low blood pressure, varicose veins or disorder of the heart or circulatory system; question 7.a., asking whether he had consulted or been treated by any physician or practitioner in the last five years; and question 7.b., asking whether he had been confined in a hospital in the last five years. The evidence is that, under National States' underwriting policies, a successful aortic valve replacement performed over four years before an application would not mean automatic rejection of the application. Had questions 6.c., 7.a. and 7.b. on Jack Ogletree's application been answered correctly, National States typically would have investigated and may or may not have rejected the application, depending on the results of the investigation. Likewise, it is not clear from the evidence whether National States would consider the misrepresentation on the Jack Ogletree application to be a material misrepresentation that would require rejection if Jack Ogletree were to make a claim based on his heart disorder. To the date of the hearing, no such claim had been made. (Claims that have been made have been paid.) Count III -- Gunnar Sundstrom. Like Edith Kastel and the Ogletrees, Gunnar Sundstrom sent in a "lead card" that was referred to the Respondent. The Respondent visited Sundstrom on or about December 9, 1987. At the time, Sundstrom had in force an Old Southern Life Insurance Company (Old Southern) Medicare supplement policy. Sundstrom wanted to replace the Old Southern policy with a National States policy which the Respondent sold him. He wanted a minimum of overlap between the effective date of the new National States policy and the lapse of the Old Southern policy, but he also wanted to be sure that there would be no gap in coverage of any preexisting conditions. He and the Respondent discussed this thoroughly, but the Respondent could not answer all of Sundstrom's questions because he was not sure at the time whether National States was going to increase the waiting period for preexisting conditions from three to six months. It was decided that Sundstrom would apply for the policy, review it upon receipt, and cancel it and ask for a full refund within 30 days, as he had a right to do under the policy, if the waiting period for preexisting conditions turned out to be six months. On the Sundstrom application, the Respondent answered "no" to the question whether the National States policy for which Sundstrom was applying was "intended to replace any accident or sickness insurance, health service or health maintenance contract." The Respondent did not submit any replacement forms as required by F.A.C. Rule 4-51.007 when a Medicare supplement policy is being replaced. 3/ The Respondent explained that he thought the "no" answer on the Sundstrom application was appropriate and that no replacement form was necessary because Sundstrom was not cancelling the Old Southern policy, only perhaps allowing it to lapse. He now concedes that perhaps he was wrong. All claims Sundstrom made under the National States policy through the date of the hearing were paid.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Petitioner, the Department of Insurance, enter a final order suspending the license, and eligiblity for licensure, of the Respondent, Richard Sidney Cole, for four (4) months. RECOMMENDED this 28th Tallahassee, Florida. day of August, 1990, in J. LAWRENCE JOHNSTON 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 28th day of August, 1990.
